Exciting Consumer Market Potential
As the middle class grows exponentially in Asia, demand for FMCGs is increasing, Mark Millar explores the opportunities that could arise from the Asia Era.
The Organisation for Economic Co-Operation and Development estimates that, globally, the size of the middle class (defined by the Economist Intelligence Unit as those who can afford to spend money on non-essential items) will increase from 1.8 billion people in 2010 to 4.9 billion by 2030. Asia will deliver 85 per cent of this growth, with spending by the region’s middle class expected to account for almost two-thirds of middle class spending globally.
At the same time, urbanisation is accelerating—China is forecast to create more than 200 new cities with a population greater than 1 million people by 2025. Projections also predict that in the next decade some 500 million people in Asia will have access to electricity in their homes for the first time, which will drive exponential increases in demand for a whole range of consumer household products.
Demand for fast-moving consumer goods (FMCG) is also forecast to rise, with PwC reporting that spending on soaps and cleaners in China and India should continue to grow at over 15 per cent per annum. But as MNCs rush to capitalise on this consumer market potential, they may discover that the most attractive markets are also likely to have challenging logistics environments.
There are huge opportunities in Asia as the middle classes grow exponentially, demand for consumer products increases, and spending on non-essential goods grows, including throughout the region’s second- and third-tier cities.
But on top of Asia’s geographic, economic, and political complexity, there are significant supply chain challenges resulting from developing regulatory environments, inadequate infrastructure, and talent shortages.
However, with informed insights and the right business partners together providing deeper understanding about the region, businesses can benefit from both production and consumption opportunities in Asia - and ensure that they are in a position to capitalise on that growth during what is becoming known as The Asia Era.