Asian brands show western functional potential

By Neil Merrett

- Last updated on GMT

Related tags Innovation

While analyst suggests Asian food and drink companies are behind their Western counterparts in driving product innovation, manufacturers in the region may still be able to lead in way in meeting western demand for certain functional goods.

In joint findings by Global Intelligence Alliance Group (GIA) and analyst Fusion Consulting, which tracked 20 multinational food and drink companies,​western-origin brands were found to be leading Asia-based products in terms of research and development.

A spokesperson for Fusion told that although the research found companies like Nestle or Danone to be more advanced in pushing innovative products that rivals such as Yakult, there was still strong potential for certain Asian products.

There are very strong Asian companies in the food and beverage industry that can compete with Western European and US-based multinationals,”​ stated a Fusion spokesperson. “In fact, in some domains like probiotic drinks and instant noodles, Asian companies are way ahead than their European or US-based competitors.”

Global growth

In looking at the findings, which were conducted between 2004 and 2007, the consultancy group said that Asia-based companies were in an increasingly strong position to follow the lead of their western counterparts and look to international markets to expand.

In the same way that more Westernised companies had worked to distribute and establish their products in Asia, manufacturers in the region were well positioned to increasingly bring their goods to Europe and the US, according to the analyst.

Fusion Consultancy said that in order to successfully meet seemingly growing Western demand in Asian food and drink products, customising products and brand identity to meet local tastes was a key challenge.

“The challenge on doing this is always the same: customisation,”​ stated the analyst. “Some companies are very good at it like Unilever, Nestle and Kraft.”

GIA Index

The GIA index, that focused on three dimensions – innovation, regional presence and revenue performance – claims that anglo-dutch firm Unilever performed "best in class"​ thanks to efforts to appoint chefs and food experts in 18 key markets to research and develop new products customised to the local needs and preferences.

Switzerland's Nestlé, with global revenues in the region of €71bn and annual spend on R&D almost €1bn in 2007, came in second in terms of innovation, "due to its research and development centres in China".

The index also confirmed the trend among top performers in the F&B industry, that included Cadbury Schweppes and PepsiCo, to customise their products to the local requirements, not only in terms of packaging but also in terms of taste and appearance.

"They have also been making strategic investments in the form of R&D centers and local manufacturing capabilities in the ​Asia Pacific region, particularly through the acquisition of local players,"​ confirmed the report.

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