The stick format created a buzz within snacks in 2015, particularly prominent in chocolate coated and filled biscuits.
Pocky is number one in chocolate coated biscuits in Japan while Pepero by Lotte Group dominates the same category in South Korea, but these brands also enjoy high uptake in ASEAN, where other manufacturers have entered the snack stick market.
New brands can help to drive interest but limit trend-setters from maximising
In Thailand, URC (Thailand) Co Ltd released Tivoli Stix in October 2015, while Uni Firms Co Ltd launched Ticky earlier in the same year.
These two brands chose to mirror Pocky's range of smaller packaging instead of the average 50 g pack size.
Boxes of Ticky with flavors like Orange Yoghurt and cocoa sticks coated in milk cream weighed only 22 g, while Tivoli Stix offered multipacks of 12x20 g packets. These were especially attractive for children, in addition to being convenient and portable.
Another reason for the shrinking pack sizes was to push prices lower, making it a more affordable snack for those in the lower income groups.
The Thai brands are more observable in mass retailers like Big C, and less common in convenience stores such as 7-Eleven and upper-tier retailers like Gourmet Market.
These products give consumers a wider range of choices in a Pocky-dominated category, especially for price sensitive consumers.
This brings a positive outlook for the market size as a whole, as it could bring about higher consumption. Large multinational players might lose percentage share in the event that new consumers of snacks prefer copycat brands.
As the middle-income group widens, consumers are expected to trade up to value-added premium products, especially those with strong Japanese and Korean elements, thus shifting preferences back to global brands.
Increasing volume consumption is the end goal
In ASEAN, the spotlight is on generating greater volume consumption of snacks and not only sweet biscuits. Penetrating markets like Vietnam, Thailand, Indonesia and the Philippines may bring about a positive impact in the long-term as these markets still have low per capita retail volume consumption, yet high prospects for development.
The stick format has potential to make an appearance in other categories. While the fad of stick biscuits might taper after 2016, in other less dynamic categories manufacturers can borrow innovation ideas from sweet biscuits.
In Thailand, the stick format was already seen in other categories, for example Berli Jucker Public Co Ltd's Tasto Stick and Tong Garden Co Ltd's expansion into vegetable, pulse and bread chips with Fun Stix launched in early 2015, also available in neighboring markets. Conz, corn sticks by Cassava Republic & Roots Co Pte Ltd, is another example available in Singapore and the Philippines among others.
Local palates in emerging ASEAN markets
While localisation is a common strategy for connecting with consumers, this factor is tricky in dynamic emerging markets.
Local palates tend to favor familiar flavors and ingredients, yet many consumers exposed to global trends also value the quality of imported products.
High costs will dampen manufacturers' ability to accommodate these factors in emerging Asia without raising selling prices significantly, so flavors are likely to remain a key differentiator between brands.
Japanese flavors like matcha, and universal flavors like cookies and cream are tried and tested for sweet biscuits, while Asian flavours like coconut and spice have also been trialed in other snack categories, like chocolate confectionery.
Products that easily adopt the latest flavor trends are value-added without driving unit prices upwards.