Organic Packaged Food in Malaysia

PROSPECTS

Strong competition from FF baby food negatively impacts overall organic sales

Organic packaged food value sales declined for the first time in the review period in 2019. This can partly be attributed to the fact that areas such as organic prepared baby food cater to high income groups who demand quality products, with distribution thus being limited to premium supermarkets.

Expanded distribution and educational sites help boost organic awareness

Consumers are increasingly aware of organic packaged food due to the influence of social media sites that promote health benefits. Organic packaged foods such as soy drinks, sweet spreads, breakfast cereals and pasta are increasingly being introduced through internet retailers.

Producers offering more affordable options in response to falling demand

Organic packaged food sales are expected to continue falling over the forecast period, with the main target group of affluent consumers becoming more price sensitive as a result of the weaker economic outlook. Organic baby food is also threatened by more affordable fortified/functional brands, which are easily available through internet retailers as well as brick and mortar stores throughout the country.

COMPETITIVE LANDSCAPE

Leading multinationals suffer from falling interest in organic baby food

Although continuing to lead overall organic packaged food sales, Heinz saw a decline in value share in 2019 due to the impact of falling demand within organic baby food. The company’s products are mainly distributed to premium supermarkets and hypermarkets, with investment in marketing and educational campaigns to create awareness remaining limited.

Internet retailers growing in popularity among convenience seeking consumers

Organic packaged food producers are increasingly distributing their brands via internet retailers due to low operational and distribution costs compared to physical stores and so as to attract busy parents. Babydash, Radiant Code, Love Earth and BMS Organics are examples of internet retailers that sell varieties of different organic baby food, although high prices ensure that demand remains limited to wealthy consumers.

Use of organic ingredients in packaged food continues to grow

In response to rising consumer health and wellness awareness, packaged food players will continue to focus on organic positioning for a growing number of brands over the coming years. For example, A Clouet, a traditional player in processed meat and seafood, expanded its shelf stable seafood ranges by introducing tuna with added organic olive oil and organic broth in October 2017.

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