NutraIngredients-Asia exclusive industry survey: Optimism abounds in APAC as firms forecast higher profits and R&D investment
As many as 79% of respondents expected their company's profit margin to improve over the next year. Meanwhile, 74% of them are planning to increase their investment in new product development (NPD). compared to the previous year.
One of the respondents even said their company had increased the R&D budget by 75%. Others explained that consumer demand for product diversification and the need for healthier options had fuelled NPD.
For the 9.6% of respondents who felt their profit margin was unlikely to improve over the next year, the higher cost prices of raw materials was cited as a contributing factor.
The survey results largely corresponded with a report by Australia's Commonwealth Scientific and Industrial Research Organisation (CSIRO) on ASEAN, published last month.
The report stated that the region's share of global health and wellness sales was projected to rise from 20% to 31% between 2002 and 2018, adding that "the Asia Pacific nutraceutical market is forecast to grow at a compound annual growth rate of 7% from 2014 to 2019".
Key reasons for growth include a rapidly expanding middle class, ageing population, the growing prevalence of chronic diseases, and a lack of potential nutrition production hubs.
Online expansion
In terms of online retail, 73% of the respondents said this channel would ultimately be as important as brick-and-mortar stores.
Companies operating via e-commerce received a major boost at the end of last year when China extended its existing regulatory scheme until January.
Under these laws, most goods entering the Chinese market are regarded as personal trade, rather than for commercial distribution. This allows overseas firms to bypass complex local registration requirements.
The setting up of more cross-border e-commerce pilot zones in China is also likely to spur the growth of online retail. This initiative was announced by a State Council executive meeting chaired by Premier Li Keqiang, and was well-received by foreign enterprises.
Social marketing
Elsewhere in the online space, the majority of our respondents felt that online marketing and social media would be more important for business growth than traditional marketing.
In a recent video interview, Jeff Hilton, a marketing expert from Brandhive, expressed that social media marketing is "not a good-to-have, not a nice-to-have, but a must-have", a view shared by 73% of our respondents.
For those who disagreed, they had observed that face-to-face marketing and customer engagement were still crucial to success.
In the same vein, Hilton pointed out that an online presence would not necessarily work, unless companies developed deep strategies to engage their audience.
In the same video, Peter Wennström from Healthy Marketing added that companies should bear in mind the four factors of marketing success: who needs the product, how customers accept the ingredients, whether customers understand the product benefits, and whether they trust the brand to deliver the results.
