The rise of the "mass affluent" in Asean will transform consumer economy: BCG report
Southeast Asia’s consumer economy will soon be transformed by the rise of the “mass affluent” as tens of millions from the middle class join their ranks, according to a new report by The Boston Consulting Group (BCG).
In the report Beyond the “Crazy Rich”: The Mass Affluent of Southeast Asia, the mass affluent was described as an income segment that controls up to 40 per cent of the region’s household despite comprising of only 10 per cent of the population.
By 2030, this income group is projected to grow from 57 million to 137 million in Asean. They will account for 21 per cent of the region’s combined population by 2030.
The mass affluent, who are predominantly young professionals who are digitally savvy and seek exclusivity in their brands of choice, are already a critical market, said the BCG report. They account for about half of all spending in categories such as leisure travel, watches, and cars across the region, for example.
“Because the vast majority have attained affluence in the past few years, many are all still in the process of trading up to higher-value products in typically middle-class categories such as home appliances, food and beverages, and apparel,” said the report.
According to research by the BCG, more than 90 per cent of mass affluent acquired their wealth as salaried professionals or by operating businesses, with only a small minority inheriting it.
In addition, the affluent are more digitally engaged than other income segments. Some 56 per cent of affluent Thais and 88 per cent of Filipinos already actively use digital channels during the shopping process.
It also flagged that affluent Southeast Asians take 12 international trips per year on average, where they buy more than 40 per cent of their cosmetics, watches, and skincare products while traveling.
Another finding is that the behaviour of Southeast Asia’s mass affluent evolves as they become more grow more accustomed to their wealth and status. While newly affluent consumers tend to spend 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, said the BCG.
“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 its Marketing, Sales and Pricing Practice in Southeast Asia.
“This enormous market is important to virtually all consumer product companies, not only luxury brands.”