The consumer goods industry in APAC is complex and diverse, with some markets rapidly growing. The pandemic has intensified this complexity, resulting in a number of market trends including shifting brand loyalty, a rise in sales of health foods, and a shift to online spending and shopping locally as movement is restricted.
Some markets in Asia are rapidly growing and others contracting. This may be due to population expansion, such as in China, when combined with India accounts for 37% of the world’s over 65’s. Conversely in Singapore, the FMCG market is declining by 0.5% each year due to changes in consumer behaviour. Disparity in the region is further illustrated through drastically different routes to market, with modern trade accounting for 90% of sales in Singapore verses only 15% in Vietnam and Indonesia. Furthermore, consumer behaviours and trends differs across markets, with loyalty to local brands prevalent in China, accounting for 98% of market share growth.
So revenue growth management is more important than ever, but CPG companies will need to respond rapidly to the pandemic in order to protect organisations and plan ahead for future phases to come.
Covid has had a huge impact on the consumer goods landscape. What are the recent market trends?
Shifting brand loyalty
There’s been lots of reporting around brand loyalty – certain brands have won over new sets of consumers as new loyalties have been formed and old loyalties broken. Particularly when availability has been scarce, some brands have lost out due to lack of availability, and substitute products have been bought.
Increased demand for more nutritious foods
The wellbeing industry has grown rapidly throughout lockdown – as lifestyle restrictions and the threat of a pandemic prompt an increased awareness of maintaining our physical and mental health. This has resulted in a rise in the demand for nutritious foods and supplements.
Rapid growth in online spending
Both in terms of ecommerce and digital penetration, Covid has resulted in a massive growth of online spending. The industry has seen a rise in ecommerce platforms and the adoption of new apps as households seek to order their groceries online.
Value has become the key purchase driver
Restrictions on movement and the lack of accessibility to premium stores meant that luxury categories suffered during lockdown, particularly during the early lockdown phase. As future phases set in, luxury brands must plan and prepare for store penetration where possible.
Growth in new distribution channels
Through the pandemic we’ve seen innovation as businesses diversify the ways they get products into the hands of their consumers, for example Grab food and Uber eats.
Increased demand for local
Through the restriction of movement, we’ve seen a resurgence of the local neighbourhood as people shop in their nearby stores and supermarkets. Metropolitan societies, have seen a significant ‘rebasing’ through reduced commuting.
Pending economic downturn
Where brand owners have seen success and growth during the lockdown phase, many are threatened as fiscal support measures unwind when governments around the world relax their support.
So what does this mean for revenue management? Responding to consumer behaviors and laying the groundwork for the next phase is crucial:
1. Harness the growth of digital – CPGs must be agile and look to repurpose their investment to maximize potential
2. Analyze your profit mix – Gaining insight into winning channel mix and pack formats is key to informing a strategy for success
3. Reassess channel and customer mix – Look at your channel pack solutions and the right occasions
4. Optimize your portfolio – Review your whole portfolio critically and increase focus on the key products that are going to drive your growth in the new world, e.g. affordable luxuries
5. Gain visibility of trade spend – analyze your ROI and make every penny count!
6. Keep forecasting – Ensure you have a contingency plan in place and continuity of supply
So, remember that the fundamentals of revenue management remain, but you’ll need to adapt quickly to consumer trends that the crisis presents. If you would like to discuss any of the following topics with us, get in touch with the Acumen team at email@example.com for more information about how we could work together.