Inflation in Asia-Pacific and Advice for Brands

Consumers in Asia-Pacific (APAC) are not overly concerned about the economic situation, yet.

For their part, brands can give warning of intended price rises, link price to value and focus on product quality (e.g., multiuse). Brands can be transparent with information proving the benefits of products or the reasons costs are rising to keep consumers informed.

Brands can also demonstrate how they are working for the common good of all, working to keep costs and prices down, maintaining quality to protect consumers, or standing up for good causes in the communities within which brands are active members.

Macro impact

Asia-Pacific is seeing inflation led by food prices. Harvests hit by poor weather in China, Thailand and India coupled with rising energy and fertiliser costs. Further energy price rises will further hike prices across a region that relies heavily on transportation to move foods, especially by sea.

The Impact on Consumer Behaviour

• Eating out is one of the first areas to be cut as consumers opt to stay home.
•  Consumers are beginning to seek lower cost retailers, private labels, and frozen/canned food, as stockpiling becomes something to consider.

^{Figure 1. Dynata/Mintel, May 2022}

How food brands can support their customers through the income squeeze

“There will be no ‘one-size-fits-all’ consumer reaction to inflation when it comes to food. Some will cut back on food service spend in favour of costeffective retail alternatives, e.g., swapping their takeaway coffee for a cheaper at-home version. Others will limit the number of purchases per week. When times are tough, food is a source of comfort.

Survival Skills to Thrive

The rising cost of living may cause consumers to reconsider what they can afford, what they’re willing to pay for, and what they can do themselves. New skills, obtained from the need for self-sufficiency and resilience, could turn into a source of strength, pride, and achievement. This could change how consumers perceive value.

Prepare for the Worst

Consumer caution can manifest as a reluctance to spend. Consumers may be worried about the rising costs of living without adequate preparation and not knowing what’s next. Brands can provide cost-effective alternatives that could offer a number of benefits, such as flexibility, financial savings and environmental benefits, to bring calm amidst worry.

Never Say Die

Use nostalgic elements to bring a sense of joy and comfort. Even for consumers too young to remember previous times, brands are exploring the culture and attitudes of the past from the library of the internet as a source of fun and escape for consumers seeking distractions from the present. No longer limited by time period or geography, brands and individuals are taking inspiration and liberties from the past, modernising them and making them their own.

The views expressed above are the opinion of the author, not those of Fonterra, and Fonterra is not responsible for any decisions taken in reliance on the same.