What new brands need to succeed in Asian markets

Price sensitivity remains a critical factor especially in essential categories like food and beverages.

INTRODUCING new products in Asian markets comes with its set of hurdles, with competitive pricing standing out as the challenge.

“Competitive pricing is often a challenge. Large corporations often possess the resources to maintain low prices for their new offerings, catering to consumer demand effectively,” Frida Polyak, innovation consultant at Euromonitor International, told Retail Asia.

However, she pointed out that smaller and independent innovators may struggle to compete on pricing, impacting their ability to thrive in the market.

Polyak noted the crucial role of cost in brand sustainability, particularly in price-sensitive regions like Asia, where 40% of consumers in Singapore prioritise affordability when purchasing food and beverages.

For instance, the pricing disparity between established brands and new entrants was evident in the Ready-to-Drink (RTD) Tea category in Singapore. Haus Brew, with its innovative offerings, priced at $1.84, contrasted sharply with No Ordinary Ice Tea, initially priced at $3.19, highlighting the pricing dilemma faced by new products.

Brand turnovers

According to a Euromonitor International analysis, the FMCG sector is experiencing a significant turnover in brands, with nearly a third of those introduced in 2022 already discontinued by the end of 2023.

Brands launched last year also faced less than a 60% chance of long-term survival.

She attributed this trend to the volatile nature of today’s market, where new brands often struggle to endure amidst short consumer attention spans and a constant demand for novelty.

Citing Euromonitor’s Passport Innovation platform, she said that in the food and beverage sector, up to 40% of new brands may fail within their first two years.

The innovation consultant stressed the necessity for shorter product life cycles to continuously engage consumers with fresh offerings.

Moreover, Polyak said consumers are spending cautiously even when it comes to buying everyday essentials such as groceries.

The taste factor

She also cited that about 23% of global consumers and 17% of Singaporean consumers are willing to pay extra for food and beverages with superior taste.
 
“It’s very simple — if a snack or a beverage doesn’t taste good, it’s not going to succeed. We see that consumers are even willing to spend more on better taste,” Polyak said.
 
She stressed that new and inventive flavours are capturing consumers’ interest, with a trend towards bold and innovative options. This is exemplified by Coca Cola’s latest offering, Coke Zero K-Wave, which drew inspiration from Korean fruits, boasting a distinctive fruity taste.

Online availability

Meanwhile, digitalisation and e-commerce have become integral to the success of new product launches in Asian markets.

With a significant shift towards online shopping, particularly in the wake of the pandemic, innovative products are increasingly debuting in the digital space.

In Asia, the exponential growth of retail e-commerce, projected to continue beyond the pandemic, underscores the importance of online availability for FMCG (fast-moving consumer goods) products.

In markets like Thailand, where 55% of digital consumers prefer purchasing food and beverage products online via their phones, digital channels are indispensable for reaching consumers effectively.