While emerging brands have made inroads capturing market share from established brands, Bain & Company’s latest analysis shows that many established consumer brands continue to achieve success.
The report studied established (also known as incumbent) consumer product brands’ market share in 23 product categories across 11 Asia-Pacific markets over a five-year period (2018–2022).
It revealed that among 253 category and market combinations Bain studied, large incumbent brands lost market share in 44% of cases (defined as losing more than one percentage point of market share in aggregate) against emerging or insurgent brands, held steady in 28% cases and won (gained more than one percentage point of market share in aggregate) in 27% cases. There was no single category where incumbents lost share across every Asia-Pacific market, nor a single market where they lost share across all categories. So, while insurgents have gained ground in more situations than incumbents have gained, our analysis of these 11 Asia-Pacific markets shows a varied competition pattern between incumbents and insurgents.
When looking at markets, Malaysia, the Philippines, and India emerge as the top three most favourable markets for incumbents, while South Korea, Singapore, and China had the most favourable environments for insurgents. In India, for example, established incumbents won or maintained share in over 65% of the 23 categories Bain tracked.
“The dominance of traditional trade and relatively low penetration of e-commerce and modern trade across most categories in India are the main factors contributing to this trend. The intricate channel dynamics of the Indian market make it challenging for new players to create scale.”
“By combining their strengths of strong brands, channel strength, and operational capabilities to scale, the incumbent brands that are winning have integrated the learnings of insurgent brands of fast innovation, catching early trends and winning with emerging channels to continue to gain share despite increased competition. In fact, the presence of new insurgents has compelled the incumbents to drive innovation and speed to market” said India-based Ravi Swarup, partner and a leading member of Bain’s consumer products practice.
From a category perspective, Bain’s analysis revealed that the beauty and personal care sector was the most receptive to insurgent brands overall, in stark contrast to other sectors, including non-alcoholic beverages, food, and home care. Within the food sector, the confectionery category was a strong area for incumbent brands, as they only lost in 1 out of 11 markets in this category.
Delving into the performance of large incumbents based on their origins, Bain’s research indicates that, in most Asia-Pacific countries, foreign incumbent brands continue to lead in market share across the majority of the 23 tracked categories and demonstrate greater resilience by outgrowing their local peers in most winning categories. However, in India, the Philippines, and Indonesia, while foreign incumbents also lead in market share across most categories, it is the local incumbents that exhibit a stronger ability to gain share in the winning categories.
The success of these local brands can be attributed to their extensive distribution networks in rural areas and lower-tier cities, where they effectively leverage traditional trade channels. While there is growth available in the emerging channels, the bulk of the Indian FMCG market
continues to be in these segments.
However, it is clear that whether of Indian origin or foreign origin, the brands have to design, deliver, and innovate in the Indian context to continue to win.
How to win: Incumbents with an insurgent mindset
Bain’s report indicates that while market, category characteristics, and macro situations contribute to incumbents’ success to some extent, what matters most is how they manage their categories and brands. Successful incumbent companies are adept at incorporating the most effective strategies from insurgent competitors while leveraging their inherent strengths. They have harnessed their scale to their advantage. They have skillfully navigated typical pitfalls, such as complexity and inertia, which often beset large organizations. Additionally, they have shown a capacity for innovation, investment, and execution.
For example, when driving portfolio growth, successful incumbents systematically search for unmet consumer needs, and innovate based on emerging trends even when new prospects initially seem minor. Other successful incumbents adopt solutions that insurgents are trying to scale—solutions that resonate with consumers—and use their scale advantage to build distribution and brand awareness and achieve cost-effectiveness quickly.
“Our study challenges the notion that insurgent brands universally disrupt incumbents. Many incumbents have successfully maintained or grown their market share amid tight competition. The successful incumbents thrived by blending their incumbent strengths and insurgent tactics, allowing them to counter threats and strengthen their market position effectively,” said Sydney-based David Zehner, head of Bain’s Asia Pacific consumer products practice.
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