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What you need to know about the Southeast Asia export market

Sep 04, 2020 by Mark Dingley

Thinking of exporting to Southeast Asia? Here’s what you need to know to get started.

Supply chain efficiency is key to exporting. Learn how the beverage industry is improving theirs

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Australia is still riding the wave of opportunity generated by China’s rising incomes and the 2015 China Australia free trade agreement, but the time will soon come when Australia reaches peak exposure, according to agribusiness specialist Rabobank.

The question is: where next?

The ASEAN region, or the Association of Southeast Asian Nations, holds massive potential for Australian food and beverage companies that want to expand into new markets and grow.

The food landscape in Asia has been a hub of innovation and change in the past five years. Consumer lifestyles have become more densely urbanised and more connected, which has led to more on-the-go consumption. Then along came COVID-19, and the situation has evolved further with rising trends in home cooking and food safety.

The most important thing is to understand the nuances and cultural characteristics of each country. If Australian food and beverage manufacturers take the time to understand the market, they can tap into the exciting growth potential.

Trends across the ASEAN region

1. Health and nutrition rules

Over the past few years, the ASEAN region has emerged as an international growth hub for premium, healthy foods, giving Australian businesses in this market an opportunity for success.

A report from CSIRO and KPMG in 2018 showed that daily protein consumption in ASEAN had grown by 50% over the past 30 years, and the global market for probiotics was growing by 7.1% per year.

Healthier, or “better-for-you”, snacks are also a growing trend, with people seeking snacks that are lower in salt, saturated fats, sugar and preservatives, as well as being high in protein or antioxidants.

2. Sustainable thinking

How food is produced and processed is an important factor in consumers’ minds. However, there’s a blurred line between sustainability and health in SE Asia. Kerry’s recent cleaner label study showed label study that 55% of consumers in Asia Pacific, Middle East and Africa (APMEA) are likely to purchase sustainable food because they believe it is healthier.

 

3. A taste for sweetness

Governments are pushing to reduce sugar consumption across Asia. But that’s difficult when sweetness remains a key pillar in local flavour preferences across the region. Australian exports should focus on solutions that can substitute sugar without compromising taste and mouthfeel.

4. COVID-19 fuels home cooking

Since COVID-19, more people in ASEAN countries are feeling the desire to cook a home. According to Nielsen, 77% of consumers in Hong Kong planning to eat at home more often than before, and 62% in South Korea, Malaysia and Vietnam.

What’s happening in each country?

Here we take a look at the top-level trends in different SE Asian countries.

Indonesia

Indonesia has the largest economy of the ASEAN countries and is consistently growing. However, the COVID-19 pandemic has intensified the Indonesian government’s push to reduce imports of food and beverages, and to increase the use of local raw ingredients in manufacturing.

On July 29, the government announced a new 35% import-reduction goal to be achieved by 2022, saying that “Indonesia has been flooded by imports in recent months” and specifically citing frozen meat from Australia as an example.

Interestingly, many Indonesian consumers are feeling more financially stable than they did in the past, which is reflected in their spending habits: 46% of consumers have been spending more on groceries over the last five years.

Malaysia

In the food and beverage sector, there is a growing demand for convenience foods, processed commodities, health-focused, and organic foods.

Post COVID-19, the country is also seeing a rise in home cooking, which means there’s potential for Australian brands who can offer ingredients, like sauces and condiments.

At the same time, Malaysians are being more cautious about food provenance and origin. They are also looking for products with tamper-proof packaging to ensure the foods they are buying are safe.

The Philippines

The Philippines is one of the largest markets in Southeast Asia and offers a mix of opportunities for Australian food and beverage manufacturers.

A young population with disposable incomes heavily influences the food and beverage industry. This generation is more willing to try new flavours and products, which makes the Philippines a great place to innovate.

Convenience is a big factor when it comes to food consumption in the Philippines. The 2019 Shopper Trends report by Nielsen found that Filipino consumers turn to convenient food channels, such as convenience stores, to eat or buy ready-to-consume food and drinks. Increasingly popular items included energy/sports drinks, chocolate powder mixes, 3-in-1 coffee mixes, and ready-to-drink (RTD) beverages.

 

Singapore

Australia currently exports AU$1.2 billion worth of food and beverage products to Singapore each year. But there’s potential for growth, especially when you consider that Singapore imports nearly 90% of all its food, and the fact that Australia has proximity and natural affinity with the region.

Two influential groups are Expats and the middle-aged PMETs (professionals, managers, executives and technicians) aged 40-64, who have a higher disposable income and a sophistication of taste acquired from their travels.

One thing that Singapore consumers are seeking is ‘clean and green’ products, something Australia can offer due to high food safety standards.

The healthy-eating wave has hit Singapore in the past year. Recent Nielsen survey data reports that nearly two in three (62%) consumers surveyed wanted to eat healthily to maintain their health and wellness. Of these consumers, 67% cut down on carbonated soft drinks and 61% on sweetened beverages.

Thailand

With the second-largest economy in the region, Thailand is one of the largest beverage markets in SE Asia. That explains why Suntory and PepsiCo recently formed a joint soft drink venture in the country.

The growing middle classes in Thailand (as well as Indonesia) open the door for healthier food options, as they are better educated about their health and the role of good nutrition. In particular, foods that promote good heart health and cholesterol management are in demand.

Another hot trend is plant-based proteins, according to research conducted by Unilever Food Solutions last year. As in Australian, vegan diets or reducing the consumption of animal products is on the rise.

Consumers are also interested in where their food comes from, how it’s grown or produced, and what ingredients are used.

Food
 

Vietnam

There’s a lot happening in Vietnam right now. Consumers in Vietnam are increasingly demanding foods with natural ingredients and fortified values, according to market-research firm Kantar Worldpanel.

This is reiterated by Nielsen Vietnam1, who state that 83% of Vietnamese consumers make dietary choices based on preventing bad health conditions, and 89% are willing to pay more for food that promotes health benefits.

However, despite their search for healthier options, consumers remain price sensitive. It’s important to prove a unique selling point, including clarity around the ingredients and their production methods.

Nielsen Vietnam’s research also revealed that 88% of Vietnamese consumers read packaging labels carefully to find out nutrition content.

And 68% of mobile users in rural Vietnam have a smartphone, which means Vietnamese consumers are a suitable target audience for smart packaging technology.

Vietnam is the fastest growing Asian nation in terms of snack consumption, according to Nielsen (only Argentina and Slovakia ranker higher). This is a good indicator that consumers have higher disposable incomes. Young consumers tend to consumer five or six meals throughout the day. For Australian snack companies, this presents a great opportunity to experiment with products.

Vietnam is also seeing an increased demand in home-cooking ingredients, with more urban Vietnamese looking to use Western ingredients at home.

 

Cambodia

The country’s rapidly developing food and beverage market is attracting attention from international brands. Cambodia is one of the world’s fastest growing economies, averaging 7% annual growth for more than a decade. A growing middle class together with a young population means there are more consumers willing to spend money on exciting imported products.

Imported packaged foods have already proven to be a growing market with an explosion of choices hitting the shelves. High growth categories include dairy products, prepared food meals for children, grab-and-go foods and fruit juices.

 

Looking for more information about exporting your products? Here are 5 examples of food and beverage products to export to Asia, then learn about the implications of COVID-19 on Australian imports and exports.