The healthy choice in Asia

The global food and beverage industry is on more than just a health kick, with the consumer focus on wellbeing that emerged in the latter 2010s proving to be an ongoing, billion-dollar opportunity.

Businesses in the space are responding by investing heavily into products that meet this demand, particularly in Asia, where consumer appetite for healthier options are growing rapidly and showing no signs of abating.

Research from intelligence group GlobalData in late 2023 showed almost two thirds of Asian consumers - 62 per cent – are either always or often influenced by how products impact their health. In China, a McKinsey study found 87 per cent of people say wellness is a top or important priority in their daily lives.

Rapidly growing developing markets are fertile ground for future growth, too. In India alone, the of the health-food market could reach as $US30 billion by 2026, according to Avendus. The Global Wellness Institute put the size of the ‘healthy eating, nutrition, and weight loss’ market in the Asia Pacific at $US358 billion in 2022.

For businesses in the food, beverage and agribusiness sector - particularly those attempting to grow their presence or establish a foothold in Asia – the opportunity, at the premium margins offered in the health-and-wellness space, is one almost too good to ignore.

Blame it on the young

Much of the growth in health-conscious consumption has been driven by younger generations, particularly in economies like China. In 2022, China imported $US5.94 billion worth of health food, including $US820 million from Australia, behind only the US in total volume.

Social media has played a role in the trend, with image-conscious, high-profile influencers driving users toward healthier food all around the world, in a way that’s backed by studies. 

Like their peers around the globe, ‘Gen Zs’ in Asia are considered more ‘worldly’, conscious of their individual carbon footprints, and are attracted to organic, sustainably-sourced food, free from synthetic fertilisers and pesticides. A study found sales of ‘sustainable’-labelled products grew 2.7 times faster than otherwise in the period between 2015 through 2021. These consumers reward businesses that can articulate their sustainability strategy, as well as the impact of their production and supply chains. In May, a PwC survey found consumers are willing to pay a sustainability premium of almost 10 per cent, even amid a cost-of-living crisis.

Growing demand for plant-based protein is another development where producers can meet demand while providing low- or reduced-emission footprints. less harmful fertilisers / chemicals

Shifting behaviours

Long seen as ‘recession-proof’, the $US1.7 trillion alcoholic beverages sector has become another front in the wellbeing market, with surging demand for drinks that drop one key ingredient – that is, the alcohol.

Surging production s comes amid shifting social behaviours and the rise of a generation more aware of their appearance and reputation in a social-media driven world. In Japan, a survey of consumer aged between 18 and 26 found 63 per cent had not drunk alcohol in six months.

According to Boston Consulting Group, the size of the global low- or zero-alcohol beer, wine, and spirits market reached $A13 billion in 2024. That’s expected to grow at a compound rate of 6 per cent between 2023 and 2027, the International Wine and Spirits Record has forecast; in the same period, the specific zero-alcohol space is expected to expand at 7 per cent.

While those rates are off the sector’s post-COVID-period peak, they remain a fillip for brewers looking to diversify into new revenue streams. Major industry players including Heineken, Carlsberg and Asahi have all invested in the space, which is disproportionally weighted toward beer, over other favourites like wine or spirits.

Asahi Chief Executive Officer Atsushi Katsuki told The Financial Times in April that low- or zero-alcohol drinks will make 50 per cent of the group’s beverage sales by 2040.

For beverage producers, a key production cost for alcoholic drinks comes in the form of alcohol-based levies and taxes. Zero-alcohol drinks avoid these duties, while maintaining similar production costs.

In addition, consumers have so far been willing to pay the same as an alcoholic beer for a low- or zero-alcohol one.

The shift to low- or zero-alcohol beer also helps producers avoid the negative social impacts that can sometimes be associated with alcohol use, particularly in economies where premium alcohol brands can be a signifier of social or financial status.

Not a fad

It was easy to write off the trend toward health-conscious consumption as a fad. The focus on wellbeing that emerged through the first part of the decade, leading to surging demand for healthy food and beverage options, could have easily quickly dissipated.

But that’s not what happened. The wellbeing trend is here to stay – and with it come with premium margins that are often worth the investment.  

For producers in Australia and New Zealand in particular, exporting to Asia can already be lucrative given the premium quality associated with brands from the regions.

That advantage absolutely extends to markets like health food and drinks – leaving the opportunity open for those willing to take it.

Sherrie Banks is Head of FBA, International at ANZ Institutional