Innovation needed to drive food sector growth in Asia: Nielsen

By Kacey Culliney

- Last updated on GMT

Asia sees a volume growth slowdown in its food sector: Nielsen
Asia sees a volume growth slowdown in its food sector: Nielsen

Related tags: Investment, Retailing

The Asian food market has seen value growth but a volume slowdown and manufacturers need to be innovative to succeed in driving development of the sector amid an economic downturn, according to industry report.

Nielsen’s latest Asia Pacific report identified sales value growth in the fast moving consumer goods sector in 2010 and for the first half of 2011 but credited this to inflation because there was no volume growth.

Peter Gale, Nielsen managing director for retailer services in Asia Pacific, told FoodNavigator-Asia that manufacturers need to anticipate opportunities that may arise as a result of inflation and economic downturn and tap into them.

Tapping into trends

“Whatever happens with the economy in the next 12 months, shoppers’ increased focus on finding a good deal is unlikely to change,” ​he remarked.

Gale explained that manufacturers will need to work hard to cut costs during production to enable ‘better value’ end products.

“Innovation along the lines of ‘convenience’ has been a big driver in sales growth for many brands,”​ he continued.

Manufacturers should carefully consider distribution channels within Asia and select one that will be “most relevant to [the] consumers in the long term”​, commented Gale.

And he pointed out that with an increasing demand for convenience throughout Asia, smaller format retail stores could be a point of distribution for manufacturers looking to exploit the convenience trend.

The smaller format stores, such as mini-markets and small supermarkets, have mushroomed rapidly throughout Asia, particularly in Indonesia and Malaysia, added Gale.

Growth potential in developing Asia

Gale remarked that the developing markets of Vietnam, Indonesia, China and India will continue to show good growth.

These markets will be a primary focus for investment in operations and store development for retailers, and manufacturers should also tap into these developing markets as they hold opportunities, he explained.

“Just look at the size of these markets, their growth potential and the increasing household income in the middle-classes,”​ Gale said.

He also pointed out a need for manufacturers to look to online distribution throughout Asia as the medium is slowly but surely experiencing growth.

There is a lot of investment going into building online relationships and conversation about products and this should not be ignored by manufacturers working with or within Asia, he said.

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