Asia Pulse - Q1 2023
The first edition of Asia Pulse for the year 2023 is here.
In the first quarter of 2023, the FMCG sector in Asia experienced a healthy growth rate of 2.8%, higher by 0.4 points from the same period the year before. Despite various challenges, such as supply chain disruptions and market uncertainties, the industry demonstrated resilience and a positive trajectory.
In this latest report, we capture the highlights of the in-home FMCG market in the region as a whole and market by market as follows:
- Chinese Mainland
Interest commerce, O2O thrived with proximity channels, while mainstream offline channels - hyper & large super- wereimpacted by logistic disruptions. The fast growth of O2O and the interest in e-commerce benefit the “Local” retail eco-system and fulfil the rising instant purchase needs.
As the pandemic gradually subsided, consumer demand for FMCG turned flat, with a year-on-year growth rate of 2.6% in the first quarter of 2023. Both the food and non-food sectors saw a slowdown in growth.
To beat the inflationary pressure, Indian consumers downsize their spending per trip across all purchase channels. As FMCG prices hike, HHs cut down on their volumes across categories like jams, ketchup, butter/ cheese, talcum powder, hair oils, floor cleaners etc.
- South Korea
Drinking carbonated drinks has been considered one of the biggest enemies of health care. Demand for ‘zero sugar’ drinks is gradually increasing in Korea with the ‘Healthy Pleasure’ trend. Consumers try to care for their health and pursue pleasure simultaneously, even when drinking beverages.
- United Arab Emirates
Hypermarkets adapt well to shopper behaviour shifts, while promotions seem less effective. Significant potential for growth exists in UAE online shopping, particularly among higher SEC and Emiratis.
Steady growth in consumer spending was also seen this quarter vs last year, with more spending for FMCG, transport, and fashion, as might be attributed to this year’s festive season.
With increased mobility, offline channels are seeing recovery driven by more occasions, while Internet dropped significantly. Proximity channels remain vital and resilient during these times –key channels for shoppers to pick up smaller quantities with lower spending.
For in-home FMCG, convenience stores continued to grow in 2023, as consumers continued to shop through this channel due to its proximity, attractive promotions, and convenience. On the other hand, local channels experienced a decline due to the lack of government support programs during the COVID period.
The Philippine economy continues to grow, but growth is slower than the previous quarter, coinciding with higher inflation (7.6%) in March 2023. However, the inflation rate is softening, but despite the improvement, shoppers are expected to remain cautious of their spending.
Beverages and Personal Care are driving the stronger growth of FMCG value in Q1 this year. The comeback of celebratory categories this Tet 2023 period boosts the performance of the entire Beverages sector, mainly thanks to Soft Drinks, Coffee & Beer.
Keep yourself informed about the most recent developments and knowledge in the FMCG sector in Asia by exploring the latest issue of Asia Pulse using the download button in this page’s upper section.
Note: The Asia Pulse Q1 2023 has excluded Saudi Arabia due to local panel enhancement.