It’s been close to a month now since I moved to the Philippines.
Just a few days ago, as I was making dinner I realized that I would soon be running out of my stock of Indian spices (well, it’s a no brainer for people who know me well, as they understand that I cannot survive without home-cooked Indian meals ;)). I immediately hopped on my laptop and did a quick search about the availability of the branded Indian spices in the Philippines, only to realize that those packets would cost me a bomb!
So the next day, as I ranted to my Filipino colleague about how costly a branded packet of Indian cumin masala is, she suggested that I should look out for the “non-branded” or “local” labels because they are bound to be many folds cheaper.
Last evening, as I filled my grocery basket with packets of Indian spices from a section of the supermarket that’s stacked up with many such “non branded” packets, I couldn’t have agreed more with her.
Growing up in India, I have seen local FMCG brands gaining ground steadily, but I was quite surprised to know that there is a similar preference for local brands across Asia. 60% of Filipinos surveyed by Kantar Worldpanel said that they would choose home grown brands over foreign brands.
As per the report titled ‘Asia Brand Power: How Asia’s Rising Retailers are Reshaping FMCG’ 2017, the growth of local brands in the region has been primarily driven by factors such as price, quality, and convenience. Be it in India, the Philippines, Vietnam, China or Thailand, these local labels are becoming extremely agile (acting fast to the changing consumer needs) and are growing robust along with the local retailers who are paid commissions for recommending/promoting and selling more units.
In terms of business, a majority of the sales of these local brands is currently coming through offline channels, while the e-commerce share is minimal (for instance, less than 1% in the Philippines). This leads us to a very critical question — Should local FMCG brands in Asia to invest in Digital?
In my opinion, the answer is yes, absolutely! Here’s my chain of thoughts to support the same —
The penetration of internet and social media in the APAC region is improving as smartphones are becoming more accessible to the masses. The active mobile social user base is said to have increased by 16% in the last one year (2017-2018).
Studies made by Google in the region have confirmed that while people are shopping offline, their purchase decisions are, to a large extent, being shaped by the digital media. 70% of the people in countries such as India, the Philippines and Vietnam have been found to research about brands while in the store. Google India and BCG, in a very recent study, have estimated digital media to influence 40% of the consumer spends in the FMCG industry by 2020.
Though the current e-commerce share of local FMCG brands is low in Asia, there’s a huge potential for it to increase. A quick glance at, for instance, Amazon India’s best selling grocery list shows that about 40% to 50% of the products are owned by local brands. This means that consumers have been finding value in these brands and are making repeat purchases.
With millennials becoming the decision makers in the household, digital has the potential to open up a plethora of opportunities for such local labels who operate on tight marketing budgets.
This is so because having grown up in a connected world, millennials resort to the online world to gain more information, check ratings and recommendations whenever they come across a new brand (whether at the e-commerce site or at the store). Factors such as showing up on the search results page and social media, two way customer engagement, reviews, user generated content and local connectivity of the brand can make prospective consumers to move forward in the buyer’s journey, while helping the brand to grow its market presence and the sales numbers.
What are your thoughts on the above topic of discussion? Leave your comments at firstname.lastname@example.org.
Also, keep watching this space to learn about the digital marketing strategies that can help local labels build a strong online presence in my upcoming blog.