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Singapore Food and Drink Report Q4 2011
Business Monitor International, Oct 2011, Pages: 92
Tight labour conditions, higher wages and increasing tourism levels are expected to have a strong knockon effect on the consumer-facing sectors in Singapore and should leave consumer-facing companies poised to do well in 2011. The effects of an ageing population will continue to dampen Singapore’s appeal to consumer-facing players, but the aforementioned positives should prove supportive of continued domestic demand strength over the long term. That said, the consumer-facing sectors are already highly mature and consolidated, leaving limited scope for growth for domestic consumer goods players. Although the mass grocery retail sector is relatively less mature given the prevalence of independent retail stores, the market is also fast approaching saturation, stressing the importance of international diversification for consumer goods players.
Headline Industry Data
- 2011 food consumption = +2.7%; compound annual average growth to 2015 = +2.1%
- 2011 alcoholic drink sales = +1.3%; compound annual average growth to 2015 = +5.4%
- 2011 soft drink sales = +1.9%; compound annual average growth to 2015 = +2.5%
- 2011 mass grocery retail sales = +2.8%; compound annual average growth to 2015 = +5.0%
Industry Trends & Developments
Organised Retail To Gain Prominence In Singapore’s Retail Landscape: The convenience, product variety, lower product prices and greater fresh food offerings provided by organised mass grocery retail players will continue to encourage the growth of the industry, which fits in well with BMIs forecast that the proportional contribution of organised retail will increase from 68% currently to 75% in 2020. Traditional retailers are naturally feeling the heat as more organised retailers such as NTUC FairPrice, Sheng Siong and Shop ‘N’ Save set up shop. Local news media The Straits Times reported that an independent grocery retailer registered a decline of as much as 70% in its monthly sales after a 24-hour NTUC FairPrice supermarket opened nearby.
APB Engaging In Acquisitions And Divestitures: Singapore-based brewer Asia Pacific Breweries (APB) has sold its stake in Chinese counterpart Kingway Brewery. The 21.37% stake was sold for CNY1.08bn (US$166mn). APB also plans to offload its stakes in Chinese brewers Jiangsu DaFuHao Breweries and Shanghai Asia Pacific Brewery to China Resources Snow Breweries as it looks to put itself in the best possible position to benefit from rapidly accelerating premiumisation momentum in the country. A significant motivation behind APB’s divestment of its stake in Jiangsu DaFuHao and Shanghai APB is the mass-market nature of the companies’ beer brands, which represents weak strategic fits to APB’s premium beer portfolio and the company’s expansionary ambitions in the higher-value Chinese alcoholic drinks segment.
Risk To Outlook
Although BMIs country risk team has already factored in a significant slowdown in export growth on the back of weaker performance in the developed economies, a sharper-than-expected slowdown in external demand could result in a downward revision of our macroeconomic outlook for Singapore. In the worstcase scenario, BMI do not rule out the possibility of an economic recession in Singapore, especially if a double-dip scenario plays out in the US or eurozone.
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