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

• Consumer spending set to grow 8% annually over the next decade driven by rising affluence and urbanization, but short-term headwinds persist as price-led growth post-Covid slows
• Increasingly polarised consumers prioritise 'good for me, loved ones, and my wallet', trading off affordability and premium quality across categories to suit their lifestyles
• Leaders most concerned about macro-volatility, weak consumer sentiment, complex route to consumer and competitive intensity

Singapore, November 4, 2025-Southeast Asia's consumer landscape is undergoing a profound transformation. Affordability pressures, digital disruption, and the rise of local and regional brands are reshaping the fast-moving consumer goods (FMCG) industry, according to the "Southeast Asia: What's Happening with Consumers and Consumer Products" report released by Bain & Company and NielsenIQ (NIQ).

As Southeast Asia's key economies (SEA-6: Indonesia, Malaysia, Philippines, Singapore, Thailand, Vietnam) expand, private consumption is projected to grow by 8% annually to nearly USD $5 trillion by 2035, potentially surpassing North America. This momentum is fueled by rising affluence and rapid urbanization in the region, with Vietnam and Thailand's urbanization rate each expected to rise 7% over the next decade.

Nevertheless, the past few quarters have seen the decline in consumer sentiment affecting FMCG category growth rates. Inflationary pressures and macro-uncertainty being key drivers. Within this environment, consumer consumption patterns are becoming increasingly polarized. Consumers are seeking affordable essentials, while selectively investing in "better-for-me" products. At the same time, artificial intelligence and social commerce are redefining consumer journeys from discovery to purchase, ushering in a new phase of digital-first consumption.

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 Praneeth Yendamuri, Partner at Bain & Company. "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 Craig Houliston, Executive Director, Above Market Consulting and Insights at NielsenIQ. "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.

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