Southeast Asia Is The New Consumer Megamarket

Southeast Asia’s consumer economy is being transformed by the ascent of tens of millions of people from the middle class into the ranks of the mass affluent, an income segment that controls up to 40% of the region’s household wealth despite comprising only 10% of its population. This trend will create strong growth in premium goods and new product categories. These are among the findings of a report, titled Beyond the “Crazy Rich”: The Mass Affluent of Southeast Asiaby Boston Consulting Group (BCG).

The maturation of Southeast Asia’s rapidly developing economies is propelling growth of the mass-affluent class, which BCG defines as consumers with the incomes and intent to sharply increase their acquisition of premium and luxury products. By 2030, this income group is projected to grow to 136 million, from 57 million today, in the ten member countries of the Association of Southeast Asian Nations: Brunei, Cambodia, Indonesia, Laos, Malaysia, Myanmar, the Philippines, Singapore, Thailand, and Vietnam. The mass-affluent class will account for 21% of the region’s combined population by 2030—and about 45% to 65% of household wealth in markets such as Indonesia, the Philippines, and Thailand.

The mass affluent—predominantly young professionals who are digitally savvy and who seek exclusivity in their brands of choice—are already a critical market.

They account for roughly half of all spending in categories such as leisure travel, watches, and cars across the region. Because the vast majority have attained affluence in the past ten years, many are still in the process of trading up to higher-value products in typically middle-class categories such as home appliances, food and beverage, and apparel.

“As the mass affluent replace the middle class as the driver of growth, the dynamics of Southeast Asia’s consumer market will fundamentally change,” said Aparna Bharadwaj, a BCG partner who leads the firm’s Center for Customer Insight (CCI) and BCG’s Marketing, Sales & Pricing practice in Southeast Asia. “This enormous market is important to virtually all consumer product companies, not only luxury brands.”

BCG’s CCI research, which included a survey of about 6,000 affluent consumers in six major Southeast Asian countries and extensive ethnographic interviews, found that the region’s mass-affluent market is far more nuanced than the lavish spenders and high-net-worth individuals portrayed in the hit movie Crazy Rich Asians. The research also found that the vast majority are young, aware of international trends, and digitally engaged.  

Among the key research findings:

  • More than 90% of the mass affluent acquired their wealth as salaried professionals or by operating businesses; only a small minority inherited it.
  • Nearly two-thirds are under age 40, and three-quarters rose up from the middle class within the past ten years.
  • The affluent are more digitally engaged than other income segments. Fifty-nine percent of affluent Thais and 88% of Filipinos, for example, actively use digital channels during the shopping process.
  • Affluent Southeast Asians take 12 international trips per year, on average; they buy more than 40% of their cosmetics, watches, and skin care products while traveling.

BCG’s research also found that, largely owing to their frequent travel and social media use, a remarkably high proportion of Southeast Asia’s mass-affluent consumers share similar values and preferences—even though they remain separated by language, culture, and distance.

The majority are in the process of upgrading to premium goods and services within the same categories, for example, and although they are willing to pay for famous brands, they want proof of a product’s value and functionality. Southeast Asia’s mass affluent also regard exclusive access as a personal statement and seek immersive shopping experiences.

“These findings indicate that Southeast Asia’s mass-affluent market is much more accessible than many companies think—and can be reached with a regional strategy,” said Vaishali Rastogi, a BCG senior partner who leads the firm’s businesses in Southeast Asia.

Another key insight of BCG’s research is that the behavior of Southeast Asia’s mass affluent evolves as they become more accustomed to their wealth and status. While newly affluent consumers tend to spend ostentatiously on famous brands, those who have been affluent for at least ten years care more about quality and value and seek out niche, harder-to-find brands.

“Understanding how mass-affluent consumers upgrade their purchases in various categories should inform the way in which companies maintain an appropriate price ladder for each product. Otherwise, companies run the risk of losing their customers to competing brands as they grow more affluent,” Bharadwaj said. All this research underscores that Southeast Asia is the new consumer megamarket.