The Asian grocery market to worth $4264 billion in 4 years
Asia, the largest regional grocery market in the world, is expected to grow by a CAGR of 6% until 2023, says new study from IGD Asia. China, India and Indonesia will be the biggest contributors to the region's top-line growth, accounting for 74% of new sales added by 2023.
"Asia will continue to extend its position as the world's largest grocery market over the next five years, contributing more additional sales to the global grocery market than the next three fastest-growing regions in value change terms – Europe, Africa and Latin America", said Nick Miles, Head of Asia-Pacific at IGD.
In 2018, the Asian grocery market was worth $3126 billion. In 4 years, $1139 billion will be added in this market, reaching a total value of $4264 billion ( 37% share of the global grocery market).
There are five countries that will contribute to this expansion in particular. China will extend its position as the region's leading grocery market. Despite growth slowing, it is still expected to have a CAGR of 6% until 2023. Nick Miles says: "Online retailers will have an increasing influence on China's grocery landscape, with partnerships fuelling the digitisation of retail. Retailers' geographic focus is shifting as first-tier cities become saturated and as such, they are looking to establish a presence in lower-tier cities. Also, new manned and unmanned store concepts are likely to emerge and change the face of physical retail."
India, the second-largest market in the region will witness a growth of 11% in grocery sales. "In India, traditional retail continues to make up more than 95% of the market. The traditional 12 million Kirana stores will remain an integral part of the retail landscape, but modern retail chains will expand with a focus on establishing themselves in major cities and urban centres. Online will be one of the most significant modern trade channels, with new retailer partnerships improving supply chain and customer reach", says Mr Miles.
In Japan, Asia's third-largest grocery market, a declining population and low spending growth mean that the grocery market will have a slower CAGR of 1% to 2023. Nick Miles says: "Collaboration and consolidation between retailers continues to be a key driver for growth in Japan, but its impact on the total retail market will be insignificant. Retailers' core grocery formats will face stronger competition from drugstores, discount and speciality stores selling more food and grocery products. Technology and automation will form part of the solution to support the country's ageing population."
Indonesia, the fourth-largest market, is set to have a CAGR of 8% to 2023. "In Indonesia, traditional trade will make up 80% of the grocery market in 2023, with suppliers and mom and pop stores better able to service the channel. Minimarket operators Indomaret and Alfamart will continue to dominate modern trade, growing their networks and investing in digital capabilities. The growing influence of online from both existing retailers and investment by Alibaba and JD.ID in the market will also play a role. The modernisation of traditional trade remains a huge growth opportunity, particularly beyond major cities and across the outer islands," according to the analyst.
As the fifth-largest Asian market, South Korea will have a CAGR of 5% and see challenging growth in hypermarkets and supermarkets, currently the country's two largest food and consumer goods channels. "The importance of convenience in South Korea is set to rapidly increase as retailers continue to open lots of new stores and invest in existing operations. South Korea has a high-tech and digitally engaged society and the world's highest market share for online grocery, meaning retailers will continue to invest in operations to stay ahead," says Nick Miles.
According to the study, Pakistan, Bangladesh, Vietnam and the Philippines will also see some of the fastest growth in the region, while Hong Kong is to grow at a slower pace, similar to Japan. Convenience stores and online will be the main channels to influence the market thanks to investment expected in these sectors.
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