South-east Asia is binging on snacks, and investors are buying in

*This article is adapted from * The Business Times

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IN 2024, several deals in South-east Asia’s consumer space raised eyebrows, like the US$1.2 billion acquisition of Indonesia’s Yupi Indo Jelly Gum by Affinity Equity Partners. If that wasn’t enough to whet investors’ appetites, Temasek’s US$1 billion investment in India’s snack giant Haldiram’s made one thing clear: the humble snack is no longer just an impulse buy – it’s now an investable asset class.

Once overlooked by traditional capital, the snack sector is proving its worth in the world of high-value exits and premium valuations. These headline deals signal not just consumer demand, but maturing, investable markets emerging across South-east Asia’s fast-moving consumer goods (FMCG) landscape.

The boom behind the valuations

With a population of over 700 million people and median age of just 31 years old, South-east Asia is a demographic dream. The region’s snack market, currently valued at about US$49 billion, is expanding at a rapid 7.4 per cent compound annual growth rate – far outpacing global averages. Indonesia and the Philippines are leading the charge – projected to hit US$6.4 billion and US$3.4 billion in market size, respectively, by 2028.

The engine behind this growth? A region-wide “snackification” trend, where meals are being replaced by quick bites that are indulgent, functional or both. Think protein-packed chips, vitamin-infused gummies and sugar-free chocolate. Better-for-you products are also gaining traction – as consumers, particularly Gen Z and millennials – seek out non-GMO, palm oil-free and reduced-sugar options.

What’s more impressive is the sector’s resilience: despite an average inflation of 3.8 per cent across South-east Asia, Mondelez reports that two-thirds of consumers maintained their snack spending. In an uncertain economy, snacks are seen as small luxuries that consumers are unwilling to give up – making them a solid bet.

The Yupi and Haldiram’s deals aren’t outliers. They represent growing investor confidence in South-east Asia’s ability to generate global consumer brands. Industry valuation Ebitda (earnings before interest, taxes, depreciation and amortisation) multiples in recent deals have exceeded 20 times, further illustrating just how bullish investors are becoming.

But generating outsized returns requires more than just trendspotting. From my experience, five core pillars define whether a snack company has the legs to scale: distribution, exports and manufacturing, innovation, brand equity and operational control.

Distribution is undergoing a shift. While traditional retail still dominates, e-commerce is climbing – albeit from a low base, accounting for just 2 to 8 per cent of snack sales. The standout platform? TikTok Shop – now South-east Asia’s second-largest e-commerce channel. Its live-selling format suits impulse categories like snacks, and brands that master this format will see sharper conversion rates and more direct consumer engagement.

That said, omnichannel remains key. Digital-first brands can leverage lower upfront costs, but true scale comes from offline expansion, through retail partnerships and in-store activations.

A wave of South-east Asia-born brands are already leaving their mark outside their home countries. Singapore’s Irvins, Indonesia’s Yupi, and Thailand’s Taokaenoi are now earning over 40 per cent of their revenue overseas. The region’s export readiness is hoisted by initiatives like Indonesia’s “Making Indonesia 4.0” and regional trade frameworks such as Asean Free Trade Area and Regional Comprehensive Economic Partnership, which reduce barriers to global market entry.

Manufacturing is another strategic edge. The low labour costs, rich agricultural inputs and flexible original equipment manufacturer (OEM) options associated with South-east Asia is turning the region into a high-margin production base. For early-stage brands, OEM provides a capital-light way to enter markets. For scaled companies, transitioning to in-house production offers margin expansion, quality control and investor confidence.

Innovation: From better-for-you to local flavours

Consumer tastes are moving towards healthier and functional snacks. The “better-for-you” category is expected to hit US$16.2 billion in South-east Asia by 2030. Driven by Gen Z and millennials, South-east Asian consumers are now demanding snacks that prioritise clean labels, nutritional benefits and healthier alternatives, without compromising taste. Consumers are not only seeking snacks that are good for them – they’re looking for products that feel familiar, relevant and emotionally resonant.

This intersection between health and heritage creates a white space for brands to differentiate. It’s not enough to be “clean” – products must also taste good and feel local. Winning brands embrace both.

Today, brand loyalty isn’t just built in supermarket aisles – it is also earned on screens. The modern customer journey is shorter, faster and more fragmented than ever. Snack companies must master storytelling in short-form video formats, live engagement and influencer partnerships.

Platforms like TikTok Shop now offer brands full-funnel conversion, from discovery to purchase. Successful snack brands are those that harness omnichannel strategies with consistent messaging across digital and offline platforms – using tools such as live crunch demos and interactive content to build trust and boost conversion.

Behind every winning snack brand is a well-oiled supply chain. OEM models help early players get to market, but for those with defensible formulations or export ambitions, in-house manufacturing is the way to go.

Successful FMCG snacks are showing gross margins of 40 to 60 per cent, with 10 to 11 per cent net margins at scale. But scaling brings challenges – from working capital gaps to discounting traps. Smart cash flow management and disciplined pricing are essential to avoid growth-at-all-costs pitfalls.

The road ahead for South-east Asia’s snack sector is paved with tailwinds – rising incomes, maturing tastes, digital penetration and export potential. But it’s also increasingly competitive.

Founders who win will combine operational discipline with brand agility. Investors who win will know how to back those founders early, help them scale, and create real, lasting value. The playbook is clear: optimise your channels, know your customers, invest in innovation, and build a brand that people not only buy – but believe in.

The writer is Associate Director, Investment, at Vertex Ventures South-east Asia and India

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