Nielsen
Jul 10, 2017

Taiwan market snapshot: Sluggish growth, cautious spending

Nielsen provides insights into Taiwan's economic outlook and retail backdrop.

Taiwan market snapshot: Sluggish growth, cautious spending

Nielsen provides insights into Taiwan's economic outlook and retail backdrop.

Led by a recovery in exports, Taiwan’s GDP grew 2.9 percent in Q4 2016, the highest quarterly growth since Q2 in 2015 and slightly up from the forecast 2.6 percent.  Consumer confidence dropped three points to 72 due to consumers’ negative perception of future job prospects and uncertainty that it is a good time to buy the things they want and need.  Increasing food prices became consumers’ second biggest concern and increasingly consumers are switching to cheaper grocery brands and delaying technology upgrades to save on household expenses.

Despite this cautious economic environment, FMCG sales remained strong overall and the market grew 5.5 percent during the quarter on the back of the performance of confectionery and household food categories. Confectionary is the FMCG market’s third biggest category and its growth is being driven by product innovation, gifting occasions, marketing campaigns and strong demand for high-quality products.

Household food has recovered from the food safety crisis in late 2014 as consumers traded-up to more premium products to guarantee better quality and this has continued as a consumer preference.  Companies in personal care categories are facing cost increases that are impacting profitability while the innovation of emerging players is raising the bar for existing players.

Health issues are becoming an increasing concern among consumers, as reflected by ​growth in “health related" categories, such as health supplements, essence drinks and vitamins.  Recognising this trend, health companies are strongly investing in above-the-line marketing (up 7.7 percent), with advertising for medical and health products ranked highest among all categories in the first half of 2016.

Taiwanese consumers’ concern over health is likely to stay with its ageing population set to grow at 56 percent over the next 10 years to account for 19 percent of the population in 2025. Customers are willing to seek out and buy premium food products, often for health reasons, as for they strive for healthier lifestyles.

Looking ahead, as the economy warms up, consumer confidence should start to recover. Taiwanese consumers are quality driven, and despite their rising concern about price inflation, they will actively seek out and pay more for premium products. Companies that can cater for this demand through product and marketing efforts will have better growth prospects. 

 

 

Related Articles

Just Published

4 hours ago

LinkedIn logs out: Is it the end of the road for ...

SOUNDING BOARD: Industry experts weigh in on the future for LinkedIn and other non-native tech platforms in China, as the business-networking site confirms it will shrink to a jobs board in the market.

4 hours ago

Japan continues to witness high ad fraud while ...

Grappling with high CPMs, Japan and Singapore report some of the highest fraud rates for IAS, while local brands pull rates down in Indonesia.

4 hours ago

Digital Media Awards 2022: Call for entries

The DMAs celebrate outstanding ideas, work, agencies, brands and talent in the Greater China region.

5 hours ago

BrandZ China: Tencent overtakes Alibaba; Kuaishou, ...

The top 100 most valuable brands in China gained 57% in brand value year-over-year, reaching $1.56 trillion, according to Kantar's latest ranking.