By Tan Heng Hong,
The COVID-19 pandemic has dealt a blow to the Southeast Asia market. According to the International Labour Organisation (ILO), an estimated 8% of working hours were lost in Southeast Asia and the Pacific in 2020 which is equivalent to 24 million full-time jobs.
Due to loss of employment or having their pay reduced, many people turned to the food industry as a means of supplementing their income. COVID-19 has seen a significant number of consumers land in financial difficulty, as Mintel research highlights that, seven in 10 Indonesian consumers* are worried about the financial impact of COVID-19 on themselves/their family, whereas one in five Thai consumers say their financial situation is tight and they are on just making ends meet.
The financial downturn has forced many people to leverage their skills or acquire new ones to generate additional revenue streams to get them through the difficult times. According to reports, Indonesia’s leading food delivery platform GoFood recorded a 50% rise in the number of partners joining the platform in 2020 compared to 2019. Many of the new merchants are small, micro and medium enterprises. In Thailand, the number of mobile food operators, including stalls and food trucks, doubled in the first 10 months of 2020.
Opportunities exist for packaged food brands to harness the entrepreneurial spirits of Southeast Asians to expand their product reach, while still supporting employment.
Exploring new routes to market
With jobs impacted due to the pandemic, packaged food players in Southeast Asia (SEA) have an opportunity to step in to create employment opportunities. At the same time, businesses can harness the Southeast Asian entrepreneurial spirit to help brands reach consumers more effectively pre- and post-COVID-19.
Companies in Southeast Asia can turn to numerous business models such as affiliate marketing to incentivize individuals to promote and sell their products to consumers. For example, Fiesta, a company owned by PT Charoen Pokphand Indonesia, has a reseller program for its ready-made meals and frozen processed meat. One of the conditions is to own a freezer to store the Fiesta frozen foods to sell from their homes. Whereas, Farm Fresh, one of the leading dairy companies in Malaysia, has a Home Dealer program to help individuals, mostly housewives, to supplement their income.
Generating goodwill by providing employment
Mintel 2030 Food & Drink Trend ‘Change, Incorporated’ highlights how consumers will turn to companies to be the leading forces for change in the next 10 years on important societal issues. Mintel research highlights that over two-third of consumers in Thailand like to be associated with companies/brands that align with their values. Food and drink companies can step in during times of crisis to provide meaningful employment for the people.
Corporates can generate positive vibes by engaging in corporate social responsibility (CSR) programs to tackle unemployment. By doing so, they can potentially attract consumers who want to be associated with companies/brands that are aligned with their values.
For example, in September 2020, CP Group in Thailand pledged to hire 28,000 new graduates to reduce the unemployment rate among graduates. The conglomerate also has the “CP Community Fridge” and “CP Fresh Shop” entrepreneur programs to help Thais to generate income from selling fresh and frozen CP branded products. In the Philippines, Coca-Cola has provided opportunities for repatriated overseas Filipino worker (OFWs) as part of the BalikPinas Project in 2020 to help them start their own business at home.
Developing a social community targeting budding food entrepreneurs
Mintel 2021 Food & Drink Trend ’United by Food’ highlights how food, drink and foodservice brands can take advantage of their positions to tie together consumers who share the same common interests and passions. Packaged food companies can reach out to small or budding food entrepreneurs through a platform to provide them with culinary tips and ideas to help them with their business. In the Philippines, four in five consumers say it is important for them to feel part of a community.
Brands have an opportunity to actively bring individual fans together into online communities or organise in-person gatherings. At the same time, companies can reach out to these communities by promoting and selling them their products. In the Philippines, Alaska Milk has created a social media site Alaskapreneur to promote its offerings, while sharing tips with food entrepreneurs.
Moreover, brands can inspire individuals hoping to start their own business. By doing so, companies can position themselves as the partner and supplier to small business owners embarking on their culinary business. Thus, brands can create a close-knit community of individuals who are also product users and fellow entrepreneurs. Companies can position themselves as a source of inspiration and a companion to support these individuals in their culinary business.
What we think
Packaged food companies in Southeast Asia will stand to gain by grooming a group of entrepreneurs, who in turn will help the businesses capture more shares, especially in traditional trade channels. Besides, businesses can promote their employment creation schemes as a CSR, thus generating goodwill. At the same time, brands can open up a new revenue stream by selling ingredients to home-based entrepreneurs.
*APAC Food and Drink Analyst, Mintel
