Cambodia is among the fastest growing economies in the world, averaging more than 7% annual growth for more than a decade, and has a growing middle class.
“It is a transformative and opportune time for food businesses, brands and products in Cambodia,” Nguon said.
Moreover, the country has a young population, half of which are below 25 and are tech-savvy and active on social media, with an increasing awareness of the world.
Its borders are also opening up, trade is increasing, and there are many more products in the market today.
Nguon said Cambodians are excited about brands and shopping, and brands are “signifiers of success”.
“These products and brands represent a connection to the wider world, the promise of a successful and prosperous future,” he explained.
Yet, tastes, preferences and habits are forming, and changing rapidly.
The young population is also driving new product preferences: Guiding habit formation, influencing adoption of branded products by their parents, or even teaching them about products new to Cambodia and how to use them.
He said product opportunities currently exist at all levels, from luxury to mass market.
According to a 2015 Cambodia Socio-Economic Survey by the National Institute of Statistics of the Ministry of Planning, national consumer household expenditure is also expected to almost double by 2030. This is a big opportunity for brands.
Food and non-alcoholic drinks was the largest category by far, making up 44% of expenditure in 2014.
Food and beverage sectors
Nguon said Asian firms have already arrived in the country and have begun to build a preference for their brands. These include Malaysia’s Julie’s biscuits, the Philippines’ Universal Robina Corporation snacks and candies, and Indonesia’s Indofoods bringing in a large variety of food and beverage products.
He cited Indomie dry instant noodles as being highly popular in Cambodia.
Imported packaged foods are undoubtedly growing rapidly in the country, with a high potential for continued future growth.
According to Nguon, changing lifestyles of Cambodians have led to changes in their eating habits, which in turn have led to greater demand for imported food and “an explosion” of new choices.
“Companies that enter the market now will benefit from the ability to shape preference, seize mindshare and establish loyalty,” said Nguon.
Categories that show high growth include dairy products (both mass and premium segments), baby food and prepared meals for children, and convenience and grab-and-go foods.
Meanwhile, Cambodia’s beverage sector is large and growing, with many opportunities for companies to compete with existing local and global brands.
While established, Nguon said there are opportunities for new competitors, especially with the expansion of supermarkets (such as Japanese chain AEON), convenience stores and mini-marts.
“Brands of fruit juices or other beverages could be in a position for more rapid market adoption by effective marketing and promotion of their unique properties and point of origin, such as from the EU or the US,” he said.
Furthermore, wines and spirits brands will find already well established distribution channels, and can build local market share based on this existing infrastructure. For some time now, French Bordeaux wines have been seen as a status symbol in the country.
Nguon said significant opportunities exist in the range of fast food or drink options, from hamburgers to coffee shops to mid-range restaurant franchise chains.
Opportunities and challenges
Nguon said, in the country, there are now many potential business opportunities in agribusiness and food processing, fast food franchises, and in pharmaceuticals.
The country’s market also has some distinct advantages over other countries in ASEAN. For instance, foreigners can own a company without a local joint venture partner, and the government welcomes foreign investment.
Other things that Cambodia offers investors include investor-focused policies such as a tax exemption for up to nine years; one of the lowest corporate tax rates in ASEAN; government-created Special Economic Zones or manufacturing areas with improved access to ministries to facilitate regulatory compliance and logistics for the importing of goods; and easy foreign currency remittances with no restrictions on foreign exchange.
One important thing to note, said Nguon, is, like in many Asian countries, business relationships in Cambodia are built on personal connections. When attempting to enter the market, it is important to approach potential partners through a trusted connection.
There are also a few challenges such as weak law enforcement, high-energy costs, infrastructure being still under development and a skills gap, where the vocational readiness of employees may be questioned.
As such, Nguon said, companies should be prepared to be hands-on, and plan to provide training and support for local teams.