Retail in Asia


Established consumer product brands continue to thrive in Asia, despite growth in emerging brands

While insurgent brands have certainly made some headway in stealing market share from established brands in Asia, it’s crucial to recognise that the trend isn’t all-encompassing.

Despite the genuine threat posed by start-up brands, many well-established brands are still finding ways to achieve success across the region, thriving amidst the growing presence of insurgent brand competitors.

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The latest analysis from a Bain & Company report reveals that while emerging brands have made progress in capturing market share from established brands in multiple Asian markets, many established consumer product brands continue to achieve success.

The report, which studied market share trends of incumbent brands in 23 product categories across 11 Asia Pacific markets from 2018 to 2022, highlights the ongoing resilience of established brands.

Source: Bain & Company

The dynamics of distribution channels appear to hold more sway than the specific characteristics of product categories

Among the 253 category and market combinations analysed by Bain, large incumbent brands lost market share in 44 percent of cases against emerging brands, held steady in 28 percent of cases, and gained market share in 27 percent of cases.

Notably, there was no category where incumbents consistently lost share across all Asia Pacific markets, nor a single market where they consistently lost share across all categories.

The analysis also identifies Malaysia, the Philippines, and India as the top three markets where incumbents have performed well, while South Korea, Singapore, and China present favourable environments for insurgent brands.

Factors such as e-commerce dynamics and established supplier networks contribute to the growth of emerging brands in markets like South Korea, while the dominance of traditional trade and lower e-commerce penetration make markets like the Philippines more favourable for established brands.

Source: Shutterstock

Beauty and personal care category ‘most receptive’ to upstarts

Analysis across various categories revealed a range of outcomes. In general, the beauty and personal care sector stood out as highly receptive to insurgent brands, unlike sectors such as alcoholic beverages, food, home care, and non-alcoholic beverages.

Specifically, within the beauty and personal care category, hair care and skin care showed a significant decline in market share for established brands in 8 out of 11 markets, respectively.

Conversely, the confectionery category remained a stronghold for incumbent brands, with only 1 market experiencing a loss for established brands.

Distinct patterns emerge across different Asia-Pacific countries

In countries like Australia, Singapore, and Vietnam, foreign incumbent brands continue to lead in market share across most categories and demonstrate resilience by outperforming local competitors in winning categories.

But in India, the Philippines, and Indonesia, while foreign incumbents still dominate in market share, it is the local incumbents that show a stronger ability to gain share in winning categories.

Notably, local brands in Indonesia have experienced higher growth in several categories, due to their extensive distribution networks in rural areas and lower-tier cities.

In South Korea and Japan, local brands traditionally held market dominance, but foreign brands have recently started leading growth in certain incumbent-winning categories such as carbonates in Japan and fragrances in South Korea, signalling a shift in market dynamics.

Source: Bain & Company

Market characteristics key to success, but nuanced approach to categories and brands is a factor

Successful incumbent companies excel at incorporating effective strategies from insurgent competitors while leveraging their own strengths.

For instance, successful incumbents proactively identify unmet consumer needs and innovate based on emerging trends, even when the potential initially seems minor.

They also adopt solutions resonating with consumers that insurgents try to scale, utilising their scale advantage to build distribution, brand awareness, and cost-effectiveness swiftly.

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Bain’s analysis challenges the notion that insurgent brands universally disrupt incumbents, showcasing how many established brands have effectively maintained or expanded their market share amidst intense competition.

By blending their inherent strengths with insurgent tactics, successful incumbents have proven able to counter threats and strengthen market position effectively.