Malaysia is a diverse and emerging market full of potential. This INCITE guide is intended for food and drink brands looking for export led growth in Malaysia.
Malaysia offers significant export led growth opportunities for food and drink brands, a cosmopolitan Southeast Asian nation with a population of 32 million.
Known for its diversity, Malaysia is made up of three main ethnicities; Malay (67.4%), Chinese-Malays (24.6%), Indians-Malays (7.3%) and Others (0.7%). This blend of cultures has led to Malaysia having the one of the most diverse cuisines available in the region. Indeed, food is at the centre of the Malaysian culture. So much so that Malaysians tend to greet people by asking ‘Have you eaten?’ rather than the traditional “Hello”.
Malaysia’s rich history contributes to its cosmopolitan diversity. The country was in the hands of the Dutch in 1641 and then the British in 1824 through the Anglo–Dutch Treaty. British colonisation lasted the longest compared to others and Malaysia still has a strong connection with the United Kingdom.
A member of ASEAN, Malaysia has particularly strong cross border ties with neighbouring Singapore. It also holds numerous Free Trade Agreements (FTA) with cooperating nations including New Zealand and Australia. The UK and Malaysia are in talks about an FTA in the post Brexit economy.
The Malaysian economy is beginning to normalise in the wake of the pandemic with growth pegged at 5.3% to 6.3% for the remainder of 2022. This is largely supported by improving domestic demand as the country opens up again after long periods of Covid-19 containment.
Market trends
While there is a growing awareness and demand for health-focused products in Malaysia relative to more developed markets in the region, experience tells us there is a greater demand for products with sweeter and saltier taste profiles. As a result, we are seeing good opportunities in Malaysia for the categories such as snacking, confectionery, desserts and convenience foods.
For western imported food and drink products in Malaysia, the typical consumer is often middle to upper class Chinese-Malays and expats, given their taste profiles, spending power and desire for premium, imported products.
Like many other Southeast Asian countries, Malaysia experienced long periods of lockdown which heavily impacted the business community and in particular tourism and food service sectors. Much like Singaporeans, Malaysians enjoy eating out regularly at restaurants, street vendors and food courts. Therefore, Covid restrictions and work from home mandates meant more people were shopping at supermarkets and preparing food from home.
From a grocery perspective, now the country is reopening there is more opportunity to continue in-store tastings and promotions to grow brand awareness and induce product trial. Digital marketing has become a critical tool for communicating with target consumers and driving them to point of purchase.
Diverse grocery channels
Malaysia offers an increasingly sophisticated array of domestic and regional grocery groups. Where once the channel was dominated by regional players such as the Dairy Farm Group and AEON, fierce competition from domestic chains has seen several independent grocery brands claim customer loyalty from the upper end of the consumer market.
These independent retailers are focused on providing a wide variety of imported food and beverage products. This has helped them to gain the upper hand over regional players that were often more focused on securing listing fees from suppliers than offering their consumers a great selection of food and beverage brands.
The strong competition amongst these retailers has also benefited food and drink brands looking to gain their place on the shelves. Listings fees are considerably lower in Malaysia than in other more mature ASEAN markets, such as Singapore, which has only two major offline grocery groups.
To continue reading about Malaysia’s market entry models, doing business in Malaysia, regulation and compliance (including Halal) and getting around, please download the full guide here; : https://www.exportincite.com/news/export-guide-my
Visit www.exportincite.com or contact [email protected]
References
1. World Bank 2020
2. Population Distribution and Basic Demographic Characteristic Report 2010 (Updated: 05/08/2011), Department of Statistics Malaysia
3. Summary Of Malaysia’s History, Department of Information, Malaysia 2016
4. Economic and Financial Developments in Malaysia in the First Quarter of 2022, Bank Negara Malaysia, Central Bank of Malaysia, March 2022
