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Oct 18, 2023

Opportunities Positioning Premium Food in Asia

The annual inflation rate for Asia Pacific in 2023 is 4%. Compared to 15% in

The annual inflation rate for Asia Pacific in 2023 is 4%. Compared to 15% in Latin America and 14% in Middle East and Africa, the rate in Asia is much softer. As such, a cautious approach to premium positioning could help companies siphon value-driven sales growth in rapidly growing emerging markets. To do so, identifying the right premium attributes is essential, considering the target consumer's income range and their price sensitivities, as well as the category environment.

Traditionally, own-brand products from major retailers like supermarkets are not known for their quality, as consumers link their economical prices to a lower standard. However, private label has innovated and expanded aggressively in markets like Hong Kong and Singapore, with a number of supermarket private label brands touting good quality while keeping prices low.

A key example is DFI Retail Group, which launched its private label brand, Meadows, in 2019. The range spanned over 65 categories in Hong Kong and later in other Asian markets. Meadows stood out as it received overall positive feedback in terms of product range and quality compared to other existing private label brands. Its initiatives included launching new made-in-Japan snacks at low prices, helping its swift success over the last few years.

In value-added categories, consumers have more choices as more brands enter the market. One major example is ready meals. In Singapore, the category has attracted not only private label brands but also SMEs and foodservice players. Pastamania (a pizza limited-service restaurant) launched frozen lasagne in supermarkets, an upgrade from the typical ready meals available on retail shelves, yet relatively cheaper than full meals at restaurants.

Source: Euromonitor International

Price sensitivity has also affected brand loyalty. As such, manufacturers have taken steps to review their product portfolios, rebrand and reassess their product offerings to consumers.

Considering Homeplus in South Korea, for instance. The company first focused on improving its existing product line before rolling out complementary services (in this case, same-day delivery, which saw strong demand during the pandemic). From there, it adjusted pack sizes, and then finally reviewed SKUs to better focus on well-performing products – specifically, affordable home meal replacement products that are both nutritious and easy to prepare.

Brands are identifying untapped categories as effective doorways into the premium segment. This acts as a new revenue driver for brands that have previously enjoyed strong market share in more mature or price-sensitive categories. For instance, Thai Glico's brands in Thailand (Alfie within chocolate tablets and Glico within chocolate pouches and bags) sit in the lowest categories in terms of average unit price. This has been in line with Thai Glico's affordable price point, and as the category as a whole has not undergone significant price changes, there has been limited opportunities for value push for the company.

However, the launch of Almond Koka – Glico Japan's Almond Milk product – into Thailand in 2023 has allowed the company to move into the more premium, healthy segment of indulgence. This is also its first foray in the country into drinking occasions and dairy, as the company is known for its snack products, such as biscuits, chocolate confectionery and ice cream.

Thai Glico's entry into a new category leverages health claims and consumers’ familiarity with the nutritional benefits of plant-based ingredients to access consumers. Effectively, it enables the brand to sit on the upper rung of the price ladder within the dairy segment.

Value-driven categories are seeing a surge of competitors from both new and established brands. This means a move away from commodity-like food ingredients and into premium claims with quality attributes such as ready to eat, heat and so on.

Source: Euromonitor's Voice of the Consumer: Lifestyles Survey 2023

For example, in 2022, Kewpie launched Fresh Stock, a line of convenient cooking sauces in a bid to expand beyond mayonnaise and salad dressings. Value-added products are a way to position its products to be more premium and less vulnerable to cost hikes. Exploring new cooking occasions also opens the brand to more opportunities beyond only the final eating occasion and food pairing with salad or finished dishes.

Although premium positioning can help to motivate spend and justify higher prices, consumers are still facing cost-of-living pressures and many of them might still practise caution in spending. In emerging markets where GDP is growing strongly, spending on premium food and drinks could be an affordable self-reward, treat or moment of indulgence for consumers – but it is important to ensure affordability as well.

Learn more about Premiumisation in our report, Positioning Premium Food in Asia, to understand how inflation has affected Asian consumers and to view the four premiumisation pillars in food; or understand the impact of the inflation surge in our report, Inflation Surge: Packaged and Fresh Food.