Innovation and technology – The keys to unlocking ingredient opportunities

Innovation and technology are the two biggest challenges facing the ingredients industry in South East Asia. But they can be overcome through foreign investment, an enlightened approach to resource utilisation, and the adoption of processing infrastructure and reforms that will make the sector more competitive and future forward

By Rose Chitanuwat, regional portfolio director – ASEAN, Informa Markets

South East Asia is a region that is rich in natural food resources, from coconuts to coffee, cocoa, soybeans, sugarcane, corn, peanuts, fish – and of course, rice. Agriculture makes a sizeable contribution to the economy of every nation within the Association of Southeast Asian Nations (ASEAN), with the exception of Singapore and Brunei.

An ingredient deficit

But despite the region’s abundant natural larder, its food and beverage industry is heavily reliant on imports to meet its demand for ingredients. Approximately 85% of the ingredients it uses are imported, mainly from China, India, Japan and Europe.

The irony of this situation is that many of these ingredients originate from South East Asia in the first place. The problem is that the region lacks the infrastructure or technological capabilities to turn these raw materials into ingredients that food and beverage manufacturers can work with. Therefore, in many cases, there is no alternative but to ship the materials overseas for processing and valorisation.

Shipping materials overseas for processing is unsustainable from an environmental impact and cost perspective. Over-reliance on exports has other disadvantages too: from a food security standpoint, it is clearly risky, as it makes the sector more vulnerable to environmental and economic shocks. It also poses a potential threat to the future competitiveness of the region’s burgeoning food and beverage processing industry.

ASEAN is one of the most dynamic growth zones for foods, beverages and nutraceuticals, with all of the major markets experiencing a healthy rate of growth. Indonesia is home to the largest food and beverage market, owing to the size of its population, followed by Thailand, Vietnam and the Philippines. In terms of growth potential, Singapore, Indonesia and Thailand represent the most lucrative market opportunities – especially for nutraceuticals.

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