Reframing value amid crises and shifting consumer dynamics in SEA

Words by Alice Dall
Date 2023-11-03

Post-pandemic, the fast-moving consumer goods (FMCG) sector, especially in the Southeast Asian arena, has embarked on a journey fraught with intricate challenges. These challenges haven’t just stirred the cauldron of consumer behaviour but have also laid a distinct set of challenges at the feet of multinational giants. This article delves into the motivations behind the FMCG titans’ measured approach to redefine value amidst this multi-crises scenario.

Unpacking Southeast Asia

Before diving deep into the labyrinth of challenges facing FMCG giants in Southeast Asia, it’s vital to acknowledge the rich tapestry of diversity that paints this region. Southeast Asia comprises 11 nations boasting a mosaic of unique cultures, languages and religious affiliations. This cultural diversity is further woven with threads of historical connections, bustling trade networks and the stark contrasts between urban sprawls and serene rural landscapes. Stretching across the equator, this region experiences perpetual tropical and sub-tropical climates, all while standing sentinel against the forces of climate change. Occupying a mere 3% of the world’s land mass, it is a haven for over 8% of the global population.

This vibrant region, where nearly 60% of its inhabitants are under the age of 35, places paramount importance on community and familial bonds. Yet, it’s a complex region, demanding nuanced attention due to its distinctive characteristics.

SEA’s multi-crisis canvas

To fathom the present landscape, we must first grasp the multi-crises tableau that unfurls across Southeast Asia. The region, much like the rest of the world, grapples with a plethora of challenges. These crises encompass the aftershock of the pandemic, economic fluctuations shrouded in uncertainty, eco-centric concerns and the ever-shifting dynamics of society. These converging crises have fundamentally reshaped the very essence of consumer behaviour.

Essentials take centre stage

Amid the uncertainty sowed by these crises, Southeast Asian consumers have resorted to a profound prioritisation of essential commodities. Extravagance and frivolous spending have been relegated to the background as individuals centre their focus on the necessities of life. Consequently, we observe a discernible surge in the awareness of value among consumers. People are meticulously scrutinising their spending patterns, gravitating towards products that offer genuine utility and affordability.

In the design realm, we’ve witnessed the humble sachet rise to prominence, becoming a pivotal touchpoint for brands in many markets as an accessible entry point for consumers.

Sustainability ascends

Sustainability has ascended to a prominent position as consumers express concerns about disruptions in supply chains and the ethical responsibility of brands towards the environment. As Southeast Asia finds itself on the frontline of climate change, people are gradually awakening to the physical impact of their brand choices.

In the Philippines, we’ve witnessed the emergence of local brands like Messy Bessy, which are both social enterprise and advocate for products refills.

Another remarkable example is the dissolvable shampoo bottle introduced by BBDO Guerrero Philippines, a testament to how brands and businesses are at the forefront of driving behavioural change.

Local pride flourishes

One of the most profound shifts in consumer behaviour in Southeast Asia is the re-emergence of local pride. Consumers aren’t merely expressing a preference for local products, they are demanding a deeper level of engagement from brands. This transcends the mere presence of locally produced goods and entails building trust and loyalty by intimately understanding and respecting the unique needs and preferences of local communities.

Orang Tua, a renowned Indonesian brand, serves as an exemplar of effective local engagement. It has cultivated profound connections with Indonesian consumers by crafting brands that resonate with the specific tastes and cultural preferences of the Indonesian market. Its engagement extends beyond commerce to community events, sponsorships and initiatives that contribute to the well-being of local communities. This profound level of local involvement has engendered trust and loyalty, underscoring the paramount importance of community and local identity.

Metamorphosis in consumer behaviour

The metamorphosis in consumer behaviour across Southeast Asia is exerting direct influence on brand choices.

Relevance trumps premiumisation

Premiumisation, once a favoured strategy among FMCG brands, now faces increasing scepticism. As consumers sharpen their discernment amidst the multi-crises, the extravagant allure of premiumisation is increasingly scrutinised.

In light of evolving consumer priorities, FMCG titans must pivot their focus towards products that seamlessly align with essential needs. Emphasising the core portfolio of essential goods, while highlighting their relevance in daily life, emerges as paramount.

Value-centric narratives

Over the years, many consumer brands have embraced purpose-driven marketing, intertwining their products with social and environmental causes. However, a certain cynicism has emerged, with critics suggesting that the industry may have reached a saturation point of “peak purpose”.

Consumers now seek tangible value beyond a brand’s societal commitments. The quest for genuine utility and relevance has prompted a re-evaluation of brands. Brands must pivot their narratives toward value, emphasising affordability, utility and sustainability to strike a deeper chord with consumers in these uncertain times.

Local engagement

Local engagement strategies are imperative. This encompasses an intimate understanding of local traditions values and consumer behaviours, which should be seamlessly woven into product offerings and marketing campaigns.

In this diverse tapestry, one-size-fits-all strategies falter. FMCG giants must tailor their approaches to each unique locale, celebrating the vibrant mosaic of cultures and preferences that define Southeast Asia. These localised strategies will fortify their roots and enable them to flourish amidst the multi-crises, effectively meeting the evolving demands of Southeast Asia consumers.

Amidst the tumult of multi-crises and the ever-evolving tapestry of consumer behaviour in Southeast Asia, FMCG titans must deftly adapt their strategies. The era of premiumisation must gracefully step aside, making way for a renewed focus on value and relevance. By astutely comprehending and addressing the evolving needs and priorities of consumers in this dynamic region, FMCG brands will not only endure but flourish in a swiftly shifting terrain. In doing so, they will ensure that their products remain an integral part of the everyday lives of Southeast Asian consumers.

First published in WARC.