Trending 2018: Food and Beverage in Asia

woman's hand holding bubble tea
The Asian market is full of opportunities, but manufacturers must look beyond a one-size fits all solution


Just weeks ago, in early March 2018, Coca-Cola announced that for the first time in its 125-year history it will launch an alcoholic drink. The sparkling water and shochu concoction, which will be sold in Japan, is a packaged version of an already popular Japanese drink, the shochu highball, or “chu-hi”. With this offering, one of the world’s most recognisable brands will tap into a very local trend.

This is just the latest in a series of moves by large food and beverage companies that recognise the importance of localisation when taking on the Asian market. As Asia’s urban middle class grows at break-neck speed, there’s ample opportunity for food and beverage producers, particularly in Southeast Asia’s emerging markets.

While increased overseas travel has made consumers more receptive to Western food and drink trends, experiences and companies, as the Coca-Cola example shows, local tastes still reign supreme. Brands looking to enter, grow or thrive in the complex Asian market should take note of three trends set to dominate the region in 2018.

 

Trend 1: Korean cuisine is influencing all of Asia.

Korea continues to be the dominant food and beverage trendsetter for Asia. The immense popularity of the hallyu, or Korean cultural wave, means millions of Asian consumers outside of Korea and are influenced by all aspects of Korean culture, from make-up and music to fashion and food.

For manufacturers in this competitive region, speed to market is key: Consumers across the region are looking for the latest craze from Korea. Brands wanting to break into Asia will benefit from keeping a finger on the pulse of Seoul’s cafes and kitchens.

What are some already identified food and beverage trends coming out of Korea?

Kimchi-inspired flavour is already a well-developed market in Asia, so brands looking to capitalise on the “next big thing” generally need to think instead about more sophisticated flavours that are still relatively uncommon outside of Korea.

The Korean ingredient gochujang, along with other fermented hot pepper pastes from around Asia, has started to grow in popularity as an ingredient and flavour because it provides a sophisticated twist to mainstream tastes while still using traditional methods in the kitchen. Originally acting as a basic condiment, gochujang has transformed into a flavour found in instant noodles and foodservice items; in the future, we expect it to expand to more savoury snacking items around all of Asia.

Of course, localisation is still important. For example, Southeast Asian countries prefer the fermented flavours and smells of belacan, an intense umami shrimp paste, as seen by the successful gochujang­-inspired burger released by a fast food chain recently in Southeast Asia. And kimchi is still popular in countries including India, although it’s served with minimal fermentation.

 

Trend 2: Cheese is seeing huge growth in Asia.

Although this region still only accounts for a tiny slice of global cheese consumption, the exceptional growth of cheese and dairy in Asia means massive opportunities. Companies can tap into the myriad uses of cheese as a premium product or upgraded addition, especially as palates open to richer, more diverse and more intense cheese tastes.

However, tastes vary greatly, which means there is a great need to localise products featuring cheese to fit with local levels of palate maturity and affluence across Asia.

More affluent countries including Japan and Korea are open to cheese flavours popular in Europe such as blue cheese. China and other markets in the infancy of cheese appreciation prefer creamier and lighter cheeses such as mozzarella. In Southeast Asia, cheese is often associated with the American cheese slices atop burgers and widely available at supermarket chains. As the middle class grows and the market matures, there will likely be a shift toward more robust European-style cheeses, which makes it especially important to stay informed on consumer preference.

In Asia there is also a unique business case to look beyond traditional cheese formats. Consumers are open to trying cheese in new formats such as in beverages, especially given the popularity of dairy caps—a foamy creamer topper—on bubble tea products. A consumer insights report called “Dairy, The Value-Added Ingredient/Flavour”,  which was conducted in 2017 by Ipsos, found that integrating dairy with beverages leads to a 29% improvement in image of the brand and a 34% increase in desire to purchase a product.

Some tea shops in the region have already introduced cheese caps to differentiate from the more mainstream bubble tea dairy caps, which may lead to the introduction of a variety of cheese flavour profiles. Based on research from our Kerry Asia division, we know cheesecake and fresh, creamy mascarpone profiles appeal the most to consumers, due to the preference for sweeter tastes and the association with desserts.

 

Trend 3: Coffee is booming in Asia.

Another Western influence on the rise in Asia is coffee consumption. While tea remains the beverage of choice, since 1990 the region has experienced the most dynamic growth in coffee consumption in the world. And, though Asia produces a majority of the world’s Robusta coffee beans, which are characterised by a harsher, bitter and more acidic flavour, the growing popularity of Arabica beans, which are used in most Western-style coffee, may mean this will change.

The prominence of coffeehouse-style coffee from the West, especially among younger generations in Asia—crowd which includes 60% of the global youth population—indicates the demand for Arabica coffee could grow exponentially along with the purchasing power of this demographic. A key example is the popularity of cold brew coffee, which is positioned as an even less acidic product than other Arabica-based blends.

The growing influence of coffeehouse-styled coffee has also led to a growing trend of more flavoured coffees in the retail space. Instant mixes or ready-to-drink formats are very popular, especially in developing cities in Asia, where consumers aspire to be part of the “café lifestyle” or are looking for a cost-effective and quick option for flavoured coffees. In the last three years, the top flavoured coffee launches in the market include caramel, hazelnut and chocolate, according to Mintel.

While Western-styled coffee are popular in Asia, the local or traditional coffee scene still stands strong. Coffees like Vietnamese coffee, a deeply roasted coffee from Vietnam that’s often drunk with sweet condensed milk, or Kopi Luwak (Civet Coffee), from Indonesia, the world’s most expensive coffee, known for its earthy and smooth taste, are examples of coffees that have distinctly different taste profiles based on the traditional roasting and brewing methods.

As mature markets like North America and Europe reach saturation point, Asia offers tremendous room for growth. To discuss market gaps and learn about opportunities, contact Kerry.

KerryDigest Fast Facts:                                                      

  • Global trends are shaping Asian tastes, but localisation is still necessary to sway consumer spending, with preferences changing at both a regional and country level.

  • As Asia’s middle class grows, opportunities await local and global food and beverage manufacturers.

  • In 2018, three popular categories are shaping the Asian market and are prime areas for growth:

    • Korean-inspired flavors
    • Cheese and dairy
    • Sweeter coffees and cold brews

Back to KerryDigest

Get KerryDigest articles delivered to your inbox

Related content: