Despite Mayan prophecies and the passing of 2012, the world has yet to end. If anything, people are only living longer and fuller lives and 2013 looks to be an indicator of that. This is especially apparent in the Asia Pacific, as living conditions improve with economic growth and increased urbanisation.
Mortality rates have fallen with better facilities and infrastructure. Instead, consumers are investing much more in their health and turning to nutrition and diet for health maintenance. While this move is partly driven by the growth of an aging population, it is also brought on by greater health awareness.
Such behaviour is typical in the savvy consumer, perpetuated by higher levels of education and the ease of getting information online. With increased knowledge comes greater awareness, which is a core feature of the health conscious individual.
The Urban Shift
As countries experience economic growth, people in the rural areas are shifting to urban ones for more opportunities and access to better infrastructure. This has led to the rapid increase of urban populations worldwide, which according to United Nations (UN) report World Urbanization Prospects, is expected to increase by 72 percent by 2050, from 3.6 billion in 2011 to 6.3 billion in 2050.
UN data further revealed that urban populations in East and Northeast Asia grew from 40.4 percent in 2010 to 50.2 percent in 2010, while Southeast Asia’s increased by 3.8 percent within the same timeframe. A byproduct of economic growth, this trend is going strong and will be seen more in emerging economies than others. For instance, Indonesia’s urban population is expected to increase from 44.9 percent in 2012 to 48.1 percent in 2020.
There are currently 23 megacities (cities with populations of more than 10 million) in the world, with 13 in Asia. However, 22 out of the total 37 megacities expected to be seen in 2050 will be found in Asia, which denotes the high levels of and rate of urban growth in the continent.
In A Meta-Analysis of Global Urban Land Expansion, it was revealed that China and India had an average annual urban expansion growth rate of 7.48 percent and 4.84 percent respectively, as compared to 3.31 in North America and 2.5 in Europe.
In tandem with a growing urbanised population, Asia is experiencing a boom in its middle class that is rapidly expanding along with increased economic strength.
Reports from the Organisation for Economic Co-operation and Development (OECD) have revealed that the size of the middle class may increase from 1.8 billion to 3.2 billion by 2020 and 4.9 billion by 2030. Of which, 85 percent of this growth will come from Asia.
Likewise, about 80 percent of the growth in global spending from US$21 trillion to US$56 trillion by 2030 will be attributed to Asia. China and India are the main contributors to this phenomenon, while countries like Indonesia, Vietnam, Thailand and Malaysia play a significant role too.
"FOODS-ON-THE-GO IS COMING ON QUITE STRONGLY IN THE RECENT YEARS, ESPECIALLY AMONG DEVELOPED COUNTRIES"
Driven By Convenience
Characterised by larger disposable incomes and busier lifestyles, the growing middle class is no longer focused on just fulfilling basic needs, but instead, going beyond that to spend a little more on quality and experience. One result of this is convenience as a trend.
“Foods-on-the-go is coming on quite strongly in the recent years especially among the developed countries. With this, we see lots of quick service eateries and coffee joints serving up quick grabs and bites for the busy yet health-conscious individuals,” said Petrina Lim, course manager of baking and culinary science at Temasek Polytechnic.
According to Datamonitor, demand for convenience stems from a combination of household changes, added time pressures, lack of motivation to cook or the lack of knowledge. Household changes include the decline in nuclear families and the rising number of women joining the workforce while time pressures include skewed work life balances, rising stress levels, and time-saving technology.
The effect of these factors are demonstrated in the results of an Emerging Markets Direct report, which has shown that food and beverage (F&B) expenditure in Singapore has expanded from US$8.3 billion to US$11.4 billion in 2011 due to growth in the female workforce, middle class and an expanding disposable income.
Changes relating to the rise of the female workforce and work life imbalances have also created opportunities in infant nutrition as mothers have less time to engage in activities like breastfeeding. Statistics from the UN have revealed that female employment in Southeast Asia has gone up by at least 12 percent since 2006, as compared to nine percent for males. Meanwhile, China has taken the lead for the milk formula market, which was worth US$12.5 billion in 2012 according to Euromonitor International.
Evolving lifestyle habits will inevitably affect the demand for packaged foods as well. Jakob Thøisen, CEO of Palsgaard has said, “The long shelf baked goods and chocolates are getting bigger in Asia and the growth will continue in 2013. We have seen strong growth in Philippines, Indonesia, Vietnam Thailand, Australia and Pakistan. Consumers in Asia are getting busier and wealthier hence they are looking for packaged foods that are convenient, tasty, and nutritious. Baked goods fit the bill.”
Data from Euromonitor International has also shown that packaged foods are experiencing the fastest growth in places like China (43.72 percent), India (43 percent), Indonesia (40.79 percent), Vietnam (30.34 percent) and Thailand (26.41 percent)—all of which are countries with a growing middle class.
Growth In Healthy Living
Meanwhile, consumers have whetted an appetite for healthier living. This is a lifestyle trend that has affected both food retail and food service sectors as consumers place a greater emphasis on nutrition.
Sharing the results of a survey conducted in Singapore, Ng Seow Ling, MD of Unilever Food Solutions (UFS), said, “More than half of the diners interviewed expressed that they actively look for healthier alternatives when dining out. 83 percent of the people surveyed also revealed that they would order the healthier alternative in a menu if the option was available. Furthermore, 63 percent of respondents pointed out that they would be willing to pay slightly more for the healthier menu option.”
Part of this demand stems from rising affluence and education levels. Data from the UN indicates that the expected duration of education has been steadily increasing each year throughout Asia. A report by Agriculture and Agri-Food Canada has also suggested education as a contributing factor to healthy eating, while other studies have indicated that functional foods consumers are generally more educated.
On another note, the westernisation of diets in Asia is contributing to higher incidences of obesity and subsequent co-morbid conditions like type 2 diabetes. It was revealed at the Worlds of Healthy Flavors Asia 2012 that Asians have a higher predisposition to diabetes.
To which, Dr Chia Kee Seng, professor at the National University of Singapore announced that every one in two Singaporeans will be afflicted with diabetes by age 70, and could become an endemic that affects up to one million people by 2050. Likewise, the World Health Organization (WHO) has dubbed India as the diabetic capital of the world.
In response to these problems, governments are taking action to prevent or reduce the rates of chronic diseases. Some of the solutions are focused on regulations and facilitating consumer demand for healthier options.
For instance, Singapore’s Health Promotion Board has rolled out hawker centres with healthier choices that use whole grains, less oil and less sodium than its regular counterparts. Supermarket NTUC FairPrice has also been retailing healthier options such as brown rice noodles and low sodium fishballs under the Sakura brand.
JOINT PROBLEMS AND SMALLER APPETITES IN THE ELDERLY COULD AFFECT PACKAGE SIZES
The growing prevalence of ageing populations throughout Asia is another pillar contributing to greater health awareness among consumers. While the percentage of elderly population in Southeast Asia was 5.8 percent in 2012, it is expected to be 27.9 percent by 2050.
This particular group has a significant effect on the global food industry due to high disposable incomes and an active interest in advancing health. It is a low volume but high value market that is willing to pay premium prices for benefits. “With longer life expectancy, ageing population worldwide and low birth rates, providing healthful alternatives to our diets becomes paramount in the years to come,” said Ms Lim.
As such, opportunities abound for the functional food and supplements sections, especially when consumers are turning to healthy diets for disease prevention in the light of escalating healthcare costs. This includes, for instance, dairy products and premixes which are aimed at tackling conditions that occur more with age (eg: osteoporosis, digestive health).
Catering to the elderly affects packaging trends as well. Joint problems are not uncommon, and people tend to gain smaller appetites as they get older. This in turn, could lead to trends involving package sizes and types, such as the development of smaller packages or the inclusion of easy-to-open and re-sealable packages.
Adding Less & Providing More
The global functional foods market is one of the fastest growing segments as it serves the needs that have arisen out of growing urbanisation and increased health awareness.
According to Dr Amy Khor, Singapore’s minister of state for health, “By 2014, the global market for functional foods is forecast to grow by 23 percent to $38 billion, with Asia Pacific accounting for 40 percent of the total market share. Rapidly emerging markets include Australia, China, South Korea, Taiwan, the Philippines and Malaysia which have large export potential.”
This is also likely to trend in places like Japan, Singapore and Hong Kong which have huge ageing populations. Japan for instance, has already established a very strong probiotic culture. Other examples include tofu that has been fortified with omega fatty acids, or cereal with prebiotics.
Lu Ann Williams, head of research for Innova Market Insights, has revealed some notable areas to focus on, which include boosting metabolism, vision, bone health, joints and mobility, cognition, as well as immunity and heart health.
Consumers in Asia are no strangers to using food for regulating health. A joint study by the Institute for Medical Research and the Institute for Health System Research has also shown that biologically-based TCAM, which includes herbal therapy, was used by 88.9 percent of the Malaysian population for health problems, while 87.3 percent used it for health maintenance.
The strong culture with traditional and complementary medicine (TCAM) is an avenue that holds potential. Consumers are aware that certain kinds of food/herbs contain health benefits; turmeric, wolfberries, Chinese dates, ginseng and Chinese yam are all regular visitors to the Asian palate and lauded for their properties. Understanding this mentality is Coreen Wong, who opened Dough & Grains, Singapore’s first traditional Chinese medicine bakery.
Fortification aside, better-for-you foods have and will continue to gain traction in the chase for healthy living. This includes alternatives that utilise healthier options, such as salt that cuts down on sodium by replacing it with potassium, or cereal and starchy staples like noodles that make use of whole grains rather than refined grains. UFS has also taken to reducing the salt content in their bouillon cubes.
Automated For Efficiency
When Asia’s economies develop, consumer demand follows suit. Manufacturers have to ensure that their existing processes allow them to fulfil orders in an efficient manner.
To increase their throughput, manufacturers have been turning to automation as a solution. According to a report by the International Federation of Robots (IFR), Asia Pacific is the biggest market for industrial robots. In particular, robots to South and East Asia were up by 41 percent.
Mr Thøisen said that automation will be the growing trend among food suppliers in manufacturers in Asia as its helps to increase production efficiency and productivity, which is the only way of coping with high consumer demand.
Elaborating on the advantages of automised processes, Shermine Gotfredsen, business development manager at Universal Robots, said, “The prevalence of automation in Asia's F&B industry has become more dominant over these years with more manufacturers trying to stay competitive in the market. This is especially so for fast-moving consumer goods where costs for raw materials used in the production is very volatile, giving high possible risks to manufacturers in suffering from low profit margins. Therefore, using technologies to improve product quality and reduce operational costs will be a strong emphasis for F&B manufacturers over the next 5 years.”
This becomes even more important when the ASEAN Economic Community comes into effect, as manufacturers will be competing with counterparts throughout the region instead of just their home country.
Japan and South Korea may have been early adopters and advocates of automation, but it is countries like China and Thailand that manufacturers should look out for. China is currently facing rising labour costs, and automation serves as a solution in that area. Meanwhile, “reports have shown that Thailand is currently the most promising market for adopting robotic solutions to automate their manufacturing process,” said Ms Gotfredsen.
With higher incomes, consumers are less price-sensitive and willing to pay more for added value. This includes Corporate Social Responsibility (CSR), which represent voluntary initiatives by firms that benefit society.
The 2010 Annual Corporate Social Responsibility Perceptions Survey by PennSchoen Berland, Landor Associates, and Burson-Marsteller showed that consumers prioritise social responsibility across business sectors, and revealed that 70 percent of the respondents were willing to pay more for products from a socially responsible company.
We are likely to see the continued adoption of CSR by companies, especially as it confers additional benefits like enhanced consumer trust, better branding and possibly reduced costs as well. “CSR is very much viable and in Asia as it is in other parts of the world as it is becoming more and more of a global trend,” said Mr Thøisen. He added that his company’s goal of being CO2 neutral by 2020 resulted in not only positive branding, but also made for good business as they could save on energy costs.
Other ethical practices in food production involve food sources, such as supporting local markets or fair trade, collection methods, employment, organic food, food safety, and green processes that include carbon footprints and green packaging (eg: compostable, recyclable). For instance, companies might opt for flat pack packaging so that more can be stored or transported at one go, which leads to energy savings (using less fuel) as well as transportation costs (making less trips).
More often than not, a focus on environmental concerns will also lead to time and/or cost savings during the manufacturing process. For instance, Walmart initiative to reduce packaging used on toys resulted in not just material savings, but also that of transportation.
In addition, CSR doubles up as a form of self-regulation, which helps to pre-empt future regulations put in place by governments. One prime example would be providing more informative labels before it is actually made mandatory, or keeping away from unhealthy food in children’s advertising.
While markets in Europe and North America are slowing down due to the economy, the same segments in Asia are only beginning to prosper as the middle class rises, spurring developments in the way companies source, produce, market and sell their products.