Affordability and accessibility the new necessity
With a general air of concern about economic and income stability having persisted in APAC since the pandemic, it comes as no surprise that affordability has become a top demand for consumers when browsing supermarket aisles.
But with food and beverage manufacturers facing pressure from the other end of the spectrum in terms of keeping profit margins up amidst rising ingredient costs, price hikes have become the ‘only way forward’ to achieve this – by passing on these cost increases to consumers – time and time again.
“The conversations surrounding costs are very real and very frequent in the food industry, as we are all aware that geopolitical factors and rising production costs are major challenges here,” McCormick VP Flavour Solutions Betty Juliana Tan told us.
“Consumers want all the health and wellness aspects to food innovation such as reduced salt and reduced sugar – but they also need to be able to afford these.
“As an example, many alternatives to salt can be pricey which would make reduced-sodium products cost more as well – we believe that there are ways to overcome this by employing multiple herbs and spices to enhance tastes beyond ‘salty’, in order to achieve the salt reduction effect without the need for expensive salt alternatives.”
At the same time, many companies are eyeing potential profit drivers in the premium segment of the food and beverage sector, believing that during times such as these consumers are now choosing better products so there is a need to focus on ‘accessible premiumisation’.
“What we have found is that [in markets such as APAC and the Middle East], consumers are increasingly willing to pay for premium experiences that respond to cultural nuances,” Mars Wrigley Global Emerging Markets (GEM) President Gabriel Fernandez told FoodNavigator-Asia.
“Modern consumers also prioritise experiences over possessions, [such as] food and snacks being affordable, experiential adventures in taste and flavour.
“This trend is evident in the popularity of indulgent, high-quality chocolates, gourmet snacks, and unique fusion flavours across [these] markets, where many of the rising middle class have yet to experience international brands.
“For instance, sharing treats with friends and family is a consumer behaviour we see a lot in places as diverse as India, Saudi Arabia and South East Asia [so] for these markets, we are developing smaller formats of our brands like Galaxy/Dove and Snickers for sharing bag product lines at lower price points, as well as using wafers to create unique gifting versions.”
“In parallel with these offerings, we are also developing premium chocolate offerings [and] experimenting with culturally relevant variants of our brands [in line] with this trend.”
Better-for-you and convenience to grow hand-in-hand
Fernandez is also confident that the demand for better-for-you products is not likely to drop any time soon despite affordability concerns, especially as rise of health consciousness that emerged during the pandemic has shown no sign of dwindling.
“There are consumers who want flexibility to consume tasty yet more health-conscious foods that fit their lifestyle, whether these are lower sugar and calorie options, adding in plant-based ingredients or observing dietary needs,” he added.
“Over the years, we have had much success in building a global better-for-you snacking platform with brands like Nature’s Bakery and KIND – and have realised that snacks that are easy to consume on the go, yet also nutritionally balanced and satisfying will dominate, due to increasingly hectic lifestyles.
“Choice is also key when driving better-for-you snacking, and we foresee growth in hybrid offerings that combine indulgence with health benefits.”
Things are also looking quite similar from a beverages angle, according to Suntory Beverages and Food Asia Pacific (SBFAP) Chief Marketing Officer Hiroyuki Fujiwara.
“We expect the health and wellness trend will continue to drive the ‘better-for-you’ drinks category towards substantial growth, especially if offering targeted benefits and well-being,” he told us.
“Ready-to-drink (RTD) beverages will also continue to thrive, especially those that offer convenience without compromising on quality.
“Additionally, tea-based drinks, particularly those with innovative flavours and health benefits, are poised for rapid growth in the coming year.”
Alternative protein rejigs: Cultivated consolidations and plant-based alterations
In the alternative protein scene, the general sentiment is more positive than not regarding the future and growth of this sector in the APAC region – but this is now much more heavily tinged with strong doses of reality checks as compared to the situation two or three years ago.
For plant-based meat which was essentially the first novel alternative protein to really hit supermarket shelves, major challenges surrounding pricing, taste and nutritional concerns have besieged the sector over the past two years or so, leading to a dip in the excitement surrounding it.
“A lot of the hype surrounding plant-based meat was due to the marketing and novelty factor surrounding it initially – we also tried this novelty factor a while back but now that consumers have tried it and given feedback, we have learned that meat eaters are still not impressed with what is available,” CP Foods open Innovation Director Peemdej Ursahajit said.
“This comes down to the fact that the format really is not there yet overall – and consumer sentiment and demands are only going to get more exacting, so nothing will change for the sector until we can improve the product format.
“There is hope for Asia as there is actually far less headwind against plant-based products compared to other markets where meat is something of a sacred subject, but now that we have proven that much more is needed than just launching many products into the market, we would need to re-evaluate and put in more R&D to improve the core offerings.
“One area to really note is that current plant-based meat products can generally satisfy vegetarians – but to form a sustainable business, we need to appeal not only to this group but also to flexitarians and meat eaters who are not willing to make the compromises that vegetarians are willing to, so now is the time to really knuckle down and go back to the drawing board.”
Over in the cultivated meat scene, firms generally believe that regulations are now no longer the ‘main’ concern, in that this has become a question of ‘when’ and not ‘if’ so it is more of a timing issue – but amidst this wait there still exist key challenges to overcome such as a rapidly decreasing pool of available investment funds.
This has been dubbed a ‘funding winter’ as many investors have tightened their pursestrings after a few years of rather generous investment amounts being disseminated to the various start-ups, likely due to a slower return on investment (ROI) than initially expected even in markets like Singapore which has been one of the industry’s key markets worldwide.
This has unsurprisingly led to an emergence of M&A consolidations within the sector, such as cultivated fish firm Umami Bioworks merging with cultivated crustacean firm Shiok Meats in Singapore last year, with more such consolidation expected to come.
“We know that sentiment surrounding the cultivated market has been down but are confident it will come back up and we will see recovery – but as there is no way to know right now how long it will take and how good it will be, the important thing for us has been to be in the best possible position we can be,” Umami Bioworks CEO Mihir Pershad told us.
“At the moment, we are looking at developing what is essentially a plug-and-play solution that can be scaled by food producers, as this would be able to help ensure not only technical scalability but also cost scalability for us.
“By letting the food firms co-finance or fully finance production, we can tackle the financial aspects of scalability far more effectively than if we had to raise substantial finds on our own.”
Digitalisation acceleration inevitable with Gen Z push – but AI no replacement for man (yet)
Digitalisation has often been cited as an important trend in the industry, but with Gen Z consumers rapidly making up a larger and larger proportion of the workforce and consumer spend, the influence of this on industry development is expected to accelerate even further.
“Digitalisation will undoubtedly continue to transform consumer interactions in 2025 driven by Gen Z’s influence in the workforce,” Fujiwara added.
“This is a tech-savvy generation, and they have even stricter demands surrounding transparency and ethical practices as well as experiences when it comes to their food and drink.
“As such, digitalisation is in this sense not only pushing businesses to innovate sustainably but also to create immersive, digitally inspired experiences [to stay relevant].”
This was echoed in the dairy industry by players such as Yili and Elle & Vire, both of which are incorporating digital input as well as artificial intelligence into their businesses in a major way.
“AI makes things easier, faster and in the dairy sector also plays the added role of being able to accelerate the ideation process, inspire designs and so on,” Elle & Vire Southern Asia MD Joris Bernard told us.
“The thing about concerns in this area such as AI overtaking humans or taking away human jobs is that we need to put this into perspective – it can help with tedious and repetitive tasks which is what we want to reduce anyway, and it can be creative to help stimulate human imagination, but we know it cannot be used as-it-is yet, and so, it cannot replace humans.
“What AI is doing within dairy is to help to make things faster and possibly better, but at the end of the day, there still needs to be human expertise and imagination stepping in and making the decision to create something new, because AI works based on existing information that has been fed to it, so there are limits to its innovation.”
Whiskey winning in Asia
Whiskey has usually been considered a drink for more formal, traditional occasions in the APAC region due to generally higher prices, alcohol content and the distinctly western connotations of its origin – but with consumers now looking to premiumise their drinking to get more value for money, whiskey popularity is seeing a boom.
“Scotch whisky consumption trends in Asia have grown so much that it has overtaken Europe – this is actually unsurprising as the potential has been there, with more opportunities for brands to tap on especially festivities,” Pernod Ricard Singapore Country Manager Alex Liu told us.
“We have observed whiskey consumption spikes during the various different festive occasions like Christmas, Chinese New Year, Deepavali and so on, on top of functions like weddings and business conventions, flights at cocktail bars and rituals at club venues.
“Whiskey has also been enjoying a resurgence as Asian consumers in general also enjoy spices and rich flavour, and these can be delivered well in whiskey – an example is our specifically formulated Royal Salute 24 Cognac Cask which has a balance of fruity, oaky and spicy notes, [meant to appeal to Asian consumers].
Many major whiskey brands believe that Asia is the place to focus on currently based on these factors, and that there is also potential to tap into consumer tendencies here to seek out localisation.
“Asian cooking is never one-dimensional, with layers of complexity and depth, and that’s where whiskey does well as it is meant to be savoured slowly with flavours evolving and new notes continuously emerging with each sip, something very appreciated in this region,” Diageo’s The Singleton Global Brand Ambassador Ewan Gunn told us.
“While the Scotch whiskey flavour is appreciated, people like to localise [but] there is a frustrating misperception about the rules of how one should drink whiskey – really, for most whiskey makers whichever way you drink, it is the right way if it makes you happy.
“We need to break down such perceived barriers about how, when, and by whom whiskey should be drank in order to introduce more people to it – mix it with green tea, with a soft drink, anything goes as long as the consumer is enjoying it.”
Other brands believe that there is a huge space in the whiskey sector for modernisation, such as Australia’s Starward and Taiwan’s Kavalan.
“To make a modern whiskey is to move away from trying to recreate traditional Scotch whiskey and focusing on the location and ingredients of origin and the unique flavours here instead – eg in Australia we use local Australian barley and mature our whiskey in Australian wine barrels,” Starward Commercial Director Scott English told us.
“Modern whiskey is really making waves in APAC in particular, as many of the modern whiskey brands are emerging in this region, from ourselves to Kavalan to Amrut from India and Ki One from South Korea.
“This is very representative of how younger consumers are a real major driving force behind this sector, and modern brands are playing a very big role in changing the mindset around age statements for whiskey to draw in more consumers of all ages.”
