Southeast Asia’s consumer landscape is undergoing a profound transformation. Affordability pressures, digital disruption, and the rise of local and regional brands are reshaping the fast-moving consumer goods (FMCG) industry, according to a new report by Bain & Company and NielsenIQ (NIQ).

As Southeast Asia’s key economies (SEA-6: Indonesia, Malaysia, Philippines, Singapore, Thailand, and Vietnam) expand, private consumption is projected to grow by 8% annually to nearly $5 trillion by 2035, potentially surpassing North America. This momentum is fueled by rising affluence and rapid urbanization in the region, with Vietnam and Thailand’s urbanization rate each expected to rise 7% over the next decade.

Nevertheless, the past few quarters have seen the decline in consumer sentiment affecting FMCG category growth rates, with inflationary pressures and macro-uncertainty being key drivers. Within this environment, consumer consumption patterns are becoming increasingly polarized. Consumers are seeking affordable essentials, while selectively investing in “better-for-me” products. At the same time, artificial intelligence and social commerce are redefining consumer journeys from discovery to purchase, ushering in a new phase of digital-first consumption.

Key highlights

• Macro backdrop: Growth remains challenged, structural risks and affordability pressures persist.
• Consumer shifts: Spending is polarizing—trading up in “good for me/my family” categories (Beauty, Baby) and trading down in others.
• Route-to-consumer: Channel fragmentation and multi-layered distribution make execution harder than ever.
• Local heroes: Regional brands now command more than 50% of FMCG value in several Southeast Asian markets.
• AI and social commerce: TikTok Shop now drives ~20% of e-commerce and is growing fast; AI is reshaping consumer discovery and decision-making.
• Sustainability: ESG intent is strong, but cost and convenience continue to outweigh action.

Six out of ten leaders feel they aren’t well prepared for the future

Leaders see the biggest capability gaps in three areas of their business:

• Operating model and decision velocity
• Insurgent mindset and agility
• Route-to-consumer excellence

Imperatives for leadership

1. Sharpen ambition and focus investment: Be clear on must-win battlefields (markets, channels, consumers) and ensure they’re well-funded.
2. Re-earn your right to win: Strengthen local consumer obsession across price, functionality, and emotional resonance.
3. Simplify and modernize route-to-consumer: Build data-led, tech-enabled capabilities to manage complexity and cost-to-serve.
4. Adopt a scale-insurgent mindset: Redesign operating models for speed, empowerment, and AI-enabled decision-making.

About NielsenIQ

NielsenIQ (NIQ) is a leading consumer intelligence company, delivering the most complete understanding of consumer buying behavior and revealing new pathways to growth. NIQ’s global reach spans more than 90 countries, covering approximately 85% of the world's population and more than $7.2 trillion in global consumer spending. With a holistic retail read and the most comprehensive consumer insights—delivered with advanced analytics through state-of-the-art platforms—NIQ delivers the Full View. For more information, please visit www.niq.com.