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New Asian markets driven by youth

News, 14 April 2015

ASIA: Laos is set to be one of the fastest growing markets in Asia in over the next fifteen years, with consumer spending predicted to triple between 2015 and 2030, driven by a combination of youth and urbanisation.

A report from research firm Euromonitor International – Markets of the Future – pointed to five markets in Asia to watch. As well as Laos, it named Bangladesh, Cambodia, Myanmar and Sri Lanka as the region's next generation of consumer markets.

A number of factors were referenced in addition to the obvious requirements of economic growth and poverty reduction. Modern retail formats, for example, are emerging and leading to a wider range of consumer goods becoming available.

But these countries also shared other characteristics, mostly having younger populations and faster growing urban populations than others in the region.

Bangladesh, for example, is expected to add 1.6m urban inhabitants every year between 2015 and 2030, with a consequent increase in demand for packaged food. Euromonitor highlighted the categories of dairy, baby food and confectionery, all of which are expected to more than double between 2014 and 2018.

Laos, meanwhile, has the youngest demographic profile, with a median age of 21.7 in 2014 and more than one third of the population aged under 14. Despite the high birth rate, relatively little is being spent on baby food ($2.07 per capita) and baby care products ($0.27).

Such low spending levels mean, said Euromonitor, that "companies must understand the trade-off poor consumers make between price and quality".

In addition, there can be "challenges around building brand awareness or even category awareness (with word of mouth a crucial form of communication)".

Standard business models are unlikely to work, even those imported from neighbouring emerging markets, although Euromonitor noted that it was often possible to combine CSR policies with commercial strategies to good effect.

It cited the example of Grameen Uniqlo in Bangladesh, with the fashion retailer sourcing raw materials, production, logistics and sales within the country and ploughing profits back into the business.

"Uniqlo is learning a huge amount of valuable information about the market as well as achieving CSR targets," it observed.

Data sourced from Euromonitor International; additional content by Warc staff