Market Development and Access Strategy 2011/2012
Singapore is a highly sophisticated and stable South East Asian economy. It is also one of the smallest and most densely populated countries in the world. Singapore is an established market and has a strong preference for Australian food products. The economy is advanced, competitive and mature and this reflects the growth opportunities for the Victorian agri-food sector, which are viewed as modest. However, Singapore presents opportunities for first time and small to medium exporters.
The Agri-Food Sector
Importing approximately 90% of its total food requirements, Singapore is heavily dependent on international food trade which is clearly evident within manufacturing, food retail and food service sectors. The food and beverage market is very well developed, competitive, and multi-cultural, with Asian and Western food styles prevalent throughout the market. Distribution channels and transport infrastructure are well established into modern retail (supermarket, hypermarkets and convenience stores) and food service markets (hotels, restaurants and institutions) which now dominate the landscape. The expansion and presence of this sector is driven by many of the approximately 5 million residents who enjoy a high level of affluence, demand western style consumer products and have a strong emphasis on quality of life and wellbeing, of which high quality and safe food is a vital component.
As South East Asia’s major trading and business hub, Singapore has a highly regulated financial sector, a sound legal system, long-standing stable government and an economy reliant upon international trade. Coupled with this business environment, the Singapore – Australia Free Trade Agreement (SAFTA) which has been in effect since July 2003, allows all food and non-alcoholic beverage products from Australia to enter Singapore tariff free. This allows access to the Singaporean market for Victorian agri-food exporters transparent and relatively straightforward.
Singapore is also a party to the Australia-New Zealand—ASEAN FTA.
Food safety is a major priority for Singapore due to its reliance on food imports and is taken extremely seriously by Singaporean consumers. Outbreaks such as BSE, Avian Influenza and the melamine milk contamination have increased demands on food safety, which have led to the development of strict trade protocols and regulation which is conducted by the Singapore Agricultural and Veterinary Authority (AVA).
Victorian Agri-Food Exports to Singapore
Value of Victorian Food & Fibre Exports to Singapore 2009-10 (A$ million)
Victorian food and fibre exports to Singapore were valued at A$277million in 2009-10 and accounted for 4% of Victoria’s total food and fibre exports. Key exports to Singapore were dairy (59%) and meat products (16%).
Singapore’s population is ageing. Of its 5 million residents, approximately 10% are over 65 and this percentage is expected to increase to over 20% by 2050. The population also consists of 0.8 million expatriate workers. In 2010, Singapore had over 10 million international arrivals (business and tourism). The majority of permanent residents are considered middle income families that enjoy a comfortable lifestyle. As such, the three major categories of consumers for Victorian food products are considered to be middle/high income Singaporeans, expatriate workers and the business/tourist market.
Modern food retailers (supermarkets, hypermarkets, convenience stores) account for over 70%, or US$4 billion of total food retail sales and only account for 20% of Singaporean retailers. The modern retailing sector is continually growing, replacing traditional markets and food stores, and it is the major focal point for Victorian companies exporting into the Singapore food retail sector. Imported products from western countries are prevalent, space on retail shelves is highly competitive and product listings can be relatively expensive. Retail ready products with smart packaging adjusted for the Singaporean market in dairy, meat (beef, lamb and pork), horticulture (grapes, citrus, stonefruit), dry-grocery, organic/wellness and ready to eat convenience categories are well suited to this segment. Access is either via import/distribution companies or direct to retail chains.
The modern retailing landscape is dominated by NTUC FairPrice (market leader) and Cold Storage (owned by the Dairy Farm Group), which both have a variety of store formats that target middle to high income earners. Other major retailers include Sheng Siong and the French owned Carrefour which target lower-middle income households. Whilst there are opportunities within the high volume-low margin operators such as Carrefour, in general, Victorian agri-food companies due to the value proposition of their products are more suited to top-tier retailers targeting middle-high income earners.
The food service sector in Singapore is complex and ranges from the 5,500 street/market stalls to well known fast food/coffee chains, institutions and the numerous 5 star hotels and world class restaurants, which together are valued at US$ 2.2 billion. Singapore has one of the broadest multicultural food offerings in the world and it is estimated that on average Singaporeans eat out at least once per day. The most attractive market segment for Victorian companies doing business in this sector is the high end hotel and restaurant segment which is largely serviced by a very competitive network of import and distribution companies with operations in Singapore. Companies supplying portion controlled meat, dairy, seafood and fresh horticultural products along with convenience style snack foods and wine are prominent in this sector. Access is either via import/distribution companies or direct to retail chains.
Due to lack of local raw materials, Singapore’s food processing sector is relatively limited. Most manufacturing is focussed on beverages, snack foods, dairy and confectionery. However for Victoria, the major supplier of dairy ingredients (powders, cheese, cream, butter) into the Singapore dairy processing sector, this is a lucrative market. As much as 45% of manufactured products are re-exported to neighbouring countries.
Key Activities For 2011 - 2012
Attend and support Victorian Government involvement at ASEAN’s premier international food and beverage trade show, Food and Hotel Asia in Singapore, April 2010. A large delegation of Victorian companies along with the Victorian State Government will be exhibiting at this event.
Monitor issues and opportunities in market access to Singapore that may develop during the course of the year.
Contact: Mr Peter Myers, Project Leader, Market Access & Competitiveness, Meat & Wool Services Branch. Email: email@example.com
Sources: GTIS, USDA, CIA Worldfact Book