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Malaysia Food and Drink Report Q1 2012
Business Monitor International, Nov 2011, Pages: 83
Business Monitor International's Malaysia Food and Drink Report provides industry professionals and strategists, corporate analysts, food and drink associations, government departments and regulatory bodies with independent forecasts and competitive intelligence on Malaysia's food and drink industry.
Evidence of a stalling economic recovery in the US and eurozone suggests that the slowdown in external demand could be more severe than previously expected. However, while export growth is expected to be relatively subdued in the near term, BMI remains optimistic that domestic demand will remain resilient on the back of a robust labour market and moderating inflationary pressures. Over the longer term, an ongoing development of the food retailing sector and the maturation of Malaysia’s youth population translate into exciting opportunities across the food, drink and mass grocery retail universe. This potential will remain firmly in the sights of multinational consumer goods players, such as Japanese brewer Asahi and US soft drinks giant The Coca Cola Company.
Headline Industry Data
- 2011 per capita food consumption = +4.1%; CAGR forecast to 2016 = +1.3%
- 2011 soft drinks value sales = +13.7%; CAGR forecast to 2016 = +4.8%
- 2011 alcoholic drinks value sales = +5.1%; CAGR forecast to 2016 = +4.3%
- 2011 mass grocery retail sales = +10.2%; CAGR forecast to 2016 = +7.0%
Key Industry Trends
Malaysia’s Mass Grocery Retail Potential Remains A Strong Attraction: Japanese retailer AEON will invest JPY200bn (US$2.6bn) by 2013 to expand its business footprint in Asia, including in China, Malaysia and Vietnam. AEON plans to introduce a convenience store chain called Ministop in Ho Chi Minh City in Vietnam, and plans to set up a shopping mall by 2013. Given that a strong pickup in private consumption is unlikely to materialise in Japan over the short-to-medium term and will continue to weigh on BMI's outlook for Japanese retail, Japanese retailers including AEON have been aggressively hunting for opportunities in overseas markets to secure their future growth. Malaysia, with a considerable lack of maturity in its mass grocery retail sector, therefore represents an attractive proposition for AEON. Also, with an aim of capitalising on Malaysia’s strong mass grocery retail growth, Malaysian supermarket Mydin has announced plans to open seven new hypermarkets in 2011. The firm says it will spend around MYR150mn (US$49mn) developing each new store.
Burgeoning Drinks Potential: Japanese retailer Asahi successfully secured Malaysian soft drinks producer Permanis with an improved offer of US$273mn, and the acquisition is scheduled to be completed in November 2011. The Japanese beer sector continues to stutter along, and Asahi clearly needs to look further afield for stronger growth opportunities. On this front, Permanis could strengthen Asahi’s much-needed exposure in emerging markets and supply considerable dynamism to the brewer’s top-line growth. Muhtar Kent, CEO of US soft drinks giant The Coca-Cola Company, has reiterated the company’s proposed investment of US$300mn in Malaysia by 2015. Kent said the investment plan is on track as the company sees the country as a critical growth market for its products and that the firm remains optimistic over the business prospects for both carbonated and non-carbonated drinks. According to Kent, a rising population coupled with changes to lifestyle and increasing consumption will become key drivers for growth in Malaysian soft drink sales.
Risks To Outlook
Headwinds in the US and eurozone remain the key risks to BMI's outlook on the Malaysian economy. Should developments in these regions turn out to be more severe than expected, BMI could see a continued deterioration in external demand, which could become a further drag on Malaysia’s economic growth. This scenario could dampen on consumer sentiment, in turn weighing on domestic demand growth.
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