New Delhi: In 2020, the year of the pandemic that saw supply chain disruptions across consumer companies, 62% of sales in fast-moving consumer goods segment came from local brands. In addition, 80% of sales came from smaller players in the sector.
These are the highlights of a report released by market research firm NielsenIQ covering Asia’s FMCG industry, including India, China, Korea, Singapore and Thailand.
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The report said that owing to the outbreak of covid-19, on the whole, FMCG growth was flat at -0.1% in 2020 in Asia compared with 8% growth in 2019. When broken down country wise, India did not rank well as it saw an unprecedented 40% decline in FMCG sales in April 2020 owing to stringent lockdown and mass store closures. However, FMCG growth bounced back to 2019 levels towards the end of the year, somewhat balancing out the decline.
Most Southeast Asian markets also experienced a significant decline with the exception of Singapore that recorded a high growth of 15.5%. Northeast Asian markets saw a lower but reasonable growth with China at 3.1%.
The NielsenIQ report added that both local as well as innovative products drove sales for the industry.
While the report said 62% of FMCG sales in Asia came from local brands, a recent consumer survey by the company also showed that Asians prefer buying local to support homegrown brands (49%). This seems true for India where the government has been relentless in its reiteration of “Atmanirbhar Bharat” and with brands supporting local sellers and artisans.
49% of the respondents in the survey also noted that local products are better priced and fresher (44%).
The NielsenIQ report said that 80% of FMCG sales were from small players. With 300,000 brands operating across Asia, 80% of total sales come from brands ranked outside the top 20 in their categories.
It noted that while “mainstream” (read popular or mid-market) price tier still dominates in Asia and accounted for 55.7% of total FMCG sales in 2020, 28% sales still come from premium products. Premiumisation has been a key focus area for FMCG brands in view of Asia’s fast growing middle class.
The pandemic has also changed the way Asians shopped. According to the survey, 31% people said they want to buy new products only online. While 95% consumer said they choose to shop on the basis of value for money, 75% said they went for low prices, 67% looked for safety and hygiene while 63% noted they look for convenient location. Although the traditional channels are still dominant, online is where growth is, the report said.
Interestingly, while innovation and affordability remain key factors for Asian consumers while choosing a product, 73% want larger economical packs with lower price per volume.
“2020 was a challenging year with most Asian markets experiencing a decline or lower growth in FMCG. We believe the pace will pick up and normalize this year though as consumer and business confidence rebounds,” said Justin Sargent, President of Retail Intelligence, NielsenIQ Asia. He added growth can be found in the right stores, categories, segments, occasions and right price tiers. “Dynamics are still uncertain but those who are more agile will be the big winners in 2021.”