Are There Growth Opportunities For Plant-Based Beverages In Asia?
Thursday, April 9th, 2020
While plant-based beverages have been around on the market for a long while, there has been growing awareness and adoption amongst consumers in Asia. Not only do these products include soy milk, coconut water and plant-based hot drinks, but there has been widening availability of almond and other nut milks. The increase in demand for plant-based beverages is attributed to growing incomes and health consciousness.
Moreover, more consumers are shifting towards a healthier lifestyle, adopting veganism to appeal to their ethical beliefs as well as becoming knowledgeable about the beverages’ health benefits, such as its support for gut and digestive health. In response, companies have made major investments in product innovation, launching new plant-based beverages. Within China, major food brands such as Huiyuan and Dali Foods have invested in this category, recognising the potential growth of plant-based beverages. Likewise, Thailand saw new launches of Fammy’s sweetcorn milk and Milky Coco’s matcha green tea-flavoured coconut milk.
Soy milk remains dominant within plant-based milk amidst competition from almond milk
Within plant-based milk, soy drinks have traditionally been the most popular in Asia, accounting for a total value of USD4.7 billion in 2019, growing at a six percentF CAGR in value terms between 2014 and 2019. This is due to the long-standing tradition of soy consumption in developed markets like China, Japan, Hong Kong, Taiwan and Singapore; its wide availability and health benefits, including its good source of protein. Furthermore, soy milk appeals to those who are lactose intolerant as well as elderly consumers seeking beverages with higher nutritional value.
Brands such as Yeo’s Soya Bean in Singapore continue to generate excitement amongst consumers; its “bandung” (rose syrup) flavoured soy drink which is fortified with calcium to address rising health consciousness, is a hit. In Hong Kong, Sansui Unsweetened Soymilk, which contains premium organic soybeans, benefited from support from actress Eliza Sam upon its launch in 2018, creating excitement amongst young adults and female office workers, who are strongly attracted by its good-for-health benefits and fresh ingredients with no GMO or chemical pesticides.
Meanwhile, in emerging markets such as Vietnam and Indonesia, packaged soy milk remains niche and available in premium retail outlets, appealing to higher income consumers due to its higher price point.
Nevertheless, while soy drinks dominate plant-based milk due to its more established presence, demand for other plant-based alternatives such as oat, rice, coconut and almond have increased, offering increasing competition to soy drinks. In China, brands such as Dou Ben Dou and Plant Selected are facing stiff competition due to their higher prices and being seen to have numerous additives compared to other milk alternatives, which are deemed to be more natural, highly nutritious and address lactose intolerance. In 2019, total value sales of other milk alternatives reached USD6.5 billion, with China, Taiwan and Thailand being the three biggest markets.
Almond milk has been increasingly popular with perceived health benefits such as reducing the rate of heart disease and being high in vitamin D. In addition, it contains fewer calories compared to soy milk, and this appeals to health-conscious consumers. To cater to growing demand for almond milk, companies have launched new products. This includes the Almond Breeze brand by Blue Diamond Growers present in markets like South Korea and Thailand, which appeals to female consumers through its unsweetened flavour. Likewise in the Philippines, Japanese company Tsukuba Dairy Products has launched its almond milk, which is sold at a premium, containing higher almond content of eight to 10 percent. Other innovations weaving in almond and soy milk are seen in Singapore, where prominent brand Nutrisoy by Frasers & Neave, launched almond and purple sweet potato soy milk.
Another type of milk alternative that has generated consumer interest is nut milk drinks, and these are typically long-standing ingredients found in food. Nut milk is perceived to contain more nutrients and is lower in fat compared to cow’s milk. The growing interest in nut-based beverages can be seen in China, where Yangyuan successfully obtained some USD630 million funding for its walnut beverage.
While nut milk remains small compared to soy and almond milk, one company in Vietnam has differentiated itself by focusing on combining different types of milk alternatives together. TH Group launched its NUT milk product line in 2018, combining macadamia nuts, walnuts, oats and fresh cow’s milk. While this is traditionally perceived as limited to high income consumers in emerging markets, TH’s NUT milks were widely distributed, appealing to mass consumers generating consumer excitement and strong sales performance. By adopting a mass strategy, the company was able to increase consumer awareness of nut milk, resulting in other companies such as Vinamilk launching new variants such as walnut-flavoured soy milk and Simple Foods Co Ltd’s 137 degrees enhancing its promotion of cashew, almond and hazelnut pistachio milk in stores.
Plant-based hot drinks remain popular due to ease of convenience and nutritional benefits
Besides plant-based milk drinks, plant-based hot drinks remain popular amongst Asian consumers as a source of nutrition. Demand has increased as total value sales of other plant-based hot drinks has increased by three percent between 2014 to 2019, hitting USD6.1 billion in 2019. With changing lifestyle habits and consumers leading busier lives, convenience plays a key role in consumption. Grain and oatmeal beverages are perceived to offer quick and easy solutions for breakfast or breaktimes for office workers, and they are perceived as having high nutritional content and contain health benefits such as reducing cholesterol, high calcium, added vitamins and low sugar, appealing to the growing ageing population as well as women. For example, sesame plant-based hot drink in Hong Kong appeal to health-conscious consumers as it seeks to nourish the skin and promote a healthy balance in the body. Similarly, in emerging markets like the Philippines, plant-based hot drinks brands like Energen provide high nutrition for workers seeking convenience while ensuring sufficient nutrition.
Challenges faced by limited consumption of plant-based beverages
Despite the growing emergence of plant-based beverages, which has a strong health positioning, the category is expected to remain niche, appealing to health-conscious consumers. This is because of taste, affordability as well as cultural reasons. For instance, taste acceptance continues to be a key attribute for consumers. According to Euromonitor trends survey 2017, 35 percent of consumers regard superior taste as important when purchasing their beverages. Hence, even though Asian consumers have been used to consuming plant-based protein such as tofu, it is a different matter when it is in the form of a beverage. As such, there still remains a need for plant-based beverages to appeal to local consumer tastes. Furthermore, plant-based beverages remain at a higher pricing point, limiting their appeal to high income consumers. The issue of affordability remains important, especially among low income consumers in developing markets. Last but not least, due to cultural reasons, with plant-based products typically consumed by Buddhists in Asia, non-Buddhists are less likely to consume them.
What strategies should companies adopt to succeed in plant-based beverages?
Despite these barriers to growth, one has to note that there remain opportunities for growth in plant-based beverages in Asia. Plant-based milk drinks is set to continue to grow in Asia Pacific at a two percent CAGR between 2019 and 2024, reaching USD12.3 billion in 2024. Similarly, plant-based hot beverages is expected to increase at a CAGR of two percent, reaching USD6.7 billion by 2024. This is because more consumers are becoming health-conscious and recognising the importance of consuming healthy products, which includes plant-based beverages.
To deal with taste acceptance, it is critical for manufacturers to understand consumer preferences and motivations for consuming plant-based beverages. Given the wide variety of dietary trends in each market, it is important for manufacturers to recognise the types of occasions when consumers drink, as well as incorporate local ingredients to cater to the local taste buds. This means that investment in product innovation is important and having a good R&D infrastructure remains important for plant-based beverages.
Furthermore, it is important to spread consumer knowledge and awareness through active marketing efforts, educating consumers on the benefits of plant-based beverages, while ensuring affordability such as through bulk purchases, especially in developing markets in order to appeal to mass consumers seeking better nutrition.
By Nathanael Lim, Senior Research Analyst at Euromonitor International
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