Local players gain ground on global brands in Asia’s cooling market

By RJ Whitehead

- Last updated on GMT

Local players gain ground on global brands in Asia’s cooling market

Related tags Marketing

Kantar Worldpanel has released what it claims to be the first report to chart the shift in the competitive landscape of Asia’s FMCG market, where local brands are asserting their dominance over their global rivals. 

For the authoritative study, he consumer intelligence analyst interviewed chief executives of 11 homegrown giants in its analysis of nine Asian countries. It also combines insight from a number of sources, including data on 5,200 Asian brands.

While the rise in FMCG consumption across Asian markets has been slowing, to the point that it has more than halved from 10% in 2012/13 to 4.6% in 2014/15, local brands now attract 74% of total FMCG spend. They have also grown their sales by 8% in the last year compared to 4% for global brands, the report said. 

It also found that brands which grew gained on average 685,000 new shoppers over the year, while those with declining sales lost 628,000 shoppers, indicating that increasing reach and penetration has had a direct impact on sales growth.

Ten Asian brands have grown their penetration the most within their home market in the last year, gaining an average of 5.4m new shoppers. In second place on Kantar’s cross-industry list, Indonesia’s Garuda brand, which focuses on snacks and biscuits, leads the food industry pack, with 7.6m new shoppers gained in 2014.

Garuda is followed by Teh Pucuk Haram and Teh Galas, both Indonesian ready-to-drink tea brands, in third and fourth place on the list. China’s Bright Group dairy major, and Tata of India, which markets salt, tea and spices, also appear in the top 10 with 5.4m and 4.7m new shoppers respectively gained in 2014.

Kantar found that the power of local brands was strongest in the food and beverages category, which has claimed 85% of the Asian market through their ability to cater to the local palate. 

 In Korea, local brands claimed 92% of the FMCG market—the highest in all of Asia.

However, Asia’s FMCG slowdown has been felt most acutely in China, where growth declined by one-third from 15.8% in 2011/12 to 5.4% today. China is still responsible for 75% of total FMCG growth in the Asia region, however. 

There, consumers’ spend on local brands increased by 7% in the last year, compared with 3% for global brands. Seventy per cent of local FMCG players have been growing their sales, compared to 50% of the global brands operating in the country. 

In terms of penetration, 44% of Chinese brands increased their shopper base in the last year, compared to 33% of global brands operating in the market.

Analysis found that the dominant Asian players had five common denominators that formed the backbone to their regional success.

Such companies were “masters of metamorphosis”, Kantar said, meaning that the most successful companies were capable of moving from being led by manufacturing to being brand-led. They evolved along with consumers and expanded beyond their country of origin, it found.

They also have sense a purpose, and play an active role in society by “respecting and caring for consumers, helping to improve lives and democratising categories”.

The most successful companies also bring world-class innovation with a local twist, and apply digital technologies to connect with consumers on an emotional level. Those which lead by data and ongoing market research that provides unbiased, actionable consumer insights, will also do well.

There are 4.4bn consumers in Asia. The more of them brands can win as customers, the closer they’ll get to winning the battle for dominance in the FMCG market​,” said Marcy Kou, Kantar Worldpanel’s Asia chief executive, said.. 

Local players are currently winning the game, and we’ve examined the journeys of those that have achieved the most significant sales growth and household penetration in their respective markets​.”

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