The Asia region scores well for the rewards component of our index with an

The asia region scores well for the rewards component

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The Asia region scores well for the rewards component of our index, with an average score of 62.4, the top score globally, aboveeven NAWE. Growth prospects in emerging Asia mean that the region is not saturated as are some developed markets in Asiaand NAWE. However, risks related to logistics and low-income populations hold the region back.Malaysia Picks Up Steam, Overtakes ChinaMalaysia has overtaken China to rank in second place in our latest Asia Food and Non-Alcoholic Drinks RRI in Q318, up from thirdplace in Q218. Malaysia's score of 75.0 out of 100 places it third globally in our rankings, and it only slightly trails first-placed SouthKorea, which has a score of 75.2 out of 100.Malaysia's move up the rankings comes on the back of an improved industry rewards score, driven by an uptick in real householdspending over our five-year forecast period to 2022, which we forecast to grow by 5.2% y-o-y in 2018. In the run-up to theMalaysian elections, scheduled to take place by August 2018, we also expect a boost in fiscal stimulus, including cash handouts, tolower socio-economic groups, which will also help to boost Malaysia's consumer outlook. The ruling Barisan Nasional (BN) coalitionhas made an effort to strengthen and broaden its support base by providing broad-based handouts to a considerable proportion ofthe population (seeBudget 2018: Fiscal Discipline Still Intact Despite Upcoming Elections’,October 30 2017), particularly civilIndia Food & Drink Report | Q3 2018bmiresearch.com17
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servants, veterans and the military, which form the key BN support base.Lower Risks Propel Malaysia Over ChinaAsia Food & Non-Alcoholic Drinks Risk & Rewards ScoresNote: Scores out of 100; higher score = more attractive market. Source: BMIAlthough Malaysia ranks above China in this quarter's iteration of our Asia Food and Non-Alcoholic Drinks RRI, we note that Chinastill presents stronger rewards than Malaysia. China has a larger population size, estimated to reach 1.4bn in 2018, compared toMalaysia, which will only reach 32mn in the same period. This creates more opportunities for food and drink retailers based on thesheer size of the population. China is also forecast to offer even stronger growth in real household spending between 2018 and2022, averaging 8.0% annually, compared to 5.2% for Malaysia. Malaysia's higher overall RRI score, when compared to China, is dueto its strong industry risk score, as the country offers the stability of a developed state, with a better regulatory environment andlogistics network. Malaysia scores 74.8 out of 100 for industry risk, whereas China scores 44.3.South Korea Still Our Top Pick In The RegionSouth Korea maintains its position in top place, leading in our latest Asia Food and Non-Alcoholic Drinks RRI in Q318. South Korea'sscore of 75.2 out of 100 places it second globally in our rankings. South Korea's top position is due to its good risk and rewardsbalance, with scores of 78.3 and 73.9 respectively. South Korea previously ranked in first position in Q317, before slipping to fourth
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  • Summer '18
  • Sagar Arora
  • ........., Alcoholic beverage, Food processing

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