MANILA -Total spending on fast moving consumer goods in Asia rose by 6.1 percent to $168 billion in 2023, with the Philippines and Vietnam posting a double digit increase in expenses for these consumer products.
This is according to a recent study by management consulting firm McKinsey, which took a look at spending on these goods in the Philippines, Thailand, India, Malaysia, South Korea, Taiwan, Indonesia and Vietnam during a 12-month period ending in March 2023.
In its report entitled “Grocery retail in Asia: Thriving in changing consumption patterns,” FMCG spending during those 12 months exceeded those in the previous two years when expenses in the countries mentioned were recorded at $152 billion and $159 billion, respectively.
“The bad news is that most of the growth was the result of rising prices caused by inflation, upward of 6 percent in five of the eight markets,” said the report.
“The good news is that, across the region, consumers have largely been resilient and maintained their spending levels on FMCG,” it said, noting that inflation peaked in most markets in June and July 2023 and that consumer confidence has started to improve.
FMCG spending in the Philippines grew by 15.2 percent, with spending per buyer was pegged at $715 during the period.
This growth rate was the highest among eight markets in Asia, followed by the 14.5 percent growth in rural Vietnam, 9.2 percent in urban India, 8.8 percent in urban Vietnam, and 4.7 percent in Indonesia.
Spending was among the weakest in South Korea at 3.8 percent and Taiwan at 2.5 percent, but the spending per buyer were at the highest in these countries at $1,507 and $1,540, respectively.
Meanwhile, growth in FMCG spending in peninsular Malaysia was recorded at 0.4 percent, while Thailand saw a decline of 3.1 percent.
When it comes to FMCG product categories, the report noted that spending on the higher-end discretionary categories, such as electronics suffered most but cited that consumers will shift part of their discretionary spending to smaller expenses with beauty products usually being at the top.
“This ‘lipstick effect’ has been documented during recessions and is evident across Asia. As one indicator, sunblock and hair color purchases were among the top three fastest growing in most markets.
“In markets where eating outside of the home was preferred and is now returning to prepandemic levels, such as Malaysia, South Korea, Taiwan, Thailand, and urban Vietnam, consumers have reduced spending on food categories,” the report said further.
On the other hand, in markets with a greater share of low-income households – such as India, Indonesia, the Philippines, and rural Vietnam- shoppers continued to spend more on food and beverages for in-home consumption.