APAC Food Market Outlook to 2028

APAC Food Market Overview

• The Asia-Pacific (APAC) Food Market was valued at USD 1370 billion in 2023, driven by rising population, increasing disposable income, and the shift towards healthier eating habits. Government initiatives promoting food security, technological advancements in food processing, and the growing demand for convenience foods are key factors contributing to the market's growth.
• Prominent companies in the APAC food market include Nestl, Unilever, Mondelez International, Danone, and PepsiCo. These companies lead the market in various segments such as processed foods, beverages, dairy, and snacks, leveraging innovation and supply chain efficiency.
• Major urban centers driving the APAC food market include Beijing, Tokyo, and Mumbai. Beijing's growth is supported by Chinas efforts to enhance food safety and supply chain resilience. Tokyo benefits from Japans strong consumer demand for innovative food products, while Mumbais market is growing due to Indias expanding food retail sector.
• In January 2023, Nestl announced plans to expand its production capacity in China by establishing a new factory focused on plant-based products. This development aligns with the growing demand for alternative protein sources in the region, reflecting the trend toward sustainable food options.

APAC Food Market Segmentation

The APAC Food Market can be segmented based on product type, distribution channel, and region:

• By Product Type: The market is segmented into dairy, bakery & confectionery, meat & seafood, fruits & vegetables, and beverages. In 2023, the dairy segment held the dominant market share due to the increasing demand for nutritious and fortified dairy products across countries like China and India. However, the meat & seafood segment is expected to see significant growth due to rising demand for high-protein diets.

• By Distribution Channel: The market is segmented into supermarkets & hypermarkets, convenience stores, online retail, and specialty stores. In 2023, supermarkets & hypermarkets led the market, driven by the growing preference for one-stop shopping experiences. However, online retail is expected to witness rapid growth, particularly in urban areas, due to the convenience of home delivery and the rise of e-commerce platforms.

• By Region: The APAC market is segmented by country into China, India, Japan, Australia, and South Korea. In 2023, China held the largest market share, driven by its massive population, urbanization, and rising middle-class incomes. Japan's market, though smaller, is characterized by high consumer spending on premium and health-focused food products.

APAC Food Market Competitive Landscape

• PepsiCo: In 2023, PepsiCo announced a $400 million investment to build two new plants in Vietnam, one in Long An Province (USD 300 million) and another in Ha Nam Province (USD 90 million). Both facilities will be powered by renewable energy sources, aligning with PepsiCo's sustainability goals and commitment to reducing its environmental impact in the region.
• Mondelez International: Mondelez International completed the acquisition of Clif Bar & Company in August 2022 for USD 2.9 billion. This acquisition enhances Mondelez's portfolio in the fast-growing snack bar category, creating a global player worth over USD 1 billion. Clif Bar's brands, including CLIF and LUNA, will complement Mondelez's existing offerings and support its strategy for sustainable growth in the snacking segment.

APAC Food Market Analysis

Growth Drivers:

1. Rising Health Awareness and Changing Diet Patterns: The rising demand for health-oriented food products across the APAC region is a major growth driver. According to the Ministry of Health, Labour, and Welfare of Japan, there has been a substantial increase in the consumption of fortified and functional foods, with sales in the sector growing remarkably in 2023. Around 62% of APAC consumers prioritize health in their food purchases, indicating a strong shift towards health-oriented products. Governments in the region have introduced programs encouraging healthy diets to tackle rising obesity and diabetes rates, particularly in countries like Japan and Australia.
2. Expansion of Cold Chain Infrastructure: In 2023, China invested noteworthy amount to upgrade its cold chain logistics as part of its National Nutrition Plan. As a result, in 2023, the total capacity of cold storage in China reached 228 million cubic meters, representing an 8.3% increase year-on-year. This infrastructure expansion is essential for ensuring the safe distribution of perishable food items across vast regions. Cold storage facilities and transport networks have enhanced the ability to preserve fruits, vegetables, dairy, and seafood, across the region.
3. E-Commerce Penetration in Food Retail: The penetration of e-commerce platforms into food retail has surged in the APAC region, driven by platforms like Alibaba in China and Flipkart in India. In 2023, the e-commerce market in the Asia-Pacific (APAC) region was estimated USD 3.78 trillion with food retail being one of important segment in the market, highlighting the significant shift in consumer purchasing habits. The convenience of online shopping, coupled with rapid delivery systems, has boosted the availability of a wide range of food products.

Challenges:

• Supply Chain Disruptions: The APAC food market faces challenges due to frequent disruptions in the supply chain caused by natural disasters, political instability, and logistical bottlenecks. Countries like Indonesia and the Philippines, which are prone to climate-related disasters, often experience delays in food distribution, impacting the availability of essential food products.
• High Cost of Advanced Food Processing Technologies: The cost of adopting modern food processing technologies remains high, especially for small and medium-sized enterprises (SMEs) across the APAC region. In countries like Vietnam and Thailand, the implementation of advanced technologies such as AI-driven automation in food processing has been slow due to financial constraints.

Government Initiatives:

• Chinas Food Security Strategy: In March 2023, the Chinese government announced the "National Food Safety and Nutrition Action Plan," which aims to improve food safety regulations and increase domestic production of essential food items to reduce dependence on imports. This initiative includes substantial investment in research and development for sustainable food production.
• Indias Cold Storage Infrastructure Development: India is investing heavily in upgrading its cold storage infrastructure to reduce post-harvest losses in the food supply chain. As of now, India has approximately 8,653 cold storage facilities with a total capacity of 394.17 lakh metric tonnes. The development of cold chain infrastructure is crucial for reducing post-harvest losses, which can be as high as 30-40% for fruits and vegetables in India.

APAC Food Market Future Outlook

The APAC Food Market is projected to experience robust growth during the forecast period, driven by increasing consumer demand for healthier food options, government support for food security, and technological advancements in food processing.

Future Market Trends:

1. Rising Demand for Plant-Based Foods: The growing awareness of environmental sustainability and animal welfare is expected to drive the demand for plant-based foods across the APAC region. Countries like China and Japan are witnessing an increasing number of consumers opting for meat alternatives, which will fuel market growth.
2. Expansion of Online Food Retail: The online food retail sector is set to expand rapidly as consumers continue to embrace e-commerce platforms for their grocery shopping needs. With major players like Amazon and Alibaba investing in their food delivery services, the APAC food market will see increased competition and innovation in this segment.