Asia's consumers lap up local brands

Li Bingbing is an ambassador for Chinese cosmetics brand Pechoin.
Li Bingbing is an ambassador for Chinese cosmetics brand Pechoin.PHOTO: PECHOIN/INSTAGRAM

TOKYO • Nestle is losing flavour to an Indonesian coffee brand famous for brewing civet-cat faeces.

L'Oreal is losing face to a Chinese skincare brand favoured by President Xi Jinping's wife.

Asia traditionally was considered easy money for Western multinationals, with beverage makers, cigarette brands and fast-food giants capitalising on rising incomes.

A survey by China Market Research Group in 2011 showed 85 per cent of Chinese consumers preferring foreign brands.

Those days are over. That preference dropped by half last year and it goes beyond China.

Indian toothpaste, Vietnamese laundry detergent and Japanese flavoured water are picking up market share with lower prices and by catering to local tastes.

Rising stars such as Indonesia's Luwak instant coffee and China's Pechoin moisturisers spell trouble for global titans at a time when Asia's economic growth is projected to outpace the world's through 2019.

"Multinationals underestimated local competition," said Mr Shaun Rein, managing director of China Market Research Group.


Li Bingbing is an ambassador for Chinese cosmetics brand Pechoin. PHOTO: PECHOIN/INSTAGRAM

"Local players have moved very fast on emerging trends."

Instant coffee by Indonesia's Javaprima Abadi - better known for selling beans excreted by civet cats - more than doubled its market share in Asia from 2012 to last year, while Nestle's Nescafe stagnated, noted research firm Euromonitor.

In Indonesia's US$1.3-billion (S$1.8-billion) instant-coffee market, the disparity is more pronounced. During that period, Javaprima gained about 12 percentage points for a 33 per cent share, while Nestle lost 1.4 percentage points to 16 per cent.

A Nielsen study slated to be released yesterday said local brands in Asia and Latin America outsell global ones.

Nestle's revenue from Asia, Oceania and Africa fell 23 per cent from 2012 to US$14.7 billion last year.

In a bid to capture more Asian consumers, it debuted ready-to-drink cold coffees in the region, opened cafes in Chinese universities and formulated a Cafe Viet line-up.

Nestle is not the only global brand that is starting to smell the coffee. In a Chinese skincare market that is set to grow 25 per cent to US$34 billion in sales by 2021, Pechoin is a domestic maker of creams and whiteners given as gifts by China's First Lady Peng Liyuan during a visit to Tanzania in 2013.

Owned by Shanghai Pehchaolin Daily Chemical, the company saw its market share jump five-fold between 2012 and last year, according to Euromonitor.

The newfound popularity came partly at the expense of L'Oreal, which lost more than a fifth of its market share in the same period.

Pechoin uses celebrities Jay Chou and Li Bingbing as brand ambassadors.

On the WeChat messaging app, it ran a marketing campaign featuring a woman strolling through Shanghai in the early 1900s.

That walk ends with her shooting a dark-clad figure surrounded by melting clocks - "my mission is to fight against time". She then introduces Pechoin's skincare products.

Asia remains a significant growth area for Western brands. The Nescafe Dolce Gusto's portioned-coffee system is popular in Japan and South Korea.

L'Oreal remains the No. 1 beauty group in China and the nation's increasing demand for luxury cosmetics bodes well for its premium positioning, the company said.

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A version of this article appeared in the print edition of The Straits Times on November 22, 2017, with the headline 'Asia's consumers lap up local brands'. Print Edition | Subscribe