singapore food and drink report q4 2014

Q4 2014www.businessmonitor.com

SINGAPOREFOOD & DRINK REPORTINCLUDES 5-YEAR FORECASTS TO 2018

ISSN 1749-2947Published by:Business Monitor International

Singapore Food & Drink Report Q42014INCLUDES 5-YEAR FORECASTS TO 2018

Part of BMIs Industry Report & Forecasts Series

Published by: Business Monitor International

Copy deadline: August 2014

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CONTENTS

BMI Industry View ............................................................................................................... 7

SWOT .................................................................................................................................... 9Food ....................................................................................................................................................... 9

Drink .................................................................................................................................................... 11

Mass Grocery Retail ................................................................................................................................ 13

Industry Forecast .............................................................................................................. 15Consumer Outlook ................................................................................................................................... 15

Food ..................................................................................................................................................... 18

Food Consumption ................................................................................................................................. 18Table: Food Consumption Indicators - Historical Data & Forecasts (Singapore 2011-2018) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 19

Canned Food ........................................................................................................................................ 19

Confectionery ........................................................................................................................................ 20Table: Confectionery Value/Volume Sales, Production & Trade - Historical Data & Forecasts (Singapore 2011-2018) . . . . . . . . . . . . . . . . . . . . . . . . . . . . 21

Fish ..................................................................................................................................................... 22Table: Fish Volume Sales, Production & Trade - Historical Data & Forecasts (Singapore 2011-2018) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 22

Oils And Fats ........................................................................................................................................ 23Table: Oils And Fats Volume Sales, Production & Trade - Historical Data & Forecasts (Singapore 2011-2018) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 23

Drink .................................................................................................................................................... 25

Hot Drinks ............................................................................................................................................ 25Table: Hot Drink Value/Volume Sales, Production & Trade - Historical Data & Forecasts (Singapore 2011-2018) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 27

Alcoholic Drinks .................................................................................................................................... 27Table: Alcoholic Drinks Value/Volume Sales, Production & Trade - Historical Data & Forecasts (Singapore 2011-2018) . . . . . . . . . . . . . . . . . . . . . . . . . 29

Soft Drinks ............................................................................................................................................ 30Table: Soft Drinks Sales, Production & Trade (Singapore 2011-2018) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 32

Mass Grocery Retail ................................................................................................................................ 33Table: Mass Grocery Retail Sales - Historical Data & Forecasts, 2011-2018 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 35

Trade .................................................................................................................................................... 36Table: Trade Indicators - Historical Data & Forecasts, 2011-2018 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 37

Macroeconomic Forecast ................................................................................................ 38Macroeconomic Analysis .......................................................................................................................... 38

Holding Out Hope In Construction ............................................................................................................ 38

Trade Outlook Not So Bright .................................................................................................................... 39

MAS Stands Pat On Cue .......................................................................................................................... 39Table: Economic Activity (Singapore 2009-2018) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 41

Industry Risk Reward Ratings .......................................................................................... 42Asia Pacific - Risk/Reward Ratings ............................................................................................................. 42

Table: Asia Pacific Food & Drink Risk/Reward Ratings Q414 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 43

Table: Asia Pacific Food & Drink Risk/Reward Sub-Factor Ratings Q414 (scores out of 10) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 46

Singapore Food & Drink Report Q4 2014

Business Monitor International Page 4

Singapore Risk/Reward Ratings .................................................................................................................. 48Table: Q414 Singapore Food & Drink Risk/ Reward Ratings . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 49

Market Overview ............................................................................................................... 50Food ..................................................................................................................................................... 50

Agriculture .......................................................................................................................................... 50

Food Processing .................................................................................................................................... 50

Drink .................................................................................................................................................... 51

Soft Drinks ............................................................................................................................................ 51

Alcoholic Drinks .................................................................................................................................... 52

Hot Drinks ............................................................................................................................................ 52

Mass Grocery Retail ................................................................................................................................ 53Table: Structure Of Mass Grocery Retail Market By Estimated Number Of Outlets, 2005-2011 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 54

Table: Structure Of Mass Grocery Retail Market By Value (USDbn), 2007-2013 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 55

Table: Structure Of Mass Grocery Retail Market By Value (SGDbn), 2007-2013 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 55

Table: Grocery Retail Sales By Format, 2012 And 2021 (%) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 55

Industry Trends And Developments ................................................................................ 56Food ..................................................................................................................................................... 56

Key Industry Trends And Developments ...................................................................................................... 56

Drink .................................................................................................................................................... 60


Mass Grocery Retail ................................................................................................................................ 65


Competitive Landscape .................................................................................................... 71Table: Key Players In Singapore's Food Sector . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 71

Table: Key Players In Singapore's Drinks Sector . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 71

Table: Key Players In Singapore's Mass Grocery Retail Sector . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 72

Company Profile ................................................................................................................ 73Auric Pacific .......................................................................................................................................... 73

Petra Foods ............................................................................................................................................ 75

Fraser & Neave ....................................................................................................................................... 78

Asia Pacific Breweries .............................................................................................................................. 80

Sheng Siong ............................................................................................................................................ 83

NTUC FairPrice ..................................................................................................................................... 86

Global Industry Overview .................................................................................................. 89Table: Select Food Companies - R&D And Advertising Financials . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 95

Table: Food And Drink Core Views . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 97

Demographic Forecast ..................................................................................................... 98Table: Singapore's Population By Age Group, 1990-2020 ('000) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 99

Table: Singapore's Population By Age Group, 1990-2020 (% of total) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 100

Table: Singapore's Key Population Ratios, 1990-2020 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 101

Table: Singapore's Rural And Urban Population, 1990-2020 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 101



Glossary ........................................................................................................................... 102Food & Drink ...................................................................................................................................... 102

Mass Grocery Retail ............................................................................................................................. 102

Methodology .................................................................................................................... 104Industry Forecast Methodology .............................................................................................................. 104

Sector-Specific Methodology .................................................................................................................. 105

Sources .............................................................................................................................................. 105

Risk/Reward Rating Methodology ........................................................................................................... 106Table: Food & Drink Risk/Reward Rating Indicators . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 107

Table: Weighting . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 108



BMI Industry View

BMI View: Singapore has one of the highest levels of food consumption in the region, which effectively

eliminates the possibility of substantial industry growth in the short or medium term. This is illustrated by

our modest sales growth forecasts for a majority of sub-sectors to 2018. Nonetheless, we believe that

Singaporean alcoholic drinks market has not reached a saturation point yet and holds significant growth

potential over our forecast period.

Headline Industry Data

Total food consumption (local currency) growth year-on-year (y-o-y) in 2014: +1.9%; compound annualgrowth rate (CAGR) to 2018: +2.1%

Per capita food consumption (local currency) growth (y-o-y) in 2014: -0.1%; CAGR to 2018: +0.3%

Alcoholic drinks sales (local currency) growth (y-o-y) in 2014: +5.8%; CAGR: 6.8%

Total soft drink sales (local currency) growth (y-o-y) in 2014: +3.2%; CAGR to 2018: +2.6%

Total mass grocery retail sales (local currency) growth year-on-year (y-o-y) in 2014: +2.7%; compoundannual growth rate (CAGR) to 2018: +2.9%

Latest Industry Trends & Developments

Sanyo To Pay USD187.5mn For 25% Of Olam's Packaged-Foods Business: In August 2014, Sanyo Foods

has acquired a 25% stake in Singapore-based food ingredients processor Olam International's packaged-

foods business for USD187.5mn. On completion of the transaction, Olam expects to register a net cash

inflow of USD167.5mn and an addition to reserves of USD80.8mn. The instant-noodle joint venture

between the companies will be a holding company for all of Olam's packaged-foods businesses incorporated

in Singapore, with Olam having the management control. Olam, which sells its packaged foods mainly in

Africa, recorded turnover of USD350mn in 2013.

GIC Inks Exchangeable Loan Agreement With CCC: In May 2014, the Government of Singapore

Investment Corporation (GIC) inked an Exchangeable Loan Agreement with Philippines-based Century

Canning Corporation (CCC). As part of the agreement, GIC has invested PHP3.4bn (USD76.2mn) in CCC,

which will be used by the firm to finance the growth and expansion of existing units, including but not

limited to CNPF, probable acquisitions and venturing into new businesses. The agreement can be extended

by both companies and will be for a term of one year. GIC can also swap both principal and all accrued

interest into 245.5mn issued and outstanding shares of CNPF, where in it will hold 11% of CNPF's issued

and outstanding shares.



Asahi Set To Acquire Etika International: In April 2014, Japan-based Asahi Breweries' Singapore unit said

it was is set to acquire the dairy product business of Singapore Exchange (SGX)-listed Etika International

Holdings in a USD329mn deal. Under the terms of the agreement, Asahi Breweries will acquire Kuala

Lumpur-based Etika Dairies Sdn Bhd and 11 other companies in the region. The reported sale will provide a

good opportunity for the group to boost their business and to maximise returns for its shareholders,

according to a statement from Etika Holdings.

WSH To Acquire Shree Renuka Sugars For USD200mn: In February 2014, Wilmar Sugar Holdings

(WSH), an affiliate of Singapore-based agribusiness group Wilmar International, decided to acquire a

controlling stake in Indian sugar company Shree Renuka Sugars (SRS) for a consideration of

USD200mn. Under the terms of the transaction, SRS will be jointly controlled by its existing promoters and

WSH, with the two parties having equal shareholding and board representation in SRS. WSH is considering

financing the acquisition through a combination of its existing funds and bank borrowings. The transaction

is subject to regulatory and shareholder approvals

Del Monte Pacific Acquires Del Monte Foods: In February 2014, Singapore-based food and beverage

company Del Monte Pacific (DMPL) completed the acquisition of Del Monte Foods' (DMF) Consumer

Products business for USD1.67bn. The acquired unit will now be renamed as Del Monte Foods (DMFI).

The acquisition includes Del Monte, S&W, Contadina and College brands, which generated USD1.8bn in

sales and USD164mn in earnings before interest, taxes, depreciation and amortisation (EBITDA) in 2013.

The deal will allow DMFI to boost its international market presence through DMPL's presence in the

Philippines and other Asian markets, while introducing new products into the US market from Asia.

Nestl Signs R&D Agreement With Government Agency: Nestl and Singapore's Agency for Science,

Technology and Research (A*STAR) signed an agreement in January 2014 that will see collaboration

across many areas of food and nutrition research. The agreement supports one of A*STAR's strategic

priorities, to develop its capabilities in food and nutrition research. From Nestl's perspective, the agreement

will help them to optimise their production processes and provide nutritional foods for their customers,

meeting the needs of an increasingly educated and affluent consumer base.

This is not the first time that the two bodies have worked together. Previous research projects focussed on

understanding nutrition requirements for infants and women during pregnancy, to promote life-long

metabolic health. The new agreement will see the involvement of A*STAR researchers in collaborative

projects with Nestl affiliates worldwide, and in turn will allow Nestl access to A*STAR's research

facilities and technology.



SWOT

Food

SWOT Analysis

Strengths The food-processing sector, although small, is efficient and works at maximum

capacity with strong levels of government support. Added-value food production

counts for a significant proportion of the total.

The government aims to increase Singapore's food production capabilities.

Importers can operate freely without concern over discriminatory taxes.

Singapore's location makes it an ideal hub for regional exporters and this has led to

considerable investment.

Per capita food consumption levels are among the highest in the region, giving

manufacturers access to a high-spending and susceptible audience.

The mass grocery retail sector is highly developed, providing excellent distribution

avenues for processed foods.

Weaknesses A small population and limited domestic processing facilities force Singaporean

companies to look abroad for new business development opportunities.

Singapore's limited natural resources mean it is dependent on imports of raw

materials and food; domestic food production levels remain low.

There is little room for development of the agricultural sector.

Singapore's absence of tariffs on food products means domestic producers face

fierce competition from foreign manufacturers.

Competition from low-cost neighbouring countries is on the increase, and its

population is ageing rapidly.

The market is highly mature and holds limited growth potential over our forecast

period.



SWOT Analysis - Continued

Opportunities Sales of packaged food and 'healthy' products have increased as a result of

consumers' increasing consciousness about food safety and hygiene.

Well developed infrastructure and a competitive business environment make

Singapore an attractive choice for added-value food producers.

Consumers are interested in branded, premium and added-value goods, rendering

these crucial ingredients for a successful product launch in the country, whether in

the food, drink or retail sector.

Wealthy, time-poor consumers are susceptible to the launch of processed and

convenience foods, which can be sold at the premium end of the market.

Threats The food-processing industry is threatened by competition from low-cost neighbours,

such as China. This will remain a problem as Singapore will continue to have high

labour and land costs.

Volatile food prices could negatively impact sales of many food products.



Drink

SWOT Analysis

Strengths Wealthy locals, a large expatriate community and tourism support the country's

competitive and dynamic alcohol and soft drink sectors.

Importers can operate freely without concern over discriminatory taxes.

Singapore's location makes it an ideal hub for regional exporters, and this has led to

considerable investment.

Alcoholic drinks are widely consumed thanks to a relaxed attitude towards

consumption among Singaporeans, the presence of a large expatriate community and

high tourism levels.

Weaknesses A small population and limited domestic processing facilities force Singaporean

companies to look abroad for new business development opportunities.

The most profitable sectors, such as soft drinks and alcohol, are already mature,

making growth difficult except through substantial marketing investment.

Although incomes are high, most consumers are still price-conscious.The market is

highly mature and holds limited growth potential over our forecast period.

Opportunities Consumers are interested in branded, premium and added-value goods, rendering

these crucial ingredients for a successful product launch in the country, whether in

the food, drink or retail sector.

High tourism levels and a hot climate boost sales opportunities for soft drinks and

alcoholic drinks manufacturers.

Although the hot drinks sector is highly mature, opportunities exist to capitalise on the

country's increased health consciousness by producing fruit and herbal teas.

The beer and wine sub-sectors are forecast to experience healthy growth and are still

many years from reaching market maturity.




In the face of regional competition for both exports and investment, the government is

encouraging economic diversification to boost competitiveness and is now promoting

the tourism sector, which in turn will boost drinks sales.

Threats High commodity costs threaten manufacturers' profit margins, potentially resulting in

reduced capacity for reinvestment.

Singapore continues to face strong and growing competition from low-cost

neighbours such as China and Vietnam. This will remain a problem as long as

Singapore continues to have high labour and land costs.



Mass Grocery Retail

SWOT Analysis

Strengths Singapore's mass grocery retail (MGR) sector is modern and characterised by intense

competition, which benefits consumers and ensures a high level of business activity

as well as a reasonably dynamic environment.

Most modern retail formats are present in the country, meaning modern shopping

choices exist for most occasions and most consumer preferences.

As modern retailers have long dominated sales and independents have managed to

carve out their own niche, there is little in the way of protective and restrictive

legislation in place.

Singapore has one of the highest incomes per capita in the world, and we predict

strong economic growth over the forecast period, which will drive future MGR sales.

Weaknesses Growth in the supermarket sector is expected to be modest, with retailers forced to

discount in order to attract consumers. Investment is likely to increasingly focus on

upgrading existing outlets.

Suitable real estate for development in Singapore is rare and accordingly sells at a

premium; available land attracts the attention of numerous bidders, and this often

drives a plot of land well over its real value.

Older Singaporeans in particular have shown a preference for shopping at wet

markets, and they remain the choice for everyday purchases of fresh items for a wider

demographic.

The relative small size of the local MGR market means that local operators will be

forced to expand into other regional markets to achieve long-term growth.

The market is becoming increasingly mature, with forecast MGR sales growth rates

for 2013-2018 expected to be much lower compared to 2007-2012.

Opportunities Opportunities exist in the convenience retail sector, and operators will be able to take

the smaller format into areas that cannot accommodate larger outlets.




Partnerships with petrol station operators have also proved a useful means of

furthering convenience store development cost effectively and in high footfall areas.

The opening of just one new hypermarket can provide a considerable stimulus to a

retailer's sales, owing to the immense profitability of this format.

Consumers have shown themselves to be hugely susceptible to added-value in-store

products and services, particularly with regard to highly innovative features, and this

allows retailers to achieve growth in spite of crowding.

Private labelling has proved an important means of securing consumer loyalty,

provided that branded goods can be significantly undercut and quality is not

jeopardised.

Compared with many other similarly developed Asian economies, independent retail

continues to account for a reasonable chunk of the market, indicating that expansion

opportunities remain.

Threats Higher growth opportunities in neighbouring markets threaten to capture the attention

of Singapore's multinational retailers, potentially resulting in reduced investment in

the country.

Although susceptible to innovative and premium goods, Singaporean consumers are

price-conscious - demanding value, not just image - which retailers must take into

account when formulating their development strategies.



Industry Forecast

Consumer Outlook

The Singaporean consumer outlook remains steady as the city-state continues to push for economic

momentum. Following a 2.7% performance in 2013, we envisage private consumption accelerating slightly

to 4.0% in 2014 and averaging 5.2% (year-on-year) till the end of our forecast period to 2018. However,

risks to this forecast are likely to the downside, as the nascent correction in the Singapore real estate market

may take a bite out of domestic demand.

Steady Growth

Singapore Population (mn) & Private Final Consumption Nominal Growth % y-o-y

Population, mn (LHS)Private final consumption, SGD nominal growth % y-o-y (RHS)

2000

2001

2002

2003

2004

2005

2006

2007

2008

2009

2010

2011

2012

e

2013

f

2014

f

2015

f

2016

f

2017

f

0

2.5

5

7.5

-5

0

5

10

15

20

e/f= BMI estimate/forecast. Source: World Bank, UN, Statistics Singapore, IMF, BMI

Despite steady private consumption and impressive labour dynamics in the face of a headline GDP growth

slowdown last year, the economy faces challenges that could impact consumer sentiment. One such

challenge is the high levels of debt currently seen in Singapore, with household debt now standing at

roughly 150% of household income, the second highest in the region behind Malaysia. There will

undoubtedly be repercussions for both lower income households as well as those that have leveraged

themselves aggressively (in order to take part in the country's housing boom) once global interest rates



begin to normalise. Nevertheless, we stress that Singapore remains among the best-placed developed

markets to weather such a phenomenon.

Leveraging Up

Singapore - Total Household & Mortgage Liabilities, SGDmn (LHS) & % GDP

Source: BMI, Singstat, MTI

There has been a great deal of recent discussion about the risk facing the Singaporean economy from an

eventual rise in global interest rates. The country's monetary policy is, in some ways, inappropriate for a

country whose nominal GDP growth is averaging almost 6% per year over the past five years. A credit

boom has undoubtedly resulted from the deeply negative real interest rate environment. It is difficult to tell

exactly what impact global rate normalisation will have on the local economy, and much depends on the

trajectory of the rise in US rates and on the eventual equilibrium level to which they reset. Our core view is

that interbank rates in the US and Singapore will begin to rise steadily beginning in 2015, but remaining

subdued by historical standards. As the price of money affects almost every major business spending and

consumption decision, higher costs of credit will undoubtedly have far-reaching implications. However,

higher global rates will bring positive as well as negative developments, and we believe that Singapore is

among the developed nations best equipped to withstand global interest rate normalisation.



The Effects Of Cheap Money

Singapore - Private Property Price Index (LHS) & SIBOR 3-Month Rate, %

Source: BMI, URA, ABS

Although concerns such as household debt and the cost of credit prompt questions over the health of the

Singaporean economy and consequently the consumer, we retain our view that the economy remains on

sound footing, retaining its position as one of the region's outperformers. Looking to the city-state's longer-

term growth prospects, we forecast GDP to expand at an average of 3.3% between 2014 to 2018,

reinforcing a steady and stable outlook. Key supporting factors underpinning this growth will remain the

government's sound economic policy, a highly skilled work force and favourable business climate: factors

that continue to bode well for the Singaporean consumer, presently and into the future.



Food

Food Consumption

Total food consumption (local currency)growth year-on-year (y-o-y) in 2014: +1.9%;compound annual growth rate (CAGR) to 2018:+2.1%

Per capita food consumption (local currency)growth (y-o-y) in 2014: -0.1%; CAGR to 2018:+0.3%

Singapore has one of the highest levels of food

consumption in the region, which effectively

eliminates the possibility of substantial industry

growth in the short or long term. Therefore, it is not

greatly surprising that the total food and drink sales

are forecast to experience a fairly modest growth of

2.1% in local currency terms between 2013 and

2018. Value sales will be largely driven by

population growth, as per capita food sales are

expected to increase only by a CAGR of 0.3% over

the same period.

Other factors, which prevent very strong growth in food consumption include the inherent price-sensitivity

of local consumers, despite the country's relative wealth, as well as the highly developed and competitive

nature of the local food and drink industry. Looking at the demographics, the country has an ageing

population, which, while already enjoying high incomes, remains very price sensitive when making

consumer goods purchases. Consequently, the majority of local industry players have relied on competitive

pricing as a means of building their existing market share, which will continue to curb consumption growth

potential in value terms.

Nonetheless, Singapore's positive long-term economic outlook, increasing tourism and low unemployment

levels will ensure that domestic food and beverage consumption remains high. Singapore is therefore likely

to continue playing a significant role in the regional growth strategies of multinationals, as the country's

solid existing spending levels provide steady returns on investments and thus support the companies'

expansions into emerging markets.

Food Consumption

(2011-2018)

Food consumption SGDbnFood consumption, SGD, % y-o-y

2011

2012

2013

e

2014

f

2015

f

2016

f

2017

f

2018

f

0

10

2.5

5

7.5

2

4

6

0

8

National Sources/BMI



Table: Food Consumption Indicators - Historical Data & Forecasts (Singapore 2011-2018)

2011 2012 2013e 2014f 2015f 2016f 2017f 2018f

Food consumption SGDbn 6.6 6.8 7.3 7.4 7.5 7.7 7.8 8.0

Food consumption, SGD, % y-o-y 2.7 3.1 6.0 1.9 1.9 1.8 1.9 2.8

Food consumption, SGD per capita 1,278.5 1,291.0 1,340.9 1,340.2 1,341.4 1,342.4 1,346.2 1,363.3

Food consumption, USDbn 5.3 5.6 5.8 6.0 6.2 6.4 6.6 6.9

Food consumption, USD per capita 1,016.7 1,049.6 1,072.7 1,085.2 1,104.1 1,118.7 1,140.9 1,175.2


Canned Food

Canned food sales (local currency) growth (y-o-y) in 2014: +3.5%; CAGR to 2018: +6.9%

We anticipate a solid growth in the demand for canned food over our forecast period. Between 2013 and

2018, the total sales (in local currency) are forecast to increase by 39.8%, while volume sales are expected

to experience slower growth at 22.7%. There are three main drivers behind this good growth forecast:

premiumisation, food accountability and a greater number of women entering the workforce.

With the average consumer in Singapore already enjoying a high income and demonstrating willingness to

trade up to higher-priced and value-added food products, demand for canned food is expected to remain

strong in the near term. With canned foods often valued at a higher price than fresh produce, accelerating

premiumisation is expected to fuel demand for canned food.

In addition, due to the spate of food safety and hygiene scares in the Asia Pacific region, food product origin

has emerged as another significant purchasing determinant (besides price and convenience) for Singaporean

consumers. Canned foods typically carry well detailed food labels and are often perceived as safer options

to fresh produce, given the stringent quality controls applied in canned food manufacturing. As a

result, demand for these products is expected to increase.

Local canned food producers are also recognising the importance of food accountability, and an increasing

number of canned food producers are changing their food labels to include more information such as the

quantity of trans-fats, calorie values and expiry date. According to the Agri-Food and Veterinary Authority,

a greater awareness of food labelling has seen the number of cases violating the rules for food labelling

falling by more than half in three years. This trend towards improving accountability among food producers



is likely to persist throughout the coming decade and should stimulate demand for canned food over our

forecast period.

Lastly, given the increasing number of working women and with Singaporeans already leading busy

lifestyles, demand for convenience food products such as canned food is set to rapidly outpace total food

consumption over our forecast period to 2018.

Confectionery

Confectionery sales (local currency) growth (y-o-y) in 2014: +3.6%; CAGR to 2018: +4.4%

Chocolate sales (local currency) growth (y-o-y) in2014: +6.4%; CAGR to 2018: +6.4%

Sugar confectionery sales (local currency) growth(y-o-y) in 2014: +3.7%; CAGR to 2018: +4.8%

Gum sales (local currency) growth (y-o-y) in2014: +1.7%; CAGR to 2018: +1.7%

Confectionery sales in Singapore are expected to

experience a fairly modest growth both in terms of

value and volume. To 2018, we forecast an overall

value (local currency) sales increase by 23.9%,

meanwhile, volume (tonnes) sales are forecast to

grow at a considerably lower rate, by 8.2% over our

forecast period, indicating the importance of

premiumisation to this sub-sector. While the industry

is without a doubt mature, Singaporean consumers

have shown a strong desire for new and innovative

products, and a willingness to pay a premium for these products remains a major driver behind value sales

growth.

Chocolate will be the fastest growing sub-sector in confectionery sales, demonstrating a CAGR of 6.4% in

local currency terms between 2013 and 2018. Sugar confectionery value (local currency) sales are expected

to increase at a slightly slower pace of 4.8% (CAGR), while gum sales will grow only by 1.7% (CAGR).

Singapore's confectionery industry is exceptional in the sense that it is one of the few sub-sectors in which a

great deal of the manufacturing occurs domestically. A number of big confectionery players such as

Bengawan Solo, BreadTalk, PrimaDli and Four Leaves have established a strong presence in the

Confectionery

(2011-2018)

Confectionery sales, tonnes, % y-o-yConfectionery sales, tonnes

2011

2012

2013

e

2014

f

2015

f

2016

f

2017

f

2018

f

0

50,000

100,000

150,000

0

1

2

3




country, while smaller confectionery shops have grown rapidly over the past few years. These companies

have been constantly reinventing their product offerings and have also reinvested heavily in marketing and

promotional campaigns as they vie for a larger share of the confectionery market, further fuelling value

sales growth.

Table: Confectionery Value/Volume Sales, Production & Trade - Historical Data & Forecasts (Singapore 2011-2018)

2011 2012 2013e 2014f 2015f 2016f 2017f 2018f

Confectionery sales,SGDmn 1,135.62 1,203.99 1,254.41 1,299.03 1,357.02 1,417.07 1,481.67 1,553.62

Gum sales, SGDmn 238.04 252.42 265.24 269.69 274.31 278.72 283.26 288.57

Chocolate sales,USDmn 98.73 104.96 108.88 117.23 126.70 136.36 147.60 160.20

Gum sales, USDmn 189.30 205.22 212.19 218.37 225.77 232.27 240.05 248.76

Confectionery sales,tonnes 116,847.8 119,104.6 120,402.3 120,774.6 122,715.9 124,951.0 127,370.6 130,290.2

Confectionery sales,SGD per capita 218.7 227.0 231.8 235.5 241.5 247.9 255.0 263.3

Confectionery sales,USDmn 903.1 978.9 1,003.5 1,051.8 1,116.9 1,180.9 1,255.6 1,339.3

Chocolate sales,tonnes 4,402.2 4,380.7 4,510.1 4,667.3 4,822.4 5,001.2 5,193.2 5,406.0

Chocolate sales, kgper capita 0.8 0.8 0.8 0.8 0.9 0.9 0.9 0.9

Chocolate sales,SGDmn 124.1 129.1 136.1 144.8 153.9 163.6 174.2 185.8

Sugar confectionerysales, tonnes 90,993.3 92,595.4 93,789.1 94,601.0 96,531.1 98,835.3 101,324.3 104,158.2

Sugar confectionerysales, kg per capita 17.5 17.5 17.3 17.1 17.2 17.3 17.4 17.7

Gum sales, tonnes 21,452.3 22,128.4 22,103.2 21,506.3 21,362.4 21,114.6 20,853.1 20,726.0

Gum sales, kg percapita 4.1 4.2 4.1 3.9 3.8 3,693.2 3.6 3,512.6

Gum sales, SGD percapita 45.8 47.6 49.0 48.9 48.8 48.8 48.7 48.9




Fish

Frozen fish (tonnes) growth (y-o-y) in 2014: +1.4%; CAGR to 2018: +1.5%

Preserved fish (tonnes) growth (y-o-y) in 2014: +3.8%; CAGR to 2018: +3.7%

Fish is one of the most consumed food stuffs in Singapore, with per capita consumption of seafood

estimated to be around 25kg per year. This places seafood as the second most popular food in the country,

behind chicken, which has an estimated per capita consumption of 35kg per year, and just ahead of pork at

20kg per year. Frozen fish sales are slightly higher than preserved fish sales, yet the latter are expected to

grow faster than frozen fish. We expect per capita consumption of frozen fish to remain largely

stable standing at around 10.5kg to 2018, while per capita consumption of preserved fish is expected to

increase by 10.2% and reach 13.4 kg over the same period. Currently, local production of fish makes up

only 4% of Singapore's demand; however, the government has introduced incentives in an attempt to raise

this figure to 15% in the next five years.

Table: Fish Volume Sales, Production & Trade - Historical Data & Forecasts (Singapore 2011-2018)

2011 2012 2013e 2014f 2015f 2016f 2017f 2018f

Frozen fish production, tonnes 38,009.4 38,533.7 40,002.4 41,332.1 42,716.0 44,201.5 45,746.6 47,307.9

Frozen fish production, tonnes,% y-o-y 5.4 1.4 3.8 3.3 3.3 3.5 3.5 3.4

Frozen fish sales, tonnes 56,662.5 56,637.8 57,557.5 58,338.4 59,173.3 60,109.9 61,106.0 62,118.4

Frozen fish sales, tonnes, % y-o-y 2.5 0.0 1.6 1.4 1.4 1.6 1.7 1.7

Frozen fish sales, kg per capita 10.9 10.7 10.6 10.6 10.5 10.5 10.5 10.5

Frozen fish exports, tonnes 23,446.1 22,755.6 22,065.2 21,374.8 20,684.4 19,993.9 19,303.5 18,613.1

Frozen fish exports, tonnes, %y-o-y -2.9 -2.9 -3.0 -3.1 -3.2 -3.3 -3.5 -3.6

Frozen fish imports, tonnes 42,099.1 40,859.8 39,620.4 38,381.0 37,141.7 35,902.3 34,662.9 33,423.6

Frozen fish imports, tonnes, %y-o-y -2.9 -2.9 -3.0 -3.1 -3.2 -3.3 -3.5 -3.6

Frozen fish balance, tonnes -18,653.1 -18,104.1 -17,555.2 -17,006.2 -16,457.3 -15,908.4 -15,359.4 -14,810.5

Frozen fish balance, tonnes, %y-o-y -2.9 -2.9 -3.0 -3.1 -3.2 -3.3 -3.5 -3.6

Preserved fish (other)production, tonnes 35,734.0 37,618.5 39,503.0 41,387.5 43,272.0 45,156.5 47,041.0 48,925.5

Preserved fish (other)production, tonnes, % y-o-y 5.6 5.3 5.0 4.8 4.6 4.4 4.2 4.0

Preserved fish (other) sales,tonnes 60,832.2 63,808.6 65,901.3 68,404.1 71,071.5 73,729.8 76,430.5 79,175.7

Preserved fish (other) sales,tonnes, % y-o-y 3.9 4.9 3.3 3.8 3.9 3.7 3.7 3.6



Fish Volume Sales, Production & Trade - Historical Data & Forecasts (Singapore 2011-2018) - Continued

2011 2012 2013e 2014f 2015f 2016f 2017f 2018f

Preserved fish (other) sales, kgper capita 11.7 12.0 12.2 12.4 12.6 12.9 13.2 13.4

Preserved fish (other) exports,tonnes 14,656.5 14,726.9 14,857.1 15,642.4 16,747.8 17,870.5 19,038.0 20,252.3

Preserved fish (other) exports,tonnes, % y-o-y 6.4 0.5 0.9 5.3 7.1 6.7 6.5 6.4

Preserved fish (other) imports,tonnes 39,754.7 40,917.0 41,255.4 42,659.0 44,547.3 46,443.8 48,427.5 50,502.5

Preserved fish (other) imports,tonnes, % y-o-y 3.3 2.9 0.8 3.4 4.4 4.3 4.3 4.3

Preserved fish (other) balance,tonnes -25,098.2 -26,190.1 -26,398.3 -27,016.6 -27,799.5 -28,573.3 -29,389.5 -30,250.2

Preserved fish (other) balance,tonnes, % y-o-y 1.6 4.4 0.8 2.3 2.9 2.8 2.9 2.9


Oils And Fats

Crude soya-bean oil sales (tonnes) growth (y-o-y) in 2014: +2.5%; CAGR to 2018: +2.6%

Corn-oil sales (tonnes) growth (y-o-y) in 2014: +23.7%; CAGR to 2018: +16.9%

Crude soya-bean oil volume sales are expected to experience a rather modest expansion to 2018, with the

CAGR standing at 2.6%. In contrast, we forecast a very strong sales growth for corn-oil sales, which are set

to grow by a CAGR of 16.9% to 2018.

Table: Oils And Fats Volume Sales, Production & Trade - Historical Data & Forecasts (Singapore 2011-2018)

2011 2012 2013e 2014f 2015f 2016f 2017f 2018f

Crude soya-bean oil production,tonnes 4,056.2 4,089.6 4,182.9 4,267.5 4,355.5 4,449.9 4,548.2 4,647.4

Crude soya-bean oil production,tonnes, % y-o-y 3.2 0.8 2.3 2.0 2.1 2.2 2.2 2.2

Crude soya-bean oil sales, tonnes 4,063.2 4,117.2 4,231.1 4,336.3 4,444.9 4,559.9 4,678.8 4,798.6

Crude soya-bean oil sales,tonnes, % y-o-y 3.7 1.3 2.8 2.5 2.5 2.6 2.6 2.6

Crude soya-bean oil sales, kg percapita 0.8 0.8 0.8 0.8 0.8 0.8 0.8 0.8

Crude soya-bean oil exports,tonnes 1,454.2 1,413.0 1,371.9 1,330.7 1,289.6 1,248.4 1,207.3 1,166.1



Oils And Fats Volume Sales, Production & Trade - Historical Data & Forecasts (Singapore 2011-2018) - Continued

2011 2012 2013e 2014f 2015f 2016f 2017f 2018f

Crude soya-bean oil exports,tonnes, % y-o-y -2.8 -2.8 -2.9 -3.0 -3.1 -3.2 -3.3 -3.4

Crude soya-bean oil imports,tonnes 1,461.2 1,440.6 1,420.1 1,399.5 1,379.0 1,358.4 1,337.9 1,317.3

Crude soya-bean oil imports,tonnes, % y-o-y -1.4 -1.4 -1.4 -1.4 -1.5 -1.5 -1.5 -1.5

Crude soya-bean oil balance,tonnes -7.0 -27.6 -48.2 -68.8 -89.4 -110.0 -130.6 -151.2

Crude soya-bean oil balance,tonnes, % y-o-y -151.3 295.0 74.7 42.8 29.9 23.0 18.7 15.8

Corn oil production, tonnes 115.2 115.6 116.6 117.6 118.6 119.7 120.8 121.9

Corn oil production, tonnes, % y-o-y 1.2 0.3 0.9 0.8 0.9 0.9 0.9 0.9

Corn oil sales, tonnes 1,666.2 2,418.7 3,171.9 3,924.9 4,678.1 5,431.3 6,184.5 6,937.8

Corn oil sales, tonnes, % y-o-y 82.6 45.2 31.1 23.7 19.2 16.1 13.9 12.2

Corn oil sales, kg per capita 0.3 0.5 0.6 0.7 0.8 1.0 1.1 1.2

Corn oil exports, tonnes 9,499.7 9,160.7 8,821.6 8,482.6 8,143.6 7,804.6 7,465.6 7,126.6

Corn oil exports, tonnes, % y-o-y -3.4 -3.6 -3.7 -3.8 -4.0 -4.2 -4.3 -4.5

Corn oil imports, tonnes 11,050.6 11,463.8 11,876.9 12,290.0 12,703.1 13,116.2 13,529.3 13,942.4

Corn oil imports, tonnes, % y-o-y 3.9 3.7 3.6 3.5 3.4 3.3 3.1 3.1

Corn oil balance, tonnes -1,551.0 -2,303.1 -3,055.2 -3,807.4 -4,559.5 -5,311.6 -6,063.7 -6,815.8

Corn oil balance, tonnes, % y-o-y 94.2 48.5 32.7 24.6 19.8 16.5 14.2 12.4




DrinkHot Drinks

Coffee sales (local currency) growth year-on-year (y-o-y) in 2014: +2.4%; compound annual growth rate(CAGR) to 2018: +1.7%

Tea sales (local currency) growth (y-o-y) in 2014: +3.6%; CAGR to 2018: +3.7%

Due the maturity of the local coffee market, we forecast very modest growth in this segment to 2018.

Coffee sales are expected to increase only by 1.7% (CAGR) in local currency terms, mostly driven by

innovation and continuing openings. Coffee culture is well ingrained in the Singaporean market, which is

not surprising given the presence of big coffee giants such as Starbucks, The Coffee Bean and UK-based

Costa Coffee. Local consumers are also becoming more sophisticated, which is an important growth driver,

particularly for value sales moving forward.

Singapore is arguably one of the most mature coffee markets in the Asia Pacific region. The presence of

established coffee retailers at both the lower end and premium end of the market largely explains the

prevalence of the coffee drinking culture across Singapore. With coffee retailers such as Ya Kun Kaya

Toast and Old Town White Coffee catering to the lower-end segment of the market, and retailers such as

Starbucks and The Connoisseur Concerto (TCC) providing consumers with the indulgence of a 'coffee

drinking experience' at the higher end, local consumers are spoiled for choice.

Despite the maturity of the Singapore coffee sector, we still see scope for growth in the longer term due to

an accelerating premiumisation momentum. The increasingly urbanised lifestyles of local consumers,

accompanied by higher incomes, will translate into a growing appetite for premium-priced Westernised

styles of coffee such as espresso and mocha. Supported by higher purchasing power, consumers are also

likely to develop increasingly sophisticated tastes for coffee and demand greater variety in coffee products

such as Vietnamese coffee and flavoured beverage options.

This premiumisation opportunity means that it remains worthwhile for coffee retailers in Singapore to

expand their product offerings as well as ramp up their store expansions to try and grow their share of the

market. The trend of product innovation is particularly evident among local coffee retailers as they try to tap

into an audience with varied tastes. For instance, yuanyang, a coffee beverage blended with milk tea, is

well received by local consumers.

The continued flurry of marketing initiatives among local coffee retailers will help to encourage coffee

consumption in Singapore as well. TCC, for instance, offers membership discounts to its frequent

customers, and Starbucks often holds sales promotions in a bid to draw greater crowds.



Meanwhile, tea sales are forecast to increase by a much stronger CAGR of 3.5% over our forecast period in

local currency terms. The tea sector in Singapore is less developed and less popular than its coffee

counterpart, and as such the main driver of this growth will be due to its smaller base. Premiumisation, as

well as increasing health-consciousness and product innovation will spur on sales.

Hot Drinks

(2011-2018)

Coffee sales, tonnes Tea sales, tonnes

2011

2012

2013

e

2014

f

2015

f

2016

f

2017

f

2018

f

0

1,000

2,000

3,000

0

500

1,000

1,500

2,000




Table: Hot Drink Value/Volume Sales, Production & Trade - Historical Data & Forecasts (Singapore 2011-2018)

2011 2012 2013e 2014f 2015f 2016f 2017f 2018f

Coffee sales, tonnes 2,470.9 2,441.1 2,445.9 2,436.6 2,433.3 2,419.3 2,385.3 2,332.0

Coffee sales, kg per capita 0.5 0.5 0.5 0.4 0.4 0.4 0.4 0.4

Coffee sales, SGDmn 76.6 79.1 81.1 83.1 85.4 87.0 87.9 88.1

Coffee sales, USDmn 60.9 64.3 64.9 67.3 70.3 72.5 74.5 76.0

Tea sales, tonnes 1,607.3 1,562.4 1,554.8 1,566.8 1,577.3 1,594.2 1,613.6 1,637.0

Tea sales, kg per capita 0.3 0.3 0.3 0.3 0.3 0.3 0.3 0.3

Tea sales, SGDmn 31.3 31.8 32.4 33.6 34.8 36.1 37.4 38.9

Tea sales, SGD per capita 6.0 6.0 6.0 6.1 6.2 6.3 6.4 6.6


Alcoholic Drinks

Alcoholic drinks sales (local currency) growth (y-o-y) in 2014: +5.8%; CAGR: 6.8%

Beer sales (local currency) growth (y-o-y) in 2014: +5.9%; CAGR to 2018: +6.5%

Wine sales (local currency) growth (y-o-y) in 2014: +5.9%; CAGR to 2018: +6.6%

Spirits sales (local currency) growth (y-o-y) in 2014: +3.8%; CAGR to 2018: +4.6%

Singapore's population at just around 5.4mn, the country's alcoholic drinks sector will remain heavily reliant

on the tourism industry and inflows of foreign labour. Nevertheless, our outlook for Singapore's alcoholic

drinks sales remains positive, and we are forecasting a CAGR of 6.8% in local currency to 2018.

Rising expatriate levels and a robust tourism scene spell optimism for the sector. However, given that

premiumisation has already occurred, we rule premiumisation out as an avenue for explosive growth in the

domestic alcoholic drinks market.

Beer will continue to dominate the sector, taking up the lion's share of sales and growing at the same rate as

the whole alcoholic drinks market. Overall volume sales are forecast to increase by 20.4% over our forecast

period to 2018 and reach 129mn litres. Aggressive marketing and promotional initiatives from market

leader Asia Pacific Breweries, coupled with the proliferating varieties of beer imports, will continue to

stimulate beer demand over our forecast period. However, with Singaporean consumers already benefiting

from a wide range of beers on offer, domestic brewers will have to continue pouring in promotional



investments to capture the attention of the discerning Singaporean consumers and protect their market

shares from erosion.

However, the most dynamic sub-sector will be the fledgling wine industry. As Singaporean consumers have

become more cosmopolitan in their drinking habits, demand for wine has increased considerably, while

wine cellars and boutiques have also sprung up across the island to cater to this growing demand. Domestic

retailers such as NTUC FairPrice and Cold Storage have also jumped on this trend by stocking wines in

their stores. This improved accessibility of wines is certainly supportive of increasing demand.

Exporters from new-world wineries will continue to target Singapore due to its wealth and widespread

alcohol consumption. As regional wine production grows, Singapore will also be a key target for premium

regional manufacturers who cannot necessarily find a market in their domestic territory in the short term.

We are forecasting overall wine sales to grow by 37.7% between 2013 and 2018 in local currency terms to

reach a value of SGD471.5mn, while volume sales are forecast to grow by 20.9% to 8.6mn litres.

Singaporean spirits sector is more mature and therefore is forecast to experience slower value sales growth

that wine or beer. We forecast overall value (local currency) sales to grow by 25.1% between 2013 and

2018, and volume (litres) sales to expand by 10%. As can be extrapolated from this divergence,

premiumisation will be the main driving force behind growth in spirits.



Alcoholic Drinks

(2011-2018)

Alcoholic drink sales, SGDmn Alcoholic drink sales, SGD, % y-o-y

2011

2012

2013

e

2014

f

2015

f

2016

f

2017

f

2018

f

0

500

1,000

1,500

2,000

6

8

10

4


Table: Alcoholic Drinks Value/Volume Sales, Production & Trade - Historical Data & Forecasts (Singapore 2011-2018)

2011 2012 2013e 2014f 2015f 2016f 2017f 2018f

Alcoholic drinks sales, mn litres 107.7 113.1 116.7 120.1 124.3 129.5 134.7 140.3

Wine Sales, mn litres 6.6 6.9 7.1 7.4 7.6 7.9 8.3 8.6

Beer Sales, USDmn 670.7 753.5 783.2 839.4 908.7 982.7 1,066.0 1,157.9

Beer Sales, mn litres 98.8 103.9 107.1 110.3 114.2 119.0 123.9 129.0

Alcoholic drink sales, SGDmn 1,187.3 1,301.9 1,374.3 1,454.1 1,547.5 1,651.7 1,761.6 1,880.9

Spirit sales, SGDmn 47.4 50.6 52.9 54.9 57.3 59.7 62.7 66.2

Alcoholic drinks sales, litres per capita 20.7 21.3 21.6 21.8 22.1 22.6 23.2 23.8

Alcoholic drinks sales, USDmn 944.2 1,058.4 1,099.5 1,177.4 1,273.7 1,376.4 1,492.9 1,621.4

Beer sales, litres per capita 19.0 19.6 19.8 20.0 20.3 20.8 21.3 21.9

Beer sales, SGDmn 843.4 926.8 979.1 1,036.7 1,104.1 1,179.3 1,257.9 1,343.2

Beer sales, SGD per capita 162.4 174.8 180.9 187.9 196.5 206.3 216.4 227.6

Wine sales, litres per capita 1.3 1.3 1.3 1.3 1.4 1.4 1.4 1.5

Wine sales, SGDmn 296.5 324.5 342.4 362.6 386.1 412.8 441.0 471.5



Alcoholic Drinks Value/Volume Sales, Production & Trade - Historical Data & Forecasts (Singapore 2011-2018) - Continued

2011 2012 2013e 2014f 2015f 2016f 2017f 2018f

Wine sales, SGD per capita 57.1 61.2 63.3 65.7 68.7 72.2 75.9 79.9

Spirits sales, litres per capita 0.4 0.4 0.4 0.4 0.4 0.4 0.4 0.4

Spirits sales, SGD per capita 9.1 9.5 9.8 10.0 10.2 10.4 10.8 11.2

Spirits sales, USDmn 37.7 41.1 42.3 44.5 47.2 49.7 53.1 57.0


Soft Drinks

Total soft drink sales (local currency) growth (y-o-y) in 2014: +3.2%; CAGR to 2018: +2.6%

Between 2013 and 2018, we forecast that soft drinks value sales to grow by a modest 2.6% (CAGR) in local

currency terms, which is low by regional standards, reflecting the maturity of the Singaporean market.

Given the relatively small size of the local market, paired with the presence of strong existing players such

as Yeo Hiap Seng, Pokka Corporation and Fraser & Neave (F&N), Singapore can be counted as one of

the least dynamic soft drink markets in the region. Despite this, global brewer Heineken is planning to enter

the market through its local subsidiary Asia Pacific Breweries (APB). Heineken currently markets soft

drinks in its home country of the Netherlands, and will use its deep pockets to finance new and innovative

products for the Singaporean market.

Singapore does have the advantage of high existing spending levels thanks to high per capita income, and

the local consumers' penchant for higher-value soft drinks will remain a major positive for regional soft

drinks manufacturers. Per capita soft drinks consumption is estimated to be around 107 litres in Singapore,

which is well above that of its regional counterparts. Supported by high purchasing power and a growing

shift of consumer preferences towards healthier products, Singaporeans have, and will continue to develop,

a massive appetite for functional soft drinks brands such as energy drinks and fruit juices.

Beverages such as F&N's 100 Plus isotonic drink, Yeo Hiap Seng's chrysanthemum tea and Pokka's lemon

tea are all well received among local consumers and are garnering increasing popularity over the traditional

carbonates brands such as Coke and Pepsi. Clearly, the high existing consumption levels and a sustained

acceleration in premiumisation momentum in the Singapore soft drinks market should continue to provide

some growth momentum to the sector, albeit modest, through to 2018.

Rising out-of-home consumption, which is partly driven by growing consumer affluence, will remain

another major growth driver of overall soft drinks demand in Singapore. The prevalence of organised retail



such as convenience stores and supermarkets has provided local soft drinks manufacturers with an extensive

distribution network across Singapore, and it is not surprising that on-trade sales are growing their

proportional share of overall soft drinks sales in the country.

These dynamics mean that it remains worthwhile for companies already present in the market to maintain

their domestic footprint and balance it against their regional growth ambitions. On this front, continued

investment in product launches from domestic soft drinks manufacturers seeking to grow their overseas

presence is likely to bring about positive spill-over effects across the Singapore soft drinks market.

For example, following its expiration of a bottling agreement with US soft drinks giant The Coca-Cola

Company (Coke), F&N plans to invest more heavily in research and development to create new products

and engage in aggressive marketing initiatives across the regional markets of Thailand and Indonesia.

Previously, under the partnership, F&N's expansion plans in the region were bogged down by restrictive

covenants imposed by Coke and it was not allowed to distribute its own portfolio of soft drinks beyond

Singapore and Malaysia. With the termination of its bottling agreement with Coke, F&N can now pursue

growth freely across the region and has recently introduced two new soft drinks to its portfolio, namely non-

carbonated beverage 100PlusEdge and carbonated soft drink Clearly Citrus, as it looks to better position

itself in the regional markets. The introduction of these products is likely to have a positive impact on soft

drinks demand in Singapore.



Soft Drinks

(2011-2018)

Soft drink sales, SGD, % y-o-y Soft drink sales, SGDmn

2011

2012

2013

e

2014

f

2015

f

2016

f

2017

f

2018

f

0

100

200

300

1

2

3

4

5

6


Table: Soft Drinks Sales, Production & Trade (Singapore 2011-2018)

2011 2012 2013e 2014f 2015f 2016f 2017f 2018f

Soft drink sales, USDmn 156.5 168.0 171.1 178.6 187.5 194.9 202.4 209.2

Soft drink sales, mn litres 539.54 567.43 577.28 596.50 616.64 637.76 659.90 683.63

Soft drink sales, SGDmn 196.82 206.64 213.85 220.63 227.76 233.86 238.84 242.62

Soft drink sales, litres per capita 103.9 107.0 106.7 108.1 109.7 111.6 113.6 115.9

Soft drink sales, SGD per capita 37.9 39.0 39.5 40.0 40.5 40.9 41.1 41.1

Carbonated soft drink exports, litres mn 90.0 92.6 93.1 96.0 100.1 104.3 108.6 113.1

Carbonated soft drink imports, litres mn 182.4 184.8 191.7 198.0 204.5 211.5 218.7 226.1

Carbonated soft drink balance, litres mn -92.3 -92.2 -98.6 -102.0 -104.4 -107.2 -110.1 -113.0




Mass Grocery Retail

Total mass grocery retail sales (local currency) growth year-on-year (y-o-y) in 2014: +2.7%; compoundannual growth rate (CAGR) to 2018: +2.9%

Supermarkets sales (local currency) growth (y-o-y) in 2014: +2.5%; CAGR to 2018: +2.5%

Hypermarkets sales (local currency) growth (y-o-y) in 2014: +3.2%; CAGR to 2018: +4.0%

Convenience stores sales (local currency) growth (y-o-y) in 2014: +2.8%; CAGR to 2018: +2.9%

To 2018, Singapore's MGR sector is forecast to experience a modest growth of 2.9% (CAGR) in local

currency terms. The growth will be largely driven by the expanding domestic market and rising disposable

incomes.

Hypermarket sales are expected to expand at a slightly faster pace than other segments. Hypermarkets, with

their ability to offer a complete one-stop shopping experience for both food and non-food goods, are poised

to benefit from the trend of changing consumer habits, which are increasingly geared towards less-frequent

shopping trips and higher spending per trip. The increase in car ownership is fuelling this trend, as it gives

consumers the ability to transport more groceries.

The ongoing expansionary activities of domestic retailers mirror the relatively stronger growth prospects for

the hypermarket sector. NTUC FairPrice, for instance, introduced the new FairPrice Xtra hypermart retail

format in 2006 and has since pushed aggressively into the hypermarket sector - the opening of another

hypermarket outlet in the NEX shopping mall being the latest example. The exit of French retailer

Carrefour in 2012 from the Singapore market due to domestic restructuring pressures arguably opens up

further room for domestic or other high profile international retailers to capitalise on growing demand for

the hypermarket format.

Compared to hypermarkets, the convenience store format will experience somewhat slower value (local

currency) sales growth of 2.9% (CAGR) in the period to 2018. Convenience stores also seem to be well

suited to Singapore as they are perfect for the state's highly urbanised lifestyle. Owing to its small floor

space, convenience stores can be adapted to fit into housing and office complexes, thus reducing consumers'

travelling time.

Dual-income families are already the norm in Singapore, and the increasing prevalence of dual-income

households means that convenience will remain one of the major purchasing determinants. Most of the

convenience stores are also operating on a 24-hour basis, which further cater demand for convenient

grocery retail options.



The supermarket sector is reaching saturation point. To 2018, it will expand only by 2.5% (CAGR) in local

currency terms and reach overall sales of SGD3.01bn. Nonetheless, premiumisation remains a viable

avenue of growth, and we would expect supermarket retailers to continue expanding their in-store product

offerings to capitalise on this strong premiumisation opportunity. Examples of this trend include stocking

higher-value organic food ranges and improving the availability of higher-margin non-food items.

Total Mass Grocery Retail Sales

Total Mass Grocery Retail Sales 2011-2018

RETAIL: Total mass grocery retail sales, SGDbn (LHS)RETAIL: Total mass grocery retail sales, SGD~ % y-o-y (RHS)

2011

2012

2013

e

2014

f

2015

f

2016

f

2017

f

2018

f

0

2

4

6

2.5

3

3.5

2

Source: Statistics Singapore, Singapore Retailers' Association, BMI



Table: Mass Grocery Retail Sales - Historical Data & Forecasts, 2011-2018

2011 2012 2013e 2014f 2015f 2016f 2017f 2018f

Supermarket sales, USDbn 2.0 2.1 2.1 2.2 2.3 2.4 2.5 2.6

Hypermarket sales, USDbn 0.6 0.6 0.6 0.7 0.7 0.7 0.8 0.8

Convenience store sales, USDbn 0.8 0.9 0.9 0.9 0.9 1.0 1.0 1.1

Total mass grocery retail sales, USDbn 3.4 3.6 3.6 3.8 3.9 4.1 4.3 4.5

Supermarket sales, SGDbn 2.5 2.6 2.7 2.7 2.8 2.9 2.9 3.0

Hypermarket sales, SGDbn 0.8 0.8 0.8 0.8 0.9 0.9 0.9 1.0

Convenience store sales, SGDbn 1.0 1.1 1.1 1.1 1.1 1.2 1.2 1.3

Total mass grocery retail sales, SGDbn 4.3 4.4 4.6 4.7 4.8 4.9 5.1 5.2

Total mass grocery retail sales, SGD, % y-o-y 2.8 3.0 2.9 2.7 2.4 2.7 3.0 3.4




Trade

Exports (EUR) growth (y-o-y) in 2014: +9.3%; CAGR to 2018: +6.4%

Imports (EUR) growth (y-o-y) in 2014: +9.1%; CAGR to 2018: +8.6%

Singapore's food and drink trade balance will continue to widen over the forecast period, as the country

continues to develop a growing dependency on food and drink imports, despite attempts by the government

to develop self-sufficiency. Between 2013 and 2018, food and drink value exports are forecast to increase

by 36.3%, while imports are expected to grow by 37.4%. Consequently, Singapore's negative trade balance

is set to expand by 87.5% and amount to EUR3.40bn by the end of our forecast period.

Through to 2018, export growth will remain vital owing to Singapore's status as trade-dependent market.

The country continues to be used as an important re-export destination, particularly for premium luxury

food and beverage products destined for other high-growth Asian markets. The country's reputation for

high-quality domestically produced products and stringent manufacturing procedures will remain a strong

demand trigger for food and drink exports to overseas markets as well.

However, import growth is expected to outpace that of exports, and this ensures that the food and drink

trade balance remains negative. Thanks to Singapore's highly developed infrastructure and skilled labour

force, it was once a sought-after investment opportunity for smaller-scale regional food and drink

processors. However, as other neighbouring markets have caught up, Singapore has lost the capacity to

differentiate itself and has increasingly been forced to import many of the raw ingredients it once produced

on a small scale.

The Singapore government remains concerned about the increasing deficit in the food and drink trade

balance. As a result, it has put targets in place to reduce the country's self-sufficiency in many popular

staple foodstuffs. Within the next five years, Singapore aims to increase egg production to meet 30% of

local consumption, up from the current 23%; fish to meet 15% of local demand, up from 4%; and leafy

vegetables to meet 15% of local demand, up from 7%. However, as our forecasts suggest, we hold the view

that the country is unlikely to meet these targets, and will import more food than ever before by the end of

the forecast period.



Table: Trade Indicators - Historical Data & Forecasts, 2011-2018

2011 2012 2013e 2014f 2015f 2016f 2017f 2018f

Exports of food and drink, EURmn 4,131.6 4,689.4 4,429.4 4,843.2 5,285.3 5,670.9 5,879.1 6,035.4

Exports of food and drink, EUR, % y-o-y 6.7 13.5 -5.5 9.3 9.1 7.3 3.7 2.7

Imports of food and drink, EURmn 5,690.1 6,536.7 6,240.6 6,805.4 7,523.4 8,217.1 8,796.3 9,432.2

Imports of food and drink, EUR, % y-o-y 6.1 14.9 -4.5 9.0 10.6 9.2 7.0 7.2

Balance of trade in food and drink,EURmn -1,558.5 -1,847.3 -1,811.2 -1,962.1 -2,238.2 -2,546.2 -2,917.2 -3,396.8

Balance of trade in food and drink, EUR,% y-o-y 4.5 18.5 -2.0 8.3 14.1 13.8 14.6 16.4




Macroeconomic Forecast

Macroeconomic Analysis

BMI View: Singapore's economy expanded by a solid 5.1% year-on-year (y-o-y) according to initial real

GDP estimates, with much of the growth driven by strong construction activity. Given our infrastructure

team's relatively sanguine view on the sector, we have incrementally upgraded our 2014 real GDP forecast

to 3.4% from 3.2% previously. That said, we continue to believe that prospects for a substantial trade

recovery over the coming quarters are likely slim, as external demand conditions remain challenging.

Singapore's economy notched another quarter of impressive economic growth in Q114, with initial

government estimates indicating that real GDP expanded by 5.1% year-on-year (y-o-y), or 0.1% in quarter-

on-quarter, seasonally adjusted, annualised (q-o-q SAAR) terms. That said, the result represented a

slowdown relative to Q413, when the economy achieved a 5.5% y-o-y growth rate (6.1% SAAR), and we

continue to believe that the economy will face headwinds due to challenging external conditions.

Under the economy's sectors breakdown, the major outperformers in the quarter were construction (+10.7%

q-o-q SAAR) and manufacturing (+4.5%), while the services sector fell into contraction at -1.8%. While our

infrastructure team remains relatively sanguine on the outlook for the construction sector over the course of

the coming year, with growth forecasted at a solid 5.5% (matching the sector's 2013 performance), this

nevertheless implies a slowdown from Q114's 6.5% y-o-y clip.

Holding Out Hope In Construction

Indeed, Singapore is in the midst of a nascent real estate correction, with particular weakness seen in the

residential sector. As noted by our infrastructure team, the value of contracts awarded for residential

construction projects in 2014 is set to fall significantly from the level witnessed in 2013. However, given

that there tend to be significant lag effects in terms of when the related construction activity actually takes

place, we could still see relatively robust residential construction growth through H114 and potentially

beyond. With ongoing support from increased government spending on infrastructure, this means that the

bulk of the slowdown in construction activity is now more likely to be pushed into late 2014 or 2015, and

we have incrementally boosted our headline real GDP growth forecast to 3.4% (from 3.2% previously) as a

result.



Don't Look Down

Singapore - Real Estate Price Index, All Residential (RHS) & % chg y-o-y (LHS)

Source: BMI, URA

Trade Outlook Not So Bright

At the same time, Singapore has experienced a recovery in its trade accounts over recent months, with non-

oil domestic exports (NODX) growing by a solid 9.1% in February. However, we remain somewhat

skeptical that this performance can be maintained over the coming quarters, as the ongoing economic

slowdown in China will take its toll on the regional demand outlook. Likewise, much of the outperformance

in both exports and manufacturing over recent months has been the result of a surge in biomedical

production, which is highly volatile. As such, we continue to envisage only a modest trade recovery over

the coming year, and therefore do not see considerable scope for faster growth in the city-state's

manufacturing cluster.

MAS Stands Pat On Cue

In line with our expectations, the Monetary Authority of Singapore (MAS) chose to stand pat with its

Singapore dollar policy at its bi-annual meeting on April 14. The decision is likely informed by both the

economy's strong growth, which suggests little need for easing, as well as a somewhat middling inflation

forecast. Following an announcement from the Land Transport Authority (LTA) that Certificate of



Entitlement (COE) quotas will be raised by 32% beginning in May, we in fact now see downside risk to our

2014 average headline CPI forecast of 2.8%, and may look to downgrade it over the coming months.

Strong Growth Set For Moderation

Singapore - Real GDP, % chg y-o-y & q-o-q SAAR

Source: BMI, Singstat

Looking ahead, even in the event that inflation remains subdued, we see little impetus for the MAS to ease

its policy basket at subsequent meetings. Generally speaking, the Singapore dollar remains relatively

undervalued relative to its regional peers. At the same time, we do not believe that growth is likely to slow

to the extent that would elicit monetary easing from the central bank, especially as core inflationary

pressures continue to build as a result of other economic policies.

Expenditure Breakdown

Private Consumption: Following a 2.7% performance in 2013, we envisage private consumption

accelerating slightly to 4.0% in 2014. However, risks to this forecast are likely to the downside, as the

nascent correction in the Singapore real estate market may take a bite out of domestic demand. Still,

Singapore's labour market remains sound, and we believe that debt levels are within reasonable bounds.



Public Consumption: We are forecasting government consumption to grow by 4.0% in 2014 following a

3.0% print in 2013. This will largely be powered by ongoing government initiatives aimed at restructuring

the economy away from its dependence on foreign labour, which will require increased spending in some

areas.

Fixed Capital Formation: We expect fixed capital formation to rebound to grow by 4.5% in 2014

following a 2.6% contraction in 2013. The resurgence will be led by the government's investments in new

public transportation infrastructure.

Net Exports: Despite a rough year in nominal terms, exports chalked up moderate real growth of 3.6% in

2013. For 2014, we see the growth of shipments moderating slightly to 3.0%, while import growth will rise

to 3.4%.

Table: Economic Activity (Singapore 2009-2018)

2009 2010 2011 2012 2013e 2014f 2015f 2016f 2017f 2018f

Nominal GDP, USDbn 190.2 233.3 264.2 290.9 293.0 314.7 345.1 371.5 400.1 430.8

Real GDP growth, % y-o-y -0.2 15.1 6.0 1.9 4.1 3.4 3.2 3.3 3.3 3.2

GDP per capita, USD 38,311 45,943 50,884 54,853 54,142 57,037 61,412 64,975 68,845 73,003

Population, mn 5.0 5.1 5.2 5.3 5.4 5.5 5.6 5.7 5.8 5.9

Industrial production, % y-o-y,ave -3.3 29.7 4.8 5.3 6.1 6.0 5.8 5.7 5.6 5.5

Unemployment, % of labourforce, eop 2.3 2.2 2.2 1.8 2.0 2.2 2.2 2.2 2.2 2.2

Source: National Sources/BMI



Industry Risk Reward Ratings

Asia Pacific - Risk/Reward Ratings

BMI's Food & Drink Risk/Reward Ratings assess a market's attractiveness to industry investors in

comparison with its peers. The reward part of the rating takes into account market size, current consumption

levels, future industry growth prospects (based on our five-year industry forecasts), market fragmentation

(with greater fragmentation indicating higher opportunities) and the size of the youth population.

Meanwhile, the risk part of the rating takes into account the legislative environment, the level of

development of the organised retail sector (with higher development leading to lower risks), as well as

relevant aspects of the economic and political environment.

Japan has re-assumed first place in our Q414 ranking over China as our reward score has been slightly

downgraded on the back of slowing economic growth and tightening credit conditions which will impact

household spending growth in 2014. Japan, on the other hand, maintained its largely more advantageous

risk score thanks to higher food consumption per capita, better distributed wealth, more efficient

administration and better infrastructure. Still, we highlight that China is the only growth-positioned market

in the top six. In fact, the country has a much better risk profile than many of the emerging markets (EMs)

covered in the region, while its reward score is similar to the ones of Pakistan and Indonesia. Positions three

to six are filled by the following comparatively mature and by extension well-developed food and drink

markets: Australia, Singapore, South Korea and Hong Kong.

This tells us that even though our ratings are designed to be biased towards growth, with the reward

component accounting for 60% of the overall score, countries like Indonesia, Vietnam and India (ranked

7th-9th) are not yet in a position to break the mature market (top six) axis ex-China. Weak risk scores and

the discrepancy in scores between the higher ranked markets and the chasing markets ultimately outweighs

the impact of the higher reward scores. Pushing up risk scores would require improvements in areas like

mass grocery retail penetration and regulatory environment. Australia and Japan continue to have relatively

strong reward profiles compared with the other mature markets, which means it will be difficult for other

countries to catch them. However, countries such as Singapore, Hong Kong and South Korea are more at

risk from the likes of India, Vietnam and Indonesia in future.



Negative Linear Correlation Apparent

Asia-Pacific Risk/Reward Ratings Q414 (Y-Axis = Reward and X-Axis = Risk)

Source: BMI

Table: Asia Pacific Food & Drink Risk/Reward Ratings Q414

RewardIndustryReward

CountryReward Risk

IndustryRisk

CountryRisk

Food &DrinkRating Ranking

Japan 46.3 32.0 60.7 77.3 80.0 74.5 58.7 1

China 58.3 62.0 54.7 57.8 55.0 60.7 58.1 2

Australia 44.2 36.0 52.3 75.7 75.0 76.3 56.8 3

Singapore 35.7 30.0 41.3 84.0 80.0 88.0 55.0 4

SouthKorea 39.3 38.0 40.7 76.0 80.0 71.9 54.0 5

Hong Kong 38.8 40.0 37.7 75.2 75.0 75.4 53.4 6

Indonesia 60.2 60.0 60.3 39.5 25.0 53.9 51.9 7

Vietnam 55.0 68.0 42.0 45.6 30.0 61.2 51.2 9

India 59.0 54.0 64.0 38.3 20.0 56.7 50.7 10

Thailand 47.7 58.0 37.3 53.1 40.0 66.2 49.8 12

Taiwan 40.3 40.0 40.7 63.5 50.0 76.9 49.6 8



Asia Pacific Food & Drink Risk/Reward Ratings Q414 - Continued

RewardIndustryReward

CountryReward Risk

IndustryRisk

CountryRisk

Food &DrinkRating Ranking

Pakistan 62.2 64.0 60.3 29.8 10.0 49.6 49.2 11

Philippines 49.2 38.0 60.3 45.3 30.0 60.6 47.6 13

Malaysia 43.2 40.0 46.3 53.9 40.0 67.8 47.5 14

Scores out of 100, with 100 highest. The Food & Drink Risk/Reward Rating is the principal rating. It comprises two sub-ratings, 'reward' and 'risk', which have a 60% and 40% weighting respectively. In turn, the 'reward' rating comprises'industry reward' and 'country reward', which have equal weighting and are based upon growth/size of food/alcohol andsoft drinks industry (market) and the broader economic/socio-demographic environment (country). The 'risk' ratingcomprises 'industry risk' and 'country risk', which both have 20% weightings and are based on a subjective evaluation ofindustry regulatory and competitive issues

singapore food and drink report q4 2014

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