The consumer-packaged goods (CPG) segment needs to be faster to take off in Southeast Asia, unlike other parts of the world. But, this could be a lull before the flood comes.

Though online purchases of CPG have been lukewarm, they are likely to get a boost with new tech; competition among various firms and consumer expectations are likely to give the sector a massive boost.

There are indications of it already, as the region is expected to weather the economic storm better than other parts of the world. The opportunities available far outweigh the challenges.

The region’s working population is expected to be 23 million by 2030, and 51 million new households are expected to come in the middle-class and upper-middle-class brackets. With this, the per capita consumption is also expected to grow phenomenally.

The Opportunities Available Far Outweigh the Challenges

Though there was a dip last year, the total value of the e-commerce market is expected to grow from $129 billion in 2022 to $280 billion by 2027, growing at a CAGR of 17%.

The number of digital consumers is also expected to grow from 370 million in 2022 to 204 million in 2027, which is a whopping 88% of the population of 15-year-olds and above.

A McKinsey report, compiled over 2001-05 and 2011-15, has shown that CPG companies get only 7% ROI in food products and 18% in beverages and household products. Despite this, the investment has shown a spurt over the last few years and has covered the losses in many cases.

Much of the losses are because the markets have gone digital and smaller players have been the disruptors, catering to customers’ needs. While large companies have lost their value, their digital competitors – like Beyond Meat and Honest Company – have created wealth running into billions of dollars.

Though global biggies like Alibaba and Amazon have had a limited impact in Southeast Asia, the local players have had a good run. There is also a latent, untapped market, which is evident from the largely young population yet to jump onto the bandwagon. Unless the domestic players and multinational companies operating in the region wake up, they might lose up to one-fifth of their value.

The money spent in Southeast Asia on clothing and footwear has been forecast to keep growing from 2022 to 2028 by $837,290.1 million or 62.76%. The spending on items related to fashion is expected to grow to 96.7 billion U.S. dollars in 2028.

This forecast has taken into consideration the Covid-impacted disruptions. But for countries like the Philippines, it will take longer to rebound. Despite the country recording 4.5% growth in 2020, it was still lower than the 5% it achieved in 2019.

However, a study predicted that the sector would grow by $70.67 between 2022 and 2026 at a CAGR of 11.68%.