For food and beverage companies plotting their next growth market, the choice is not simply between chasing scale in Asia or tapping established demand in the West. The more revealing question may be what kind of growth they are seeking.
Asia offers large and diverse consumer markets, from India’s scale to Japan’s purchasing power and Southeast Asia’s fragmented but rapidly evolving demand. That diversity can create opportunities to localise products, respond to specific consumer needs and test new propositions.
Mature Western markets, meanwhile, offer established demand and familiar categories, creating opportunities for companies to extract more value through premiumisation, functionality, reformulation and brand-building.
For the African country Eswatini, the attraction of Asia is both commercial and cultural. Thandeka Dlamini, manager for external trade promotion at the Eswatini Investment Promotion Authority, said the country is looking beyond its established US trade towards markets including India, Japan and Taiwan.
Asia offers scale and room for exploration and localisation
“We do export to the US a lot but the growth in Asia is growing at a faster rate,” she said, pointing to Asia’s population, purchasing power and openness to unfamiliar foods as factors making the region attractive.
Different Asian markets offer different opportunities. “India is great cos there’s volume,” Dlamini said, while she described Singapore and Japan as having high buying power.
Japan also offers preferential market access for Eswatini products through the Generalised System of Preferences (GSP), while Dlamini said Eswatini has an agreement with Taiwan allowing its products to enter at zero percent tariff.
But market size and trade access are only part of the attraction. Dlamini also sees opportunity in what she describes as Asia’s willingness to explore unfamiliar foods and try new things – a trait she considers very similar to Africans.
“The Asian market is more exploratory. Asians and us Africans – we are more curious, and there’s a big cultural similarity between us,” said Dlamini.
“Culture is ingrained in the products. That’s why you see culture in the things that people eat. If you go to Africa, there is a huge variety of food so we are one and the same when it comes to this. It creates opportunities for exporting and importing, especially Asia being developed in terms of machinery, which we buy. We love tea, we buy tea from Asia. Oolong, etc.” she said.
She pointed to Eswatini’s bean jam by youth-led agribusiness Smiling Through as an example. “This bean jam is done for the Asian market,” she said, adding that Asians had been the most positive respondents to the product even though it is not something they’ve seen before.
The jam is expected to do well in Taiwan because it is natural and sustainably produced – something that is increasingly appealing to Asian consumers. Lemon and sugar have also been added for a citrusy sweetness that suits local palettes.
Macadamia oil is another example. While consumers may be familiar with olive and other cooking oils, Asian consumers had never encountered macadamia oil, she said.
“Our products are new but different and organic and that sells. Macadamia oil works as a viable substitute for olive oil – you can use it to cook or drizzle in on salads,” Dlamini said.
For companies like Eswatini’s exporters, this creates an opportunity to find consumers willing to try products that may be unfamiliar in established markets. It also creates scope to adapt products around different tastes, food cultures and consumer needs.
For companies seeking growth in the West, localisation takes on a slightly different form – it involves taking a new product and making it relevant to their target audience’s current lifestyle.
Brand-building and capturing a mature market in the West
China’s Chi Forest focuses on the US market to build a different kind of growth. The beverage company has expanded beyond Chinese and Asian supermarkets in the US, including through Costco, as it sought to take its sparkling-water proposition to a broader mainstream audience. Its strategy is to capture the Asian audience in the US before targeting the rest of the US consumers through its electrolyte beverages and herbal drinks.
The Chi Forest example highlights how entering a new market can be about moving beyond an existing consumer base rather than simply increasing sales among established customers.
Other Asian companies are taking products rooted in local ingredients or traditions into Western markets. Japan’s Okinawa Ginger Syrup, for example, is using the food-as-medicine trend to build its appeal in Europe, while China’s Yalexian sees particular interest in porcini and truffles in Europe and the US.
This does not mean Western markets are simply places to sell established products. Innovation remains a route to growth there too.
Innovating for mature markets
Mature Western markets offer a different set of possibilities. Their established categories and consumer familiarity can reduce the need to introduce an entirely unfamiliar proposition, but they also mean companies must find ways to stand out.
That can mean extending an existing product into a new consumption occasion, adding functionality, reformulating or premiumising a familiar category.
Australian wine producer Brown Brothers, for instance, tested an aluminium prosecco bottle designed around lighter weight, resealability and new consumption occasions. The company is also looking at opportunities in the US, where consumers already have familiarity with aluminium packaging in other beverage categories.
Here, innovation is not necessarily about introducing an unfamiliar beverage category. Instead, an established product is being adapted to create new occasions and differentiate it within a mature category.
Our recent analysis of 3 make or break factors for Asian brands in the West similarly examines how companies from Asia can enter established markets such as Europe and the US, where they face a different competitive environment from that of many emerging markets.
Expansion is not necessarily about abandoning a product’s local identity. Instead, companies can use a familiar proposition from their home market and identify consumer trends overseas that give it relevance.
Choosing the growth you need
The contrast, then, is not necessarily as straightforward as a fast-growing Asia versus mature markets in the West. Both regions can support innovation, but companies may be pursuing different forms of growth depending on the market.
For companies deciding where to export next, the more useful question may therefore not be whether East or West offers greater potential, but what they want that growth to achieve.
