Changing dietary preferences and increasing health awareness are the key factors propelling the demand for functional food products in Asia-Pacific (APAC). Meanwhile, the growing awareness of lifestyle-related diseases and the importance of preventive healthcare also encourage consumers to seek foods that promote better health outcomes and overall well-being, leading to the reshaping of the APAC food industry, according to GlobalData, a leading data and analytics company.
Priyanka Jain, Consumer Analyst at GlobalData, said that despite the waning of COVID-19 concerns, APAC consumers are gravitating towards natural, organic, and functional food products that are perceived to help alleviate health concerns.
This aligns with GlobalData’s 2023 Q4 consumer survey finding that the food purchases of 62 percent of APAC consumers are often or always influenced by how well the product/service impacts their health and well-being.
“The health trend is also spurring demand for probiotic and nut-based snacks,” said Jain.
As a result, the APAC food market with health and wellness attributes expanded at a value compound annual growth rate (CAGR) of about seven to nine percent from 2017 to 2022. With consumers reverting to their hectic pre-pandemic lifestyles, they seek foods that boost physical stamina and cognitive alertness, alleviate fatigue and stress, and aid in relaxation and sleep.”
Tim Hill, Key Account Director at GlobalData Singapore, said that premium prices remain a key barrier to the penetration of health and wellness foods in the highly cost-conscious retail market. Moreover, amid high inflation and the prolonged Russia–Ukraine conflict, food manufacturers are pressured to pass these high input costs to consumers to conserve their margins.
GlobalData’s survey revealed that 49 percent of APAC consumers are concerned about the impact of inflation on their household budgets.
“Owing to the cost-of-living crisis, these frugal consumers are switching to cheaper brands and labels or cheaper stores. The limited product awareness also undermines the segment’s growth prospects,” Hill said.
Jain continued that manufacturers were driven to strike a fine balance between price and health benefits.
“Increasing participation in physical activities will stimulate demand for functional on-the-go offerings, particularly for snacking and mealtime accompaniments,” said Jain.
“As macroeconomic conditions improve, consumers can be encouraged to trade up to premium food products more frequently. Manufacturers need to create awareness of these products through marketing initiatives.”
Hill stated that functional and fortified food products have remained a niche segment in the APAC region due to their above-average prices compared to regular variants. To expand their consumer base, manufacturers must highlight the benefits associated with product consumption.
Leading companies also leverage alternative ingredients and production techniques to develop healthier alternatives with more personalised claims, such as ‘promotes gut health and blood circulation’ and ‘energy-boosting’.
