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Consumer trends 2015 - South East Asia


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Consumer trends 2015 - South East Asia

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Consumer trends 2015 - South East Asia

  2. 2. 04 Get Clean What’s happening in 2015? 05 Why consumers will buy into this 06 Where next? 08 10 Get Healthy What’s happening in 2015? 11 Why consumers will buy into this 12 Where next? 15 16 Get Natural What’s happening in 2015? 17 Why consumers will buy into this 18 Where next? 20 22 Get Smart What’s happening in 2015? 23 Why consumers will buy into this 28 Where next? 29 CONTENTS 30 29 18 710 14 13 22 2 2  3
  3. 3. WHAT’S HAPPENING IN 2015? In 2015, pollution will become a key media focus. The abandonment of the Carteret Islands in Papua New Guinea due to rising sea levels and the Milan Expo 15’s investigation into the future of clean water supplies will revive discussion around emissions, while controversy will grow around Canada’s Northern Gateway oil pipeline to Asia. However, it’s a growing awareness of the link between urban pollution and cancer and premature deaths – following the World Health Organisation’s revelation that pollution is the world’s biggest environmental health risk – that will provoke a reaction. The API (Air Pollution Index) has become a talking point across Malaysia, as critical levels (greater than 300) are reached in various regions. In Singapore, the PSI (Pollution Standard Index) is also of concern. The region suffers from cross-border pollution due to back-burning in Indonesia, which creates a smog haze, raising API/PSI to critical levels for weeks on end. In March 2014, Klang in Malaysia was forced to close schools as API reached 203. The cosmetics industry in particular has been awakening consumers to the immediate, visible, personal effects of pollution, with Avon even coining a term ‘urban dust’ to describe the ‘environmental aggressors’ that threaten our skin and general health. GET CLEANInternational events – some catastrophic, some inspirational – are putting emissions and toxicity back on the agenda, but it’s the threat of pollution to human, rather than environmental, health that’s driving technological innovation and a spate of clean, protective product launches in the Consumer Product Goods space. The cosmetics industry in particular has been awakening consumers to the immediate, visible, personal effects of pollution. Trends 2015 SOUTHEAST ASIA 4 4  5 Get Clean Get Healthy Get Natural Get Smart
  4. 4. WHY CONSUMERS WILL BUY INTO THIS The case for going clean has clear global resonance. Research from the Pure Earth/Blacksmith Institute reveals that pollution kills 8.4 million people each year, almost three times the deaths caused by malaria and 14 times those caused by HIV/AIDs. According to the WHO, outdoor air pollution was linked to an estimated 3.7 million deaths, while indoor air pollution, mostly caused by cooking on inefficient coal and biomass stoves, was linked to 4.3 million deaths in 2012. In addition to the more serious effects of pollution, consumers around the world are aware of pollution’s impact on their skin. In the UK 22% of women look to cleansers to protect their skin from the environment or pollution. Older consumers are a particular target: 31% of UK women who use facial skincare products use a moisturiser to counter the effects of pollution or the environment on the skin, but this figure rises to 48% of women aged 65+. In the US, the figures are 39% on average, rising to 49% of women aged 65+. Chinese consumers also recognise the effects of pollution on their skin. At least a quarter of Chinese women aged 20-49 who use bodycare or handcare products said that anti- irritation, healing or soothing, and antibacterial claims are important when purchasing products. This could be a useful avenue for brands looking to reverse the usual pattern, whereby usage of skincare and make-up drops once women hit their mid-60s. The positioning of skincare products for pollution protection has recently taken a softer approach, incorporating “fighting urban irritants” as one of many claims in a multi- functional product, rather than being a stand-alone claim area. This is in contrast to products launched a few years ago which were much more single-purpose oriented when it came to pollution. Major brands such as L’Oréal, H2O+ and Oriflame have recently launched products into the Southeast Asian market that claim to protect against environmental stressors such as pollution and UV protection, along with other claims relating to moisturisation and improving complexion. The positioning of skincare products for pollution protection has recently taken a softer approach, incorporating “fighting urban irritants” as one of many claims in a multi-functional product, rather than being a stand-alone claim area. 6  7Trends 2015 SOUTHEAST ASIA 6 Get Clean Get Healthy Get Natural Get Smart
  5. 5. WHERE NEXT? Consumers are already embracing apps that scrutinise a product’s environmental credentials, and we expect this concept to grow in the food and beverage market. Meanwhile, we can expect protective claims against PSI/API to grow in Southeast Asian product marketing in skincare and across other sectors. Expect consumers to care more about apps that measure food miles and cleaning products made from ‘all natural’ ingredients like lemon, vinegar and baking soda, as well as buying into foods and beauty products that make ‘protection from pollution’ an actual product claim. We’ll see more technological solutions in the form of self-cleaning surfaces, using permanent treatments to enable flooring, worktops and windows to repel dirt and grime. We’ll also see more wearable devices – and clothes – that measure, guard against and combat dangerous levels of air pollution. In advertising we’ll see more initiatives like billboards that fight pollution, as well as homes, offices and even shop frontages made from materials that absorb carbon, reflect heat or absorb light to emit it at night time. We’ll also continue to see a major uptake of LED lighting systems in the home, retail and office space. In the automotive sector, it’s possible we may see repeats of the Parisian anti-smog experiment of March 2014 that saw the city authorities reduce traffic by 50% after levels of minute particles of PM10 emitted by diesel exhausts reached more than double the designated safe level of 80 microgrammes. Smaller electric cars, ride share services and urban biking schemes will receive backing and brand sponsorships. Water purity – from manufacturing, to agricultural run-off, to home waste – will see efforts to reduce the incidences of chemical fertilisers, microbeads in cosmetics or chemicals in personal care soaps or household cleaners polluting our waterways. Trends 2015 SOUTHEAST ASIA 8 8  9 Get Clean Get Healthy Get Natural Get Smart
  6. 6. GET HEALTHY WHAT’S HAPPENING IN 2015? The area of functional foods has seen significant growth within the Asia-Pacific region in recent years. APAC has in fact seen a relatively high proportion (8%) of functional food launches in the last five years, compared with the 6% seen globally. Japan is often credited with creating the term “functional foods” in the late 1980s. Japan is the only nation that has legally defined functional foods and the Japanese functional food market is now one of the most advanced in the world. For those reasons, developments in Japan are often cited as indicative of possible developments in Europe and the United States. The growth of functional foods in Southeast Asia (SEA) is affected by malnutrition from both over-nutrition and under-nutrition, so looking at the health needs of consumers can be a complex issue. Health issues such as hypertension, high cholesterol and diabetes are key concerns and on the rise in many SEA nations, while under-nutrition and poor immunity, especially in rural areas, are also an essential focus for most SEA countries. Asian consumers have different behavioural patterns than those from other parts of the world. In Europe and the United States, for example, consumers choose their functional beverages based purely on the drink’s health benefits, its ease of use and price point. In Asia, there is a fourth factor of ‘localisation’. Asian consumers consider how much they identify with the ingredient, linking purchase decisions to their own cultures. In fact, there is a preference for ‘local ingredients’ – for instance, a preference for avocado in ANZ, pineapple-based flavours in the Philippines, and jasmine tea in Indonesia. In addition, each country in Southeast Asia tends to look at functional beverages from a different perspective. For instance, while Indonesia focuses on fortified ready- to-drink (RTD) tea for beverage sales, Thailand is an energy drink market. Consumers are becoming more informed about their health and are increasingly seeking out superfoods free from chemicals and additives. Trends 2015 SOUTHEAST ASIA 10 10  11 Get Clean Get Healthy Get Natural Get Smart
  7. 7. WHY CONSUMERS WILL BUY INTO THIS A growing ageing population means there is a greater need for products which deliver functional health benefits. In Japan, the number of people aged 65 or over rose by 1.1 million to 31.9 million, accounting for 25.1% of the population. India, China, Indonesia and Japan are four out of the top five nations with the highest number of diabetes cases and predicted estimates for 2025 indicate that these countries will continue to see high incidence of diabetes. This also creates an opportunity for manufacturers to develop more functional food items that offer preventative benefits for such health issues. An ambitious plan was launched in Vietnam to increase the average height of men and women by about 6.35cm over the next 25 years. This has also led to the need for more fortified foods and in particular, foods that offer benefits for young children and youth in general. India, China, Indonesia and Japan are four out of the top five nations with the highest number of diabetes case and predicted estimates for 2025 indicate that these countries will continue to see high incidence of diabetes. Trends 2015 SOUTHEAST ASIA 12 12  13 Get Clean Get Healthy Get Natural Get Smart
  8. 8. WHERE NEXT? There has been a 17% increase of food and drink launches with a functional claim in Southeast Asia between 2011 and September 2014; this supports the trend that more people are focussing on health and wellness. The key sub-categories of food and drink launches in Southeast Asia that have used functional claims over the last two years are growing-up milks (8%), tea (7%), and flavoured milks (5%), followed by baby formula and milk. The baby formula and growing-up milks reflect manufacturers’ focus on the young population, especially in the Philippines, Indonesia and Vietnam. These products are also in the news (and on the rise) in China and Korea. Growing-up milks and baby formula are positioned as assisting the physical and cognitive development of children. In line with government initiatives in Vietnam and to meet consumer demand for products that are fortified with nutrients, enhance children’s resistance, and help children’s development, baby food launches in Vietnam focus on promoting functional claims. Functional was the top claim category for baby food launches in Vietnam, with 76% of products launched between January 2010 and September 2013 featuring a claim from the category. In Malaysia, nearly three in 10 rice products launched in 2013 were high in fibre. Many of these products made claims relating to cardiovascular and digestive health and diabetes. Globally, India has seen the highest number of food launches (18%) with cardiovascular claims in the last two years. Vietnam and Thailand are the other two Asian nations that feature among the top 10 countries with cardiovascular food launches. In 2015 and beyond, we are bound to see much more innovation within functional food and drink in the Southeast Asia region. As health awareness grows within Southeast Asia, consumer interest and need for these types of products will only increase further. Local ingredients and localised positioning of functional products will also aid further growth of these types of products within the region. Functional was the top claim category for baby food launches in Vietnam, with 76% of products launched between January 2010 and September 2013 featuring a claim from the category. Trends 2015 SOUTHEAST ASIA 14 14  15 Get Clean Get Healthy Get Natural Get Smart
  9. 9. GET NATURAL WHAT’S HAPPENING IN 2015? Asia-Pacific has seen a significant rise in food and drink launches with natural claims, growing from 6% to 25% in the last five years. The Southeast Asia sub-region has grown at a similar pace when it comes to natural food and drink launches. Asia has been rocked by a number of food scares, from harmful ingredients in baby food in China to fake eggs and squid found in Vietnam, to name just a few. The recent spate of health scandals is encouraging Asian consumers to turn to natural, organic and herbal remedies in health and beauty. This has created new market opportunities with product awareness and choice maturing. In a recent survey by Weber Shandwick, nearly all respondents in China – 96% – said that they choose to buy organic food at least occasionally, if not always. Korea and Singapore are not far behind with sourcing considerations elevated at 90% and 82%, respectively, of those surveyed. For China and Singapore, labelling remains the principal source of identifying this information. The natural trend is also likely to mean more manufacturers will change from artificial to natural colours in new product development. Futhermore, on the outside of package, manufacturers will further utilise colour to communicate healthiness to attract consumers. Multi-national brands are researching and investing in non-caffeine natural energy sources, exploring the use of herbal ingredients used in Traditional Chinese Medicine (TCM) that provide fatigue-relieving benefits. PepsiCo have a patent for a caffeine-free beverage with herbal extracts of Duan- Gen-Wu-Jia (similar to Ginseng), Gou-Qi-Zi (Goji or Wolfberry), and Huang-Jing (Solomon’s Seal), that were reported to increase energy levels when combined. Nestlé Health Sciences have formed a 50/50 JV with Chi-Med – Nutrition Science Partners; this could also lead to further developments into herbal energy combinations. The global organic personal care products market witnessed steady growth in recent years due to increasing consumer concerns regarding personal health and hygiene. Asia-Pacific is expected to be the fastest-growing region at an estimated CAGR of 9.7% from 2012 to 2018, due to rising consumer incomes, changing lifestyles and increasing awareness and demand for organic personal care products. Japan and China dominated the Asia-Pacific market, together accounting for over 64% of market revenue in 2011. Food scares, changing lifestyles and rising incomes have elevated Asian consumers’ awareness of what’s in their food and personal care products and their means to control what they buy. 2015 will see consumers increasingly return to natural and often traditional, ingredients. Trends 2015 SOUTHEAST ASIA 16 16  17 Get Clean Get Healthy Get Natural Get Smart
  10. 10. WHY CONSUMERS WILL BUY INTO THIS In Singapore, The Health Promotion Board (HPB) ran a campaign around the dangers of eating hawker food, which is known to be greasy and salty. Initiatives like this one contribute to increasing overall awareness around healthier lifestyles. Within the first three months of 2014, at least five juice cleanse businesses popped up in Singapore. They offer fresh and cold-pressed fruit and vegetable juice mixes. These businesses are building awareness around the belief that the cold-press mechanism is the healthy way, leading to an increase in consumer demand for this type of product. The detox movement in Malaysia has its grassroots in do-it-yourself enzyme drinks. A strong community exists in the country teaching its members how to make health enzyme drinks themselves. Lately, juice cleansing has emerged as the next juice detoxification trend. Service providers such as Lifestyle Juicery and Reboot offer raw, pressed juices in convenient bottle format, targeting discerning, busy consumers with their one-, two-, four-day juice cleansing programmes. Indonesians believe in the efficacy of jamu or traditional medicine, which is made from natural materials including roots, leaves and fruits. Nearly half (49%) of Indonesians aged 15 and above consume jamu, according to a study by the Health Ministry in 2010, with about 5% consuming it every day. One of the latest trends is the mangosteen fruit. The rind is prized for its array of polyphenolic acids, including xanthones and tannins. The application of mangosteen rind extracts can now be found in products such as health tonics, tea, health capsules and juices. Trends 2015 SOUTHEAST ASIA 18 18  19 Get Clean Get Healthy Get Natural Get Smart
  11. 11. WHERE NEXT? The trend towards natural colours has been reflected in launch activity over the past year in Vietnam and is likely to continue to increase, especially as it moves into other categories. Most innovation in natural colours has been in sweet biscuits and cookies, pastilles, gums, jellies and chews, as well as table sauces. Neighbouring Southeast Asian countries are also likely to be influenced by natural colour trends in Vietnam. Naturalness will continue to be an overriding trend, influencing the type of ingredients used in formulations. Natural sweeteners and natural colours will continue to be featured in new innovations, while the search for natural caffeine and natural non-caffeine energy sources will continue to see more traditional herbal medicines being explored. Incorporating foods with intrinsic health properties is an ideal way for manufacturers to leverage ‘naturalness’ and for some ingredients to provide functional health benefits. Trends 2015 SOUTHEAST ASIA 20 20  21 Get Clean Get Healthy Get Natural Get Smart
  12. 12. GET SMARTThe world of synced devices, home appliances and wearable technology will start to become mainstream, as trusted companies move into the market and join the convenience- driven, data collection revolution WHAT’S HAPPENING IN 2015? Smart devices – from watches to ceiling fans – appeal to consumers because they save time and money, promise convenience and control and – in our age of digital navel-gazing narcissism – knowledge and self- analysis. What’s changing is that this is no longer the domain of start-ups offering home hub hardware – the major players are now embracing the trend and raising consumer confidence in it. Apple and Google are both introducing ecosystems to compete for leadership in the connected home. Apple’s Homekit software/ app creates a framework that will enable consumers to use Siri voice commands to control smart lighting, doors, thermostats and other home appliances, operating on Bluetooth Low Energy and managed through any modern Apple device. Meanwhile, Google-owned Nest – the pioneering manufacturer of internet-connected thermostats and smoke alarms – has created its own open-sourced framework, Thread, also designed to allow smart devices to communicate. Samsung’s forthcoming SmartHome ecosystem will compete on the same grounds, using the brand’s S Voice software, and the brand has opened up its system to thousands of new developers. Retailers are also pushing synced devices, with Sears currently testing a connected device department in its stores, ahead of a planned expansion in 2015. New software is also coming onto the market to make it easier for consumers to sync their mobile devices with their health-monitoring tools and home appliances. Google Fit will provide a centralised activity tracker to compete with Apple’s iOS8 software and HealthKit app, bringing users’ data from various fitness devices into a single location, helped in its development by the participation of Nike, Jawbone and Fitbit. A host of new product launches in 2015 – from tablets to smart watches and smart TVs – will also pique consumer interest in syncing up. 2 Google Fit1 Philips Hue 1 2 22  23Trends 2015 SOUTHEAST ASIA 22 Get Clean Get Healthy Get Natural Get Smart
  13. 13. 1 1 Nest Thermostat and Airwave Google is launching Android TVs, while LG is launching a new webOS operating system for smart TVs. LG is also tipped to be launching a Flex 2 smartphone, while Samsung is expected to introduce a foldable tablet and Lenovo will present a new wearable device at CES 2015. Beyond that, the Apple Watch is sure to give wearable app development a further boost ahead of its retail launch in 2015. It’s important to consider that smart devices needn’t be about health or home economics – they can be about aesthetics and ambience as well. We’re also going to see oPhone ‘scent messaging’ devices go on sale, theoretically allowing consumers to remotely fragrance their homes or send odours as a form of communication. Ralph Lauren is the first mainstream fashion/sports brand to work with wearable technology, having designed a polo shirt to be worn by ball boys and a collegiate player at the US Tennis Open, featuring sensors knitted into the core of the product to read biological and physiological information. Network providers and the authorities are also making it easier for us to remotely connect to our smart devices. ATT is aiming to bring 4G Wi-Fi to planes across the US in late 2015, while British Airways is in negotiations with satellite operator Inmarsat to provide a similar pan- European version of a high-speed air- to-ground internet service and the UK Government are set to commence a £90 million investment to boost internet signal across the country’s train network. Putting our smart devices to use could get easier as network providers and government authorities are adding Wi-Fi on planes and trains, allowing people to be connected anywhere, anytime and making it ultra-convenient for us to “Get Smart”. The Land Transport Authority in Singapore has committed to rolling out free Wi-Fi across 28 MRT stations over the next nine months. The process has begun with three major stations launching Wi-Fi in August 2014. Consumers are also using smart devices to improve convenience levels on everyday activities, such as Loyalty Apps, of which Perx in Singapore is a great example. Perx is easy to use for both merchants and customers, with consumers scanning a QR code in-store which acts as a virtual punch in the customer’s online loyalty card. 24  25Trends 2015 SOUTHEAST ASIA 24 Get Clean Get Healthy Get Natural Get Smart
  14. 14. AIRLINES WITH IN-FLIGHT WI-FI Air Canada British Airways Lufthansa Emirates Etihad Gull Air Qatar Airways Aerofloy Transaero All Nippon Airways JAL Norwegian SAS TAP Portugal Aer Lingus Icelandair Tam Libyan Airlines Turkish Airlines Oman Air Saudi Air China THAI Airways Singapore Airlines HongKong Airlines Garuda Indonesia Cebu Pacific Philippine Airlines Mango Airlines AirTran Alaska Airlines American Airlines Delta Frontier Airlines JetBlue Southwest Airlines United US Airways Virgin America Trends 2015 SOUTHEAST ASIA 26 26  27 Get Clean Get Healthy Get Natural Get Smart
  15. 15. WHY CONSUMERS WILL BUY INTO THIS Globally, smart devices have already been adopted by consumers to a degree, but the potential is far greater. Over one in five (21%) UK adults already use either a wearable device or a health-related mobile app, but as many as 40% of Brits are interested in a device that tracks heart rate, blood pressure and movement. Meanwhile, 13% of Chinese consumers say that they have a wearable digital product in their household. In the UK, 76% of potential TV buyers are interested in a TV with the ability to wirelessly stream content from other devices, while 28% would pay more for this feature. In addition, 34% of UK refrigerator shoppers expect or would pay more for a barcode reader that syncs to online shopping. In the US, Mintel’s data reveals that consumers are already thinking about how their devices sync as part of their research and purchasing process: 40% of consumers would like to buy technology products that easily connect to products they already have and 59% of consumers would be interested in using an app or website to control their home. Furthermore, 31% expect or would pay more for refrigerators that assess their contents and provide recipe suggestions. We’re certainly seeing evidence that North American consumers are purchasing and using smart devices: 22% of all US consumers have purchased a wearable device, such as smart watch or Fitbit. One in 20 (5%) Canadian consumers already use a wearable device that tracks heart rate, blood pressure and movement, and 37% say they would be interested in using such a device. WHERE NEXT? In 2015 and beyond, we’ll see smart devices advancing into new annexes. Wearable technology will have to transcend the convenience of connectivity and offer wearable devices that are both secure and fashionable. Indeed, increased adoption of wearable devices might force more conversations regarding regulations about digital device etiquette. Aesthetically, wearable devices are as much status symbols as they are data collectors. Nike, Intel, reality TV series “Project Runway” and Digital Trends will host the first Wearable Technology Fashion Competition in the US to make wearable technology more stylish. Likewise, smart home systems will go beyond economising utilities by embracing ambience and blending in with the décor, which we’ve already seen from Philips ‘Hue’ LED lighting systems and oPhone fragrance diffusers. Overall, we’ll come to expect more from our smart devices: wearables that analyse our mental well-being, smart food and drink containers that automatically re-order replacements, and companies that analyse our data in order to customise services and costs. All this constant connectivity will increase demand for innovations that help to charge mobile devices on the go. Security will also be a concern as consumers become more wary of placing personal data in the cloud and on other servers. To further the purpose behind this data gathering, analysis will become a key area of expansion for companies – witness the fact that Nike+ is backing out of the actual device space to focus on data and apps – and people will increasingly share data with professionals for analysis. We’ve already seen black boxes that monitor driving habits, Russian banks that give preferential interest rates based on running data, and MyHealthPal – a platform that shares a patient’s data on medication, diet and exercise with neurologists. Data-collecting devices will also invite companies to become analysis providers, and the next stage will be for banks, grocers and doctors to do more to develop data relationships. Globally, smart devices have already been adopted by consumers to a degree, but the potential is far greater. 1 oPhone Uno 1 Trends 2015 SOUTHEAST ASIA 28 28  29 Get Clean Get Healthy Get Natural Get Smart
  16. 16. Nike, Intel, reality TV series “Project Runway” and Digital Trends hosted the first Wearable Technology Fashion Competition in the US to make wearable technology more stylish. 1 Wearable Technology Fashion Competition Photography by Jeff Wong Trends 2015 SOUTHEAST ASIA 30 30  31 Get Clean Get Healthy Get Natural Get Smart
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