Singapore Country Profile



SingaporeEuromonitor reports the Singaporean economy will strengthen in 2015. Real Gross Domestic Product (GDP) will grow by 3.2% in 2015 after gains of 3.0% in 2014. Stronger exports and a modest strengthening in domestic demand will be the main drivers.  Cheaper oil prices will also benefit most of the industrial sector.  They add though that the potential rate of growth will fall in the medium term owing to slow growth of the labor force.

The economy’s performance in the medium term will depend on the success of the ongoing program of economic restructuring and policy responses to population ageing.  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.

 

Gains in productivity could partially offset this effect however. Policies to restrict the flow of foreign labor have pushed up wages and business costs across all sectors, though the manufacturing sector has suffered most.  Singapore relies on manufacturing, finance and tourism to provide most of its growth but that leaves it especially vulnerable to downturns in consumer demand in wealthy countries.  At the same time, the city-state’s strong competitive position has allowed it to accumulate a huge amount of foreign exchange reserves – amongst the largest in Asia. This buffer offers ample protection in times when the global and regional environment slumps.

USDA’s Office of Agricultural Affairs, OAA, in Singapore hereinafter referred to as “Post” reports that it is one of the world’s most open economies and is highly dependent on international trade; it is the 14th largest exporter and the 15th largest importer in the world.  With one of the highest per capita GDP’s on a Purchasing Power Parity (PPP) basis, (US$62,400 2013 est.) in the world, it is also a solid market for U.S. high value products.  In 2014, the U.S. exported US$795.2 million in total agricultural products to Singapore, growth of 5% from 2013. Of that amount a record US$608.1 million in consumer-oriented products were exported, growth of 6%.  Top exports of processed foods to Singapore in 2014 included other processed foods, ingredients and beverage bases, chocolate, distilled spirits, whey protein, lactose and syrups, french fries, powdered milk and dry beverages.

Not all the imported foods are consumed locally.  It is estimated that routinely, and, depending on the product category, up to 75% of food imports are re-exported mostly to neighboring countries.  Major product categories include dairy products, frozen poultry and poultry parts, fresh fruit and vegetables, red meats, alcoholic and non-alcoholic beverages, snack foods and other consumer-oriented products.  The growth rate for the consumer oriented foods category averaged about 5% per year over the calendar period 2011-2013.  The U.S. market share from averages 9%-11% in the consumer oriented foods category in the last few years.

Competition with U.S. agricultural products comes from Australia, New Zealand, EU, Brazil, China and South Africa, 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 her 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.

 

Retail Sector:

Euromonitor has estimated the retail sales value of packaged foods in Singapore at nearly US$2.4 billion in 2014.  This represents an increase of 22% or US$431.4 million since 2009.  They have also forecast the packaged food retail sales to reach over US$2.5 billion by 2019, an increase of 7% or US$164.7 million.  High growth products in the forecast include baby food, noodles, snack bars, ice cream, bakery, confectionery and frozen processed food.

Euromonitor reports it is estimated that about 53% of the grocery retail sales of just over US$6.1 billion take place in supermarkets, while the rest are sold in hypermarkets, modern mini marts, convenience stores, traditional provision stores (Mom & Pop stores), petrol stations and wet market stalls.  Traditionally Singaporeans shop for their fresh produce, meats and fish in wet market stalls.  Over the last decade however, more and more household are turning to supermarkets for their fresh produce, meats and fish requirements.  Generally, importers who represent foreign brands will be responsible for the market development of the brands, advertising and promotion and increasing distribution reach to all retailers.

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, salad dressings, pre-packed deli meats and fresh temperate fruit.  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, and NTUC Fairprice. Dairy Farm 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 32%.

The largest supermarket chain in terms of number of supermarket retail stores is the Dairy Farm Group with 123 supermarket stores, comprising of 47 Cold Storage supermarket retail stores, 9 premier Market Place stores, 4 specialty stores and 62 Giant Stores (previously called Shop & Save).  A large percentage of products on their shelves comprised mostly western-type products procured from E.U., Australia, New Zealand and the U.S.  Eight 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 NTUC Fairprice supermarket chain has 97 Fairprice supermarkets, 16 Fairprice Finest stores and 7 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 middle and lower income groups.  Competitive pricing is one of the main factors determining whether a new product should be procured for the Fairprice stores.  The 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.

 

Best Product Prospects:

Products with good potential and growth in this sector include snack foods (potato and corn chips and extruded snack foods), fruit and vegetable juices (mixtures, grape, grapefruit, orange), fresh fruit (grapes, apples, oranges), tree nuts (shelled almonds), fresh vegetables (potatoes, lettuce, celery) and dog and cat food.

 

 

Food Service Sector:

Post reports the Singaporean foodservice 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 2013 due to the greater influx of tourists and business arrivals.  The key drivers of the foodservice industry are growth in tourism, a stable economic environment, increases in the female working population and a low level of inflation.mThe opening of two integrated resorts, Marina Bay Sands and Resorts World Singapore and new leisure facilities, Garden 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.

Singaporeans spend about US$5.7 billion annually eating out.  Singaporeans are increasingly adopting a lifestyle of eating away from home more frequently, with recent surveys suggesting more than half the population eating out for 8 meals per week.  This trend is leading to expansion in the food and beverage industry.  The Food and beverage industry consists of over 6,500 establishments, which includes restaurants, cafes/coffee houses/snack bars, and food courts/coffee shops/eating houses, fast food restaurants and caterers.  In terms of total revenue, restaurants account for about 37%, fast food outlets 13%, caterers 12% and coffee shops/small cafes/food courts the remainder. This data does not include the numerous Hawker Stalls that can be found throughout Singapore.  In terms of fast food franchises, McDonalds is the dominant player, followed by KFC and Subway.

Other restaurant franchises include Dunkin Donuts (Golden Donuts, the master franchise for Malaysia and Singapore); Texas Fried Chicken (local franchise: Select Group); and TGIF Friday (local franchise: ChasWood Resources).  In addition to other international hotels and restaurants, there are also other local hotel chains and restaurants/bakeries. In general, these establishments do not usually import U.S. food and beverage products/or in significant amounts.

In general, chain fast foods and casual dining restaurants are suitable and accessible to customers in all income groups because of their affordable packages and prices, delivery services, creative menus and convenience: easy access due to outlets scattered across the island and availability of on-line ordering.  Full service restaurants promote group events such as televised sports and are increasingly working with credit card companies to offer discounts/special promotions.

Singapore’s distribution system for imported goods is fairly simple; foods/beverages are mainly distributed via importers/distributors.  However, in some cases, U.S. chains or upscale HRI operators import directly from U.S. exporters.  For example, Quick Service Restaurants may have exclusive contracts with importers/distributors.  Products such as frozen potatoes, fried chicken coating mix and cheese for pizza are imported into the country so as to ensure the final products meet strict franchise standards.  Also, for small and medium HRI operators, they typically purchase products through local agents, wholesales and supermarkets.

A number of well-known U.S. brands are being transshipped or distributed from Singapore.  Singapore importers and 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.  Meat and poultry products, which require halal certification for Muslim consumers in the region, are generally shipped direct to the country of destination.  Again, some Singapore traders may be involved in the procurement process as well as in the provision of short-term credit to the local importers in the destination country.

 

Best Product Prospects:

Post advises the products in the market which have good sales potential include breakfast cereal and other breakfast products, fresh fruits, prepared/preserved meats and processed vegetables and pulses. Products not present in significant quantities but that have good sales potential include cheese, non-alcoholic beverages, wine and beer and fats and oils.

 

Food Processing Sector:

Post advises that Singapore’s food processing sector is made up of 750 companies, dominated by mainly small and medium enterprises.  These companies span 17 sub-sectors, ranging from flavors, sauces, ready meals, noodles, deli meats, sausage making, confectionery, chocolates, and snack foods to beverages.  Some of the food manufacturers are keen to venture overseas and many have gained footholds in various parts of the countries, including the ASEAN region and in the Middle East and Russia.

Singapore food manufacturers are keen to invest in R&D to cater to wider consumer bases through improved packaging, and product shelf life, as well as adherence to strict food safety standards.  Many are certified to international food safety standards as the Hazard Analysis and Critical Control Points (HACCP), ISO 22000 and BRC which help them gain a competitive edge in the global marketplace.  Practically all food ingredients for manufacturing are imported from a wide range of countries worldwide since Singapore has no crop or livestock production.  Singapore’s total food export (coffee, tea, cocoa, spices and manufactures; fish, seafood preps; beverages and tobacco and manufactures)

The total output of the locally manufactured food, beverage and tobacco sector was valued at around US$7 billion in 2013, out of which it was estimated that over half was re-exported.  Products, which are exported, include beer, soft drinks, edible oils, chocolates, processed seafood, milk powder, condensed milk, sauces and spices.  The source of competition is dependent upon the nature of the product manufactured.  For example, Australia and New Zealand supplies most of the milk products and dairy ingredients while China supplies most of the corn and soybean products.  Malaysia supplied nearly 20% of the food ingredient market and is the major supplier of live poultry for slaughter, edible oils, tropical fruit and vegetables. The U.S. has significant market share in juices, juice concentrates, frozen poultry parts, fresh temperate fruit, nuts, flavorings, spices and leaf tobacco.


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