Dairy and snacks present major growth opportunities, but Chinese brands must localise to compete with dominant incumbents.
“Chinese brands remain significantly underrepresented across several consumer sectors in South East Asia, highlighting substantial untapped potential for market disruption,” said Emil Fazira, APAC Insight Manager for Food at data analytics firm Euromonitor International.
Chinese brands currently account for less than 5% of the packaged food market in South East Asia, according to Euromonitor.
“South East Asia’s packaged food market, projected to be APAC’s fastest-growing region, requires a strategic blend of localisation and agility,” Fazira said.
Chinese brands like Mengniu and Yili have gained ground by adapting products – from probiotic beverages to value-positioned ice cream – while leveraging local distribution.
Yet, incumbents like Nestlé, Unilever, Indofood and Mayora retain dominance through continuous innovation and strategic partnerships, said Fazira.
To successfully penetrate Southeast Asia’s dynamic food industry, companies must adopt tailored strategies that resonate with regional preferences while navigating diverse and highly competitive landscapes.
Successful localisation goes beyond flavour – it also requires deep understanding of consumer preferences and retail dynamics.
Yili: Localised ice cream strategy boosts market share
Dairy giant Yili has product offerings spanning various categories including yoghurt, cheese, and ready-to-drink tea.
The firm entered Indonesia’s ice cream market in 2018 and managed to capture 5% of the local market share by 2024 – a notable achievement given the fragmented landscape and strong incumbents, said Fazira.
“Yili achieved this by localising its distribution strategy to suit Indonesia’s grocery-dominated market, partnering with retailers to install freezers, while also launching value-added dairy products to overcome lingering consumer scepticism toward Chinese-made pure milk,” noted Fazira.
Yili also consolidates its market presence via mergers and acquisitions.
The firm acquired ice cream brand Cremo, part of the Thai company Chomthana, in December 2018. It implemented digital upgrades and improved product quality, while leveraging Cremo’s existing market reach.
Similar strategies are also employed by Chinese brand Mengniu – a fierce rival of Yili that is also venturing into the snack market.
Mengniu’s Aice acquisition fast-tracks SEA expansion
In 2021, Mengniu acquired Singapore brand Aice, which is well known for its ice cream products across South East Asia.
Mengniu saw Aice’s remarkable growth potential, as it outpaced industry giants like Paddle Pop, Cornetto, and Campina between 2017–2019, said Fazira.
Aice’s strategy is to combine retail distribution with foodservice kiosks offering frozen desserts and beverages.
It also offers local flavours and ingredients, such as ube, or purple yam, in the Philippines.
This made Aice the market leader in Indonesia with 24% market share in 2024.
It also achieved rapid penetration into the Philippines, where its largest factory is located.
These developments show how localisation can give Chinese brands a competitive edge in South East Asia – especially as growth slows in more mature markets like China, Japan, and South Korea.
South East Asia a growth hotspot for packaged foods
According to Statista and Asian Development Bank, the Asia Pacific region is experiencing a mixed economic outlook, with South East Asia and South Asia experiencing strong growth while others, like East Asia, are facing slower growth rates.
The packaged food market in the South East Asia, however, is seeing stronger growth.
South East Asia offers growth potential across categories
Retail value sales 2024–2029 CAGR
For dairy products and alternatives, South East Asia is projected to see a 4% growth compared to South Korea, which did not even hit 0.5% growth; in China and Japan, the sector is forecast to see negative growth.
For snacks and staple foods, South East Asia is projected to see 4– 6% growth, compared to 0.5–2.1% for the East Asian regions.
Source: Euromonitor International, Passport Cooking Ingredients and Meals, Dairy Products and Alternatives, Snacks, Staple Foods, Soft Drinks and Hot Drinks 2025
Competing with entrenched multinationals won’t be easy – these firms enjoy strong brand equity, meaning they are trusted and can command higher prices.
They can therefore command higher prices for their products and services. At the same time, they can also leverage on their extensive capabilities, and deep local expertise to dominate the market, said Fazira.
“A localisation strategy through M&A is essential for success in South East Asia. Partnering with or acquiring fast-growing brands – particularly those with strong local equity – allows companies to rapidly establish a foothold, build credibility and create a scalable foundation for regional expansion.
“By leveraging proven local expertise, firms can make smarter market-entry decisions while accelerating growth in this dynamic and diverse market,” concluded Fazira.
