Emerging snack markets in India, China, Indonesia
Snacks as a category are rapidly growing in popularity within the Asia Pacific region, driven by consumer trends such as a preference for convenience and GDP growth.
Within this region, snacking giant Mondelez has identified the markets in India, China and South East Asia, especially Indonesia, as those with the most significant potential for growth moving forward into 2020, making these very significant emerging markets for the company.
“We see India, China and South East Asia countries as developing markets that are growth engines for our business in the Asia Pacific, Middle East, and Africa region,” Mondelez International AMEA Executive VP and President Maurizio Brusadelli told FoodNavigator-Asia.
“We see 80% of our global growth coming from developing markets in the next five to 10 years. [In the region as a whole], the total snacking category [is estimated] to be US$600bn - and that presents lots of opportunities for us to grow in our current categories in [these] developing markets.”
“[There are several ways we could do this] - it could be the distribution of our brands in different channels or in new cities, building brands – either local or global – and connecting to local cultures through local adaptions of global brands, with country-centric bundles and flavours or renewed investment in local favourites.”
Based on Mondelez’s recently released State of Snacking report, on the whole the majority of adult consumers in India (73%), Indonesia (75%) and China (80%) prefer small meals/quick-on-the-go options, driven by evolving needs and lifestyles.
“Snacking habits are growing and are highly correlated to GDP growth. As GDP rises in [these] developing markets, so does per capita consumption of snacks and we see that snacking is outpacing other food categories in developing markets,” Brusadelli added.
“We also see opportunity in connecting brands to local events like the 11.11 Singles’ day in China and SEA, and festive gifting for occasions like mid-Autumn, Chinese New Year, Ramadan, Easter, Christmas, Rakhi, Diwali and more.
“Additionally, there are opportunities for us to participate in categories we aren’t currently in, as markets in this region also have snacking categories that don’t exist in the rest of world.”
He cited various examples of Mondelez snack products that have been localised to meet demands in each country, including Oreo Forbidden City flavours and Stride gum in China, reinvestment in local Indonesian brands Biskuat/Tiger and Jacob’s, as well as Cadbury Silk and Cadbury Dairy Milk 30% less sugar in India.
Vietnam as emerging market for energy drinks
The energy drinks sector has receiving a great deal of attention as of late, especially in South East Asia where progress and modernisation are driving consumer need for ever more energy.
Vietnam has been an especial focal point for both large firms and newer players in the energy drinks market, most likely due to the rapid development taking place in the country.
“Vietnam is what we call an undeveloped or developing market in terms of energy drinks and other beverages, ” energy drink brand Kanguru’s President Asia Pacific David Westall, also previous CEO of Coca-Cola Korea Bottling and Pepsi Cola Bottling Central Asia, told FoodNavigator-Asia.
“All the big companies want to be the first to be there so as to capture consumer awareness and loyalty.”
True enough, Coca-Cola just launched its first self-branded energy drink Coca-Cola Energy in Vietnam earlier this year, making Vietnam only the second South East Asian country (behind Cambodia) to see this launch, beating out other usually more ‘high-profile’ ASEAN nations for new product launches such as Thailand or Singapore.
“We recognise the pace of progress that is happening in Vietnam today. And to keep up with the hustle and bustle of modern life, Vietnamese consumers need a great-tasting dose of energy. The launch of Coca-Cola Energy is our answer to that,” Coca-Cola New Categories Marketing Manager told us.
According to Westall, Kanguru launched its first products into Korea earlier this year, and is eyeing Vietnam as a region of interest, especially with a local convenience chain having ‘expressed interest’. When it does make its entry, some serious competition can likely be expected within the sector.
“The problem for big companies when developing new products [including energy drinks] is that these are expensive and challenging, so they tend not to do it,” he said.
“For example, Coca-Cola Energy [which has been launched in Vietnam] is essentially just Coca-Cola with a minute amount (0.06mg) of guanara in it, then same amounts of sugar etc.
“Small companies like us can do [real new product development], instead of just adding a little bit here and there to existing products like big companies usually do, so such a product is very hard to replicate.
“Kanguru has over 5000 times more guanara than Coca-Cola Energy at 340mg, [which is why we see real opportunity in this market].”
Oceania hemp trend moving to Thailand and China
Within the Asia Pacific region, the popularity of hemp in Oceania has been close to meteoric ever since hemp seeds were approved as a food item in Australia (2017) and New Zealand (2018).
According to hemp product specialist company Trichomia Co-Founder Georgia Branch, the rapid growth that is being seen in Oceania for hemp food is unlikely to slow down any time soon, and she sees potential for several other Asian countries as well.
Trichomia operates two hemp-product companies: FMCG firm Soul Seed which sells snacks, hemp protein and hemp seed oil; as well as Hemple, a cannabinoid-focused company making related products for the wellness space which are exported to markets where these are legal such as the United Kingdom, United States and Europe
“APAC is going to be huge for hemp,” Branch told FoodNavigator-Asia.
“The convenience foods and snacks space is the best place to have hemp foods in at the moment, especially as an introduction to hemp for the uninitiated and to get the word out about its many benefits.
“Globally, the price of hemp is going down as well, and that helps too – as interest in it rises, the commodity prices have dropped, and it is now much more accessible as an ingredient.
From around A$18 (US$12) two years ago when hemp was just legalized as food, Branch says that it has now dropped to hit A$12 (US$8) or A$13 (US$8.8).
“It’s just about two-thirds of what it once was just two years ago, which makes it much more accessible as an ingredient here too,” she said.
Outside of Oceania, Branch sees great potential for Thailand and China.
“In Thailand, CBD has been legalised for medical purposes – and that’s excellent, because it usually starts with medical cannabis before filtering down to other purposes such as for food, so it’s good to see Thailand leading in this area,” she said.
“China has a long tradition of cannabis usage and is already one of the biggest producers of hemp foods worldwide, though not much in terms of market regulations are there yet – you can’t yet buy these off retail store shelves just like that.
“But in terms of emerging potential, China and Hong Kong are big for hemp – the latter even more so for hemp snacks, due to the need for stress relief and high demand for convenient food options.”
That said, she added that what is needed to really get things going in any of these countries is from a brands and marketing angle, especially from big brands.
“It’s about trust – people trust certain brands, and if a certain big brand brings in a hemp range of products, this will change the way it is viewed in the country,” she said.
“The convenience of finding these products is very important too – it will be hard to see growth otherwise.”