Meet your future Asian consumer

Asian consumers are expected to account for half of global consumption growth in the next decade, offering a $10 trillion consumption growth opportunity. Globally, one of every two upper-middle-income and above households is expected to be in Asia, and one of every two transactions to be made by consumers in the region. Strong prospects for consumption in the region reflect falling rates of poverty and rising incomes and spending power. Capturing this growth will require understanding the region’s diversity and rapidly changing consumer behaviors. Companies will need to acquaint themselves with Japanese Insta-grannies, Indonesian Generation Z gamers, Indian small shop owners, Chinese lifestyle-indulging millennials, and others.

Many companies have rightly focused on the urban consumer in Asia as mass urbanization has stimulated the bulk of consumption growth. Cities still matter. About 80 percent of Asia’s consumption growth is expected to be in urban areas over the next ten years. The largest 250 cities in the region are seen contributing two-thirds of this growth, but of those it is not the top 50 that are growing consumption fastest but the next 200, outpacing the top 50 by 2 percentage points a year.

Today and looking ahead, a granular view of urban growth is no longer only about which cities will experience the fastest consumption growth, but which consumer cohorts within cities are driving that growth. Companies and investors need to understand in detail the changing landscape and consider the “map of growth” for their offerings.

Across Asia, the average size of households is shrinking. Most countries have experienced a decline in the past 20 years. In Indonesia, the average household size declined by 10 percent, in India by 15 percent, in Vietnam by more than 20 percent, and in China by almost 30 percent from 3.6 people in 1999 to 2.6 people in 2020. Single households are becoming a significant segment. One-third of households in Advanced Asia and more than 15 percent in China are single-person ones.

This significant demographic shift is changing patterns of demand. For instance, new forms of companionship are a growing market. The rise in the number of individuals living alone has led, for instance, to soaring ownership of pets across Asia. In the past five years, the number of pets in China, Singapore, and Thailand has jumped by 114 percent, 12 percent, and 23 percent, respectively. AI-driven chatbot companions are proving increasingly popular with hundreds of millions of users, many of them single people.

Single households require different products, including food delivered at home and smaller portions in the case of packaged food; in Japan between 2012 and 2019, the average net weight of several fast-moving consumer goods decreased by 8 percent in the case of butter to as much as 25 percent in the case of instant coffee. The rise of the single household may even lead to shifts in urbanization patterns as demand for more single-unit housing increases.

Asian consumers are increasingly online and mobile first across age groups, from members of Generation Z voraciously consuming video content to the more than 90 percent of seniors in Japan and South Korea expected to be online by 2030. But what platforms, influencers, and payment methods do Asian consumers prefer? Asian platforms are gaining prominence and crossing borders. However, there is still no single playbook in the region, and companies will need to adjust their digital footprint to local markets. Asia’s digital generation tends to use non-Asian social-media platforms, but largely follow local social-media influencers. They use Asian e-commerce platforms and local digital payments providers. Within this broad picture, however, there are significant variations. Chinese consumers largely adopt local platforms, while Australian consumers tend to use non-Asian ones.