Southeast Asia’s consumer landscape is set for a significant transformation, with private consumption projected to grow by 8% annually, reaching nearly $5t by 2035, according to a report by Bain & Company and NielsenIQ. This growth is driven by increasing affluence and rapid urbanisation across key economies, including Indonesia, Malaysia, the Philippines, Singapore, Thailand, and Vietnam. However, short-term challenges such as inflation and weak consumer sentiment persist, affecting fast-moving consumer goods (FMCG) growth rates.
Despite these headwinds, Southeast Asia’s gross domestic product (GDP) is expected to grow almost 5% annually through 2034, with Vietnam and the Philippines leading the charge. Investors remain optimistic, as the region attracts more foreign direct investment than China for the first time in a decade. In 2023, the FDI per capita for the region was 6.4%, compared to China’s 0.2%.
Consumers are becoming more deliberate in their spending, with 42% seeking lower-priced products and 25% switching to brands offering better value. This shift has prompted brands to adjust their offerings to meet evolving consumer perceptions of value. Whilst consumers are buying less, they are willing to invest in health and premium brands, particularly in beauty, baby, and pet care sectors.
Social commerce and artificial intelligence (AI) are reshaping consumer journeys, with platforms like TikTok Shop accounting for 20% of total e-commerce in the region. AI tools are increasingly used by 85% of Southeast Asian shoppers for product discovery and personalised recommendations. Local brands are also gaining ground, commanding over 50% of the FMCG market value, particularly in Indonesia, Thailand, and Vietnam.
As Southeast Asia enters its next phase of consumer growth, businesses are urged to adapt to the fast-evolving market by incorporating locally relevant elements and leveraging AI to maintain competitiveness.
