Industry and Market opportunities 

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The Asia Pacific food and beverage industry has achieved a turnover of US$3.23 trillion in 2016 after growing to almost the same level as the rest of the world combined. The industry outpaced the second and third largest regions, Western Europe and North America, which have seen relatively modest expansion rates of two percent and four percent, respectively. China, Japan, and Indonesia are set to rank as the leading food and beverage producers in Asia Pacific, together accounting for just over three quarters of total turnover. Although the countries in Asia Pacific are highly diverse in terms of income levels, demographics, and dietary preferences, the industry is nevertheless shaped by several common trends.

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Asia’s Food Drivers: Rice, Oil And Meat

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The three key food categories of Asia Pacific’s US$3.23 trillion food industry turnover in 2016, have been, namely grain mill products, oils and fats, and meat and meat products. Asia Pacific will continue to be the largest global consumer of oils and fats, as Asian consumers’ taste for fried food and thus demand for cooking oils and fats is showing no signs of stopping. Moreover, Asian countries will rank amidst the leading global suppliers of vegetable oils.

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Southeast Asian countries, such as Malaysia and Indonesia, will continue to invest in the renewal of palm tree varieties in order to improve yields of the world’s most popular vegetable oil, both for domestic use and for exports. Meat and meat products will rank as the third largest food category in value terms. Despite high variance in meat consumption among Asian countries, the region as a whole will post double-digit expansion in turnover and rank as the largest producer in the world. The production of and demand for meat products will be driven by growing disposable income and the popularity of Asian fast food. Not far behind these three is also the ready meals that includes spices, coffee, and tea, which have already account for a 12 percent share of the food industry turnover in 2016. Production of ready meals and soups will enjoy robust growth in line with increasingly busy lifestyles in metropolitan areas. Ready-to-eat and ready-to-cook meals will benefit from particularly robust growth in Asia Pacific’s developed countries, including Singapore and South Korea, where working hours are long, time for cooking is scarce, and eating on-the-go while commuting or at the desk is commonplace.

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Healthy Drinks And Booze Govern Beverage Growth

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Asia Pacific beverage turnover has reached US$365 billion in 2016. In value terms, alcoholic and non-alcoholic drinks account for nearly equal shares of the industry. Soft drinks expansion will be shaped largely by the health and wellness trend, which will see bottled water, juice, ready-to-drink (RTD) tea and sports and energy drinks combined account for more than three quarters of domestic volume sales. For Asians, functional beverages are an affordable, convenient, and trendy way to take nutritional supplements. Functional beverages are present in a variety of forms in order to cater to differences in taste between countries, although the most popular forms across Asia Pacific are energy drinks and RTD teas.  

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Bottled water is expected to capture 22 percent of the total soft drinks turnover value in the next years. Key drivers of expansion will be perception of bottled water as a healthy alternative to carbonated soft drinks and a substitute for tap water in heavily polluted metropolitan areas. On the supply side, bottled water turnover growth will be fuelled by build-up of production capacity and tapping of new water resources. For example, the glaciers in the Tibet Autonomous Region has already became a target for numerous bottled water producers due to abundance of cheap, clean, and therefore premium-priced water. 

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Turnover of the alcoholic beverages industry have seen double-digit growth in 2016, as the region’s vast population is continuing to develop a taste for alcohol, in turn encouraging major alcohol producers to build up their capacity. Spirits will account for one third of total beverages’ industry turnover with premium brown spirits, such as whiskies. The domestic beer industry is expected to be just half the size due to the strong popularity of imported beer in Asia Pacific. Per capita alcohol consumption in Asia Pacific will remain significantly below that observed in Europe with international alcohol manufacturers viewing the differential as an opportunity for growth. Alcoholic beverages producers will have to supply an increasingly broad range of products in order to remain competitive, as Asian consumers will require a variety of beers, wines, and cocktails for different occasions and to meet different flavours. Nearly half of alcohol consumption will take place at bars, restaurants, hotels, and other venues, where domestic producers will continue to struggle with foreign competitors—the premium segment will be comprised of imported rather than domestic drinks. At the same time, expansion will be limited by government constraints on alcohol consumption. 

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Other Factors Shaping Food And Beverage Consumption

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The health and wellness trend will stimulate producers into innovating across the supply chain—from processing to packaging—in order to provide healthier, tastier, and more attractive food. Asian consumers will be increasingly concerned about the origin and contents of the products they purchase. Moreover, consumers will be willing to purchase more expensive products, such as organic foods, at least occasionally. An increase in spending will be more notable among high-income consumers, who will be more willing to splurge on premium food and beverage products in order to spend less on health care in the future. Increasingly busy lifestyles will be a tailwind for fast food for which domestic players will reap the benefits as Westernisation in foodservice fades. Western fast food expansion will be driven by Asian fast food. Throughout Asia Pacific, domestic fast food chains, including small-scale local chains, will expand and attract consumers by offering high quality fast food and will target suburban areas ignored by multinational fast food chains. Trendsetters and influencers will be increasingly important and shape not just foodservice, but also grocery shopping trends. Moreover, social media will enjoy a growing role as consumers are posting pictures of their food online to reinforce social status. In turn, food producers will have to manage brand image and invest heavily in marketing. This trend will be particularly strong in Asia Pacific’s largest market—China— where surveys suggest nearly half the respondents share pictures of their food online on a regular basis, and nearly three quarters admit they are susceptible to celebrity endorsement when buying groceries or choosing a restaurant. Despite growing demand for healthy food and premium beverage products, consumers in Asia Pacific will be price-sensitive as the region’s economic growth is likely to slow down. Therefore, producers will have to find ways to deliver high quality products at affordable prices.