It is no secret that factors such as the COVID-19 pandemic as well as the Ukraine-Russia crisis have contributed to rising inflation all over the world, including in the APAC region –
Analytics firm GlobalData has estimated average overall consumer price inflation in the region at 3.6% in 2022, with India leading the pack at 6%.
Food prices have been amongst the most severely hit by this economic situation, not only in developing markets like India but also in developed nations such as Singapore where economic data analytics firm Trading Economics reported food prices have increased by 6.9% year-on-year as of September 2022, with items such as meat (13.9%) and oils (8.4%) hit particularly hard.
Amidst this backdrop, there are several food categories that have emerged to become more popular amongst consumers, with the common them amongst these unsurprisingly being affordability, longer shelf-life and convenience.
“Value purchases are very important to consumers now and they want to get as much value as possible out of their purchases, which would include attributes such as good pricing, high quality and natural ingredients,” flavours and research firm Scentium Marketing Manager Rafael Bonache told the floor at the recent Fi Asia 2022 event in Bangkok, Thailand.
“This is why items such as retailers’ private label are doing increasingly well, as these fit the value perception consumers are looking for such as containing all the basic items they would need combined with the trust they have in the retailer.
“Throughout this, we have seen and are now also seeing some popular food categories emerge during times of inflation, such as frozen foods as these are affordable, taste good, are long-lasting and tend to be more affordable than fresh products.
“These also have the advantage over canned or highly processed products by having less preservatives as well as a large variety of products available including indulgent meal options.”
Another option is dry and canned foods, which is particularly popular amongst consumers looking for convenient ready-to-eat (RTE) options that can just be stored in cupboards at ambient temperatures, or those without the luxury of freezers in their homes.
“Canned goods are known to be very long-lasting and are also very suitable to be purchased in big volumes for stocking up, which is attractive to consumers at this time,” Bonache added.
“There are many types of food segments available from vegetables to meat to dairy and more, and it can cover all the basics required such that a lot of these can be stored for long periods of time [to tide over difficult periods].”
Apart from food for basic survival needs, it is also normal for consumers to demand small enjoyments amidst difficult times – this has manifested in the form of bakery products, a common category associated with enjoyment.
“During the last recession we saw an explosion of cupcakes and other indulgences, which showcases the importance consumers place on the fun factor,” he said.
“These make for convenient, affordable forms of entertainment at home that are already considered a ‘must-have’ food for celebrations, and categories such as cookies are dynamic enough to be able to accommodate constant new innovations in terms of flavours, formats, shapes and so on which keeps things interesting.”
Learning from other recessions
With the fear of a recession looming, Bonache also highlighted examples of developing countries that have already been struggling with inflation for some time, with some food-related learnings made from these.
“Turkey for example has been in an inflationary state since 2018, and saw 80.2% inflation in the 2021 to 2022 period – an obvious trend here was that the people started to buy much larger volumes of FMCG products to stockpile and save costs as much as possible,” he said.
“Dehydrated soups were found to be especially popular due to the stability, shelf-life and being able to be consumed as a complete meal. Artisanal cookies also saw a boom, which emphasizes the need for small indulgences.
“Another good example is Argentina, which economy has been fluctuating for many decades – consumer data has shown that over half the population (66%) is looking for cheaper products, with 63% having stopped buying from big brands in 2016.”