Asia will generate US$4264 billion of grocery sales by 2023 – almost the same as Europe and North America combined – according to new market forecasts from IGD Asia, the food and consumer goods research organisation.
- Asia, the largest regional grocery market in the world, is expected to grow by a CAGR of 6% between 2018 and 2023
- The grocery market will be worth US$4264 billion by 2023, up from $3126 billion in 2018. Its share of global grocery spend will be 37% in 2023, adding around US$1139 billion to the global grocery market to 2023
- China, India and Indonesia will be the biggest contributors to the region’s top-line growth, accounting for 74% of new sales added by 2023
Nick Miles, Head of Asia-Pacific at IGD, says: “Asia will continue to extend its position as the world’s largest grocery market over the next five years, contributing more additional sales to the global grocery market than the next three fastest-growing regions in value change terms – Europe, Africa and Latin America.”
IGD predicts the top five markets in Asia will account for 83% of the region’s grocery sales in 2023, and 78.8% of total growth over the next five years.
China will extend its position as the region’s leading grocery market. Despite growth slowing, it is still expected to have a CAGR of 6% until 2023. Nick says: “Online retailers will have an increasing influence on China’s grocery landscape, with partnerships fuelling the digitisation of retail. Retailers’ geographic focus is shifting as first-tier cities become saturated and as such, they are looking to establish a presence in lower tier cities. Also, new manned and unmanned store concepts are likely to emerge and change the face of physical retail.”
India, the region’s second-largest market, will see the fastest growth to 2023, with a CAGR of 11%. Nick says: “In India, traditional retail continues to make up more than 95% of the market. The traditional 12 million Kirana stores will remain an integral part of the retail landscape, but modern retail chains will expand with a focus on establishing themselves in major cities and urban centres. Online will be one of the most significant modern trade channels, with new retailer partnerships improving supply chain and customer reach.”
In Japan, Asia’s third-largest grocery market, a declining population and low spending growth means that the grocery market will have a slower CAGR of 1% to 2023. Nick says: “Collaboration and consolidation between retailers continues to be a key driver for growth in Japan, but its impact on the total retail market will be insignificant. Retailers’ core grocery formats will face stronger competition from drugstores, discount and speciality stores selling more food and grocery products. Technology and automation will form part of the solution to support the country’s ageing population.”
Indonesia, the fourth-largest market, is set to have a CAGR of 8% to 2023. Nick says: “In Indonesia, traditional trade will make up 80% of the grocery market in 2023, with suppliers and mom and pop stores better able to service the channel. Minimarket operators Indomaret and Alfamart will continue to dominate modern trade, growing their networks and investing in digital capabilities. The growing influence of online from both existing retailers and investment by Alibaba and JD.ID in the market will also play a role. The modernisation of traditional trade remains a huge growth opportunity, particularly beyond major cities and across the outer islands.”
As the fifth-largest Asian market, South Korea will have a CAGR of 5% and see challenging growth in hypermarkets and supermarkets, currently the country’s two largest food and consumer goods channels. Nick says: “The importance of convenience in South Korea is set to rapidly increase as retailers continue to open lots of new stores and invest in existing operations. South Korea has a high-tech and digitally engaged society and the world’s highest market share for online grocery, meaning retailers will continue to invest in operations to stay ahead.”
Nick concludes: “Asia’s food and consumer goods market possesses huge growth opportunities: The combination of the largest regional grocery market and strongest real growth prospects of any region means Asia should be on any suppliers’ radar for growth.
“Growth will vary considerably by market: Indonesia, Pakistan, Bangladesh, Vietnam and the Philippines will see some of the fastest growth, while Japan and Hong Kong some of the slowest. China and India will dominate. Given the scale of both markets they will have an increasing influence on the region, but a strong local understanding of each market is required to win.
“Convenience and online will see the fastest growth. Asia’s market landscape is very diverse, but we expect the convenience and online channels to see the greatest investment and fastest growth over the next five years. Asia is also a hotbed for innovation and we can expect this to accelerate over the next five years, with retailer partnerships and new technologies driving change.”
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Top 20 grocery markets in 2023: nominal US$bn
Notes to editors:
- IGD is a not-for-profit research and training organisation. It has a trading subsidiary that provides commercial insight services for the consumer goods industry. The profits from these commercial services fund our not-for-profit activities. IGD Asia is the trading name for our Singapore-based trading entity
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