Global FMCG: Finding Opportunities

GLOBAL FMCG: FINDING OPPORTUNITIES
PLMA ACCESSING EXPORT MARKETS CONFERENCE
REHAN PANDITARATNE, AUGUST 2017

© Euromonitor International
2
How do brands achieve success in global markets?
GLOBAL FMCG: FINDING OPPORTUNITIES
Grown 5% annually over last 5 years
globally despite stagnant domestic Japanese
market to reach US$5 billion sales.
Female
Empowerment
Ageing
Ethical
Consumerism
Urbanisation
Grown China outlets from 250 to 2,500
over the last 10 years to reach over
US$2 billion in sales.
8% annual global growth over the last
5 years to reach over US$200 million
in sales.
Achieved US$1.8 billion absolute growth
globally over the last 5 years.
Time Poor
Consumption
Grew sales by 50% in Asia over the last 5
years to US$280 million.

INTRODUCTION: GLOBAL OVERVIEW
URBANISATION
TIME POOR CONSUMPTION
EMPOWERED WOMEN
ETHICAL AND GREEN CONSUMERISM
AGEING POPULATIONS
CONCLUSION

4EUROMONITOR INTERNATIONAL
Euromonitor International: Strategic Global Market Research

5
Global packaged food by category
-1%
0%
1%
2%
3%
4%
5%
6%
7%
8%
0
50
100
150
200
250
300
350
400
450
RetailvaluesalesCAGR2011-2016
Retailvaluesales2016(US$billion)
Packaged Food: Size 2016 and Strength of Global Categories 2011-2016
Retail Value Sales 2016 Retail Value Sales % CAGR 2011-2016

6
Dairy: Asia has surpassed North America and Western Europe in value

7
0%
50%
100%
2000 2005 2010 2015 2020 2025 2030
World GDP by Region: 2000-2030
Other Emerging and Developing Countries
Emerging and Developing Asia
Developed Countries
0 60 120
Latin America
MENA
Sub-Saharan Africa
Emerging and Developing Asia
% growth
Real GDP Growth in Emerging Regions: 2015-
2030
In 2030, this region will
account for 44% of global GDP,
up from just 18% in 2000.
Why Asia Pacific?

9
China’s urban population expanded by 37%.
China’s rapid urban growth has resulted in a rising number of megacities with
populations above 10 million.
China: Nearly a billion people will live in urban areas by 2030
URBANISATION

10
Rise of single
persons
Later parenting;
shrinking families
Expanding middle
class with rising
incomes
Better access to
education
Better
connectivity
High costs of
housing; small
living spaces
Pressure on
infrastructure and
services
Less time for
leisure and
physical activity
Pollution and
related health
issues
Large gaps
between ‘haves’
and ‘have nots’
Impacts of urbanisation
URBANISATION

11
Mega Trend: Changing Family Dynamics
The growth of products such as coffee machines,
smoothie makers and snack foods is largely linked
to people who live alone.
GOING SOLO
Existing Industry Examples
• The rise of single-portion cakes and frozen desserts.
• Growth in per capita consumption of ready meals, share of small and micro packaging
and more.
Going solo
URBANISATION

12
Demand for smaller pack sizes and
re-sealable packs, which stand-up
pouches are growing.
Much of the growth in stand up
pouches will come from Asia Pacific.
0
500
1,000
1,500
2,000
2,500
3,000
3,500
0-50g 51-100g 101-
300g
301-
500g
501-
750g
751-
1,000g
Millionunits
Stand-Up Pouches in Sauces, Dressings and
Condiments Packaging by Size Band 2010-
2015
2010 2015
Single-person households drive demand for smaller pack sizes and pouches
URBANISATION

14
Mega Trend: Time as Currency
Focus on convenient and flexible products and solutions
that enable consumers to either save time through
outsourcing of tasks or multi-task through more flexible
packaging options.
OMNIPRESENT CONSUMPTION
• The rise of snack replacements from all corners of the supermarket. The growing
availability of portable breakfast solutions.
• A plethora of online food delivery options spanning scratch cooking options to ready-
to-eat services.
• Per capita consumption of snack replacements and stand up pouches.
Omnipresent consumption

15
Breakfast Combo
Dual pots,
especially those
with disposable
spoons, are fast
becoming popular
with commuting
consumers.
Drinking Yoghurt
Now many
yoghurt brands
are simply selling
their products
with straws to
allow
consumption in
beverage-like
fashion. Yoplait
variants in China
are good examples
of this trend.
It’s All Greek
Positioning as a
high protein snack
is. From the US to
Australia, Brazil to
the UK, consumers
are buying into the
thick yoghurt
variant for satiety
purposes.
Dessertification
“Dessertification”,
a trend best
exhibited in
chocolate, which
replicates
restaurant
desserts, has
proven to be a
valid alternative to
mainstream
snacks.
Snacking yoghurts being used to meet a variety of purposes
- - -

16
PepsiCo expands Quaker oats into biscuits, granola and snacks
On-the-go
porridge
Ready-to-eat supergrain
cereals and granola
Savoury snacks
Breakfast bars
and biscuits

18
0
5
10
15
20
25
30
35
40
45
50
%constantgrowth
Selected Leading Growth Markets For Female Disposable
Income Per Capita 2011/2016
Female empowerment
EMPOWERED WOMEN
Female disposable incomes soared in China by 44% over the last 5 years

19
What is driving the obsession with self-image?
EMPOWERED WOMEN
The empowerment of women The “selfie culture”
Exposure to idealised images of beauty The power of the online influencer

20
Euromonitor survey revealed that
22% of women were actively trying to
lose weight in 2016.
36% claimed they were actively
monitoring what they eat in order to
manage their weight.
The quest for weight loss
EMPOWERED WOMEN

21
The global retail market for
weight management was
worth US15.9 billion in 2016.
Growth was driven by the
two largest categories – meal
replacement and weight loss
supplements.
0
2,000
4,000
6,000
8,000
10,000
Meal Replacement Weight Loss
Supplements
Slimming Teas
USDbillion,constant2016rsp
Global Sales of Weight Management
2011/2016/2021
2011 2016 2021
0 1,000 2,000 3,000 4,000 5,000 6,000
India
Mexico
Japan
China
US
USD billion
Top Five Markets for Weight Management
2016
Growth in weight management
EMPOWERED WOMEN

URBANISATION
POOR CONSUMPTION
EMPOWERED WOMEN
AGEING POPULATIONS
CONCLUSION

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Selling trust
Mega Trend: Striving for Authenticity
Trend Description
In a bid to stay safe and knowledgeable about what goes into
their bodies, consumers have moved towards “authentic”
products. Traceability and transparency are key components
of this movement and the digital economy is enabling
solutions for brands.
SELLING TRUST
• Single-origin cocoa used by a growing number of premium chocolate brands.
• Growing demand for manufacturers to move towards clean label ingredients.
• Growing anti-GMO sentiment in the US.
• The return of heritage ingredients and ancient grains.

24
Clean labelling
0
5
10
15
20
25
30
0
10
20
30
40
50
60
70
US$billionRSP
Top 10 clean label markets
2015 2015-2020 % Growth

25
Case study on selling trust
Hipp Combiotic, United
Kingdom
Source: Ocado.com
As consumers become more price
conscious and increasingly mistrusting
brands, especially those from the largest
global food manufacturers, there is a shift
towards more “authentic”, niche and
natural products, with consumers seeking
brands that they see as upholding key
values.

26
Scandals came thick and
fast over 2013-2015 in
China and Taiwan,
shaking rebuilt but weak
consumer confidence.
That said, international
brands are unlikely to
carry their superior
status as a USP for much
longer, as more and
more international
brands are flogging
these markets.
Food scares increase demand, not just for foreign brands…
Australia’s Own Milk for Children in China, 2015

27
Environmental food and beverage forecast to grow strongly in China
China: Ethical Labels Retail Value Market Size 2015-2020
(USD billion, Fixed 2015 Exchange Rate)
Note: Light blue is forecast, dark blue is 2015
The market size of environment is expected to overtake people/value by 2020.
This is partly due to multinationals’ contribution to supplying FSC packaging to
major liquid carton brands, particularly in dairy.

28
Consumers globally
show a growing
awareness of
naturally derived
ingredients, as well a
desire that products
are sustainably
produced.
These concerns are
more prevalent in
emerging markets,
especially in Asia,
than in developed
markets.
Asian consumers show highest preference for green beauty

29
Islam is the most popular religion in
Asia, so it is unsurprising that the
researched countries in the region
contributed heavily to sales of packaged
food and beverages with a halal claim.
Indonesia, for example, had US18 billion
in value sales of products with a claim in
2015; a country where the Muslim
population in the country stands at over
85%.
In order to succeed both in Asia and in
regions where Muslim populations are
growing, particularly Western Europe.
Halal certification in Asia Pacific

31
0 100 200 300
South Korea
Spain
Thailand
Mexico
UK
France
Italy
Germany
Indonesia
Brazil
Russia
Japan
US
India
China
Million
The Biggest 60+ Populations in 2020
The global population will continue to age,
on the back of rising life expectancy, falling
birth rates and the ageing baby boomers.
China and India will continue to have the
largest over 60s populations, and will
experience faster ageing than the global
average.
The world will continue to age, especially in China and India
AGEING POPULATIONS

32
Mental agility
Brain Health Supplements Learning new skills Volunteering Brain training
Health and wellbeing
Disease prevention through
self-care and good nutrition
Keeping fit Monitoring weight Emotional wellbeing
Outward appearance
Use of anti-ageing beauty products
and supplements
Cosmetic treatments Stylish clothing and accessories
How are consumers challenging ageing?
AGEING POPULATIONS

33
Older consumers are
increasingly aware that they
need to eat healthy and
nutritious foods in order to
help prevent chronic diseases.
Convenience foods, such as
snacks, ready meals, soups and
supplement nutrition drinks,
are popular among this
demographic.
In April 2016, Nestlé
announced the opening of a
new research and development
centre in Singapore, for the
creation of new products for
ageing consumers in Asia
Pacific and across the world.
0
50
100
150
200
250
300
Fortified/Functional Naturally Healthy
USDbillion,constant2015rsp
Global Sales Of FF And NH Products
2010/2015
2010 2015
In China, probiotic yoghurt
is a burgeoning niche.
In 2010 it was worth
US$2 billion. In 2021 sales
of this product will be
around US$15 billion.
Untapped potential for foods aimed at seniors
AGEING POPULATIONS

34
 Health supplements; natural and fortified foodsChronic diseases
 Vitamin D; calcium supplementsLoss of bone denisty
 OTC antacids; laxatives; high-fibre foodsDigestive problems
 Lutein and other eye supplements; reading glassesEye problems
 Hair loss products; colourants; specialist shampoosHair loss
 Anti-ageing creams; beauty supplementsLines and wrinkles
 Calming and sleeping aidsSleeping difficulties and anxiety
 Urinary health supplements; incontinence productsIncontinence
 Lethicin and other memory supplements; brain gamesMemory loss
Old age ailments and commercial opportunities
AGEING POPULATIONS

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Product design
•Nutritious foods
that are easy to
prepare and eat
Packaging design
•Clear labels with
bigger fonts,
•Easy-to-open
packaging
Distribution
•Offer a variety of
home delivery
options
•Local stores
•Convenience
Pricing strategy
•Older consumers
tend to be more
value-conscious
Manufacturers will
have to think carefully
about how to adapt
their offer to suit the
needs of an ageing
population.
Opportunities: Adapting the offer for older consumers
AGEING POPULATIONS

URBANISATION
WORKING WOMEN AND TIME POOR CONSUMPTION
AGEING POPULATIONS
CONCLUSION

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Engage older consumers. They are the future.
Understand the evolving needs of female consumers.
Account for the unique ethical and green
considerations, especially in Asia.
Leverage urbanisation trends.
Recommendations for FMCG companies exporting globally
CONCLUSION
Time poor consumption in your NPD and channel
strategy.

THANK YOU FOR LISTENING
Rehan Panditaratne
Consultant
+61 2 9581 9232
rehan.p@euromonitor.com
https://www.linkedin.com/in/rehanp/

Global FMCG: Finding Opportunities

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