PREMIUMISATION A LOOK INTO THE CURRENT AND FUTURE STATE OF PREMIUMISATION-BASED PRODUCTS
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PREMIUMISATION A LOOK INTO THE CURRENT AND FUTURE STATE OF PREMIUMISATION-BASED PRODUCTS November 2020
Contents
SECTION 1 SECTION 2 SECTION 3
Shaping Premiumisation The Premium Customer Industry Developments
An introduction to premiumisation: Understanding the premium customer A zoom-in to the largest and fastest-
definition, historical and current state of and influencing trends which convince growing markets globally in Consumer
premiumisation, and driving factors them to pay a premium price Health, Packaged Food, Alcoholic Drinks,
Pet Food and Beauty and Personal Care
Page 2 Page 13 Page 24
SECTION 4
How To Win?
A highlight on the future state of
premiumisation, and a review for
businesses planning for a premium
product or brand positioning
Page 49
SECTION 1 Shaping Premiumisation The shaping premiumisation section presents an introduction to premiumisation: defining premiumisation, how it has evolved, and a summary of factors supporting the premiumisation trend.
SECTION 1 SHAPING PREMIUMISATION
Defining premiumisation
Premiumisation refers to the added-value
of a product; however, it does not directly
Premiumisation is a process to achieve a premium status
translate as “more expensive products”.
Instead, premiumisation is rather denoted
as the use of the product’s characteristics, Mass Premium
traits and features to influence consumer
perception and increase the willingness to
pay more for the products or services.
Thus, value is also associated with other
aspects, including quality, convenience,
authenticity, novelty and consumer experience.
Consumers are willing to pay more for what they prioritise and what they perceive matters to them. Typically, consumers tend to
consider a product or service as premium if it can help to improve these aspects of life:
Organisation & Uniqueness Time-saving Safety & security Health
efficiency
SECTION 1 SHAPING PREMIUMISATION
Consumers’ changing values impact the purchasing decision
Global Consumer Value:
Status and Consumerism, 2015/2017/2019
100%
80% 68%
66% 67%
60%
46%
38% 41%
40% 30% 31% 31%
20%
0%
I find I am looking for ways I am willing to spend money I enjoy spending my money
to simplify my life to save time rather than saving it
2015 2017 2019
Source: Passport Lifestyles Survey, 2020
• As the added value in premiumisation goes beyond the price of products and services, there are ideological factors
that shape consumers’ intrinsic value, e.g. beliefs, attitudes, priorities, perceptions and motivation.
• These consumer values can change over time. They influence purchasing decisions and the willingness to pay more
for what caters to their specific needs or reflects their true self.
• Today’s consumers are facing increasingly time-starved lifestyles. Thus, more consumers will pay a premium price for
products or services which can simplify, ease processes, and save time in their daily lives.
SECTION 1 SHAPING PREMIUMISATION
Premiumisation is vital as volume growth struggles and consumers seek
specific added value when making purchasing decisions
Retail Value Global Retail Value and Volume Growth (%), 2014/2019/2024 Retail Volume
8% 8%
6% 6%
4% 4%
2% 2%
0% 0%
Beauty and Personal Alcoholic Drinks Cheese, Spreads, Sweet Biscuits, Pet Care
-2% Care Butter Snack Bars, -2%
-4%
Fruit Snacks -4%
%YoY %YoY
Value 2014 2019 2024F Volume 2014
2014(Vol.) 2019
2019(Vol.) 2024 (Vol.)
2024F
Source: Passport Beauty and Personal Care, Passport Alcoholic Drinks, 2020 Edition, and Passport Packaged Food, Passport Pet Care, 2021 Edition
Note: F refers to forecast
Increasing competition over retail price and consumer sophistication have led to an increase in premiumisation
• The competitive retail environment has added pressure to retail prices globally. Global mass brands faced challenges capturing
volume growth in the past 10 years. The challenges are not limited only to developed markets, but are also seen in emerging
markets, as local players’ capabilities improve and consumers become more knowledgeable about brands or products.
• The rapid penetration of the internet and smartphones is influencing consumers’ purchasing habits. Real time connectivity,
social media, online searches and e-commerce allow consumers globally to be better-informed than ever before. Also,
consumers are able to make purchases regardless of their location through cross-border e-commerce. This allows niche
brands to reach and penetrate their target consumer base faster and in a more efficient way.
• With the pressure from both market competition and consumer sophistication, there is a need for brands to engage more with
consumers to establish an emotional connection and communicate the premium “added value” of their products and services.
SECTION 1 SHAPING PREMIUMISATION
Today’s consumers look beyond quality and function – they seek brands
and products which are better-connected and closer to their personal values
Pre-financial Crisis Post-financial Crisis
Creating a personal connection with
First Wave of Premiumisation Second Wave of Premiumisation
consumers can include:
1990s – 2008 2008 – present
ETHICAL EMOTIONAL AESTHETIC
• Premiumisation created through • Premiumisation created through
offering previously unavailable creating stronger personal connections
product/service quality with consumers of consumers said that
• High prices • Higher prices, smaller volumes purchasing eco-conscious
• Expansion of specialist physical • Vertical integration: seamless shopping
28% or ethically-conscious
products makes them feel
retailers experiences between social media, e-
good
commerce and physical stores
• Mostly European brands with a
lifestyle-driven image • Expansion of Asian brands with culture-
• Products that reflect personal led evolution 28% ofto consumers said they try
shop at locally-owned
success and sophistication • Premiumisation as a trusted guide to stores
purchasing quality products/services
of consumers would
Starbucks – was able to raise KitKat Chocolatory – created
prices and transactions by premium status by offering 38% rather buy fewer but
higher quality products
incorporating European-style uniqueness and emotional
coffee, quality and engagement through KitKat bar
experiences into its offerings. personalisation Source: Passport Lifestyles Survey, 2019
SECTION 1 SHAPING PREMIUMISATION
What are the driving factors for premiumisation?
Shifting economic power
✓ Growing middle-class, especially in developing markets
✓ Increasingly sophisticated consumer tastes
Key factors
driving
Population change premiumisation
Technology
✓ Demographic shifts, ✓ Internet and smartphone
including urbanisation, falling penetration
birth rate, ageing society, ✓ Emerging social media and
smaller household size and e-commerce platforms
delay in marriage
SECTION 1 SHAPING PREMIUMISATION
Growth in the middle-income population in Asia is key – this is the
future target for premiumisation
Top 10 Emerging & Developing Countries • Middle-class households in emerging and developing
with the Largest Number of Middle-Class countries are growing in terms of number and spending
Households, 2019 (‘000) capacity. This is also expected to be the main growth driver
of labour productivity and disposable income, which directly
China 103,763 support the growth of the middle-classes in emerging and
developing markets.
India 78,563
• China and India are seen as key countries for driving growth
Indonesia 20,056
in the higher-income population, especially in urban areas,
Russia 16,954 as rapid urbanisation contributes to more economically
active areas/regions.
Brazil 15,491
• Emerging and developing countries outside the Asia Pacific
Nigeria 11,331
region have seen limited economic growth, with labour
Pakistan 10,248 productivity growth expected to be weak through to 2030.
This will thus limit the growth of middle-class households in
Bangladesh 9,484 these regions.
Mexico 9,362
Egypt 9,156
Ikinari Steak – A Japan-based chained
- 30,000 60,000 90,000 120,000 steak house which focuses on the
concept of high-quality steak. The meat
Source: Passport Economies and Consumers, 2020 Edition quality is claimed to be similar to that in
Note: Middle-class is defined as the number of households high-end restaurants, but is served at a
with between 75.0% and 125% of median income. more reasonable price.
SECTION 1 SHAPING PREMIUMISATION
Increase in households without children leads to more disposable
income
Growth in Households by Type,
2019 vs. 2025
• The number of households without children (couples
without children and single-person households) is rising.
Single Person 14%
This has created opportunities for premiumisation on the
basis that households without children do not have child-
Couple Without Children 11% related expenses and therefore have more disposable
income to spend on high-end products and services.
Couple with Children 5% • As such, consumers have no parental obligation, their
schedule is more flexible, with greater possibility to focus
on work and achieve their career goals and higher
Single-Parent Family 7% compensation. These households are able to make
purchasing decisions based on their personal satisfaction;
0% 10% 20% buying products which could be viewed as too expensive
if they had to allocate income for children’s expenses.
% growth from 2019
Source: Passport Economies and Consumers, 2020 Edition
New Covent Garden Soup Company – This UK-based brand launched the advertising
campaign “Let’s Do Lunch Better” for its high-end healthy chilled soup. The brand targeted
consumers aged 25-35. Furthermore, the product was also observed to appeal mostly to
couples or households without children, as the brand’s ready to eat soup could be deemed as
too expensive for households with children.SECTION 1 SHAPING PREMIUMISATION
Urbanisation expands the target audience for premiumisation
Global Urban and Rural Households (‘000),
2019-2030
2,500,000
823,883 823,209 822,331
824,514 824,556 824,338
822,655 823,580 824,191
2,000,000 816,397 819,799 821,404
1,500,000 1,584,938 1,610,114 1,634,966
1,507,441 1,533,607 1,559,432
1,427,042 1,454,146 1,480,958
1,344,109 1,372,391 1,399,693
1,000,000
500,000
0
2019 2020F 2021F 2022F 2023F 2024F 2025F 2026F 2027F 2028F 2029F 2030F
Urban Households ('000) Rural Households ('000)
Source: Passport Economies and Consumers, 2020 Edition
Note: F refers to forecast
• As cities are expanding and rural areas continue to urbanise, it is Fonterra – Originally penetrated the
Chinese market by exporting milk
expected that about 5 billion people will live in urban households by 2030.
powder. As demand for Western food is
These new urban consumers are likely to seek quality new and even growing amongst urban Chinese
premium products and services, with an aspiration to have the things consumers, they are seeking and willing
which were previously unavailable to them in rural areas. to pay for high-quality dairy products.
Fonterra has therefore expanded its
• Thus, urbanisation will uncover opportunities for high-end brands to offering, exporting a diverse portfolio of
capture sales from the greater number of new urban households. 47 dairy products to China.SECTION 1 SHAPING PREMIUMISATION
Rising proportion of elderly consumers expected to drive demand for
premium products
Top 10 Markets by Population Aged Under and Over 60, 2019
100%
29% 28% 28% 28% 28% 28% 26% 26% 25%
80% 34%
60%
40% 74% 74% 75%
66% 71% 72% 72% 72% 72% 72%
20%
0%
Japan Italy Finland Portugal Greece Bulgaria Germany France Netherlands Denmark
0-59 years old 60+ years old
Source: Passport Economies and Consumers, 2020 Edition
• A high proportion of the population is aged over 60 in developed countries. The
rising number of elderly consumers will drive demand for premium products
specifically designed for the elderly or targeted towards the ageing society. Helmut Lang – An Austrian
luxury fashion brand hired a
• One important motivation behind older consumers’ purchasing decisions, group of elderly women for its
especially for non-essential products, is acquiring status or prestige, as the elderly campaign in 2018. The elderly
Welsh women modelled Helmut
have worked their way to the top of the career ladder pre-retirement. Thus, there Lang’s autumn and winter
is an opportunity for brands to engage with baby boomers. womenswear collection.SECTION 1 SHAPING PREMIUMISATION
Accessibility and penetration of internet and smartphones spur sales of
premium products and services via online channels
Growth in Retail Formats, • Household connectivity is another key driver of premiumisation.
%CAGR 2014-2019 With improving technology and higher disposable incomes,
(excluding sales tax) consumers have more access to the internet and smartphones,
Store-Based and are becoming increasingly connected regardless of location.
• Developed markets embarked on digitalisation first. However, as
-0.1% mobile and smartphone technologies became more affordable,
they were able to rapidly penetrate emerging and developing
markets. This provides consumers with greater access to
product information, options and premium products. The
increasing popularity of cross-border e-commerce also enables
Mobile E-Commerce niche brands to innovate and reach out to their target
consumers globally.
+43%
Cross-border E-
Commerce
+18%
Italic Marketplace – A members-only marketplace
that lets consumers shop for unbranded luxury
Source: Passport Retailing, 2020 Edition goods directly from the factories through its website.SECTION 2 The Premium Customer Understanding premium customers and the key trends influencing these customers to trade up. The premium customers explored in this section are categorised into three types of premium customer groups: (1) customers who seek “Services That Help”, (2) customers who are into “Thoughtful Consumption”, and (3) customers who want to “Build a Better Me”.
SECTION 2 THE PREMIUM CUSTOMER
Perceived premium value through the lens of premium customers
Services that help
Real-time personalisation and service
Time-starved and stressed-out consumers are seeking out and spending more on
products or services that promise to simplify their lives and allow for time-saving.
They are looking to streamline the process of finding, purchasing and customising
products that match their needs.
Thoughtful consumption Building a better me
From premium products to Wellness, mindfulness, happiness
premium moments While some consumers want to maintain their health, with
As indulgence commands a premium, it demands a a preference for nutritious food or plant-based meat
reason for purchase, as consumers look to justify that alternatives, for example, some consumers are keen to
the offering provides the right experience, at the right polish their personal branding. In each case, there is
time, with minimal harm to health and the environment. opportunity to help consumers become their “best selves”.SECTION 2 THE PREMIUM CUSTOMER
Regional manifestation of premiumisation
Services that help
Southeast Asia (SEA): Premiumisation in SEA is characterised by
observable traits and features in products and services which act as
tangible value drivers to justify their higher price. SEA consumers
increasingly relate to concepts such as “permission to indulge” and are
looking for added-value through convenient solutions to address their
everyday frustrations.
Southeast Asia
US, Australia
& Europe
Thoughtful consumption East Asia Building a better me
US, Australia & Europe: Developed markets, East Asia: Asian consumers from countries such as Japan,
including selected European countries, the US and South Korea and China are increasingly prioritising health,
Australia, take a more balanced approach to wellness and connectivity, with consumer expenditure on
premiumisation, with products and services that help related products and services forecast to increase in the
with thoughtful consumption and building a better medium and long term. Value considerations are also
me. important, as East Asian consumers are closely aligned with
values such as thoughtful consumption and self-betterment.SECTION 2 THE PREMIUM CUSTOMER
Premiumisation in action
Premiumisation
Trends
Premium
Customer Curation and Partnership
Services
Personalisation
That Help
The Quest for Time
Smart Luxury
Growing premiumisation
Thoughtful trends observed in Asia
Premiumisation Consumption
Permission to Indulge
Health is the New Wealth
Building a Authenticity & Local
Better Me Traditions
Buying Experience and
CommunityTHE PREMIUM CUSTOMER Services That Help:
SECTION 2 Personalisation
Personalisation commands a premium price by offering a tailor-made
solution and enhancing consumers’ emotional connection and experience
• Personalisation is one way to build a connection
between consumers and products, as
49%
premiumisation can often be related to the of consumers globally said that they
emotions and experiences that consumers value products and services that are
associate with the products or services they uniquely tailored for them
use. Personalised products are perceived to
offer additional value, with specific benefits
which match different lifestyle needs.
VN Smart Photoelectric Beauty
• Thus, personalisation is a means to increase Skin Center – Located in China,
consumer satisfaction, brand loyalty and this is a personalised skin care
service launched by Weimeidu
ultimately improve quality of life.
International Beauty Chain Group.
The store provides customised
• Whether it is in DIY or made-to-order format,
skin analysis and a selection of
technology is the key influencer increasing more than 120 natural health-
demand for personalisation. Smart diagnostics focused ingredients which can be
and real-time tailored recommendations are customised to match skin types
becoming increasingly popular and consumers and needs.
are trading up to products and services derived
from these solutions. Meanwhile, artificial
intelligence could potentially play an important
role in driving future growth in personalisation.THE PREMIUM CUSTOMER Services That Help:
SECTION 2 The Quest for Time
Consumers pay more for time-saving solutions so they can focus on
top life priorities
• Regardless of age, location and income level, time, either for oneself or with loved ones, is often ranked as a top priority and is
highly valued. However, modern lifestyles have led to increasingly time-starved consumers. Many consumers are tied up with
longer work hours and congestion in urban areas. The COVID-19 pandemic has blurred the line between professional and
personal time even further, with consumers telecommuting and working from home. They typically find it more difficult to
separate working and non-working hours, while some employees feel that their employers expect them to always be online or
able to respond immediately. As such, products and services that can help save or manage time or free up schedules so that
consumers can focus on what matters to them, are viewed as premium.
• Still, consumers do not want to automate or outsource everything. They are looking for options to outsource certain tasks, and
are willing to pay more for solutions that can free up that time so they can focus on doing other higher-priority activities.
Top Life Priorities Time for myself
Priority Student Full-time worker Full-time worker with Retired
Rank (15-19 yrs) without children children under 18 (60+ yrs) Time with parents
1 Time with partner/spouse
2 Time with children
Time with extended family
3
Time for work
4
Time for favourite activities
5
Earning money to live on
Source: Passport Lifestyles Survey, 2020
Following my passionTHE PREMIUM CUSTOMER Services That Help:
SECTION 2 The Quest for Time
Foodservice players premiumise by offering quality fresh meals with a
similar speed to fast food
• For the past 10-15 years, the foodservice industry has stepped into the premiumisation trend by offering “fast casual”
and “chef-driven” food concepts. These are premium approaches which combine the speed of fast food counter
service with an upscale menu design. The price points are typically higher than ordinary fast food, but still lower than
the mid-price of full-service restaurants.
• Concisely, the fast casual and chef-driven concepts are seen to provide food variety and novelty with a dining
experience in an informal setting. At the same time, they allow time-starved consumers to enjoy quality meals.
• An example of a fast casual foodservice
brand is Nando’s, a South African chain
that offers spicy grilled chicken with
design-centric outlets and an assorted
wine menu.
• Shake Shack is another example of this trend. The
brand is a burger chain which originally started as a
small kiosk serving a limited menu, with a claim to
offer fresh, simple and high-quality versions of classic
burgers. Shake Shack currently operates more than
100 outlets globally.Thoughtful Consumption
SECTION 2 THE PREMIUM CUSTOMER
Permission to Indulge
Consumers seek justification to make them feel better when making
purchases for self-indulgence
• Many consumers are paying more for products or services Global Retail Value Fortified/Functional
which allow self-indulgence. Products that are commonly Food and Beverages (USD million),
seen in this area include affordable luxury products such as 2014/2019/2024
imported spirits, craft beer and high-end branded lipsticks.
400,000
• Increasing retail sales of fortified/functional food and
350,541
beverages were observed in 2019, and sales are expected to 350,000
continue growing. During the purchasing decision,
consumers typically ask themselves “what can this product
300,000
do for me?”. This reflects that consumers are seeking not 266,553
only quality, but also a sense of justification when they are
250,000
paying a higher price. This added-value helps them feel good 222,482
about spending more and can be presented in various forms;
for example, additional functionality, health benefits, 200,000
nutritional fortification, authenticity, exotic appeal, social
responsibility, or a product/service which resonates with their 150,000
personal image.
100,000
• For product categories which are typically viewed as
unhealthy, in the wake of the global financial crisis (2008)
50,000
consumers have become more judicious and look for specific
value to justify when they pay a premium price or indulge in
0
less healthy activities. It is important that consumers perceive
2014 2019 2024F
that such indulgent products are more interesting, offering
additional value such as an authentic story, exotic flavour or
Source: Passport Health and Wellness, 2020 Edition
tied to craft or novelty. Note: F refers to forecastThoughtful Consumption
SECTION 2 THE PREMIUM CUSTOMER
Permission to Indulge
Dine-out culture drives indulgence in foodservice and demand for
premium food and drinks products
Spending per Capita at Full-Service Restaurants – Asia (USD),
2014-2024
250 30%
200 20%
10%
150
0%
100
-10%
50 -20%
0 -30%
2014 2015 2016 2017 2018 2019 2020F 2021F 2022F 2023F 2024F
Spending per Capita, USD %YoY Growth
Source: Consumer Foodservice, 2020 Edition
Note: F refers to forecast
• In Asia, out-of-home dining is an important part of social life. Among the top 20 markets, there are eight countries in Asia with the
highest consumer foodservice transaction per capita. The increase in per capita spending in full-service restaurants in Asia is largely
caused by the increasing demand for quality dining.
• Food culture has long been rooted in the Asia Pacific region. Many of the world’s oldest and best-known culinary traditions
originated from this region, where consumers have been searching for, arguing about, writing about and preparing good food for
hundreds of years. In addition, apartments and living spaces in urban areas tend to be small as urbanisation increases. Thus, social
life in Asia mainly takes place in bars, restaurants, cafés and around food stalls, which has led to growing interest in high-quality
food when dining out, driving premiumisation in foodservice. In particular, growing interest is observed in fad-driven (trends driven by
collective behaviours) foodservice, and brands which can connect with consumers via new flavours or unique outlets.Building a Better Me
SECTION 2 THE PREMIUM CUSTOMER
Health is the New Wealth
Consumers are paying a premium price and putting more time and
effort into investing in health
• In the past year, increasing focus on health was observed and is
expected to drive future premiumisation. Consumers are now of consumers globally said they
dedicating their time and money to maintaining both their physical
health and mental wellbeing. They are seeking products and
services which deliver clear benefits.
42% read food and beverage nutrition
labels closely
• With the impact of the COVID-19 pandemic, premiumisation is
being driven by what consumers feel they need the most; of consumers globally said they
specifically, healthy, sanitary and mood-enhancing products or
treatments. Also, the pandemic is expected to further accelerate
demand in these areas in the future.
42% take health supplements/vitamins at
least once a week
• The growing trend towards holistic health is also reflected in the
increasing popularity of certain types of sports, such as yoga, of consumers globally said that they
where mental and physical health are included as a core part of
physical exercise. 23% participate in stress-reduction
activities, e.g. meditation, massage
• As medical advancement continues, people are expected to live
longer. Consumers aspire to age healthily, reducing the number
of sick years and seeking to prevent health problems.
• Food and beverage brands have been seen to develop
products in response to consumers’ health-consciousness. For
example, PepsiCo developed Drinkfinity, a personalised and
portable beverage system that allows people to create their
own functional beverage with no artificial sweeteners or
artificial flavours added.Building a Better Me
SECTION 2 THE PREMIUM CUSTOMER
Authenticity & Local Traditions
Brands leverage local traditions to communicate authentic messages
• Growth in disposable incomes also helps to elevate the level of
confidence in spending among Asian consumers. Higher
confidence is typically reflected in demand for luxury imported
products and international travel.
• In addition, demand for premium quality, attractive designs, new
technology or the modernisation of local/traditional products is
being seen. This is driven by emotional connections with their
local culture, reflecting a sense of originality and roots.
• In Japan, a blend of old traditions and modern technology Jiangxiaobai – This
creates a sense of authenticity, such as flavoured sake, which Chinese brand
commands a premium price. Similarly, middle- and upper-class launched a
consumers in India pay more for versions of local products which traditional baijiu with
are home-made or produced with modern quality and sanitation a lighter taste and
standards. For instance, some cereal brands launched Indian- modern and
minimalist
inspired flavours, such as PepsiCo’s Quaker Oats Kesar Flavour packaging design.
(saffron) with Kishmish (raisins).
• In China, most consumers still prefer foreign brands, as these
are perceived to have high quality and safety standards.
However, there is a desire to modernise local traditional products
and increase the positive perception of local brands. The
Chinese-based e-commerce platform Taobao, from Alibaba, has
been promoting “Quality by China”, a programme which was
introduced in 2015 to endorse quality home-grown brands and
their original designs.SECTION 3 Industry Developments Exploring how premiumisation has developed in key industries across the globe and understanding how customers’ needs and premiumisation trends are applied in real-life product examples.
SECTION 3 INDUSTRY DEVELOPMENTS Consumer Health
Consumers are driven by a preventive healthcare approach, seeking less
chemically-based consumer health products
Global Retail Value – Vitamins and Dietary Supplements (USD million),
2013/2019/2024 and CAGRs 2013-2018 and 2019-2024
80,000 16%
60,000 12%
40,000 8%
20,000 4%
0 0%
Asia Australasia Eastern Europe Latin Middle East & North Western Europe
America Africa America
2013 2019 2024F %CAGR 2013-2018 %CAGR 2019-2024F
Source: Passport Consumer Health, 2021 Edition
Note: F refers to forecast
• Asia is the largest region in terms of retail sales of vitamins and dietary supplements, followed by North America. Market growth
in Asia is mainly driven by its massive population, the increased penetration of vitamins and dietary supplements in the region,
the growth in the middle-classes and the preventive health concept, especially in China, Thailand and Indonesia. While retail
value sales in Middle East & Africa remain relatively small, the region is expected to grow rapidly, at almost a 16% CAGR from
2019-2024. Increased access to vitamins and dietary supplements and rising health awareness will be key growth drivers.
Consumers in the region typically prefer to take vitamins with the aim of strengthening their immune system.
• The growing concept of health and wellness is expected to drive future demand for consumer health products which are made
from herbal local/traditional ingredients in Asia. More consumers are shifting from modern or chemical-based products to
natural/herbal-based ingredients, as they believe that they are less toxic, contain no chemicals and carry fewer side-effects.
• While concern over mental wellbeing is more common in developed markets, it is also gaining more attention among Asian
consumers. In addition, it is observed that consumers in developing markets are paying more attention to chronic and lifestyle-
related health problems such as diabetes and obesity.SECTION 3 INDUSTRY DEVELOPMENTS Consumer Health
High-growth markets like China and Indonesia are driven by the need for
health supplements stemming from urban life and increasing pollution
Top 10 Markets by Retail Value –
Vitamins and Dietary Supplements
(USD million), 2019 and CAGR 2019-2024 • Future growth among the top 10 markets for vitamins and
dietary supplements will mainly be driven by consumption in
40,000 14%
China. Although smaller in terms of retail value, Indonesia is
forecast to project higher growth, with a 12% CAGR over
12%
2019-2024.
30,000
10%
• The growing healthy living trend and the concept of prevention
are key driving factors for consumer health products in China.
8%
In addition, the government emphasises improving public
20,000 health and promoting the prevention of health problems.
6% • In Indonesia, consumer demand for vitamins and dietary
supplements is driven by environmental conditions and
4% increasing awareness of health care. Air pollution has been an
10,000 ongoing issue within the country, caused largely by traffic
2% congestion in urban areas and smoke from slash-and-burn
agricultural practices in Sumatra.
0 0% • As urbanisation and modern lifestyles are expanding rapidly,
more consumers are experiencing stress and time pressures,
which have led to sleep deprivation, insomnia, obesity,
digestive issues, skin problems and hair loss. Thus, the
demand for products such as sleep aids and weight
Market Value, 2019 (USD million) %CAGR 2019-2024F management and wellbeing products is set to grow in both
China and Indonesia.
Source: Passport Consumer Health, 2021 Edition
Note: F refers to forecastSECTION 3 INDUSTRY DEVELOPMENTS Consumer Health
Increasing interest in holistic wellbeing results in rising demand for mental
wellbeing-related products due to stressful lifestyles
Awareness of and concerns about mental
wellbeing are growing and are expected to drive
future premiumisation of consumer health
products
• Consumers are taking care of their health in a
more holistic way. Apart from physical health,
growing interest in spiritual and mental wellbeing is
also driving growth in consumer health products.
• Demand for mental wellbeing solutions will Consumer Health Thailand
continue growing due to busy modern lifestyles,
with higher levels of stress and nervousness, Short-Medium Term Health is the New Wealth
which have led to the so-called “anxiety economy”.
Deep Sleep – drinks for better-quality sleep
• Consumers are seeking out and spending more on
holistic products and services, such as those InnoWeness Deep Sleep is a functional beverage which claims
which promote better sleep, relaxation and stress to promote better quality of sleep. The brand claims to use
reduction. Products or services that can help them 100% natural ingredients, containing an amino acid found in
to recover and recharge from their daily work-life chamomile, L-Theanine, as the key component to help reduce
responsibilities can command premium prices. stress and increase relaxation.
As the drink elevates sleep quality throughout the night, it claims
to help consumers maintain brain health and feel refreshed in
the morning.SECTION 3 INDUSTRY DEVELOPMENTS Consumer Health
Products command premium prices by offering health benefits and easy
consumption
Consumer Health China Consumer Health Indonesia
Permission to Indulge, Health is the New Wealth,
Short-Medium Term Short-Medium Term
Health is the New Wealth The Quest for Time
Swisse & LELECHA – collaborative drink YouVit – multivitamin gummies
A supplement brand from Australia, Swisse, partnered with YouVit is an Indonesia-based vitamins brand which focuses
LELECHA, a well-known tea café chain in China. The two on gummy format vitamins in different flavours for easy
brands launched a collaborative drink, Swisse Collagen consumption. The vitamins come in compact packaging
Essence Lemon Tea, which contains Swisse Ultiboost with a modern design. YouVit also has vitamins options
Golden Collagen Blood Orange Liquide. which target female consumers and mothers. In addition,
consumers can choose a subscription service on the
The beverage is claimed to be less sweet than the typical
website. The brand will deliver the chosen vitamins pack to
ice tea beverages, offers a savoury taste and provides a
the customer’s home according to the frequency chosen,
refreshing feeling, while the Swisse collagen in the drink
e.g. weekly or monthly delivery.
can help promote glowing and healthy skin.SECTION 3 INDUSTRY DEVELOPMENTS Consumer Health
As health needs vary by individual and other external factors, consumers
seek products that best fit them, and expect to see results
Consumer Health UK Consumer Health Germany
Health is the New Wealth,
Long Term Short-Medium Term Health is the New Wealth
Personalisation
Nourished – customised 3D printed vitamins STURM – anti-pollution food
Nourished is the world’s first 3D vitamins printing start-up, STURM is positioned as a German science-based brand,
which offers nutrition customisation through an online developed by Dr Barbara Sturm, offering anti-pollution
questionnaire, from which the consumer can then receive the supplements to help protect the body’s cells and skin and
vitamins suggested or create their personal vitamins profile. reduce the inflammation caused by air and digital pollution.
The brand claims that its vitamins are freshly-made, thus the The product is claimed to fortify the skin’s natural barrier
body can better absorb the nutrition they contain. In addition, and immune system with a blend of adaptogens, which are
Nourished’s vitamins are vegan, halal and kosher-friendly. known to provide holistic healing nutrients and increase
The ingredients are sourced ethically and the packaging is chemical and physical stress resistance for the cells and
100% free from plastic. skin.SECTION 3 INDUSTRY DEVELOPMENTS Packaged Food
Asia leads packaged food retail sales globally, while dairy products
are expected to continue growing in Southeast Asia
Global Retail Value – Packaged Food (USD million),
2013/2019/2024 and CAGRs 2013-2018 and 2019-2024
1,000,000 16%
800,000
12%
600,000
8%
400,000
4%
200,000
0 0%
Asia Australasia Eastern Europe Latin Middle East & North Western Europe
America Africa America
2013 2019 2024F %CAGR 2013-2018 %CAGR 2019-2024F
Source: Passport Packaged Food, 2021 Edition
Note: F refers to forecast
• The global consumption of packaged food is driven by Asia, due to its higher population. Although
Middle East & Africa is a smaller market, it is expected to see stronger growth in the future.
• Growing opportunities for packaged food in Asia are expected to be driven by dairy products. For
instance, drinking yoghurt has great potential for expansion in Southeast Asia, especially in Indonesia,
the Philippines and Vietnam. Consumers in the region perceive drinking yoghurt as a healthy choice of
drink, and it can be consumed conveniently on-the-go. In addition, yoghurt and drinking yoghurt are
commonly used for beverages and desserts in Vietnam, e.g. yoghurt coffee and black sticky rice with
yoghurt. Vietnam – Black sticky
rice with yoghurt (sua
• In Middle East & Africa, overall market growth is driven by higher incomes. The growth of packaged
chua nep cam).
food is also driven by higher demand for quality dairy products, specifically baby milk formula.SECTION 3 INDUSTRY DEVELOPMENTS Packaged Food
Urban consumers are increasingly looking for and paying more for
nutritious and convenient packaged food
Top 10 Markets by Retail Value –
Packaged Food (USD million), • Demand for packaged food continues to grow, especially
2019 and CAGR 2019-2024 in developing markets such as China and India.
500,000 12% • The increasing focus on nutrition is driving premiumisation
in packaged food among health-conscious consumers in
10% both China and India. Furthermore, urban lifestyles have
400,000
also led consumers to source convenient food or snacks.
8% Thus, a shift from traditional unpackaged to packaged
300,000 food is observed as it better fits the on-the-go concept,
6% responding to the needs of time-starved consumers.
200,000 • In China, there is growing demand for milk substitutes and
4% flavoured milk, especially among foodservice retailers
such as specialist coffee and tea shops and street
100,000
2% stalls/kiosks. Meanwhile, the easing of the one-child policy
to a two-child policy potentially enlarges the opportunities
0 0% for baby milk formula. Specifically, modern parents are
looking for and willing to pay for special formula, such as
lactose-free or hypoallergenic products.
• Consumers in India are leaning more towards healthier
packaged food choices, as well as seeking new product
Market Value, 2019 (USD million) %CAGR 2019-2024F developments offering new local and international
flavours.
Source: Passport Packaged Food, 2021 Edition
Note: F refers to forecastSECTION 3 INDUSTRY DEVELOPMENTS Packaged Food
Brands create added-value by positioning their products as a healthier
choice of convenient food, while adopting local flavours
The healthy living trend is moving consumer
choice to packaged food in which nutrition is the
key justification for purchasing premium
products
• Today’s consumers view nutrition as a component
of their daily life, and are willing to pay more to
obtain foods that are natural, organic or meet their
daily nutrient requirements. In addition, consumers
look for these elements when paying a premium Packaged Food China
price for food indulgence.
• To command a premium price, the inclusion of Short-Medium Term Health is the New Wealth
ingredients directly linked to consumers’
perception of added-value, such as quality and Weilong – 10 vegetable & bone soup biscuits
health benefits, is vital. It is important that the
packaging is also designed to convey the Weilong is a nutritious biscuit snack made from 10 types of
message of added-value and represent a premium vegetables, and the brand uses bone broth soup as a key
product image. ingredient.
Typically, It is believed that bone broth soup is very nutritious in
Chinese cuisine, providing health, nourishment and healing
properties. However, it is time-consuming to cook this soup.
Thus, bone broth soup in biscuit format is considered a healthy
snack which is suitable for busy lifestyles.SECTION 3 INDUSTRY DEVELOPMENTS Packaged Food
Consumers seek and are willing to pay more for nutritious packaged
food options which do not comprise on taste or food safety
Packaged Food India Packaged Food US
Permission to Indulge,
Short-Medium Term Permission to Indulge Short-Medium Term
Health is the New Wealth
Amul – flavoured butter Kashi by Kids – organic superfood bites
Amul is an India-based dairy products company. Apart from Kashi by Kids launched an organic cereal for children. The
standard butter, the brand has launched flavoured butters: brand includes superfood ingredients such as purple corn,
garlic & herb butter and chocolate buttery spread. Amul red lentils and chickpeas. Thus, the cereal is high in
claims that its products are real butter made from the finest nutrition but also tastes good.
cream and do not contain vegetable oil. Thus, they taste
In addition, Kashi by Kids claims that its products are non-
better and are healthier.
GMO, certified organic and the ingredients are sourced
according to fair trade.SECTION 3 INDUSTRY DEVELOPMENTS Alcoholic Drinks
Asia will continue to lead alcoholic drinks sales globally, while sales in
Middle East & Africa will remain small but are expected to see high growth
Global Retail Value – Alcoholic Drinks (USD million),
2013/2019/2024 and CAGRs 2013-2018 and 2019-2024
400,000 16%
300,000 12%
200,000 8%
100,000 4%
0 0%
Asia Australasia Eastern Europe Latin Middle East & North Western Europe
America Africa America
2013 2019 2024F %CAGR 2013-2018 %CAGR 2019-2024F
Source: Passport Alcoholic Drinks, 2020 Edition
Note: F refers to forecast
• Asia leads global retail sales of alcoholic drinks, mainly driven by consumption in China. Also, the alcoholic drinks markets
in Vietnam and Philippines continue to grow. At the same time, higher disposable incomes are seen to drive premiumisation
in alcoholic drinks in Asia and the growing markets in Middle East & Africa.
• The spirits category in Asia continues to be dominated by locally-produced spirits, especially in China, South Korea, Japan
and Thailand. Locally- or traditionally-produced spirits are typically associated with an old-fashioned image, and it is
challenging to attract younger consumers. Thus, locally produced spirits brands have launched new products which are
more appealing to younger customers, e.g. ready-to-drink sparkling sake, which offers a new drinking experience, as it is
easier and more convenient to drink.
• As the younger generation is seeing increasing incomes, becoming more educated and developing a sophisticated taste for
spirits, it is expected that future demand for premium alcoholic drinks will be driven by younger consumers.SECTION 3 INDUSTRY DEVELOPMENTS Alcoholic Drinks
Increasing incomes in China drive demand for quality alcoholic drinks,
reflected in the wider availability of premium products with higher prices
Top 10 Markets by Retail Value –
Alcoholic Drinks (USD million),
2019 and CAGR 2019-2024 • China leads premium alcoholic drinks globally,
500,000 8% but market opportunities for international
brands are also expected to emerge from Latin
6%
America, the US and Europe. Premiumisation is
400,000 being observed in alcoholic drinks and is
expected to be a key driver of value sales in
4%
China. With higher income per capita,
300,000
consumers are trading up to higher-quality and
2% better-tasting alcoholic drinks. This trend
200,000 reflected in higher average retail prices for
0% spirits, beer, wine and cider/perry in 2019.
100,000
-2%
• The growing healthy living trend is negatively
impacting the consumption of spirits products
with a high alcohol content. Yet, it potentially
0 -4%
brings sales opportunities for other types of
alcoholic drinks with a lower alcohol content,
such as premium beer, rice wine, and cider/
perry.
Market Value, 2019 (USD million) %CAGR 2019-2024F
Source: Passport Alcoholic Drinks, 2020 Edition
Note: F refers to forecastSECTION 3 INDUSTRY DEVELOPMENTS Alcoholic Drinks
As prosperity improves, higher-quality and healthier alcoholic drinks
will be the key driver of premiumisation
Consumers are likely to drink less, but drink better.
They are paying more attention to higher-quality
alcoholic drinks.
• As consumers become more health-conscious, they
could limit their alcohol intake, and potentially look for
higher-quality or healthier alcoholic drinks options.
• The overall premiumisation trend for alcoholic drinks
is mainly being driven by higher disposable incomes
and economic growth. The increasing demand for Alcoholic Drinks US
quality alcoholic beverages and the expanding
Health is the New Wealth,
cocktail culture are seen to continue supporting the Short-Medium Term
growth for some product categories, such as Permission to Indulge
premium English gin*. With the impact of the COVID-
June Shine – ready to drink alcoholic kombucha
19 pandemic, home has become an entertainment
hub, resulting in higher at-home alcoholic drinks June Shine is a US-based company which produces ready to
consumption. However, as the pandemic has also drink kombucha which has an alcohol content of 6%.
impacted spending, some groups of consumers are The brand claims that its alcoholic kombucha is a healthier
expected to limit their spending on alcoholic drinks in choice for consumers who want to enjoy drinking alcohol. The
the short-medium term. products are brewed from organic ingredients such as tea, fruits
and honey. In addition, they are highlighted as being gluten-free
*There are essentially two styles of gin: English, the style most common in the
UK and US, and Dutch (jenever), which is produced in Holland and Belgium.
and containing probiotics.
Note that this definition refers to style, the gin itself may be produced in any
country.SECTION 3 INDUSTRY DEVELOPMENTS Alcoholic Drinks
Brands target premiumisation by creating modern versions of popular
local or international flavours
Alcoholic Drinks China Alcoholic Drinks Singapore
Permission to Indulge, Permission to Indulge,
Short-Medium Term Short-Medium Term
Authenticity & Local Traditions Authenticity & Local Traditions
Pass-Out Ice Cream – baijiu ice cream Compendium – Chendol gin
A well-known traditional baijiu brand, LuZhou LaoJiao, Compendium is a brand under a Singapore-based brewery,
partnered with the ice cream brand Zhong Xue Gao to Rachelle The Rabbit Meadery. The brand launched a
launch Pass-Out ice cream. The ice cream’s unique premium gin using pandan leaves and coconut as key
ingredient is the baijiu filling. Typically, baijiu is highly ingredients. Pandan leaves are commonly used in
related to traditional Chinese drinking culture. The Southeast Asian cuisines and are known for their sweet
collaborative ice cream aims to modernise the image of fragrance. Meanwhile, the name Chendol gin is inspired by
baijiu by blending it with a popular Western dessert to the green colour of the Chendol rice jelly dessert.
attract younger consumers.SECTION 3 INDUSTRY DEVELOPMENTS Alcoholic Drinks
Alcoholic drinks, which are typically viewed as unhealthy, try to attract
health-conscious consumers with healthier options
Alcoholic Drinks US Alcoholic Drinks UK
Health is the New Wealth, Health is the New Wealth,
Short-Medium Term Short-Medium Term
Permission to Indulge Permission to Indulge
LQD – low-calorie canned cocktail i heart WINES – i heart Rosé canned wine
AB InBev launched LQD canned cocktails, which include i heart WINES launched sparkling wine in a can format.
health-related ingredients such as green tea, coconut The new can format is based on the on-the-go concept,
water or other fruit juice. LQD is positioned as a healthier offering more convenience to consumers as the product is
way to enjoy alcoholic drinks. The alcohol content is about lightweight and does not need a bottle opener. Compared
6%, which is lower than a typical cocktail (12%-20%) or with the standard 750ml wine bottle, the can format is
glass of wine (12%). In addition, each can of LQD is smaller. It is more suitable for consumers who want to limit
claimed to contain a low level of sugar, at 10-12g, and has their alcohol intake or do not want to have to finish the
around 200 calories. whole bottle before it loses its freshness.SECTION 3 INDUSTRY DEVELOPMENTS Pet Food
High proportion of table-scraps/home-made food for pets in Asia presents
the opportunity for conversion to packaged pet food
Global Retail Value – Pet Food (USD million)
2013/2019/2024 and CAGRs 2013-2018 and 2019-2024
50,000 16%
40,000
12%
30,000
8%
20,000
4%
10,000
0 0%
Asia Australasia Eastern Europe Latin Middle East & North Western Europe
America Africa America
2013 2019 2024F %CAGR 2013-2018 %CAGR 2019-2024F
Source: Passport Pet Care, 2021 Edition
Note: F refers to forecast
• Although North America dominates retail sales of pet food globally, growth is expected to be driven by Asia in the future.
• Dog and cat food accounts for 96% of total pet food sales globally. In Asia Pacific, the current per capita consumption of
pet food is still relatively low compared with developed markets such as North America or Western Europe. This is due to
the fact that many pet owners feed their pets with table-scraps and home-made food. However, this situation also
presents a significant opportunity for brands to convert pet owners to feeding packaged pet food. Growth opportunities
are expected to be particularly high in China and Thailand, where consumers are seeking convenience and becoming
more educated about packaged pet food.
• In addition, the ageing demographic in Asia Pacific could potentially lead to a higher preference for cats over dogs, as
consumers think cats are easier to maintain and take care of. Brands could leverage this trend and develop growth
opportunities, offering specific value-added cat food for older pet owners.SECTION 3 INDUSTRY DEVELOPMENTS Pet Food
More consumers treat their pets as beloved family members, and pay
a premium price for better-quality pet care products
Top 10 Markets by Retail Value –
Pet Food (USD million),
• The increasing pet population in China is being driven
2019 and CAGR 2019-2024
by changing demographics, especially the growth of
40,000 25% single-person households, elderly households and
couples without children. These three types of pet
20% owners typically view pets as a companion or member
30,000 of the family. More importantly, they are likely to spend
more on better-quality pet care products.
15%
• One notable trend observed in China is “cat cyber
20,000
petting”. This trend refers to the increasing number of
10% consumers who enjoy watching cat videos online and
are eventually inspired to acquire a cat of their own.
10,000 This trend is increasing in popularity, and is particularly
5%
popular among consumers in urban areas and the
younger generation. In addition, it reflects positively on
0 0% premiumisation in terms of sales of cat food, as well as
other related products, such as cat toys and cat litter.
• Similarly, the trend of acquiring dogs is also growing in
China. However, stricter regulations on dog breeds and
dog walking in some cities may impact the decision to
Market Value, 2019 (USD million) %CAGR 2019-2024F acquire a dog.
Source: Passport Pet Care, 2021 Edition
Note: F refers to forecastSECTION 3 INDUSTRY DEVELOPMENTS Pet Food
As pets are treated as family members, opportunities for health-focused
and customised formulae can be capitalised on
Cat and Dog Food – Dry/Wet Food (USD million)
Premium vs. Mass, Sales by Region and CAGRs 2019-2024
40,000
16%
30,000 13%
10%
20,000 7%
10,000 4%
1%
0 -2%
Asia Australasia Eastern Europe Latin AmericaMiddle East & North America Western Europe
Africa
Mass (2024F) Premium (2024F) Mass %CAGR 2019-2024F Premium %CAGR 2019-2024F
Source: Passport Pet Care, 2021 Edition
Note: F refers to forecast
Pet owners are focusing more on quality and specialised diets to maintain their pets’ wellbeing
• Increasing premiumisation is seen in pet food, as pet owners perceive and raise their pets as beloved family members.
This trend is expected to grow in the future, especially among pet owners in emerging markets.
• Trends for pet food closely follow trends which have emerged in human food; for example, ingredients with natural,
organic or grain-free claims.
• In addition, pet food in humanised formats is expected to grow in the near future, e.g. cakes and ice cream for pets.
Meanwhile, specialised diets, such as specific formulae for different breeds and ages, and therapeutic and customised
formulae, are likely to be future growth drivers.SECTION 3 INDUSTRY DEVELOPMENTS Pet Food
Pet health is the main focus when consumers trade up to premium pet food
Pet Food China Pet Food Thailand
Health is the New Health is the New
Short-Medium Term Short-Medium Term
Wealth Wealth
Shanghai Bridge Petcare – premium pet food Bone and Raw – B.A.R.F diet for dogs and cats
Shanghai Bridge Petcare is a China-Norway joint venture Bone and Raw is a Thailand-based pet food brand which
company and is one of the leading companies in premium focuses on the B.A.R.F diet concept (Biologically
pet food. The brand claims that its products follow Nordic Appropriate Raw Food or Bones and Raw Food). The
standards, with the inclusion of Oriental diet philosophy. Its brand claims that its pet food is made from human-grade
products mainly focus on promoting pet health, such as ingredients: 97% fresh meat/bone/offal, and 3% from
premium, grain-free, probiotic or herbal formulae. natural supplements such as extra virgin olive oil, cold
press coconut oil and apple cider vinegar. The products are
also free from preservatives, gluten, potato, wheat, grain
and corn.SECTION 3 INDUSTRY DEVELOPMENTS Pet Food
Personalised and humanised pet food are gaining popularity, driving
product value
Pet Food Belgium Pet Food UK
Permission to Indulge, Personalisation,
Short-Medium Term Short-Medium Term
Personalisation Health is the New Wealth
Smoofl – ice cream mixes for dogs Tails.com – customised dog food
Smoofl offers an at-home DIY ice cream mix specifically Tails.com is a UK-based dog food brand which focuses on
designed for dogs. The brand claims that its ice cream mix offering customised formulae. The brand allows consumers
is free from grain, lactose and fat, so is also safe for dogs to create their dog’s profile. The formula can then be
with food sensitivities. customised to the specific dog breed, as well as allergy
and nutrition needs. In addition, the brand claims that it can
Smoofl ice cream mix can be purchased on its website,
make portion recommendations for feeding in order to help
and is also available in physical stores in Belgium and
dogs maintain their ideal weight.
other selected stores in the Netherlands, France, the UK,
Germany, Greece and Slovenia.Beauty &
SECTION 3 INDUSTRY DEVELOPMENTS
Personal Care
Wellness, safety and international beauty concepts set to drive future
per capita spending on beauty and personal care products
Global Retail Value – Beauty and Personal Care (USD million)
2013/2019/2024 and CAGRs 2013-2018 and 2019-2024
250,000 16%
200,000
12%
150,000
8%
100,000
4%
50,000
0 0%
Asia Australasia Eastern Europe Latin Middle East & North Western Europe
America Africa America
2013 2019 2024F %CAGR 2013-2018 %CAGR 2019-2024F
Source: Passport Beauty and Personal Care, 2020 Edition
Note: F refers to forecast
• Asia is the key market for beauty and personal care, accounting for 35% of global retail sales in 2019. It is expected that
consumers in the region, particularly in China, India and Japan, will be the main drivers of future growth for both skin
care and colour cosmetics. Meanwhile in Middle East & Africa, growth is expected to be driven by skin care and hair
care, the growing consumer demand for masstige brands, and the international beauty concept.
• In emerging markets such as India and Indonesia, sales will be driven by population growth and increasing per capita
spending on beauty products. Consumers are also adopting more international beauty concepts, for instance the
concepts of halal, Ayurveda, K-Beauty (South Korea), C-Beauty (China) and J-Beauty (Japan). These trends are
influencing purchasing decisions and adding value to products.
• In addition, consumers are increasingly adopting wellness concepts and lifestyles, and prioritising ingredients safety. It
is expected that these factors will continue to be key purchasing criteria during the COVID-19 pandemic.You can also read
