Singapore Country Profile

Market Overview:

Euromonitor reports that Singapore’s economy is losing steam, dragged down by a slump in domestic demand and a decline in exports owing in part to a slowing Chinese economy. Singapore’s exposure to the Chinese economy remains a substantial risk. Investment in infrastructure (for example, development of Changi Airport and a high-speed rail link with Malaysia) provides moderate support. Growth in manufacturing, finance and insurance is slowing. Forecasts suggest that the economy will improve moderately in the remaining years of the decade, averaging about 3% per year.

Prospects for Singapore’s export-oriented economy are limited in view of weaknesses in external demand. Real Gross Domestic Product (GDP) grew by 1.1% in 2016, down from 2% in 2015. Singapore has one of Asia’s most expensive housing markets but prices have been gradually falling for several quarters. The softer market is due to the large stock of unsold homes. Tighter mortgage curbs also appear to be cooling demand. The real value of private final consumption rose by 4.3% in 2015 and gains of 1.3% were forecast for 2016. Lower energy prices support consumer spending but the benefits of moderate wage increases are outweighed by high levels of household debt (currently about 75% of GDP).

Demographic forecasts suggests that the number of those 65 years and more will triple by 2030 while the number of those of working age (20-64 years) will begin to decline after 2020. To resolve its labor shortages, the government calls for population to grow by up to 30% (reaching a population of around 7.9 million) by 2030. Of this total, as much as 30%, or 2.5 million, will be foreign workers. The potential rate of growth will fall owing to slower growth of the labor force.

USDA’s Office of Agricultural Affairs, OAA, in Singapore hereinafter referred to as “Post” reports Singapore is one of the world’s most open economies and is highly dependent on international trade. It is the 14th largest exporter and the 16th largest importer in the world.  With one of the highest per capita GDPs ($52,310) in the world, it is also a good market for U.S. high value products. Leading U.S. prospects are fresh fruits, processed fruit and vegetable, fresh/chilled/frozen/processed red meats, dairy products including cheese, tree nuts and wine and beer.

In 2016, the U.S. exported US$738.3 million in total agricultural products to Singapore, an increase of 10% from 2015. Of that amount US$444.1 million were in consumer-oriented products, a drop of 8%, but 60% of the agricultural total, ranking it 4th in Southeast Asia. Singapore also imported US$414.4 million in U.S. processed food exports in 2016, the same as the prior year but sufficient for a 3rd place ranking in the region. Top exports of processed foods to Singapore in 2016 included food preparations, fats and oils, processed vegetables and pulses, non-alcoholic beverages, distilled spirits and other alcoholic beverages, chocolate and confectionery and prepared/preserved seafood.  

Singapore is at the cross-roads of major air and sea routes within the Asia Pacific region and serves as a hub and major transshipment center for much of the Southeast Asian region and the Indian subcontinent. Singapore's role in regional trade is demonstrated by the fact that re-exports comprise between 45%-50% of total exports.  It also serves as a regional food showcase and headquarter for international food and agricultural related companies. Singapore is almost entirely dependent on imports for all of its food requirements with virtually no local agricultural production.                                                      

Competition with U.S. agricultural products comes from Australia, New Zealand, European Union (EU), Brazil, China and neighboring countries such as Malaysia, Indonesia and Thailand, who export similar consumer oriented products, including temperate fruits and vegetables, fruit juices, nuts, wines, processed packaged and canned food products, confectionery and candies, frozen poultry and frozen meats. As the market for consumer-oriented products is very open and easily accessible, there is fairly quick entry for new comers. Competition in some of the consumer product categories is very intense.

Since the signing of it’s first FTA under the ASEAN Free Trade Area (AFTA) in 1993, Singapore's network of FTAs has expanded to cover 20 regional and bilateral FTAs with 31 trading partners, including the U.S. Now, as reported, ASEAN has agreed to become the Asian Economic Community, or AEC, advancing its level of economic integration even further.

Retail Sector:

Euromonitor has estimated the retail sales value of packaged foods in Singapore at nearly US$2.2 billion in 2016.  This represents an increase of 14% or US$268 million since 2012. They have also forecast the packaged food retail sales to reach over US$2.6 billion by 2021, an increase of 16.7% or US$376.8 million.  High growth products in the forecast include baked goods, ice cream and frozen desserts, confectionery, savory snacks, sweet biscuits snack bars and fruit snacks, dairy products and breakfast cereals.

Post reports that the Singapore grocery retail sector had total sales of US$6 billion in 2015. Most of the food retail sales in Singapore take place in hypermarkets, supermarkets and modern mini-marts. In 2015, Mom and Pop stores such as convenience shops, neighborhood/traditional provision shops, wet market stalls and petrol stations took 20% of total sales. Online grocery shopping is only popular among busy working adults who do not have to do physical grocery shopping, as consumers generally prefer to shop physically at supermarkets and convenience stores as they highly accessible, and conveniently located

Generally, the large supermarket chains and several up-market retailers import western-type products directly from source countries, consolidators and distributors for their own outlets, while smaller retailers buy from local distributors. Products imported directly include juices, jams, confectionery, biscuits, snack products, salad dressings, pre-packed deli meats and fresh temperate fruit, although it can be anything now if the volume warrants direct importation and cutting off the middleman. Products procured from local importers would include products from the Asian region, dry groceries, tropical fruit, frozen chicken and chicken parts, frozen beef, local sauces and ethnic foods.

Two major supermarket chains dominate the Singapore retail industry, Dairy Farm International Holdings Ltd., and NTUC Fairprice. Dairy Farm International Holdings with their Cold Storage brand stores target principally the middle and higher income groups, while NTUC cater to the mass-market group. NTUC Fairprice remains the leader in the industry with a market share of 33% in 2015.

The largest supermarket chain in terms of number of supermarket retail stores is the Dairy Farm International Holdings with 123 supermarket stores, comprising of 53 Cold Storage supermarket retail stores, 5 premier Market Place stores, 5 Specialty stores and 29 Giant Express, 22 Giant Supermarkets and 8 Hypermarkets. A large percentage of products on their shelves are western-type products from the EU, Australia, New Zealand and the United States. Nine of their outlets are located in upper middle-income residential areas and customers to these outlets are principally expatriates and upper middle-income residents. In addition, the Dairy Farm Group operates the 7-Eleven Convenience Chain of 530 stores and 128 Guardian Pharmacy outlets.

The second largest, is the NTUC Fairprice supermarket chain with a network comprising 100 Fairprice supermarkets, 16 Fairprice Finest stores and 8 Fairprice Xtra (Hypermarkets). In addition, the group has 160 Cheers Convenience Stores and 20 Fairprice Convenience Stores some of which are located in Esso-Mobil Stations. NTUC Fairprice’s target audience is principally the upper-middle, middle and lower income groups.

Competitive pricing is one of the main factors determining whether a new product should be procured for the NTUC Fairprice stores. The NTUC Fairprice chain is the most extensive in terms of consumer reach, geographically, and across all income segments. Fair price stores are located in almost every large residential population concentration. Importers who require their products to be distributed island-wide and with the focus on the mass market prefer to work with NTUC Fairprice.

NTUC Fairprice supermarket chain procures their food products from consolidators, distributors and local importers. The company has also embarked since 1985 on extensive house branding of basic essentials like confectionery, rice, bread, sauces, cooking oil, toilet paper, tissue paper, sugar, detergents, canned fruits and vegetables, etc. The items are, on average, priced 10% to 15% lower than comparable products. In July 2008, “Pasar Organic” was added to the range, offering organic produce at affordable prices.

There are several independently managed supermarkets such as Big Box, Isetan, and Meidi-Ya, Mustafa’s, and Prime Supermarket. The locally established supermarket chain, Sheng Siong which has 33 small and medium sized stores and Prime Supermarket with 19 outlets are family-owned business entities which originated from small single grocery outlets to their current sizes today. Both Sheng Siong and Prime are very price competitive as they procure most of their products from China and other neighboring low cost Asian supplier countries. Customers of both supermarket chains come mostly from the lower middle-income groups. The rest of the above mentioned supermarkets are independently operated supermarket stores with only one outlet each. Isetan and Meidi-Ya target principally the upper middle-income groups and the Japanese community in Singapore.

There is a saturation of convenience stores in Singapore. As convenience stores are located near each other, competition is intense. In addition, they also face stiff competition from supermarkets which offer products at lower prices as well as wider variety. Furthermore, an increasing number of supermarkets are extending their operating hours to cater to consumers, thus increasing competition.

Euromonitor adds that Halal groceries are the latest trend in grocery retailing. Many independent supermarkets and small grocers selling only halal products in their stores opened in the review period. New hypermarket Big Box and chain supermarkets such as FairPrice, Giant, and Cold Storage also have halal-certified sections that cater to Muslim consumers. To do so, they need to work with the Islamic Religious Council of Singapore (Muis) to get a halal certification for the product displays. While additional paperwork is required, retailers find it a worthwhile investment as demand for halal-certified products is increasing.

Best Product Prospects:

Products with good potential and growth in this sector include breakfast cereals, dairy products, fresh fruits and vegetables, edible nuts, fish and seafood, pork, snack foods and wine.

Food Service Sector:

Post reports that the Singaporean food service market has witnessed steady growth mainly due to a steady domestic economy, rise in tourism and demographic changes. Restaurant sales reported an increase of 10% for 2015 due to the greater influx of tourists and business arrivals (15 million). The key drivers of the food service industry are growth in tourism, a stable economic environment, increases in the female working population and a low level of inflation. The two integrated resorts; Marina Bay Sands and Resorts World Singapore and new leisure facilities; Gardens by the Bay and Marine Life Park, and shopping malls provided opportunities for further expansion by existing players and allowing new entrants into the market. Tourism receipts from food and beverage totaled US$2.3 billion in 2015. Singapore’s Hotel, Restaurants and Institutional (HRI) industry is extremely competitive with the number of food service outlets and sales growing about 3% and 4% respectively.

The food landscape is changing as a result of the introduction and preference of more foreign foods and popularity of online shopping. Supermarkets are well stocked with foreign and exotic ingredients from around the world and the restaurant scene is more vibrant. The launch of the Michelin Guide in Singapore 2016 is expected to boost patronage for the 200 recognized players in more than 35 different cuisine categories and food establishments.

In Singapore, eating out is common due to the availability of hawker centers, food courts, coffee shops and casual dining places which provide a wide variety of local dishes at affordable prices. Singaporeans are clocking more work hours and less time spent cooking, which means opting for “meals to go” and or meals at casual dining cafes, food courts or opting for fast foods. 

Local food stalls at a hawker center are major local players. Crystal Jade and Tung Lok Restaurants rank top in full-service restaurants in 2015 with their interesting cuisines and themes. Franchising is prevalent in Singapore, with casual dining chains and fast food chains having the strongest presence, for example, ABR Holdings Ltd which is the franchisee of Swensen’s. Korean cuisine are also finding success with consumers because of the influence by K-pop and K-dramas, for example, franchises such as Andon Zzimdak and Masizzim, Mr. Churro and Churro 101.

The industry continues to struggle with a growing manpower crunch and rising rental costs. There is a high turnover in the sector and a great dependence on foreign labor. Players are therefore making use of technology, for example, iPads are used for displaying menus and ordering, to lighten their manpower requirements.

The local health authorities’ Healthy Dining Program has spurred consumers’ interest to eat healthy and this led to increased demand for healthier meals, which in turn, encourage players to offer more healthy options on their menus. The launch of “Food Panda” in 2012 offered consumers the convenience of on-demand delivery with choices from fast food, fast casual restaurants such as Burger King, Yoshinoya (Japanese), Carl’s Jr., Swensen’s and The Manhattan Fish Market. “Deliveroo” and “Uber Eats”, recent entrants with a different positioning, provide delivery service for restaurants and cafés. These players provided both operators and consumers with more choices as well as convenience, and help simplify the process for food delivery.  Food delivery provides an extra avenue for players to sell and reach out to consumers.

Food service companies in Singapore are widening their distribution network to other countries in the Asian region to achieve economies of scale in operation. As individual restaurant requirements are small, Singapore food service companies provide an alternative supply chain to customers who have small but frequent procurement needs for U.S. or western-type products. A number of well-known U.S. brands are being transshipped or distributed from Singapore. Singapore Importers/Traders are able to provide credit terms to their counterparts in the region or to carry out specific handling, packaging or documentation requirements. Generally, products which have a longer shelf life and which do not need refrigeration are more easily transshipped.

It should also be noted that halal-certified foods, ingredients and inputs are also becoming more and more important in Singapore’s food service/HRI supplies market. Most of the fast food and Quick Service Restaurant (QSR) chains are already halal certified. This trend is also happening in Singapore’s hotels. The number of Muslim tourists and business visitors arriving from Indonesia, Malaysia, the Indian sub-continent, the Middle East and China, indicate that between 20% and 25% of Singapore’s foreign visitor arrivals are now Muslims. Indonesia, the World’s most populous country and a close neighbor of Singapore, has become more affluent over the past 5 years.

Competition in the HRI/food service supply market is aggressive from certain low-cost countries in some of the United States’ core target markets for example, chicken (Brazil) and fish fillets (Vietnam). Competition from other quality countries, for example, Australia (freight advantages), New Zealand and some European countries (for example, France and Netherlands) because of strong and longstanding links between exporters in these countries and their loyal importers in Singapore. European exporters also benefit from demands for provenance (original origin of products) and also from very strong demand-pull from European executive chefs who work in 4 to 6 star hotels in Singapore.

Best Product Prospects:

Post advises the products in the market which have good sales potential include dairy products, dried fruit and edible nuts, fish and seafood, pork, fresh seasonal vegetables and wine and beer.

Food-Processing Sector:

Post reports that Singapore’s food processing sector is small due to limited natural resources, livestock and agricultural production. As the country engages in minimal agricultural production, most raw materials for food processing are imported. The few local food manufacturers that exist cannot meet overall demand; hence, Singapore imports 90% of the food consumed in the country – including large amounts of processed food products. 

The United States, Malaysia, Indonesia, Australia and China are Singapore’s main suppliers of food/food products including food processing products. Competition depends on the product. For example, Australia and New Zealand supply most of the milk products and dairy ingredients; China supplies mostly corn and soybean products; and Malaysia supplies nearly 20% of the food ingredient market and a major supplier of live poultry, edible oils, and tropical fruits and vegetables.

Singapore’s food processing sector comprises mainly small and medium enterprises which, on average, employ less than 100 personnel. Many local food manufacturers are keen to invest in research and development (R&D) in order to cater to wider customer bases through improved packing and product shelf life, and to adhere to food safety standards. In fact, many are certified to international food safety standards, such as the Hazard Analysis and Critical Control Points (HACCP), ISO 22000 and British Retail Consortium (BRC).

The local food manufacturing industry spans over 17 sub-sectors – including flavors, sauces, ready meals, noodles, deli meat, sausage, confectionary, chocolates, snacks and beverages. The local processing sector is dominated by major food manufacturers in beer, non-alcoholic beverages, fish processing and snack products. Growth in consumer spending on food and agricultural products and consumer goods is expected to remain strong in 2014-18, at an average of 5% in local currency terms. Some local food companies are keen to do business overseas, and in fact several have gained footholds in ASEAN countries, the Middle East and Russia. It is estimated that over half of total manufactured output of food, beverage and tobacco sector is re-exported.  Some re-export products include beer, soft drinks, edible oils, chocolates, processed seafood, milk powder, condensed milk, sauces and spices.

The Agri-Food and Veterinary Authority (AVA) - a government statutory board that governs food and agriculture matters in the country – issued licenses to food processing establishments: i.e. where food is manufactured, processed, prepared or packed for distribution to wholesalers and retailers. They include bakery and flour confectionery factories, dairy processing plants, noodles and pasta manufacturers, etc. AVA also issues licenses to slaughter houses and cold stores that are used to store meat/fish products; and registers food storage warehouses to store commercial storage of food. Singapore’s National Environment Agency (NEA) issues licenses to food retail businesses, including restaurants, cafes, supermarkets, mobile food wagons and food caterers.

According to AVA, in 2015, AVA issued licenses to 964 food processing establishments, 139 cold stores and 15 slaughter houses (10 chicken slaughter houses, 4 duck slaughter houses and 1 pig slaughter house); and registered 1,130 food storage warehouses. Food establishments licensed by AVA are subject to regular inspections - for food safety considerations - and laboratory analysis to ensure compliance with the country’s Food Regulations. Food establishments are also graded annually and classified under grade A, B, C or D according to food safety and hygiene standards. 

Intermediate products are a category used by the Global Agricultural Trade System (GATS) and are usually where food processing ingredients are found. In 2016 U.S. exports of intermediate products grew 67% over the prior year to US$268.5 million, easily the highest total on record. Top intermediate products exported to Singapore in 2016 included essential oils of all types, rennet, protein concentrates and isolates, vegetable saps and extracts, corn starch, ginseng roots, corn-soya milk blends and oleoresin extracts.  

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