Asia’s Scorching Heatwave: Impact on Consumer Trends and Market Dynamics

Asia is experiencing an intense heatwave, with temperatures reaching record highs. As people seek relief, there’s a noticeable shift in consumer behavior towards ice cream and chilled beverages, which is expected to impact various sectors positively.

Zara Lightowler, an Associate Partner at Bain & Company, notes that similar heatwaves in other regions have led to increased sales of fans, air conditioning units, and cooling products. In Southeast Asia, record temperatures have been exacerbated by climate change, lower winter rainfall, and El Niño, a phenomenon that contributes to hotter and drier conditions.

Soft drink and ice cream companies stand to benefit significantly. Analysts predict a surge in sales for bottled water and drinks, with brands like Coca-Cola and PepsiCo seeing an 18.5% and 3.8% increase in shares, respectively, over the past year. Similarly, Unilever, known for its Walls ice cream, could see gains.

The demand for air conditioners and fans is also expected to rise. Allison Malmsten from Daxue Consulting anticipates increased air-conditioning use will boost the HVAC industry but also result in higher energy consumption. Fans are seen as a more affordable and sustainable alternative to air conditioners.

However, the heatwave is not without its drawbacks. Extreme dryness is likely to drive up crop prices, impacting rice, soy, wheat, corn, and tea leaves. As these crops decline in yield, cattle feed prices—affected by grains like corn and wheat—may also rise, leading to increased meat prices. Coffee beans and rice, crucial globally, are also at risk.

On a positive note, the heatwave could enhance the demand for sustainable products, as consumers become more aware of the links between extreme weather and climate change. This increased environmental consciousness may drive a shift towards more sustainable purchasing practices, benefiting industries focused on sustainability.