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Consumer product companies and brands are beginning to regain their footing following several difficult quarters in which surging inflation , dim economic prospects , and rising interest rates slowed spending on consumer goods in many sectors . For consumer product companies , growth has largely come from pricing rather than volume . In Southeast Asia , consumers have cut their spending in the short term . But the good news is that macro forces are ripe for long-term growth .
For brands that are already present in Southeast Asia and those that are exploring a meaningful presence here , having a playbook on the rules of the game and the trends that are shaping the region ’ s consumer categories is key .
With that goal in mind , in Q3 2023 , Bain & Company partnered with Meta and DSG Consumer Partners to conduct a survey with consumer product company senior executives and 9,000 consumers from across Southeast Asia to gain insights into issues likely to drive the region ’ s consumer products expansion over the next five years . The results are captured in our recently released SYNC Southeast Asia report , Bold Moves : Leading Southeast Asia ’ s Next Wave of Consumer Growth .
The report uncovers several traits defining consumer behaviors — chief among them their current , value-conscious spending habits — while underscoring that the region includes a diverse set of countries and cultures , each with its market preferences that brands must recognize and engage .
Interestingly , however , older consumers were not far behind Gen Z in their reported daily use of online shopping channels and digital tech , including even new technologies exploration , such as AR / VR electronics . The takeaway is clear : to build successful market growth , companies must consider nuanced / personalized marketing and offerings that engage all Southeast Asian age demographics .
Companies can also build successful market share with SKUs targeting members of the solo economy , another emerging Southeast Asian demographic that will shape consumer preferences and spending habits in the decade ahead . Already , small and single households represent 50 % of the total population in the region , with the percentage of single-person homes growing at 2.4 % annually .
To effectively gain market leadership in the region , companies must first recognize Southeast Asia as “ same-same , but different .” Each battlefield ( market , channel , or consumer segment ) must be won separately , requiring ruthless prioritization and sequencing to allocate resources effectively . Once the “ where to win ” is clear , companies may want to move to “ how to win .”
Brands can look to “ insurgent disruptors ,” companies that are effectively stealing market shares from incumbents , for inspiration on how to profitably and quickly grow in the region . These brands report finding success — taking share away from incumbent brands , leading to a much higher share volatility in the last five years than the five years preceding them — by deploying one of five strategies :
The Localized Traditional Approach ( specialized or localized products priced for the masses )
SEA Primed for Growth :
Businesses Must Make Bold Moves and Seize Opportunities
By Praneeth Yendamuri , Dhruv Vohra and Sameer Mehta
shoppers are more likely to spend more on a product or brand ( 63 %) and recommend it ( 66 %).
AI has become an important tool for businesses to meet these expectations at scale and across the full customer journey . With the Southeast Asian consumer increasingly embracing AI and use cases growing , the region is well suited for AI to take off at pace .
Targeted Playbook for Effective Brand Growth
For brands ready to make a bold move in Southeast Asian markets , our report suggests a four-step action model for success :
Prioritize , sequence , and fund your Southeast Asian ambition
Brands should base their top priorities in the region on future-facing opportunities there — and seek funding accordingly . At the same time , companies must strategically choose which markets , channels , and consumers to target , whether low-end consumers , consumers across all incomes , or high-end luxury consumers only . Brands that avoid a one-size-fits-all model and effectively discern where to go deep versus broad in their marketing approach will net the greatest profit gains .
Build an obsession with the “ local ” consumer Companies must have an exhaustive understanding of their target consumers ’ preferences and buying habits to cater to them effectively . This involves meeting and engaging consumers where they are — including well-allocated spending across various marketing channels — and choosing routes to market that meet consumer needs .
Representing the third most populous region in the world — with more than 700 million residents — and the third-fastest growing large economy in the world , Southeast Asia ’ s status as a market block has long been well-established . In coming years , however , its market influence is expected to grow even more , particularly as private equity and venture capital funding continue flooding the region and companies look to de-risk their supply chain footprint .
As a whole , the region ’ s expected typical GDP growth rate is projected to well exceed the global average of 2-3 %, with some Southeast Asian countries doubling it . This economic upswing and its related boost to the region ’ s high- and upper-middle-class populations is expected to usher in new levels of consumer spending , particularly for previously untapped markets , including luxury goods .
Already , certain categories , such as beauty products and branded apparel , are shifting in consumers ’ minds from “ wants ” to “ needs .” This mindset reflects Southeast Asian shoppers ’ growing willingness to pay for elevated goods that once might have seemed like extravagances , so long as their value is apparent .
Our report also emphasizes the future power of Gen Z — representing shoppers currently between the ages of 17 and 27 — in expanding and shaping the Southeast Asian marketplace , particularly in their preference for online shopping and products that align with their generation ’ s sense of individuality , authenticity , sustainability , and identity .
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The High-End , Digital First Approach ( purpose-driven , digitally enabled operations at premium pricing )
The Low-Cost Champion Approach ( economy pricing to target consumers from lower- to mid-income levels )
The Retail Copycat Approach ( affordable , retail-branded products that mimic the look and feel of high-end branded goods )
The Shapeshifter Approach ( products focused on delivering new solutions for unmet needs ).
Significantly , our survey found the region ’ s consumers to be more concerned about their well-being than U . S . and European consumers . Overall , Southeast Asian shoppers report a strong willingness to pay for wellness goods , including sports nutrition , fitness wearables , and vitamins or supplements . Still , these products ’ high costs and limited availability prevent their larger market adoption .
Additionally , savvy shoppers throughout the region report a growing preference for products that are customized or personalized to fit their unique needs , from wellness and baby care products to beauty products and electronics . Because personalization strategies are expensive and hard to execute at scale , many companies are embracing AI to explore bringing production and delivery costs down .
In addition to the personalization of actual products , consumers show a strong preference for personalized content / marketing . When marketing reach is personalized ,
Evolve your business models and consumer engagement Future winning models in Southeast Asia are markedly different from historically winning ones . We predict the greatest success for companies that target one or more of the following approaches : top-line growth and ESG prioritization , fully local product specialization , a flexible approach to asset ownership , and investments in disruptive or innovative marketing platforms , including those driven by AI-powered data analytics .
Become a “ scale insurgent disruptor ” Companies primed for success in the Southeast Asian market must engage the best approaches from the insurgent and incumbent mindset . By finding a middle ground that walks the line between deriving scale advantages , prioritizing stable returns , and using models that can pivot quickly to respond innovatively to local consumer needs , brands can maximize their growth and profit potential in the region .
Southeast Asia is primed for growth now . For companies ready to move strategically , the region presents a rare opportunity to expand both brand loyalty and brand reach in previously untapped markets within one of the fastest-growing consumer segments on the globe .
Praneeth Yendamuri is a Partner at Bain & Company , Dhruv Vohra is Managing Director at Global Business Group , Mid-Market , APAC at Meta and Sameer Mehta is Investment Director and Head of Southeast Asia at DSG Consumer Partners .