Higher prices, bigger challenges for Malaysian FMCG industryDespite the higher prices, less than half of Malaysian consumers were willing to spend less on their current lifestyle. This could mean they would still spend on essentials like food and beverages, and consumer demand would be a lifeline during the current inflation. However, even the food and beverages sector in the FMCG industry saw less revenue growth in 2022.
The beauty and personal care segment in Malaysia was still expected to grow amidst rising prices, with stable year-to-year revenue growth. Both well-known international personal care brands like Colgate and local brands like Safi had high penetration rates among Malaysian households. This segment was forecasted to weather the ongoing inflation as the inflation rate is expected to moderate in 2023. On the other hand, other FMCG segments, like tobacco, saw a steady decrease in revenue for the past few years. This segment will likely suffer the impact of inflation further this year.
Online shift due to the COVID-19 pandemicThe Movement Control Order (MCO) during the COVID-19 pandemic has shifted Malaysian consumers’ in-home and out-of-home spending. Malaysian consumers started to purchase less in physical stores and more through online FMCG purchase channels.
Malaysians were already used to purchasing apparel, personal care, and beauty and cosmetic products online through established e-commerce sites such as Lazada and Shopee. These segments were thus able to adapt faster to the shift than the food, beverage, and tobacco segments. Due to the limited online purchase options for groceries, Malaysians still preferred to shop directly from their local grocery retailers.
While the FMCG market in Malaysia may face challenges because of inflation, consumer demand remains strong, especially in the essential segments of the industry. Moreover, the current trend in e-commerce gave Malaysian consumers more options and convenience for purchasing goods.