Southeast Asia’s consumers are redefining value amidst headwinds, powering a $5 trillion consumption future by 2035

Macroeconomic headwinds bite but investors optimistic

Southeast Asia continues to post steady growth. The gross domestic product (GDP) of SEA-6 economies is forecast to grow almost 5% annually through 2034, with Vietnam and the Philippines leading the way, each expected to expand by about 6% per year.  

However, this growth is not translating into FMCG category growth driven by weak consumer sentiment and hence low domestic demand. Across Southeast Asia FMCG category growth rates in H1 2025 have been weaker than prior years, where a lot of growth depended on price increases.

Consumers in the region are cautious, with 43% indicating they are cutting back on non-household expenditures. 52%¹ of executives also expect slower business growth in 2026 compared to 2025, with competitive intensity, macroeconomic uncertainty, and inflation topping the list of executive concerns.

Yet, investors continue to bet on long-term prospects. For the first time in 10 years, the region is attracting more foreign direct investment (FDI) than China, as multinational companies diversify manufacturing footprints. In 2023, FDI per capita for SEA-6 was 6.4%, compared to 0.2% for China.

Value takes center stage

Amid rising food prices and economic uncertainty, consumers across Southeast Asia are becoming more deliberate in how they spend and what they buy. 42% of consumers now seek the same products at lower prices, and 25% are switching to brands that offer better value for money. This shift has also prompted brands to recalibrate offerings, from product pack sizes (multi-packs, smaller packs) to (magic) price points, to meet consumers' evolving perceptions of value and budgets.

While consumers are buying less, they are willing to spend more on health and premium brands, with beauty, baby, and pet care capturing significant share, underscoring a more selective and "better-for-me" mindset, while favoring affordability in functional categories such as household and laundry. Notably, 53% of consumers also cited cost as the the main barrier to making sustainable purchases.

"Consumer Product companies operating in Southeast Asia are navigating one of the most dynamic shifts we've seen in recent years," said Bain's Yendamuri.

"They are facing increasingly brand agnostic consumers who are deliberate in their choices, balancing affordability with aspiration and expecting brands to deliver both; amplified by competition from formidable local and insurgent brands. Within this context, brands that design to cost, incorporate locally relevant elements of value, master the route to consumer, and evolve their operating models to be agile will stand out in this competitive market." 

Commerce rewired for social and AI-led growth

Southeast Asia's commerce landscape is being transformed by two forces that are redefining how consumers connect, discover, and buy. Social commerce has rapidly evolved from an experiment to a mainstream channel. Platforms like TikTok Shop now account for roughly 20% of total e-commerce in the region and saw triple-digit GMV growth rates in Thailand, Vietnam, Malaysia and the Philippines between 2022 and 2024.

Concurrently, AI is transforming purchase journeys as a new shopping partner for consumers. Around 85%² of Southeast Asian shoppers are already using or considering AI tools to guide decisions, from product discovery to price comparison and personalized recommendations. AI is also driving transformation across the FMCG value chain, from predictive product development to forecasting and marketing for supply chain optimization.  

Local brands on the offensive

Local and regional manufacturers now command over 50% of FMCG market value across Southeast Asia, particularly in Indonesia, Thailand, and Vietnam. At the same time, leading local brands are expanding across borders on the back of strong domestic demand.

"Local and regional manufacturers are not only leading but also gaining market share across Southeast Asia," said NIQ's Houliston. "While affordability remains a key driver, it is complemented by aggressive distribution expansion and rapid, localized innovation that responds to evolving consumer needs. These efforts are being executed with remarkable speed. We anticipate that more manufacturers from Southeast Asia and the broader Asia Pacific region will increasingly expand within the region to seize the significant growth opportunities ahead."

"As Southeast Asia enters its next phase of consumer growth, businesses must consider how to sharpen their battlefield focus and rethink pack-price-channel architectures to regain consumer share. This is a new test of readiness in the race to harness the power of AI and adopt a scale-insurgent mindset to win in this fast-evolving region," added Praneeth Yendamuri, Partner at Bain & Company.  

Footnotes

¹ Insights are drawn from a survey with ~25 CXOs conducted by Bain in 2025.

² Based on an online consumer survey conducted by NIQ in June 2025 using its BASES methodology. The survey gathered responses from 4,211 consumers across 14 Asia-Pacific markets (Australia, China, Hong Kong, India, Indonesia, Japan, Malaysia, New Zealand, the Philippines, Singapore, South Korea, Taiwan, Thailand, and Vietnam) representing diverse age groups, income levels, and geographic locations.

About The Southeast Asia: What's Happening with Consumers and Consumer Products Report

Southeast Asia is increasingly becoming a strategic priority for global, regional, and local Consumer Products companies seeking accelerated growth over the next decade. However, success in the region is not guaranteed. This report, jointly developed by NielsenIQ and Bain & Company, explores Southeast Asia's growth potential, competitive dynamics, and the strategic imperatives required to win in this evolving market. Drawing on NielsenIQ's retail and consumer measurement data and Bain & Company's strategic insights, the report offers a comprehensive view of the opportunities and challenges ahead.

About NielsenIQ

NielsenIQ (NYSE: NIQ) is a leading consumer intelligence company, delivering the most complete understanding of consumer buying behavior and revealing new pathways to growth. Our global reach spans over 90 countries covering approximately 85% of the world's population and more than $7.2 trillion in global consumer spend. With a holistic retail read and the most comprehensive consumer insights-delivered with advanced analytics through state-of-the-art platforms-NIQ delivers the Full View™. 

About Bain & Company

Bain & Company is a global consultancy that helps the world's most ambitious change makers define the future.

Across 65 cities in 40 countries, we work alongside our clients as one team with a shared ambition to achieve extraordinary results, outperform the competition, and redefine industries. We complement our tailored, integrated expertise with a vibrant ecosystem of digital innovators to deliver better, faster, and more enduring outcomes. Our 10-year commitment to invest more than $1 billion in pro bono services brings our talent, expertise, and insight to organizations tackling today's urgent challenges in education, racial equity, social justice, economic development, and the environment. We earned a platinum rating from EcoVadis, the leading platform for environmental, social, and ethical performance ratings for global supply chains, putting us in the top 1% of all companies. Since our founding in 1973, we have measured our success by the success of our clients, and we proudly maintain the highest level of client advocacy in the industry. 

Forward-Looking Statement

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