How can consumer brands win price-conscious Southeast Asian shoppers?
Price remains the top concern for most consumers.
Southeast Asia’s fast-moving consumer goods industry is projected to underpin nearly $5t in private consumption by 2035, but slowing sales growth and rising price sensitivity are forcing companies to rethink pricing and distribution strategies.
Whilst regional economies continue to expand, consumer goods growth has cooled, according to a report by Bain & Company and NielsenIQ. In value terms, the growth of offline fast-moving consumer goods across six key markets—Singapore, Indonesia, Malaysia, Thailand, the Philippines, and Vietnam—slowed to 2% in the first half of 2025 from 5% in 2019, before the COVID-19 pandemic.
The slowdown has been uneven. Singapore and Indonesia posted slight contractions, whilst Thailand and Vietnam posted modest gains. The Philippines and Malaysia outperformed most peers, though growth remains below pre-pandemic levels.
The divergence reflects differences in inflation, wage growth and consumer confidence across markets.
Shoppers are becoming more cautious. Bain and NielsenIQ found that 42% of consumers are sticking with preferred brands but choosing cheaper variants. About a third are cutting back on consumption, whilst a quarter are switching to lower-priced alternatives.
Separate research by McKinsey & Co. showed price remains the top concern for most consumers in the Asia-Pacific region.
Premium categories continue to hold ground in segments such as beauty, pet care, and baby products. In staples such as dairy, packaged food, and beverages, mass-market products dominate as households manage tighter budgets.
Local brands are gaining share by adjusting pack sizes and price points. Bain and NielsenIQ cited low-priced energy drinks in Thailand and small-format shampoo sachets in Indonesia that account for most category sales.
A Kantar Group Ltd. report showed local brands now command more than half of consumer reach in several Southeast Asian markets, intensifying competition for multinationals.
Yeo Hiap.Seng Ltd.’s Malaysian business generates 78% of revenue outside its home market, whilst Universal Robina Corp. in the Philippines gets 24% of revenue regionally.
Retail channels are also shifting. Traditional trade, including neighbourhood stores and wet markets, still accounts for a large portion of sales, particularly in Vietnam and Indonesia.
Modern trade and e-commerce continue to expand. Platforms such as TikTok Shop have rapidly gained share in Vietnam, Malaysia, and Thailand, accounting for as much as 24% of e-commerce value.
Digital tools are increasingly embedded in the purchase journey. More than half of consumers use online platforms to discover products, compare brands and evaluate options, according to McKinsey.
Bain and NielsenIQ said a large majority are already using or plan to use artificial intelligence tools to support purchase decisions.
Sustainability remains secondary. Most consumers cite cost as the main barrier to buying environmentally friendly products, with limited availability another constraint.
For consumer goods companies, headline economic growth is no longer enough. The priority is defending margins, sharpening price architecture and capturing digital demand in markets where shoppers are more selective and brand loyalty is under pressure.
Questions to ponder:
- How much pricing power do brands still have?
- What differentiates markets that are still expanding from those that are contracting?
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EXPERT OPINION
The shift toward consumer trading down in Southeast Asia isn't just a challenge; it’s a filter for brand resilience. In an environment where purchasing power is under pressure, brands often make the mistake of competing on price, which inevitably erodes margins. To defend those margins, the focus must shift from 'broad appeal' to 'essential value.'
True brand defense lies in identifying the non-negotiable attributes of a product that consumers refuse to sacrifice, even when budgets tighten. By surgically optimizing supply chains and pivoting marketing toward high-utility messaging which includes services, brands can maintain price integrity. In a region as diverse as SEA, the winners won't be those who empathize with the struggle, but those who position their products as the most efficient use of a consumer's remaining capital. This is a game of strategic positioning, not a race to the bottom.
When consumers start trading down, brands need to be strategic about both pricing and costs. On pricing, firms can explore ways to justify a premium position within existing product lines such as:
Existing popular product differentiation: Introducing a new formulation of an existing, well-known product can justify a higher price while keeping marketing costs minimal, since there is consumer recognition. This approach works best when the changes require minimal modifications to the core manufacturing process. For example, Nestlé’s Milo versus Dark Milo demonstrates an 80–100% price difference at retail.
Minor changes to the existing marketing strategy: One area to explore is packaging size and/or design. Adjusting sizes could help optimise margins, while rebranding certain products such as highlighting features like sustainability or premium ingredients, could justify higher prices on product lines where consumers are less price-sensitive. Another dimension is distribution channels where focusing on outlets such as convenience stores, could help maintain margins as shoppers already expect higher prices in such channels.
Exploring export markets: Brands can also look beyond domestic markets and consider export opportunities, where the same product lines may command a higher premium due to brand perception or limited availability.
On the cost side, firms should analyse each product line by separating direct from shared indirect costs and reviewing the full product lifecycle—from sourcing to production and distribution—to identify immediate efficiency gains. Longer-term strategies should target initiatives that benefit multiple product lines, ideally with some products able to support a price increase. Products that cannot absorb costs or justify higher prices may require strategic divestment. Ultimately, decisions should be data-driven and focused, rather than applying a uniform approach across the portfolio.