Customers shop at a supermarket in Qingzhou, eastern China’s Shandong province, on January 12, 2024.
Future Publishing | Future Publishing | Getty Images
“Consumer product companies of the future will need to constantly reinvent their brand portfolios,” said David Zehner, head of Bain’s consumer practice.
“If you can leverage the advantages of your scale and existing position while simultaneously being nimble and responsive to consumers, you can win, even in the face of tough conditions,” he said. . It’s a tough environment because there are so many rebels. ”
Bain defines Rebel brands as brands with annual revenue in excess of $25 million, an average category growth rate of more than 10x over the past five years, and those that are either independent or acquired by a larger company in the past two years. It is defined as a company that has Year.
Incumbent companies are leaders in this field and have a strong market position.
For example, sponge brand Scrub Daddy is a rebel brand, while competitor Scotch-Brite is an incumbent brand.
The company studied 23 consumer product categories in 11 markets in Asia Pacific from 2018 to 2022 to find out whether rebels and established brands are thriving or struggling in the countries studied. .
China and South Korea stood out as particularly strong markets for rebel brands.
According to Bain’s report, existing brands gained market share in only eight of China’s 23 sectors: sports, bath & shower, skin care, confectionery, sweet biscuits, milk powder, dairy products and juices. .
According to the report, existing brands dominated only four categories in South Korea: fragrances, confectionery, diapers, and bottled water.
The flourishing e-commerce scenes in China and South Korea make it easier for rebels to penetrate these competitive sectors, Zehner stressed.
According to the report, online shopping accounted for 34% of retail sales in South Korea in 2022, and 27% in China.
“Many brands are launching in markets like China because it is easier to reach consumers. It is quite difficult to operate as an established brand in these categories as there are always new competitors. “It’s become a thing,” Zehner told CNBC.
The country’s “rebel-friendly” market is also due to the boom in live streaming, he added, referring to the sales practice in which sellers show and talk about their products on social media to attract customers. .
High e-commerce penetration in Indonesia (26%) and Singapore (13%) also gave a boost to rebel brands. Bain’s report found that out of 23 sectors in each country, incumbents increased their market share in only seven and three sectors, respectively.
In contrast, emerging brands continue to be popular in Malaysia, the Philippines, and India, where e-commerce is less popular and traditional transaction levels are higher.
All three developing countries had e-commerce sales penetration rates of less than 8% in 2022.
New consumer tastes, often influenced by social media, are creating demand for brands that can adapt quickly.
Zehner noted that new brands were able to benefit from the trend in South Korea, where “fashions change so quickly that people change their entire wardrobe every season.”
“It’s the same thing with apparel. The same thing is happening with other consumer goods,” he says.
The industry structure is also becoming more fragmented, allowing consumers and small business owners to communicate directly with factories.
“There is also an ecosystem of third-party suppliers, allowing brand owners to quickly outsource any part of their business if needed,” said Zehner, adding that startups can do business in any area without having to make large upfront investments. He pointed out that you can find a partner. step.
By product, Bain found that Rebel hair care and skin care companies are the most popular among consumers, but when it comes to confectionery, they prefer established brands.
It is also unclear how long new brands can survive in such a competitive environment.
“For any of the rebels, it may be easy to reach consumers, so it becomes popular quickly, but then it becomes a victim of the next trend,” Zehner said.
Bain’s findings revealed that while rebel brands have made strides in some markets, incumbent brands have maintained or expanded market share in others.
According to the report, there was no single sector in which incumbents lost share across Asia-Pacific markets, and there was no single market where incumbents lost share across all categories.
For example, in the color cosmetics category, established brands won in two markets and lost in seven, but remained stable in Singapore and Vietnam.
“There are trends and patterns, but there are also a lot of nuances and exceptions,” Zehner said.
“If you are the incumbent, [brand] If you miss a new consumer trend, someone else will grab it and grow your brand rapidly. Then you have a choice. You can protect your existing position, you can try to innovate and find the next consumer trend, or you can try to make an acquisition. It’s a brand that just grew up,” Zehner pointed out.
He added that during the pandemic, customers temporarily returned to brands they know and trust and have safer supply chains in place.