A Market for Consumer-Oriented Foods

ALMOST entirely dependent on imported foods, Singapore's long-term consumer picture remains reasonably positive on the back of a rapid influx of foreign immigrants, low unemployment levels and a robust tourism scene. In addition, according to a report from Business Monitor International1, the solid premiumisation opportunity on offer here means that Singapore will continue to enjoy a place in multinational food and beverage players' balanced geographic portfolios.
The likes of Fonterra, Fraser & Neave (F&N), Nestlé and Asia Pacific Breweries (APB) have clearly benefited from the high existing spending levels here and will continue to leverage on these levels to support their push into higher-growth developing markets, says the BMI report.

Demographics
Like most developed and highly urbanised economies, the indigenous population growth rates in Singapore have been falling rapidly in the last decade. However the number of the city-state’s residents has increased primarily due to the growing influx in the number of foreigners taking up employment in the country in recent years. This factor alone augmented the slow natural growth (estimated at less than one percent per annum) in the number of Singapore citizens, according to a USDA report2. As of 2010, the total population of 5.07 million comprised of 3.77 million citizens and permanent residents and over a million foreign workers (and their dependents) on employment passes, work permits or long term social visit passes.
The proportion of elderly residents has increased rapidly over the last ten years. Residents aged 65 years and above comprised about 8 per cent of Singapore's resident population. This proportion is expected to increase to over 20 per cent by 2050. On the flipside, the youth population (aged 14 years and below) as a percentage of the population declined to about a fifth of the total population. On the positive side, the mean years of schooling amongst resident non-students aged 25-39 is 9.4 years; 87 per cent of the population in this same group has secondary or higher qualification. The number of singles has also risen in the country with the fall in the number of persons getting married over the last ten years. The age at which both grooms and brides get married have also risen.

Industry trends & developments
Faced with a mature domestic market such as Singapore, BMI expects international expansion to remain key to domestic players’ growth strategies, with developing markets in particular holding the key to potentially explosive long-term growth prospects.
With a wide geographical spread across developed economies, emerging and frontier markets, brewer APB has demonstrated its capacity to deliver stellar sales growth. The brewer recorded a 25.6 per cent and 62.5 per cent growth in net sales and income respectively for FY10 (end September). Similarly, Singapore-based food and beverage producer F&N posted an increase of 11% in FY10 revenues (end September), to SGD5.7bn ($4.3bn), on the back of surging demand in its regional markets of Malaysia, Singapore, Thailand, Indonesia, India and Viet Nam.
On a negative note, French retailer Carrefour withdrew its 23 Malaysian stores and two Singaporean outlets from sale after a strategic review. Whilst Carrefour has successfully sold its Thailand stores to Casino Guichard-Perrachon, the retailer failed to garner enticing bids for its Singaporean and Malaysian stores. BMI said limited distribution opportunities in Singapore’s mass grocery retail (MGR) sector are likely to have quelled investors’ acquisitional interest in Carrefour’s combined network of Singaporean and Malaysian stores, which explains their lower-than-expected bid values.

Spending on the rise
Dependent as it is on imported consumer-oriented foods, not all the imported foods are consumed locally. It is estimated that routinely, about 25 perBasketball Shoes