In 2022, our experts team will regularly publish and analyze articles and reports on the latest trends in Food & Beverage and Hospitality industry in Cambodia and South East Asia region.
This month, discover how Covid 19 has deeply changed our ways of consuming food, how it may affect your business and which opportunities it could create for your company to grow.
This first article is based on a note published by the Australian Trade & Investment Commission.
COVID-19 has changed the way people buy and consume food and agricultural products.
Consumers are increasingly looking for food with health benefits. There has also been a substantial increase in online food buying. Demand for premium food, usually consumed in restaurants, has fallen. Meanwhile, takeaway food consumption has increased.
Parts of the world are now moving from acute pandemic responses to ongoing disease management.
Implications for trade
These consumer food trends are likely to affect trade.
Buying food online is likely to remain above pre‑COVID‑19 levels. This trend will be particularly strong in markets with young populations (such as Cambodia). It will also be strong in markets with high online transactions (such as Korea and China and also Cambodia). Advertising and selling products online are essential in these markets.
Food with credible health claims will continue to attract premium prices, particularly in China, Japan, Taiwan and Korea.
Reduced international travel, risk aversion and capacity limits will slow the global hospitality sector’s recovery. This will suppress demand for certain products, such as premium wine and fresh seafood.
Food sales go online
In April 2020, consumers in Asia-Pacific countries reported a 16 to 70% increase in online spending on food (Source: McKinsey 2020, Reimagining food retail in Asia after COVID-19). Markets and food retail stores are reopening in many countries. However, there is evidence that online food purchases will remain at elevated levels.
China’s leading e-commerce platforms collectively made more than RMB 315 billion (A$68 billion) in sales during this year’s Singles Day event. Singles Day is an online shopping carnival on 11 November. Shoppers from smaller cities outnumbered those from larger cities. “Food and drink” was the eighth largest category (Source: Syntun 2021, The e-commerce platforms sales report).
Monthly online shopping transactions in Korea reached an all-time high of KRW 16.19 trillion (A$13.8 billion) in July 2021. Agricultural, livestock and fisheries, and food and groceries grew to A$3.1 billion (Source: Statics Korea 2021, Online shopping statistics).
The number of Southeast Asian consumers who tried online grocery shopping doubled in 2020. More than 75% said they would continue buying groceries online post-COVID (Source: Facebook, Bain and Company 2021, Southeast Asia, the home for digital transformation: A SYNC Southeast Asia report).
In Cambodia, like everywhere, Covid 19
has definitely boosted online purchasing trend!
Buying food in Cambodia is no exception: ordering a meal or having your groceries delivered at your home in a click on your phone has never been easier. Our bet is that this new habit is here to last, especially among Phnom Penh's young and active population. E-Commerce should definitely be part of your business plan and the development of your own app is a must.
One good example of successful development is EFG - Pizza Company, Dairy Cream, Bar B Q Plaza etc. - which very quickly offered an online application at the end of 2020.
Having your application online will reduce your costs. At all levels, even for a small structure, intermediate solutions exist. B. Consulting has worked on a project to strengthen direct deliveries for Tipsy Seafood restaurants.
Finally, being present on local platforms (Nham 24, Food Panda, Bloc, E Get etc.) means controlling production costs and reviewing your sales model.
The systematisation of online payments (ABA app) facilitates these deployments at a reduced cost.
From eating out to eating at home
COVID-19 closed restaurants around the world. Consumers turned to takeaway food, meal kits and home cooking. Persistent outbreaks have prevented venues returning to full capacity. In some countries, consumers may continue to eat at home to reduce their risk of infection.
In the 3 months to 30 September 2021, Uber’s food delivery business booked a total of US$12.8 billion. This was up 50% from the same period last year (Source: Uber 2021, Uber announces results for third quarter 2021).
Food delivery grew by 183% in Southeast Asia in 2020, led by Indonesia, Thailand and Singapore (Source: Momentum Works 2021, Food delivery platforms in Southeast Asia).
In August 2021, the South Korean Government announced it had set aside A$23 million to re-introduce a cash-back scheme for consumers ordering food via delivery apps. The program aims to assist the hospitality industry amidst a fourth COVID-19 wave. It underscores the growing importance of food delivery services (Source: The Korea Herald 2021, Government to bring back cashback scheme for food delivery service amid fourth wave).
Restaurant closures and reduced tourism are an ongoing challenge for premium food exporters.
Exporters should consider partnering with local premium food distributors and meal-kit providers. They can also redirect food into the retail sector. Food sold in the retail sector often needs different packaging and may attract lower prices compared to the hospitality sector.
Pandemic were a race to adapt.
After the rapid growth of scooter and moped deliveries,
will green delivery be a new trend in Cambodia, as elsewhere in the world?
As the Australian Trade commission underlines, the food delivery grew by 183% in Southeast Asia in 2020.
During months, restaurants had no revenue except from takeaway and delivery. Some venues were very reactive while others had trouble adjusting to this new way of serving food. The very first months of the pandemic were a race to adapt.
Now is the time to make the best of this lasting trend. Review your menu, target new segments, make sure transportation or packaging do not alter the quality of products and services you aim for, optimize your team’s time and production with a specific training for the entire delivery process from ordering to handling the meal at your guest’s door.
Where can I source the right packaging ? How can I handle the cost of packaging ? What can I offer for a better experience to my guests ? Can I develop a loyalty program ? How can I collect and use data while using 3rd party delivery ? How can I optimize my costs ? All these questions and many others should be asked to make sure you are making the best of this new way of consuming food meals.
Increased focus on health and sustainability.
COVID-19 has amplified consumer preferences for foods with health, freshness and sustainability credentials. With COVID-19 still affecting many countries, this trend is likely to continue over the coming years.
Chinese e-commerce platform Tmall registered a 56% rise in sales year-on-year to May 2021 of healthy foods that are packaged to eat on the go (Source: Alibaba, 2021, Online healthcare spending in China surges).
87% of Malaysians reported they would choose a brand with environmental, sustainable and governance credentials built into their business. More than three-quarters were willing to pay a 10% premium (Source: Facebook, Bain and Company 2021, Southeast Asia, the home for digital transformation: A SYNC Southeast Asia report).
Health and environmental concerns are shaping Korean dairy consumption. The organic milk market reached KRW 104 billion (A$122 million) in 2020. This was up from KRW 5 billion in 2008 (Source: USDA 2021, South Korea: Dairy and products annual).
In Cambodia, the global disruption in supply chains
will definitely help local products to impose themselves.
Organic products -Lucky supemarket - Phnom Penh
Organic Khmer food was already a hot topic before 2020 (Ibis Rice, Khmer Organics, IPG). With the pandemic, our health has become the core issue.
Eat healthy to stay healthy is now a motto well known by Cambodian consumers. As this trend coincides with the arrival of a variety of mart and supermarket brands, local and organic products benefit from new displays and recognizable signaletics, making them easy for the consumers to purchase. (see photo display Lucky Express). Short supply chains with local suppliers are also being favoured as we are experiencing global disruption in our traditional supply routes.
The use of local products may also be an additional guarantee of trust for consumers. Supporting local producers, buying local, communicating local is a winning combination in the long run.
Loyalty disruptions
COVID-19 restricted physical movement and the availability of goods (particularly fresh produce). This, and changing preferences, led consumers to try new brands.
Surveys in early 2020 found 68% of Thai and 80% of Filipino consumers tried new brands (Source: McKinsey, 2021, Five areas of growth for digital marketing in ASEAN).
Sustainability and social responsibly was one of the top 3 most cited reasons for switching brands in Southeast Asia (Source: Facebook, Bain and Company 2021, Southeast Asia, the home for digital transformation: A SYNC Southeast Asia report).
Disruption to regular brand preferences presents opportunities to gain market share and reach new consumers. It also emphasises the importance of ongoing engagement with current customers to maintain their loyalty.
Show your "made in Cambodia card"
Kirisu Farm - Press article - Khmer Times
As global supply chains are still suffering from disruption, food products shortage may be the new norm. While it may trigger some headaches to source ingredients and build a sustainable supply chain, now is a great opportunity for new brands to arrive and seduce consumers.
And good news, one of the main reasons to switch brands is sustainability and social responsibility. Cambodian local products are already well known thanks to flagship products such as Kampot pepper and some of them even encounter real success at international level.
In this post covid period, local brands have a real chance to win the race, especially when they manage to build trust using international standards while showing their “made in Cambodia” card. Plan your branding to make sure you get your communication right.
For more information :
Julie Thai,
Food & Beverage Consultant for b. Consulting Cambodia