APAC’s food and beverage acceleration: Five developments for Chinese firms to tap into

 

The broader Asia-Pacific and Middle East regions contain a host of opportunities for Chinese food, beverage and nutrition brands, but navigating the complexities of multiple markets, with different consumer trends, regulatory environments and economic conditions can be a challenge.

At FoodNavigator-Asia and NutraIngredients-Asia, we report the region’s food, beverage and nutrition industries each day, and here are five of the most pressing recent developments that we think brands from China, and further afield, need to know about the APAC market.

1. Salt hits the sweet spot for brands in APAC

Asia Pacific has emerged as a global leader in salty snacking markets and innovation, claiming four of the top five spots for salty snacks product launches last year. Data from the Mintel Global New Products Database (GNPD) has revealed that China, India, Indonesia and Japan ranked first, third, fourth and fifth respectively in term of salty snacking product launches in 2018. 

The Asia Pacific region launched some 58% of all chocolate-flavoured salty snacks globally – also beating its closest competitors in the EMEA region (19%) and North America (10%) by a wide margin.  Numbers attributed to this trend came from Japan in particular, with 12% of chocolate-flavoured salty snacks coming from the country overall, beating the United States by about 4%.

2. Functional beverages propelling growth in Japan

Healthy drinks and functional products are driving growth in Japan’s soft drinks market. According to the Nikkei Shimbun, the total size of the soft drink market is now ¥5.16 trillion (up 0.5% YOY), and in 2018, the market was forecast to hit ¥5.18 trillion (up 0.4% YOY). 

Sugarless drinks and mineral water are also showing steady growth, while jelly drinks and vegetable juices, both with high nutritional benefits, are also expected to soar. For example, Meiji launched Sokko Genki Jelly nationwide in September 2018. It concentrates 11 vitamins and four minerals into a single drink, at high added concentrations. These are niacin, pantothenic acid, vitamins A, B1, B2, B6, B12, C, D, E, and folic acid, and 4 mineral types, zinc, iron, copper, and selenium.

In terms of hot drinks, speciality coffee only accounts for around 6% of the market, but demand is quickly growing. According to a recent data announced by the Specialty Coffee Association of Japan, 55% of their members who are roasters, wholesalers, retailers, cafés, or importers reported growing sales over the past three years.

3. Connected packaging gathering momentum

It’s not just in China where connected packaging is booming, it’s also rapidly taking off in Korea and Japan with QR codes, augmented reality and RFID becoming more common. These advances are being used to educate consumers about ingredients or traceability, and entertain through access to content and competitions.

In terms of categories, snack foods were noted to be one of the most frequent adopters of connected packaging within the F&B industry, according to Mintel. Growth of the connected packaging trend within the F&B industry is expected to grow even further moving forward not only on the consumer end, but also in production and manufacturing.

4. The Middle East is becoming a major play for health products

The Middle East has been predicted to lead the global health and wellness packaged food market growth over the next five years. MENA beat out its closest competitor sub-saharan Africa (8.8%) by just 1.1% with a predicted growth rate of 9.9%, but in terms of absolute value analysts predicted that MENA will be worth three times more by 2023 at US$31.5bn as opposed to the latter’s US$10.7bn. This can partly be attributed to an expanding middle class ‘who, with a higher income, are more likely to spend on health and wellness products that are often priced higher than more conventional packaged food’.

In relation to this, modern retailers in the region have invested in private label premium lines to tackle growing consumer demand for more economical healthy food options. An example was Carrefour, which developed a ‘Healthy Kitchen Section’ in a number of UAE outlets providing  various organic packaged food items.

5. Health claims could be tightened up in Singapore

Health officials could be set to tighten up health claims in Singapore, which would be a blow to many brands which have benefitted from a light regulatory regime to date. The authorities have issued a tender calling for a third party to conduct research into Singapore's regulatory landscape in order to assess where it might be lacking when it comes to health claims. They are concerned that there are some products falling between the food and complementary health product categories, and are referred to as 'grey area' products. These include tea containing diuretics and laxatives, and drinks that claim to support liver function or maintain blood glucose.

 

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