Asia Pacific is forecast to account for 52% of global sales growth between 2016 and 2021.

While the majority of global salty snacks sales are derived from North America and Asia Pacific in 2016, a marked shift toward Asia Pacific as the key growth driver is increasingly apparent. North America has generated 33% of global sales in 2016, but only 23% of global growth between 2011 and 2016. By contrast, actual sales growth in Asia Pacific accounted for 42% of world growth over the same period, despite generating only 29% of the global sales in 2016.

As this trend is set to continue, sales in Asia Pacific are forecast to overtake that of North America by 2021. Asia Pacific is forecast to account for 52% of global sales growth between 2016 and 2021, with China predicted to become the single largest growth contributing market ahead of the US, thereby fueling a rise in PepsiCo’s sales. In North America, the Purchase, NY-based company’s performance benefited from its dominance in tortilla chips, which recorded the strongest growth in actual terms among salty snacks categories, driven by the rising popularity of Mexican food.

China set to leapfrog Japan as largest market

Japan remained the largest salty snacks market in Asia in 2016, following a robust performance and a 2% CAGR in sales between 2011 and 2016. However, this was dwarfed by the 6% and 16% CAGR recorded in China and India respectively, and Japan is forecast to be overtaken by China by 2021 as the largest market in Asia Pacific. Growth in Asia is set to remain largely driven by the strong growth in potato chips and puffed snacks, while rice snacks, a more mature category present mostly in Japan, is set to see more modest growth, following a CAGR of only 1% over the 2011-16 period.

PepsiCo’s unchallenged lead in Asia Pacific

PepsiCo, the undisputed largest global player in salted snacks due to its dominance in North America, also ranks number one in Asia Pacific. PepsiCo’s strong performance in Asia Pacific between 2011 and 2016 was largely driven by the growth of the global brand Lay’s, which ranks number one in potato chips in China and India, and also benefited from the rise of its local puffed snacks brand Kurkure in India.

PepsiCo’s two main challengers in Asia Pacific — Want Want Holdings, Taiwan, and Calbee, Tokyo — only have a minor presence outside their domestic market and have failed to make inroads against their larger rival. Want Want Holdings, which generates the majority of its sales in rice snacks, is increasingly focusing on a higher growth category, puffed snacks. However, the company’s share remained hindered by its absence from potato snacks, a faster growing category in China.

Calbee’s share in Asia Pacific has been eroded by its dependence on Japan, with a presence in the rest of Asia Pacific revolving mostly around smaller markets, notably Singapore, Taiwan and Thailand. It would therefore need to focus on expanding in larger markets in order to be in a position to challenge PepsiCo. In early 2016, Calbee unveiled ambitious growth targets for China, with a focus on e-commerce to develop its presence, thanks to a partnership with Tmall, after failing to establish a solid presence through a brick-and-mortar based distribution. As Calbee plans to achieve 30% of its sales outside Japan in the longer term, it is also looking beyond Asia Pacific, the company becoming present in Western Europe in 2015 with the launches of Harvest Snaps in Spain and the Yushoi range in the UK.

Having built a dominant position in potato chips in China and India, PespiCo has been the major beneficiary of the rapid growth in salty snacks in Asia Pacific, where it is expected to continue enjoying strong growth. Among local companies, which also took advantage of these favorable conditions, no single player has emerged as a serious contender to PepsiCo, and none has built a truly pan-Asian presence matching that of the US giant.

Amid a fragmented salty snacks competitive environment in salty snacks in Asia Pacific, organic growth strategies such as those undertaken by Calbee in China may not be sufficient to fully seize opportunities in emerging markets, and medium-sized acquisitions would be necessary in order to attempt to bridge the gap in shares with PepsiCo.

While the latter company will continue capitalizing on rising sales in sales in Asia Pacific, notably in China and India it may also rely on acquiring brands with a health and wellness positioning revolving around organic and natural ingredients as part of strategies to maintain growth in North America.