Despite global economic uncertainties, Southeast Asia’s economy continues to show robust resilience, driven primarily by its demographic dividend and the rapidly expanding e-commerce sector. Home to nearly 700 million people, the region boasts a young demographic profile. For instance, Indonesia and the Philippines have median ages of 29.5 and 24.5, respectively. This significant population base, combined with its youthful structure, translates into higher productivity and dynamic consumer activity. According to the International Monetary Fund, Southeast Asia's GDP is projected to reach approximately $3.86 trillion in 2023, with a growth rate of 4-5%.

In this context, Southeast Asia’s food market has been fueled. Euromonitor estimated that the retail sales value of packaged foods in the region reached $109.9 billion in 2023, marking a 36.1% increase comparing to 2019. The market was projected to expand further, with retail sales anticipated to hit $163.5 billion by 2028, a 38.9% increase from 2024. This article delves into the current state, and key trends in the Southeast Asian food market, providing insights for stakeholders to navigate this dynamic landscape.

Retail Channels in Southeast Asia

Southeast Asia's food retail market spans traditional grocers, modern retail formats, and online shopping. Traditional grocers, often family-run establishments, sell items ranging from sachet-packaged groceries to prepackaged snacks and beverages. These stores, known for their convenience and local reach, dominate markets, especially in countries with lower urbanization rates like Vietnam and Indonesia. According to Boston Consulting Group, traditional grocers account for 73% of grocery retail sales, making them the region's largest retail channel.

Modern retail formats, such as supermarkets and hypermarkets, play an essential role in brand visibility and reaching middle-to-high-income consumers. While these channels command a notable market share in countries like Malaysia, they have yet to catch on across Indonesia, and Vietnam. It’s worth mentioning that over the years, smaller retail formats (under the modern retail category, distinct from large formats) like minimarkets and convenience stores have driven growth in some areas. For instance, in Thailand, small formats claimed 58% of the modern retail market share in 2022. Moreover, emerging players such as Speedmart in Malaysia, CJ Express in Thailand, and DALI in the Philippines are targeting both large and small formats. These players tend to adopt differentiated, more aggressive approaches, which emphasizes convenience and value pricing.

Supported by digital payment tools and widespread internet access, the e-commerce sector in Southeast Asia has experienced explosive growth. According to a joint report by Google, Temasek, and Bain & Company, Southeast Asia’s e-commerce transaction value reached $138 billion in 2023 and was expected to grow to $159 billion in 2024. Indonesia is the largest e-commerce market in the region. Data shows that the e-commerce GMV in Indonesia reached $59 billion in 2023 and was projected to grow to $65 billion in 2024, reflecting a 10.17% rise.

Food E-commerce

According to TMO's research on food and beverage e-commerce in Southeast Asia's six major countries (Indonesia, Thailand, Singapore, Malaysia, Vietnam, and the Philippines), Indonesia leads with a 23% market share, followed by Vietnam at 22.6%. Thailand, Singapore, the Philippines and Malaysia hold a share of 17.5%, 13.4%, 11.9% and 11.5%, respectively. Food products constitute 54.3% of the market, followed by beverages (including alcoholic beverages) at 32.3% and dairy at 13.5%.

Food Category

Within the food category, demand varies across countries. Staple foods and seasonings are top sellers in Vietnam, Thailand, and the Philippines, representing over 40% of the market share in all three countries. In Indonesia and Malaysia, snacks and candy lead, followed by staple foods. In Singapore, frozen and fresh food products dominate with nearly 44% of the market share.

In this category, the concentration of brands is relatively low. No dominant players have emerged, which presents significant opportunities for new participants. Furthermore, local and international brands are in close competition. Overseas brands like Bango, Hershey’s, SAMYANG, Nutella, Quaker, Lay’s, and Picard are performing well across the region. In terms of pricing, products priced between $2-5 account for the largest share of sales in Indonesia, Malaysia, the Philippines, and Vietnam. Meanwhile, in Singapore and Thailand, products in the $5-10 price range dominate the market.

Beverage & Beer Category

Beverages and coffee are popular segments in this category. In Vietnam, Indonesia, and the Philippines, beverages are the top-selling items. Particularly in Vietnam, beverage accounted for around 64.6% of the online market share. Coffee enjoys significant popularity in Thailand and Malaysia, contributing nearly 50% of sales. Alcoholic beverages are the most popular items on Shopee and Lazada in Singapore, with a market share of about 33.2%, much higher than other countries. 

International beverage brands are well-received in Southeast Asia, with Nestlé (including Nescafé and MILO) maintaining a strong presence, particularly in Malaysia. Besides, health trends have driven demand for zero-sugar and low-calorie drinks. For instance, POKKA, a Japanese brand specializing in health beverages, has gained widespread popularity in Singapore.

Dairy Category

In the dairy category, milk powder and milk products lead sales. Milk powder/adult nutrition milk powder is the top-selling segment in Vietnam, Indonesia, and Malaysia, constituting more than half share in these three countries. Milk/fresh milk/soy milk is the most popular segment in Thailand, the Philippines and Singapore. Notably, consumers in Singapore have high demand for cheese and butter compared to other countries.

Market concentration of the dairy industry is relatively high, particularly in the Philippines, where the top five brands accounted for more than 70% of the market share. South Asian consumers show a high recognition of well-known international dairy brands. Abbott Ensure adult nutrition milk powder holds a prominent position in this market, while other global brands such as Nestlé and Anlene also performing well in several countries. Notably, there is a rising demand for functional dairy products and plant-based milk. Abbott’s Glucerna, tailored for diabetics, has achieved strong sales in Vietnam and Malaysia. Oatside, a plant-based beverage brand from Singapore, has gained significant popularity in both Thailand and Singapore with its oat milk offerings.

Notable Trends

Health and Wellness-Driven Products

Consumers’ attention to health and wellness, represented by their pursuit of nutritionally enriched products, is shaping food choices across Southeast Asia. Functional foods and beverages enriched with probiotics, vitamins, and minerals are gaining popularity. For instance, in 2023, Fonterra, under its brand Nurture, introduced a probiotic powdered drink targeting gut-conscious consumers in Singapore and then in Indonesia, Malaysia, and Thailand, targeting the growing middle-income group. Besides, plant-based products, known for their health and eco-friendly attributes, is a growing segment. According to Krungthai COMPASS，the Thailand plant-based food market was projected to reach THB 45 billion in 2024, a 10% year-on-year increase. Brands like Lactasoy and Oatside are well-received. In addition, the demand for clean-label products is on the rise. Consumers prefer products with simple, natural, and recognizable ingredients free from artificial food additives.

Flavor Innovation

In Southeast Asia, young consumers are seeking for new flavor experiences rooted in regional heritage but enhanced with modern twists. According to Stemgenic, there is a growing trend of blending local flavors like pandan and lemongrass with global ingredients like matcha and truffle. Besides, traditional foods and beverages are being reinvented with a modern twist. For example, fermented food like tempeh is being adapted into new formats, such as chips and condiments, to appeal to contemporary tastes.

Sustainability Transition

Sustainability is another growing concern in the food market. Companies emphasize more on sustainable sourcing of ingredients like responsibly harvested palm oil and ethically farmed spices. Besides, biodegradable, compostable, and recyclable packaging is becoming more common as companies strive to reduce their environmental impact. Moreover, as enhanced transparency is increasingly expected by consumers, companies are providing consumers with detailed information about product sourcing and production processes.