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Beyond income: Redrawing Asia’s consumer map - A $10 trillion consumption growth opportunity

Asia is the world’s consumption growth engine — miss Asia and you could miss half of the global picture, a $10 trillion consumption growth opportunity over the next decade. Scale continues to be a key characteristic, but the story of the next ten years and beyond is one of rising diversity in consumer markets in this already diverse region amid significant social, demographic, and technological change.


Three changes in perspective are key to understanding the new consumption paths being blazed by Asia’s consumers. First, as incomes rise across Asia, more consumers will reach the highest tiers of the income pyramid, and movement within the consuming class is likely to be a larger driver of consumption growth than movement into it. Second, cities will continue to drive consumption growth, but promising sources of growth are increasingly diverse cohorts within cities, such as Insta-grannies in Seoul, Generation Z gamers in Surabaya, career moms in Manila, and lifestyle-indulging digital natives in Chengdu. Third, as the relationship between income and consumption breaks down in some instances, new consumption curves are emerging in specific product categories. Income-driven S-curves may flatten or shift as business innovation and new technologies enable more people, even on lower incomes, to afford goods and services.


Part of a series on the future of Asia, this research focuses on the region’s consumer markets, surveying the outlook for consumption and identifying major shifts in consumption patterns and behavior over the next decade. While the COVID-19 pandemic continues to affect economies in Asia and around the world in fall 2021, this research aims to look beyond the economic effects of the pandemic, focusing on the factors that may influence long-term consumption growth in Asia to 2030 and beyond.


From people moving into the consuming class to moving within the consuming class

Asian consumers are expected to account for half of global consumption growth in the next decade, equivalent to a $10 trillion opportunity. Globally, one of every two upper-middle-income and above households is expected to be in Asia, and one of every two consumer transactions is likely to occur in the region.


An increasing number of people are projected to join the consuming class, defined as spending more than $11 a day in 2011 purchasing power parity (PPP) terms. In 2000, only 15 percent of Asia’s population was part of the consuming class; the incomes of the remaining three billion people were still insufficient to support discretionary spending. However, over the next decade, a significant reversal is likely. By 2030, three billion people, or 70 percent of Asia’s total population, may be part of the consuming class.


Members of the consuming class are expected to attain higher income levels than ever before, shifting the center of gravity of the income pyramid sharply upward and changing consumption patterns. In the past 20 years, 80 percent of Asia’s consumption growth came from lower income tiers of the consuming class as new entrants joined. In the next decade, 80 percent of that growth could come from higher-income consumers


VIEW ARTICLE: https://www.mckinsey.com/featured-insights/asia-pacific/beyond-income-redrawing-asias-consumer-map


Article by By Oliver Tonby, Rohit Razdan, Jonathan Woetzel, Jeongmin Seong, Wonsik Choi, Sven Smit, Naomi Yamakawa, and Tiago Devesa


#asia #growth #economy #trade #globaltrade #insight #consumers #asean


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