Functional food opportunities abound for Australia in ASEAN market: CSIRO-KPMG report
The region's leading probiotic and microbiome event — Probiota Asia — will get underway in Singapore this month with a stellar line-up of speakers, including the likes of Blackmores, Danone, Herbalife and Life-Space, set to take to the stage.
The report, entitled Food for Health, stated that health and wellness was one of the world's fastest growing F&B categories, accounting for 20% (US$436.2m) of the global US$2.18bn packaged food market.
Disease-driven development
This was due mainly to lifestyle- and diet-related chronic illnesses such as obesity, type 2 diabetes, cardiovascular disease, and cancer, especially in ASEAN countries.
With non-communicable diseases (NCDs) expected to be responsible for over 70% of deaths in South East Asia by 2030, consumers, governments and organisations alike are seeking to reduce the incidence of chronic disease, resulting in greater interest in health and wellness.
ASEAN market demand is driven not only by the greater prevalence of chronic illness, but growing affluence as well — in countries such as Singapore, Indonesia and Thailand in particular, premium health food products have gained much popularity.
In a bid to minimise the risk of age-related chronic disease, ageing populations in the region are also contributing to the growth of the health and wellness category.
To meet the increasingly varied demands of consumers, a growing number of companies are using personalised nutrition to provide precise solutions to different health concerns.
The report's authors wrote that across the ASEAN market, the health and wellness segment was expected to grow at a CAGR of 3% (Singapore) to 9% (Malaysia) between 2017 and 2022.
The report then highlighted four types of consumer-led market opportunities for Australian health food manufacturers: health by stealth, alternative proteins, gut health and precision nutrition.
Be stealthy, get healthy
The first opportunity involves "creating policies that target food ingredients and formulations to promote health".
This is characterised by subtle changes to product formulations, including those that "historically have not featured health-promoting ingredients".
The report stated: "Global food corporations active in the ASEAN region are adjusting their product portfolio and looking for unique ingredients. The Consumer Goods Forum reports that over 180,000 products were reformulated by its members since 2016."
These companies include big names such as Mondelēz International, Nestlé and PepsiCo.
To this end, the CSIRO created The Flavour Model, a patented reformulation method that alters product composition to reduce sugar or salt content without changing the overall flavour intensity and perception.
At the same time, functional ingredients and foods have become increasingly common, with many companies developing food products enriched with ingredients such as probiotics, omega-3, vitamins, minerals and other nutrients to support a wide range of health needs.
Using conventional plant breeding techniques, the CSIRO developed BARLEYmax, a new type of low-GI barley containing twice the dietary fibre of regular grains and four times the resistant starch of regular barley.
Presently, Australian firm Freedom Foods is selling products containing BARLEYmax in key ASEAN markets.
To meat or not to meat?
The second opportunity stems from a wider variety of non-animal protein sources in Asian cuisine, compared to Western cuisine.
The overall population across the ASEAN region is expected to be one of the world's fastest growing, therefore leading to higher demand for protein — in fact, daily protein consumption in ASEAN has grown by 50% over the past 30 years, higher than the global average.
Despite this, the numerous non-animal protein sources Asians are accustomed to means Aussie firms have plenty of opportunity in this segment.
Furthermore, the authors wrote that "between 2016 and 2017, there was a notable increase in non-animal sources of protein consumed by both urban Thais and Indonesians".
"Research has also confirmed more than half of Indonesians and Thais believe non-animal protein is a healthier option."
This has led a rising number of manufacturers to develop soy- and dairy-based meat substitutes, insect protein, plant-based 'meat', algae protein, seafood substitutes, and pulses.
One Australian company that has tapped into this trend is The Lupin Company, which has re-purposed lupins — traditionally used for animal feed — to a significant degree of success in Asia, where its products are marketed based on their 40% protein content and 37% fibre content.
Lab-grown meat is another non-animal protein source, though its prohibitively high costs — which are gradually being lowered — have prevented it from being commercialised so far.
Marketing for the microbiome
The third opportunity is found in gut health, whose importance more consumers have come to understand better in recent years.
According to the report, the global market for probiotics in ASEAN has been seeing an annual growth of 7.1%, driven mainly by dairy so far.
However, non-dairy products are expected to be one of the fastest growing probiotic categories in the near future, with a forecasted CAGR of 9.6% between 2017 and 2022.
Gut health research has also seen a greater degree of commercialisation of late, with patents being secured for probiotic products, and new strains under constant development.
The probiotics market has also seen notable acquisitions recently — Australian firm Life-Space, for instance, was acquired by China's BY-HEALTH for a $690m in February.
In June, the CSIRO announced the latest phase in its partnership with Singapore's Nanyang Technological University (NTU), whereby it would seek to provide health solutions for seniors based on research into their gut microbiome.
Precise potential
Growing demand for personalised nutritional products and programmes has given rise to the fourth opportunity, precision nutrition.
To meet the increasingly varied demands of consumers, a growing number of companies are using personalised nutrition to provide precise solutions to different health concerns.
The report’s authors wrote: "Nutritional advice is evolving from largely static mass market advice to real-time and personalised solutions.
"Precision nutrition will enable the convergence of medicine and nutrition, with an aim to prevent and manage chronic disease."
A recent Herbalife survey revealed that 33% of Asian consumers were keen on personalised nutrition plans, with the figure expected to grow steadily over the next four years. Indeed, personalised nutrition has been identified as one of the top four health and wellness trends in the ASEAN region.
Nutrigenomics — the study of how genes interact with nutrition — forms the basis of R&D for many personalised nutrition firms, something the CSIRO-NTU partnership is looking at as it strives to provide targeted nutritional advice to seniors.
The Australian approach
Apart from outlining the four main opportunities on the ASEAN market, the report also suggested three core approaches Australian businesses should take when entering the region.
The first approach centred around personalisation, which the report said was "key to customer satisfaction".
"ASEAN's diversity across its 10 member nations means that there are many opportunities across the health and wellness continuum. Specific flavour profile preference means producers need to ensure they meet the specific local needs relevant to preferences in a specific market.
"Incorporating popular Asian ingredients, marketing and branding products in a tailored way, and utilising emerging channels to market, such as e-commerce, will enable food producers and exporters seeking to succeed in the changing ASEAN markets."
The second approach was to leverage increasing consumer awareness and rising affluence, especially as demand for better-for-you products was bound to grow alongside greater knowledge.
At the same time, ASEAN consumers' higher spending power means Aussie firms have the opportunity to offer premium supplements and health foods, especially when it comes to targeted food solutions that boast health benefits.
Finally, the report suggested that Aussie firms partner with local industry stakeholders across the ASEAN region.
"Collaboration of investments by internationally-recognised technology businesses, prominent investment funds, and existing food manufacturers indicate the benefits of partnering with in-market players close to the consumer.
"In doing so, they are able to gain rich consumer insights, understand local regulations, and create instant integration into established distribution channels. Australia has a strong reputation across ASEAN as a trusted and competent business partner."
