Premium Products Quench Southeast Asian Consumers’ Thirst for Quality and Differentiation

Premium Products Quench Southeast Asian Consumers’ Thirst for Quality and Differentiation

The rising spending power of Southeast Asia’s aspirational consumers is creating a surge in demand for preium products, particulartly in the FMCG sector where premium offerings are growing at twice the rate of any other price tier.

In its research into the future of Southeast Asian markets, Nielsen analysed commonly purchased grocery categories in six Southeast Asian countries over the past 12 months and identified a 21% increase in the share of premium-priced goods sold compared to mainstream and value brands. This increase has been premium products’ share of grocery sales rise to 16%. In Malaysia, although the growth rate for premium products is only 1% but the premium products share of grocery sales stands at 18%.

“There’s no doubting mainstream brands dominate in Southeast Asian markets, but we’re seeing a definititve shift toward middle-class consumers trading up to premium brands, and that the phenomenon of premiumisation can be harnessed by innovative new products that are competitively priced,” said Johan Vrancken, Nielsen’s Head of Innovation in Southeast Asia, North Asia and Pacific.

Nielsen’s research suggests premiumisation is a powerful tool for manufacturers operating in almost all categories, but is especially prevalent for makers of fast-moving consumer goods eager to tap into the psyche of the region’s emerging middle-class consumers who seek products that offer a strong emotional or functional benefit, and/or convey their new-found prosperity.


By 2030, Nielsen estimates that Asia will be home to three billion middle-class consumers. Already about 17% of consumers surveyed by Nielsen say they can spend freely – a percentage the company forecasts will increase over the next 15 years. in Malaysia, about five in 10 consumers say they are able to either spend freely or live comfortably and bought some things they liked.

About 55% of Malaysian consumers also said that they will pay more for innovative product, and indicate the main product characteristics influencing their purchasing decisions include quality and safety, superior technology, or intangibles, such as social status or self-reward.

Concurrent to increasing demand for premium products, Nielsen’s research suggests the average price of premium products launched in Asian markets has fallen gradually over time, even as the price points of mainstream goods have increased.

“The path for brands to go premium is more complex than simply catching a demograhpic wave,” emphasizes Vrancken. “Consumers in Southeast Asia are becoming increasingly discerning in their purchasing decisions and they seek out products which they perceive to be innovative and unique compared to other items on the shelf. Pricing plays an equally important role, and the blurring of price boundaries between premium and mainstream products is driving perceptions around the affordability of premium products and allowing more consumers to trade up.”


The premiumisation effect is at work across most product categories but growth in the past 12 months has fluctuated. Premium food, for example, has seen inconsistent growth across the category with products such as ice-cream, breakfast cereal and infant formula in decline. Conversely, premium personal products such as facial moisturizer, facial cleansers and baby diapers, have seen significant growth rates at the premium end of the market of 24%, 24% and 19%, respectively.

“Premiumisation can be a powerful force to break established brand preferences, delivering a tantalizing prospect to manufacturers looking to grow their bottom line,” continues Vrancken. “The excitement around new products or category-wide technological breakthroughs tends to draw consumers up to premium end of the market. But for premium brands to outperform their mainstream peers, innovation and marketing investment is key.”

“Brands must effectively differentiate, communicate and deliver on the ‘promise of premium’. Any brand that fails to deliver a great experience, backed by advertising, packaging and a unique name, will struggle to generate repeat purchase.”

For additional insights, check out Johan Vrancken’s blog on the Uncommon Sense: Going Premium in Southeast Asia and this cool infographic about premiumization in Southeast Asia.