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Singapore Food and Drink Report Q2 2008
Business Monitor International, June 2008, Pages: 65
The Singapore Food Drink Report provides independent forecasts and competitive intelligence on Singapore's food and drink industry.
Executive Summary:
BMI has, for the first time this quarter, incorporated food production and processed food production data and forecasts within our Singapore Food & Drink Report. The figures, which show food and beverage output rising from US$4.21bn in 2007 to reach US$4.67bn in 2012 (an increase of 11%) and processed food and beverage output climbing by 18.8% to reach US$1.12bn in 2012, say much about the nature of Singapore’s food and drink industry.
As this report goes on to discuss, Singapore is in many ways a very attractive proposition for regional investors; at US$1,786.74 per capita in 2007, food consumption levels are among the highest in the region and consumers are enormously susceptible to innovative and high value product launches. However, the island’s tiny geography, limited population and advanced state of maturity mean that opportunities are spread out among the few, rather than the many, while even these few are increasingly starting to look elsewhere for growth.
An overwhelming and consistent trend in BMI’s Singapore Food & Drink Reports is that food and beverage production is increasingly shifting abroad. Company analysis of local confectioner Petra Foods, included in the report for the first time in Q208, examines the way in which the company has sought export and manufacturing opportunities abroad in a bid to offset domestic market stagnation.
Other events detailed here that have occurred in the last few months include: Singapore’s Asia Pacific Breweries’ desire to boost its Indochina presence, in order to best exploit low competition, long-term growth opportunities; local boutique bakery BreadTalk’s decision to focus its expansion efforts on Malaysia’s growing food market; and Singapore Food Industries constant quest for a larger international contribution to total group sales.
While these events more than highlight the limitations of the Singaporean market, one must also stress that it does still hold considerable appeal. The country ranks joint sixth in BMI’s Asia Pacific Food & Drink Business Environment Ratings, its limits being impressively offset by its low-risk business environment, with regard to both the food and drink market and the economic and political risk outlook.
Certain events from the last quarter also serve to highlight this side of the Singaporean story. Coca-Cola Zero was launched to much fanfare and a bullish statement from Coca-Cola Singapore that the drink would change the local soft drinks landscape. Such confidence stems from Singaporean consumers’ desire to embrace new products – particularly those in keeping with the global health trend – and their willingness to spend on non-essential food and beverage items. Continued mass grocery retailer (MGR) activity also serves to emphasize the market’s appeal, as rivals rush to exploit high consumer spending, via store upgrades and new concept launches, in what is essentially a saturated local marketplace.
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