Growing affluence, evolving tastes and technologies, and enhanced focus on healthy, safe and sustainable food are changing the way Asian consumers buy and enjoy food. This vast, diverse market offers exciting opportunities for both new and established brands.
Asia has become the largest region in the global food market. By 2030, consumers will spend an additional US$4.4 trillion on food over the next 10 years, as massive demographic changes and evolving consumer needs drive up demand for larger quantities and better quality of food.
To meet this fast-growing consumer-driven spend, we estimate an additional US$750 billion in incremental investment will be required above existing levels by 2030, across the entire value chain. This is on top of the US$800 billion upstream investment highlighted in our inaugural report, bringing the total investment requirement to US$1.55 trillion by 2030.
In our second edition of The Asia Food Challenge report this year, we consider the expectations and behaviour of Asian consumers, and how this will drive the strategies of agri-food businesses and investors in this exciting and fast-growing region.
Our research shows that of the US$4.4 trillion incremental food spend in the next decade, 55% (US$2.4 trillion) will be directly driven by consumer choices.
The region’s affluence is growing - 65% of the world’s middle-class population is expected to reside in Asia in 10 years. It is also urbanising faster than any other region, with traditional multigenerational households slowly breaking down as younger generations of empowered, educated, and sophisticated consumers move to cities. Increasing numbers will live in smaller households, impacting the way in which consumers will buy and consume food.
With agri-tech investments quadrupling between 2014 and 2019 in ASEAN alone, it is clear that investors will play a pivotal role in developing new products and business models which are highly responsive to the Asian consumer’s fast changing food palette.
Consumers have been demanding more from the products they consume. Based on extensive research, we have distilled the key shifts in six broad areas. These six trends are not isolated, but are often overlapping and have a significant influence on the other trends.
With agri-tech investment growing at a rapid 377% to US$30.5 billion in 2020 from US$6.4 billion in 2014 1 , it is clear that investors are a driving force in Asia’s food industry. The investments reflect a keen interest in the six new food trends outlined above.
Private equity, venture capital and sovereign wealth funds have all played a pivotal role in transferring knowledge and expertise across the food sector, translating market demand into capital allocation, and helping to bridge the gap between academia, corporates and governments.
We foresee that consumer-driven trends will require an additional response of US$750 billion over the next decade to 2030, and these funds need to be directed in a targeted approach to serve a new generation of sophisticated Asian consumers.
When considering the key trends, our research shows that companies with a broad emphasis on health, digital and sustainable offerings have enjoyed valuation premiums between 2015 and 2020, compared with companies that did not.
1 AgFunder. (2021). 2021 AgFunder AgriFoodTech Investment Report.
Grocery, health and well-being have been some of the strongest performing M&A categories in the first half of 2021, with intense activity in brands focusing on providing sustainable and healthy products to consumers and society. Meeting the needs of consumers in this era and the next decade will require new platforms, products, business models and government policies that did not exist five years ago. Having a well-defined value creation plan in place will enable business leaders and investors to maximise these opportunities with greater certainty.
The six food trends will impact the entire Asian food ecosystem, from investors to agri-business producers, food tech companies, governments and research institutes. Four key areas Asia’s food ecosystem participants will need to focus on:
A second installment of our Asia Food Challenge report delves deeper into Asia’s changing consumer behaviours in the food and agricultural landscape. This report is officially released by PwC, Rabobank and Temasek.
At PwC, our purpose is to build trust in society and solve important problems. We’re a network of firms in 155 countries with over 284,000 people who are committed to delivering quality in assurance, advisory and tax services. Find out more and tell us what matters to you by visiting us at www.pwc.com/sg.
We have over 3,000 food and agribusiness and corporate finance experts, spanning more than 60 countries, offering a breadth of expertise not usually combined in a service offering to address the urgent need for fully integrated food and agribusiness advisory.
Rabobank is a Dutch cooperative bank and one of the largest financiers in the global food industry and agriculture. Enabling the change to a more sustainable food supply chain by working together is core to our mission of growing a better world together’. Our aim is to bridge the gap between “food” and ‘”finance” by providing access to our knowledge, networks in 36 countries and financing solutions. Our efforts are focused on addressing the four most pressing food issues: increasing the availability of food, improving access to food, promoting a balanced nutrition and increasing stability of food supply chains. Measured by Tier 1 capital, Rabobank Group is one of the world's largest financial institutions with high credit ratings by all rating agencies and is ranked by Sustainalytics in the Top-5 best performing banks in environmental, social and governance (ESG).
Read more about Rabobank at www.rabobank.com.
Temasek is a global investment company with a net portfolio value of S$381 billion (US$283b) as at 31 March 2021.
Our Temasek Charter defines our three roles as an Investor, Institution, and Steward, and shapes our ethos to do well, do right, and do good.
Sustainability is at the core of all that we do. As a provider of catalytic capital, we seek to enable sustainable solutions to key global challenges and bring about a sustainable future for all. We deploy financial capital to stimulate innovation and growth; develop human capital to uplift capabilities and enhance potential; enable natural capital and foster sustainable solutions for the climate and a better living environment; and seed social capital to transform lives for a more inclusive and resilient world.
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For more information on Temasek, please visit www.temasek.com.sg. For Temasek Review 2021, please visit www.temasekreview.com.sg.
2 UNEP. (2021). UNEP Food Waste Index Report 2021. UNEP, ATAG
3 eConomy SEA 2019. (2019). Google, Temasek and Bain & Company.