ASEAN clients’ confidence in regional industrial relations with the European Union plummeted early last year due to the latter’s deforestation law and its effects on various food products, as the region’s major palm oil-producing countries officially protested on the global stage.
The EU parliament approved its long-debated and highly-controversial deforestation regulation in September last year despite widespread protests from countries producing several food commodities in regions from Asia to South America.
They claimed the move was a political ploy and experts warned it would likely lead to additional price increases amid inflationary pressures.
This led to major palm oil producer markets such as Malaysia and Indonesia to look at retaliation, with talks of potentially cutting off palm oil trade with the EU.
Nestlé’s strategy of focusing on product affordability and accessibility paid off in 2022, with the company reporting further expansion of its business in emerging markets, even amid economic turbulence and inflation.
Nestle published its FY2022 full year financial results on February 16 2023, announcing total year-on-year organic sales growth of 8.3% to CHF94.4bn (US$136.5bn) and a 16% increase in operating profit to CHF16.1bn (US$23.3bn), though profit margins were reported to have dropped by 30 basis points (0.3%) to 17.1% overall.
Nestlé’s emerging markets account for 42% of its business (the remaining 58% are evolved markets), demonstrating once again the strength of this segment. Many of those emerging markets are in the Asian region, from giant countries like India to many smaller but faster ones. -Growing markets in Southeast Asia such as Vietnam.
Many Southeast Asian countries have remained cautious and concerned about a lack of confidence in food and emerging inflationary costs, despite the meteoric post-COVID-19 expansion in several food categories.
ASEAN’s food and beverage sector experienced ups and downs at the height of the COVID-19 pandemic, with sectors such as alcohol taking a hit in some markets such as Malaysia, and others, such as snacks and canned goods, experiencing monumental expansion amid customer backlog. and move on to dinner or cooking more at home.
Since the last quarter of 2022, sales trends across all food and beverage categories have normalized, but industry experts have remained cautious in 2023.
Global food giant Kraft Heinz said its investment in improved facilities and new sustainability commitments reaffirmed its commitment to the Indonesian market, while revealing it was exploring opportunities in the realm of meat substitutes.
The company’s largest production facility in the Asian region is located in Indonesia and is primarily focused on the production of its ABC branded products, which are the percentage market leader in the country.
Kraft Heinz invested a total of IDR 1. 2 trillion (US$84 million) in capital investments to improve this site, installing improved treatment equipment, solar energy and wastewater control systems.
“This advancement is expected to transform the ABC Indonesia Karawang plant into a world-class factory and is an important milestone for us here in Indonesia as we pave the path for our long-term growth in Indoensia,” Kraft Heinz Indonesia-Papua New Guinea Managing Director Steven Debrabandere told FoodNavigator-Asia.
Malaysia’s Ministry of Health (KKM) issued a statement in 2023 calling on the public to update local legislation governing food protection and dairy quality in the country, raising considerations about fraudulent or unsafe products slipping through the cracks.
The current statute governing these products has been the 1985 Food Regulations, and the scope of milk products that KKM wanted to improve control over included skimmed milk, non-fat milk, pasteurised milk, recombined milk, reconstituted milk and so on.
“KKM is seeking public input to update those regulations in the face of potential health hazards and prevent tampering with the preparation, sale or use of those foods and beverages,” KKM said in an official statement.
Nestle Malaysia highlighted that its strong focus on continued new product innovation is what would help it combat ongoing global economic challenges and food commodity cost increases.
The Nestle Group as a whole announced its Q12023 financial results in April 2023, reporting a 5.6% increase in global sales compared to Q42022 to CHF23.5bn (US$26.4bn) but did not reveal any profits numbers in this report apart from a forecasted profits margin in 2023 to be between 17% and 17.5%.
What was highlighted was a 9.8% pricing increase overall, attributed to ongoing significant cost inflation. For the APAC region, this was broken down to be 9.1% in Zone Asia, Oceania and Africa (AOA) and 3.9% in Zone Greater China.
Asia was not the worst hit by price hikes when compared to Latin America (13.4% increase), North America (12.4% increase), and Europe (10.7% increase), but in a market where price sensitivity is particularly high such as Malaysia, the impacts are always likely to be more enhanced.
A study conducted by Singaporean researchers on the government’s Nutri-Grade beverage front-of-label formula in 2023 concluded that more paints are needed for this formula to have a positive effect on consumers’ food and purchasing choices.
Singapore first announced the Nutri-Grade labeling formula for pre-packaged sugary drinks in 2020, and after all, it was officially rolled out in the country in December 2022 after several delays attributed to COVID-19.
It ranks beverages from A (healthiest) to D (least healthy) in terms of sugar and saturated fat levels.
Researchers at Duke-NUS School of Medicine conducted a randomized trial with 138 participants to read about the effects of implementing Nutri-Grade on consumers’ purchasing choices, an experimental online grocery platform NUSMart in collaboration with local grocery store FairPrice.
They found that while the FOP labeling formula helped inspire consumers to choose beverages with higher ratings, this wasn’t as evident in terms of improving their fitness and food choices.
In 2023, Vietnam put into effect regulations requiring the demonstration of nutrition labeling in accordance with national criteria on all eligible food and beverage products in the country, moving forward from its previous voluntary labeling system.
According to government data, in the past only 60% of the country’s food companies displayed nutritional labels on their products. Most of them were major brands and retailers.
“A study conducted by the Department of Preventive Medicine of the Ministry of Health showed that in general, 60% of products have nutritional information. It also found that 82% of non-alcoholic beverages have labels, but 50% of packaged processed foods do. ” Vietnamese Deputy Health Minister Do Xuan Thuyen said in an official statement.
Thailand has proposed modernizing its regulations on expiration dates and allergen warnings, and the Thai Food and Drug Association (FDA) regulator has released draft proposals for prepackaged foods.
Following in the footsteps of several other Asian countries, from Vietnam to South Korea, Thailand’s food regulator has embarked on a change to its labeling regulations to align them with foreign standards.
The Thai FDA’s main goal with this update is to replace the control of requirements related to how expiration dates and allergen-related warnings are displayed on packaging.
“A primary replacement that has been proposed in this draft is much greater clarity on how allergen warnings are displayed and what ingredients such warnings contain,” the company said in an official statement.
The Singapore Food Agency (SFA) granted a first regulatory approval to GOOD Meat for the use of serum-free media in cultured meat production in 2023.
The company claims that this technical and regulatory step would lead to greater scalability of production power, decreased production costs, and a more sustainable product.
It also paved the way for the production of larger quantities of free-range chickens from cells than from slaughtered animals.
GOOD Meat won SFA approval for its first poultry product in November 2020 and then approval for new formats in November 2021. With the most recent regulatory approval for serum-free culture media, the U. S. food generation company announces that it will soon transition to a more effective culture medium. and favorable production process.