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Singapore Food & Drink Report Q1 2008
Business Monitor International, Jan 2008, Pages: 70
The Singapore Food Drink Report provides independent forecasts and competitive intelligence on Singapores food and drink industry.
As third quarter and full-year financial results for Singapore’s leading food and beverage companies begin to drift in, the paradox of the local marketplace is again made clear. The opportunity to make handsome returns on food and beverage investments in Singapore is there; however, the size of the market and its late stage of development mean that only the smallest number of strategically focused firms can reap these rewards.
Singapore falls in sixth place in our new Food and Drink Business Environment Ratings and this placing again highlights the frustration of the market to investors. Economic and political stability, as well as high levels of per-capita GDP and high consumption rates in some major food and beverage categories, all work in Singapore’s favour. However, the tiny size of the population - just 4.4mn people - and an absence of medium- and long-term growth opportunities because of market maturity all work against it.
To investors interested in the region, Singapore is certainly attractive, with high spending levels and established consumption habits typically providing a satisfactory return on investments. However, with so little market share to go round, few companies can now enter Singapore and hope to harness sufficient consumer interest to warrant the required investment. Even those already established are finding the market tough and are having to operate at the height of their business activity levels in order to remain competitive and protect their market share.
One key development discussed in this quarter’s report is the rumoured break-up of beverage major Fraser & Neave (F&N). F&N has refused to comment on rumours that it is to split its business into separate food and beverage, property and publishing companies, and yet the persistence of these rumours is indicative of how difficult it is to successfully operate in Singapore’s food and drink sector, let alone while balancing non-core property and publishing interests. Meanwhile, F&N-backed APB, despite committing huge sums to expansion across emerging Indochina, has had to continue to invest in domestic brand building to avoid a renewed assault on its market share from close rival Carlsberg, which last quarter snared APB’s Corona distribution agreement.
The challenges of trying to maximise growth opportunities within such a small market mean that market leaders require a strong strategic focus, substantial financial resources and the capacity for innovation; when all come together, Singapore can prove highly lucrative. Singapore Food Industries (SFI) announced its Q307 results in November and the figures make encouraging reading. Despite years of trying to reduce its dependency on Singapore, the country remains SFI’s primary growth driver, with sales here increasing by 23.7% over the three-month period to contribute to group Q307 sales growth of 13.4% to US$111.3mn.
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