Mass Affluent Consumers Set to Become Southeast Asia's New Growth Engine: BCG
BY : SARAH YUNIARNI
NOVEMBER 21, 2018
Jakarta. The number of mass affluent consumers in Southeast Asia is projected to reach 136 million by 2030, replacing middle-income consumers as the region's growth engine, global management consulting firm Boston Consulting Group says in its latest report, released on Tuesday.
According to the report titled "Beyond the Crazy Rich," mass affluent people are "predominantly young professionals who are digitally savvy and who seek exclusivity for their choice of brands."
These people have been rising from their previous status of "middle class" over the past 10 years, spurred by the fast-growing economy in the region, which has contributed to their wealth.
Mass affluent consumers are projected to make up 21 percent of the region's total population by 2030, from 9 percent currently, BCG said in the report.
Most of the more than 50 million mass affluent consumers are currently below the age of 40. They gained their wealth through their work as professionals, or businesses ownership.
"As the mass affluent replace the middle class as the driver of growth, the dynamics of Southeast Asia's consumer market will fundamentally change. This enormous market is important to virtually all consumer product companies, not only luxury brands," BCG partner Aparna Bharadwaj said in a statement.
BCG said mass affluent consumers have stable buying power during economic volatility – unlike middle-class consumers – and tend to do thorough research on products before buying, to find the most authentic, niche and premium goods that are worth the price.
These consumers also travel frequently for leisure, are heavy users of digital channels or social media, and live in urban centers.
BCG said the economic transition and higher gross domestic product of countries in the region are among the factors behind an increasing number of middle-income consumers turning into mass affluent consumers.
The region had a combined total GDP of $2.8 trillion last year, which had doubled since 2007.
In Indonesia alone, the number of mass affluent consumers is projected to make up 21 percent of the country's total population by 2030, from 5 percent currently.
Mass affluent consumers now control 20 percent and 40 percent of household wealth in the region, but this is expected to increase to 65 percent by 2030.
The global consultancy also noted that while middle-class consumers mostly purchase indulgence products, such as snack foods and beverages, affluent consumers spend their money on liquor, cars, restaurants and travel.
Mass affluent consumers in Indonesia also accounted for 46 percent of total spending in restaurants and on goods such as watches, jewelry and eyewear (49 percent), leisure and travel (46 percent), and cars (53 percent).
Targeting the AffluentThe BCG report recommends that brands or companies adopt regional strategies to attract mass affluent consumers in the region, as they exhibit similar behavior and mostly live in urban centers.
Brands should also offer exclusivity by launching limited-edition goods, holding private events for selective loyal clients and provide a background story for each product sold, which could spark greater interest among these consumers.
Targeting travelers by establishing a presence in regional hubs and at airports could also allow companies to be noticed by such consumers.
BCG emphasized that brands should also promote social inclusion and contribute to economic development by using sustainable locally sourced materials, while also supporting social projects in each country.