Equities
What drives the Asian consumer? – Digitalization
Digitalization is very evident in Asia, and is becoming a larger component of GDP in many Asian economies.
27 May 2021
Article
What drives the Asian consumer? – Premiumization
27 May 2021
The growing Asian middle class is a well-documented phenomenon. Unsurprisingly, as Asian consumers are becoming more affluent, they have an increased focus on quality of life. From daily essentials like tea and coffee to food, toilet paper and big-ticket items like home appliances and cars, Asian consumers putting a much greater emphasis on quality. This consumption upgrade, or premiumization, is prevalent across product categories and consumer segments and provides a compelling opportunity to companies that are able to position themselves to benefit.
Figure 1: Chinese consumers prefer premium brands in many product categories
Source: McKinsey 2018 Global Consumer Sentiment Survey. As of September 2018 (latest available data).
One company that we believe has shown the potential to meet this demand is a food and beverage company, Uni-President China. We have been a long-term investor in this company and we have observed significant product innovation in the premium space over the past few years.
This has included the rollout of new flavours, enhanced nutritional elements and upgraded packaging. For example, it launched a self-heating food product, which has been well-received by customers thanks to the use of innovative instant cooking technology, the usage of high-quality rice, and a succession of new flavour variants. In 2020, sales of this product rose more than 600%, despite its significantly higher price point relative to other instant foods.
According to its management, launching new products in high-end segments is a key strategic focus for the company going forward, which we believe will help it expand market share and deliver enhanced growth.
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Important Information
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Data as at 30.04.2021, unless otherwise stated. This document is marketing material and is not intended as a recommendation to invest in any particular asset class, security or strategy.
Where individuals or the business have expressed opinions, they are based on current market conditions, they may differ from those of other investment professionals and are subject to change without notice.
