Retail in Asia

In Sectors

Meeting plant-based demand in China and Southeast Asia

Plant-based food demand in Asia is rooted in a long history of plant-based eating, including traditional foods such as soy drinks and tofu. The rise of Western-style plant-based diets in recent years has brought new dynamics to the Asian market where exciting innovations drive awareness and trial in both foodservice and retail.

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Meanwhile, local players are actively giving local twists to products, leading to increasing product availability.

Consumer perceptions around nutrition, taste and affordability remain key challenges for the growth of the plant-based food industry in Asia, as they do elsewhere. However, one key difference is that the sustainability narrative is a relatively weak driver in Asia compared with the west. Nevertheless, there are positive developments, such as the growing popularity of oat milk in several countries, such as China and Japan, and the significantly increased varieties and formats of the products available in Southeast Asia.

Oat milk’s success indicates channel and positioning potential in China

Oat milk is, in terms of performance, the most outstanding plant-based alternative in the recent plant-based trend in China, having achieved steady return consumption after its debut in 2018 when Oatly appeared in boutique coffee shops for the first time. Now, the oat latte has become a permanent item across the country, and the application of oat milk has evolved to product types such as ice cream and baked goods. In retail, oat milk has grown to account for 2.5 percent of the plant-based milk market in 2022.

The story of oat milk in China indicates where potential growth areas might lie for plant-based alternatives in the future. Firstly, foodservice has proved to be an effective market entry point. This is also the case for plant-based meat, where the sales volume in foodservice increased by 258.4% over the period 2020-2022. Given that both outlets and sales of foodservice channels such as coffee and tea shops are expected to grow steadily, sales of plant-based alternatives through foodservice are expected to increase accordingly. And retail sales are expected to benefit as consumers will become more familiar with plant-based foods through foodservice.

Secondly, positioning plant-based products as an occasional alternative for a novel experience might be more aligned with consumer perceptions than challenging animal-based products directly with a sustainability or nutrition narrative. Oat latte has won consumers over mainly due to its unique taste. Following the success of the oat latte, the coconut milk-based latte has also achieved phenomenal popularity for its exotic sweetness and fragrance in coffee drinks.

Product and format diversification is key for growth

Southeast Asia is known for its diverse consumers profile; this can be tapped into by plant-based food producers. Twenty-six percent of all Buddhists live in this region, and these vegetarian consumers have always been consuming plant-based food. While this group used to focus on the consumption of vegetable-based dishes and traditional mock meat, opportunities are now opening up for the new generation of plant-based food. Quorn came into the region in 2017 through Singapore. This was followed by a wide range of global brands like Beyond Meat and Impossible Foods, before regional brands entered the plant-based segment – these included Charoen Pokphand and Thai Union from Thailand, Green Rebel Foods from Indonesia, and Snappea with pea milk in Malaysia.

Since 2017, when Quorn first arrived, the varieties and formats of the products available have increased significantly. From originally meat substitutes focused on frozen beef format, recent innovation includes shelf stable seafood substitutes as seen from UnMeat in the Philippines. Other than varieties, producers have tried to be more inclusive in targeting their consumers through halal product labelling. Some 31 percent of Asia Pacific Muslim consumers reside in Southeast Asia, and clear halal labelling provides reassurance of the safety of consuming the products.

Key challenges remain

Several key challenges remain in Southeast Asia, especially regarding accessibility. At the moment, plant-based drinking milks are more available in foodservice establishments like cafés, while meat substitutes are typically still available in key cities (especially in archipelagic countries like Indonesia and the Philippines). A second challenge is affordability. Animal products are still significantly more affordable than plant-based substitutes. An example can be seen from the unit price of frozen meat substitutes vs fresh meat products in Thailand; meat and seafood substitutes are priced more than five times higher, on average.

Greater integration into daily eating expected

Looking at the currently remaining challenges, plant-based alternatives still have potential to grow in the region. Several key concepts like localisation, diversification of proteins beyond soy protein, and innovations and creation of experiences such as entry into sauces and ready meals segments hold potential. Additionally, as consumers are shifting from a pandemic to an endemic lifestyle, they are increasingly more aware of health and the nutrition of their food intake. This is also an opportunity that producers can tap into by highlighting the health benefits of plant-based products beyond just the protein’s benefit.

Source: Euromonitor