BMI's Executive Summary

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As third quarter and full-year financial results for Singapore's leading food and beverage companies begin to drift in, the paradox of the local marketplace is again made clear. The opportunity to make handsome returns on food and beverage investments in Singapore is there; however, the size of the market and its late stage of development mean that only the smallest number of strategically focused firms can reap these rewards.

Singapore falls in sixth place in BMI's new Food and Drink Business Environment Ratings and this placing again highlights the frustration of the market to investors. Economic and political stability, as well as high levels of per-capita GDP and high consumption rates in some major food and beverage categories, all work in Singapore's favour. However, the tiny size of the population – just 4.4mn people – and an absence of medium- and long-term growth opportunities because of market maturity all work against it. To investors interested in the region, Singapore is certainly attractive, with high spending levels and established consumption habits typically providing a satisfactory return on investments. However, with so little market share to go round, few companies can now enter Singapore and hope to harness sufficient consumer interest to warrant the required investment. Even those already established are finding the market tough and are having to operate at the height of their business activity levels in order to remain competitive and protect their market share.

One key development discussed in this quarter's report is the rumoured break-up of beverage major Fraser & Neave (F&N). F&N has refused to comment on rumours that it is to split its business into separate food and beverage, property and publishing companies, and yet the persistence of these rumours is indicative of how difficult it is to successfully operate in Singapore's food and drink sector, let alone while balancing non-core property and publishing interests. Meanwhile, F&N-backed APB, despite committing huge sums to expansion across emerging Indochina, has had to continue to invest in domestic brand building to avoid a renewed assault on its market share from close rival Carlsberg, which last quarter snared APB's Corona distribution agreement.

The challenges of trying to maximise growth opportunities within such a small market mean that market leaders require a strong strategic focus, substantial financial resources and the capacity for innovation; when all come together, Singapore can prove highly lucrative. Singapore Food Industries (SFI) announced its Q307 results in November and the figures make encouraging reading. Despite years of trying to reduce its dependency on Singapore, the country remains SFI's primary growth driver, with sales here increasing by 23.7% over the three-month period to contribute to group Q307 sales growth of 13.4% to US$111.3mn.

Contents

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Chapter 1 – Business Environment

Retail Business Environment Rankings

Table: Asia Pacific Business Environment Rankings

SWOT Analysis

Singapore Food & Drink Industry SWOT

Macroeconomic Outlook

Table: GDP, Population & Output

Chapter 2 – Retail

Regional Overview – Private Labelling in Asia Pacific

Table: Assessment Of Private Label Qualities – By Region

Table: Leading Private Label Categories By Market Share & Annual Growth Rate

Industry Forecast Scenario

Table: Singapore Mass Grocery Retail Indicators - Historical Data & Forecasts By Format

Industry Developments

Company Developments

Market Overview

Table: Structure of Singapore's Mass Grocery Retail Market by Number of Outlets

Table: Structure of Singapore's Mass Grocery Retail Market by Value (US$mn)

Table: Estimated Average Sales (US$mn) per Outlet by Format – 2005

Chapter 3 – Food & Drink

Regional Overview – Dairy in Asia

Table: Per-Capita Dairy Consumption (kg) & Consumption Growth In Selected Asian Markets

Table: Milk Production (000 tonnes) & Production Growth In Selected Asian Markets

Table: Dairy Production (000 tonnes) Forecasts In Selected Asian Markets

Industry Forecast Scenario

Table: Food Consumption Indicators - Historical Data & Forecasts

Company Developments

Market Overview

Table: Singapore Agricultural Sub-Sector Production

Chapter 4 – Tobacco

Industry Forecast Scenario

Table: Cigarette Value/Volume Sales - Historical Data & Forecasts

Industry Developments

Market Overview

Chapter 5 – Competitive Landscape

Key Players

Key Players in Singapore Mass Grocery Retail Sector

Table: Key Players in Singapore's Food & Drinks Sector

Asia Pacific Regional Company Case Studies

AEON in Asia Pacific

Table: AEON Five-year Financials (JPYmn)

Table: Speciality Store Network (as at February 20 2006)

Coca-Cola Amatil in Asia Pacific

Table: Coca-Cola Amatil Five-Year Financials

Table: Coca-Cola Amatil Market Share By Country And By Beverage Sub-sector – As At Year-End 2005

Table: SPC Ardmona Market Share By Product Category

Heineken in Asia Pacific

Table: Heineken – Brands Distributed In The Asia Pacific Region

Table: Contribution Of Asia Pacific Region To Heineken 2005 Financial Performance

Kraft in Asia Pacific

Table: 2005 Kraft Global Facts

Company Analysis

Singapore Food Industries

Petra Foods

Asia Pacific Breweries (APB)

QAF Ltd

Fraser & Neave

Dairy Farm Singapore

NTUC Fairprice

BMI Forecast Modelling

How we generate our industry forecasts

Retail Industry

Sources

Competitive Landscape for Asia Food & Drink Reports: Sample of  
Companies Ranked

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At-a-glance perspective on the strengths, weaknesses, opportunities and threats facing each market’s food & drink industry. BMI also provides similar economic and business environment studies. Company SWOTs (Strengths, Weaknesses, Opportunities, Threats) covering all leading food and drink companies operating in each market, including competitive intelligence on geographic presence and competitive positioning of multinationals against local companies; leading products, services and brands; sales and local market share; foreign direct investment, projects, partners and acquisition strategy. Illustration of the industry via rankings tables comparing revenues, number of outlets, number of employees and registration dates. BMI analyses each company’s performance, market position, strategy and investment potential.

Network of Asain Food Sources

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BMI's Asian Food Reports are based on an extensive network of multilateral organisations, government departments, food industry associations, chambers of commerce and company reports. Information sources include: