Forbes.com

The New Rules for Consumer Brands in Developing Asia

The best consumer goods companies in emerging Asia are using their low-cost positions and knowledge of local tastes to win in key categories.

著者：Mike Booker, Sebastien Lamy, Bruno Lannes and Nikhil Ojha

First published on 3月 28, 2016
min read


This article originally appeared on Forbes.com. Meet the new Asian multinational. From Universal Robina Corporation in the Philippines to Mayora in Indonesia, the best consumer goods companies in emerging Asia are expanding across the region, using their low-cost positions and knowledge of local tastes to narrow the gap on Western multinationals and win in key categories. No longer is the battle between local champions and Western multinationals. Today it’s among local champions, Western multinationals and these new Asian multinationals, which have introduced a whole new level of competition: They’ve consolidated product categories, effectively raising the barriers to entry and leadership for others hoping to win in this promising region. The rise of Asian multinationals is just one of several signs that the rules have shifted for consumer goods companies in developing Asia, a market that despite unsteady GDP, still offers solid fundamentals for growth. The region is home to nearly 50% of the world’s population, it can deliver profits that exceed global averages, and by any indication, most companies’ moves to capture this vast market are still in their infancy. However, winning means understanding the nuances of a new era for growth. What else has changed? For one thing, consumers now can pay more and are becoming more discerning and demanding more choice. This has opened the door for new categories and subcategories and altered the dynamics of existing categories. For example, Bain & Company research has found that 38% of the volume in China’s yogurt sales last year came from premium SKUs. Consumers in developing Asia will pay more in categories devoted to health or to improving their quality of life, but they are less loyal to any particular brand. This poses a threat for incumbents and creates an opportunity for followers and new entrants. Another big trend: Geographic markets within the region have evolved differently from one another. Differences among markets are now more prominent than similarities. Fully 48% of all milk products purchased in Indonesia are in the form of powdered milk, a format barely consumed in China and India. Modern trade accounts for the majority of grocery retail sales in China but is miniscule in India. In Indonesia, smaller formats such as mini-marts and convenience stores are preferred. In China, mother-and-baby-stores have proliferated in recent years. Similarly, the online world is taking on varying shapes in different countries. In China, the preferred e-commerce platform is Alibaba. In India it’s Flipkart. In Southeast Asia, it’s Lazada. Overall, the region is experiencing unprecedented growth in connectivity, particularly in mobile commerce, but digital adoption is far greater in China (with 60% growth each year since 2010) than in India, Malaysia and the Philippines (each of which grew by 10% annually during the same period). Also, different categories and products within categories shift to online sales at different speeds in different countries. As these dissimilarities come into clear view, some companies are gaining an edge over rivals by following a few basic rules. In such a diverse environment, winning companies maintain an unwavering focus on just a few products and brands in a core set of markets, with the goal of building up leadership positions (either organically or inorganically). Focus allows companies to provide the scale support required to help ensure success. For example, spending at scale on advertising is necessary to achieve threshold share of voice. Winning with a more focused portfolio requires strategies that are tailored to the nature of the category and country, using market position as a guide. For example, market share leaders extend their leadership, and close followers strive to become leaders by growing their core business and carefully expanding the category. This is the approach taken by China’s Vinda, the market leader in household paper, which expanded its category by moving into baby diapers. Over the past decades, Indonesia’s Petra established itself as the chocolate category leader in part by hitting the right price points for occasions such as after-school snacks and by making the most of its low-cost position. Then, among the moves that helped it stay on top, it targeted a few key brands to maximize its advertising budget. Distant followers are best served by doubling down, pursuing a niche or, if the prospects for growth seem unfavorable, exiting the market. Distant follower Wings took advantage of its route-to-market capabilities in detergents to grow its position in noodles in Indonesia, gaining share from leader Indofoods. It then expanded to Malaysia, where its Mi Sedaap brand noodles took the market by storm. In both cases, Wings established itself as a strong follower. New entrants can find an underserved category and introduce it to the market, as L’Oréal did when it brought hair-coloring kits to India, where powder dyes predominated, or Indonesia-based Wardah did by serving the market for halal cosmetics. China’s Bright Dairy partnered with a European company to enter the ambient yogurt category, introducing recipes and ingredients from Momchilovtsi, a Bulgarian village. Emphasizing that foreign connection in advertising was one of the ingredients that helped the brand flourish. Only six years on the market, Momchilovtsi-branded yogurt contributes about one-third of Bright Dairy’s total revenue. The brand’s revenue grew by 85% in 2014, making the yogurt a billion-dollar business. Brands can gain access to an existing category through partnerships with local brands or by turning to mergers and acquisitions, as Mondelez International did with its purchase of Kinh Do’s snacks business in Vietnam. Winning companies look for acquisition targets that are closest to the core and that can reinforce organic growth. Companies in all market positions need to invest to win at the point of sale in both the physical and online worlds. Establishing a leading point-of-sale presence requires building out a route to market that will provide maximum reach, taking a highly disciplined approach to sales execution in both traditional and modern trade alike and delivering an online shopping experience that complements the physical store experience. Finally, companies hoping to prosper in the region can’t succeed without keeping their costs below those of competitors, even as those costs rise in some Asian markets. A low-cost model (with lean structures and overhead) helps a company keep prices down, maintain margins and fuel growth. It also provides protection from opportunistic new entrants and activist investors, a big influence and a looming threat. Winning means constantly looking for opportunities to generate savings. In a major cost transformation effort, India’s Godrej saved millions of dollars by reducing its manufacturing footprint in a single product category and by reducing inventory by six days. This is a defining moment in developing Asia. While growth rates vary among the countries, these markets still hold great promise for consumer goods companies. However, as the dynamics of each market and product category take shape, brands will need to act before it’s too late. How companies respond in the next five years will determine which brands will thrive in the region for decades and which brands will need to look elsewhere, to possibly less-promising markets, for their future. Mike Booker is a Bain & Company partner based in Singapore; he leads the firm’s Consumer Products and Retail practices for the Asia-Pacific region. Sebastien Lamy is a partner based in Singapore, Bruno Lannes is a partner based in Shanghai, and Nikhil Ojha is a partner based in New Delhi. All are members of Bain’s Consumer Products practice.

This article originally appeared on Forbes.com.

Meet the new Asian multinational.

From Universal Robina Corporation in the Philippines to Mayora in Indonesia, the best consumer goods companies in emerging Asia are expanding across the region, using their low-cost positions and knowledge of local tastes to narrow the gap on Western multinationals and win in key categories. No longer is the battle between local champions and Western multinationals. Today it’s among local champions, Western multinationals and these new Asian multinationals, which have introduced a whole new level of competition: They’ve consolidated product categories, effectively raising the barriers to entry and leadership for others hoping to win in this promising region.

The rise of Asian multinationals is just one of several signs that the rules have shifted for consumer goods companies in developing Asia, a market that despite unsteady GDP, still offers solid fundamentals for growth. The region is home to nearly 50% of the world’s population, it can deliver profits that exceed global averages, and by any indication, most companies’ moves to capture this vast market are still in their infancy.

However, winning means understanding the nuances of a new era for growth.

What else has changed? For one thing, consumers now can pay more and are becoming more discerning and demanding more choice. This has opened the door for new categories and subcategories and altered the dynamics of existing categories. For example, Bain & Company research has found that 38% of the volume in China’s yogurt sales last year came from premium SKUs. Consumers in developing Asia will pay more in categories devoted to health or to improving their quality of life, but they are less loyal to any particular brand. This poses a threat for incumbents and creates an opportunity for followers and new entrants.

Another big trend: Geographic markets within the region have evolved differently from one another. Differences among markets are now more prominent than similarities. Fully 48% of all milk products purchased in Indonesia are in the form of powdered milk, a format barely consumed in China and India. Modern trade accounts for the majority of grocery retail sales in China but is miniscule in India. In Indonesia, smaller formats such as mini-marts and convenience stores are preferred. In China, mother-and-baby-stores have proliferated in recent years.

Similarly, the online world is taking on varying shapes in different countries. In China, the preferred e-commerce platform is Alibaba. In India it’s Flipkart. In Southeast Asia, it’s Lazada. Overall, the region is experiencing unprecedented growth in connectivity, particularly in mobile commerce, but digital adoption is far greater in China (with 60% growth each year since 2010) than in India, Malaysia and the Philippines (each of which grew by 10% annually during the same period). Also, different categories and products within categories shift to online sales at different speeds in different countries.

As these dissimilarities come into clear view, some companies are gaining an edge over rivals by following a few basic rules.

In such a diverse environment, winning companies maintain an unwavering focus on just a few products and brands in a core set of markets, with the goal of building up leadership positions (either organically or inorganically). Focus allows companies to provide the scale support required to help ensure success. For example, spending at scale on advertising is necessary to achieve threshold share of voice.

Winning with a more focused portfolio requires strategies that are tailored to the nature of the category and country, using market position as a guide. For example, market share leaders extend their leadership, and close followers strive to become leaders by growing their core business and carefully expanding the category. This is the approach taken by China’s Vinda, the market leader in household paper, which expanded its category by moving into baby diapers. Over the past decades, Indonesia’s Petra established itself as the chocolate category leader in part by hitting the right price points for occasions such as after-school snacks and by making the most of its low-cost position. Then, among the moves that helped it stay on top, it targeted a few key brands to maximize its advertising budget.

Distant followers are best served by doubling down, pursuing a niche or, if the prospects for growth seem unfavorable, exiting the market. Distant follower Wings took advantage of its route-to-market capabilities in detergents to grow its position in noodles in Indonesia, gaining share from leader Indofoods. It then expanded to Malaysia, where its Mi Sedaap brand noodles took the market by storm. In both cases, Wings established itself as a strong follower.

New entrants can find an underserved category and introduce it to the market, as L’Oréal did when it brought hair-coloring kits to India, where powder dyes predominated, or Indonesia-based Wardah did by serving the market for halal cosmetics. China’s Bright Dairy partnered with a European company to enter the ambient yogurt category, introducing recipes and ingredients from Momchilovtsi, a Bulgarian village. Emphasizing that foreign connection in advertising was one of the ingredients that helped the brand flourish. Only six years on the market, Momchilovtsi-branded yogurt contributes about one-third of Bright Dairy’s total revenue. The brand’s revenue grew by 85% in 2014, making the yogurt a billion-dollar business.

Brands can gain access to an existing category through partnerships with local brands or by turning to mergers and acquisitions, as Mondelez International did with its purchase of Kinh Do’s snacks business in Vietnam. Winning companies look for acquisition targets that are closest to the core and that can reinforce organic growth.

Companies in all market positions need to invest to win at the point of sale in both the physical and online worlds. Establishing a leading point-of-sale presence requires building out a route to market that will provide maximum reach, taking a highly disciplined approach to sales execution in both traditional and modern trade alike and delivering an online shopping experience that complements the physical store experience.

Finally, companies hoping to prosper in the region can’t succeed without keeping their costs below those of competitors, even as those costs rise in some Asian markets. A low-cost model (with lean structures and overhead) helps a company keep prices down, maintain margins and fuel growth. It also provides protection from opportunistic new entrants and activist investors, a big influence and a looming threat. Winning means constantly looking for opportunities to generate savings. In a major cost transformation effort, India’s Godrej saved millions of dollars by reducing its manufacturing footprint in a single product category and by reducing inventory by six days.

This is a defining moment in developing Asia. While growth rates vary among the countries, these markets still hold great promise for consumer goods companies. However, as the dynamics of each market and product category take shape, brands will need to act before it’s too late. How companies respond in the next five years will determine which brands will thrive in the region for decades and which brands will need to look elsewhere, to possibly less-promising markets, for their future.

Mike Booker is a Bain & Company partner based in Singapore; he leads the firm’s Consumer Products and Retail practices for the Asia-Pacific region.

Sebastien Lamy is a partner based in Singapore, Bruno Lannes is a partner based in Shanghai, and Nikhil Ojha is a partner based in New Delhi. All are members of Bain’s Consumer Products practice.