laporan market intelligence -...

LAPORAN MARKET INTELLIGENCE

PACKAGED FOOD IN SINGAPORE (EXPORT OPPORTUNITY ASSESSMENT IN SINGAPORE)

KERJASAMA

ATASE PERDAGANGAN RI SINGAPURA DENGAN

INTERCEDENT ASIA

KEDUTAAN BESAR REPUBLIK INDONESIA SINGAPURA, NOPEMBER 2015

Intercedent Asia

2 Table of Contents

For: Ministry of Trade, Government of Indonesia

Table of Contents

3 Executive Summary 4 Chapter 1 – Introduction & Background 4 Indonesia’s Packaged Food Exports 6 Indonesia’s Food Manufacturing Industry 7 Indonesia’s Packaged Food Brands 9 Chapter 2 – Market Information & Trends 9 Singapore Market Size and Growth 11 Product Demand Trends 13 Retail Trends 15 Foodservice in Singapore 18 Packaging Trends 20 Chapter 3 – Singapore Trade in Packaged Foods 20 Singapore Packaged Food Imports 21 Singapore Foods Imports by Product 22 Singapore Packaged Food Exports 23 Chapter 4 – Indonesia’s Competitive Position 23 Indonesia in the ASEAN Context 27 Indonesia’s Brand Presence – Retail 30 Leading Packaged Food Brands in Singapore 32 Local Packaged Food Competition 34 Chapter 5 – Regulatory Environment 34 Import Tariffs and Non-tariff Barriers 35 Import Regulations 37 Environment, Social Health and Safety Requirements 39 Labelling and Packaging Requirements 42 Certification Organisations 43 Chapter 6 – Distribution Channels 43 Importers & Distributors of Indonesian Foods 44 Distributors of Malaysian and Thai Foods 45 Pricing & Payment Terms 47 Chapter 7 – Market Entry Advice 47 Packaged Food Exhibitions 48 Packaged Food Importers & Distributors 49 Product Differentiation & Value Proposition 49 Halal Packaged Food Products 49 Singapore Opportunity Heat Map

Appendix I: HS Codes for Indonesia’s Main Packaged Food Exports

Intercedent Asia

Executive Summary 3


Executive Summary

Enjoying high disposable incomes, Singapore is one of the most developed food markets in Asia. Being a tiny island nation lacking agricultural land, Singapore is highly dependent on imported food. Singaporeans spend more on food products compared to neighbouring countries and Singapore has a highly developed modern retail sector and relatively large food service industry. Its small F&B manufacturing industry is unprotected by import duties. The country is recognised as a trendsetter and an important gateway to the region; besides being a market in itself Singapore can be a strategic entry point for Indonesian exporters looking to tap other faster growing ASEAN markets.

Singapore’s multi-ethnic demographic profile, large expatriates workforce and significant tourism industry influences the local food culture, integrating a variety of regional and international cuisines. The market entry cost is relatively high. The retail and foodservice market is highly competitive and not easy to penetrate. Poorly differentiated Indonesian products unsupported with marketing activities will face challenges in gaining market presence.

High food import dependency

Open economy with no tariffs

Easy to do business

Strong Indonesia export growth

Major foodservice market

Appetite for new, Asian flavours

Singapore as gateway to ASEAN

Ready-to-eat, confectionary, healthy, impulse and premium products

Strengths

Recent immigrated led population growth is over

Small market logistical challenges

Price sensitive mature market

Strict regulatory environment

Competitive retail and food service industry

Imports from (a) Malaysia (land access); (b) Thailand (scale)

Opportunities

Weaknesses Threats

Singapore Packaged Food Market SWOT

Intercedent Asia

4 Chapter 1. Introduction & Background


Chapter 1

Introduction & Background

The Indonesian government aims to increase exports of its agriculture-based products, including processed food. This report assesses the challenges and opportunities for Indonesian packaged foods in Singapore’s market. In this initial chapter, Indonesia’s food and beverage export capabilities are assessed with a view to determining the higher potential packaged foods for the Singapore market.

Indonesia’s Packaged Food Exports

Indonesia’s Food Manufacturing Industry

Indonesia’s Packaged Food Brands Indonesia’s packaged food exports to global markets have been growing rapidly in US$ terms, more than doubling since 2009 and registering an annual average growth rate of 18.5% (2010-14).

824 939 1,013 1,249

1,907 1,646

2,042

3,182 3,317 3,288

3,841

0

1,000

2,000

3,000

4,000

5,000

2004 2006 2008 2010 2012 2014

US$

mill

ion

s

Indonesia's Packaged Food Exports to the World

Source: UN Comtrade Note: HS Codes 1517, 16, 1704, 1806, 19, 20, 21

2010-14 CAGR | 18.5%

Indonesia’s Packaged Food Exports

Intercedent Asia

Chapter 1. Introduction & Background 5


The total value of Indonesia food product exports (HS 1517, 16, 1704, 1806, 19, 20, 21—see Appendix 1 for descriptions) in 2014 was US$3.84bn. Singapore is a significant export market for Indonesia’s packaged food products, ranking 7th among export destinations by value, ahead of countries such as Australia and South Korea.

Indonesia produces and exports a wide variety of packaged foods. Leading products include edible oils, processed/canned fish such as tuna and prawns, biscuits, noodles, confectionary and sauces. These products are the ones in which Indonesia has an evident comparative advantage. They are the focus of this report (see table below). Within ASEAN, Singapore, despite its relatively small size, is often a leading destination for Indonesia’s exports. By way of example, Indonesia total global exports of sauces, condiments, seasonings amounted to US$103 million in 2014 1 ; within ASEAN, Malaysia was Indonesia’s strongest export market for sauces, condiments and seasonings—followed by Singapore.

1 UN Comtrade data

14

16

17

18

24

46

46

57

98

121

157

176

389

414

659

900

Canada

Brazil

New Zealand

India

Mexico

Hong Kong

Russia

Korea

Australia

SINGAPORE

Saudi Arabia

Japan

China

EU

USA

ASEAN (ex. Sing)

Indonesia's Packaged Food Exports by Country US$million in 2014

Source: UN Comtrade Note: Indonesia leading food export categories: HS 1517, 16, 1704, 1806, 19, 20, 21; Other markets: US$689m

Total export value in 2014

US$3.84bn

Intercedent Asia



Source: UN Comtrade ASEAN countries: Singapore (SG), Malaysia (MY), Philippines (PH), Thailand (TH), Myanmar (MM), and Vietnam (VN).

Indonesia has strong food and beverage manufacturing capabilities. In 2013, Indonesia had more than 5,000 food manufacturing establishments classified as medium to large factories (having more than 20 employees). The output value of these enterprises was worth over IDR500trn.

Packaged Food Indonesian Exports (US$m), 2014 Indonesia Exports to ASEAN

Edible oils

Tuna, etc.

Miscellaneous food preparations

Shrimps and pawns

Biscuits (sweet)

Pasta (noodles)

Pineapple, prepared or preserved

Waffles and wafers

Sugar confectionery

Sauces, condiments, seasonings

Margarine

Baking preparations

Chocolate and preparations

Cereal related preparation

Other prepared fish

Ice Cream

Milk/Cream

Soya Sauce

Ground nuts, prepared or preserved

Soups Preparations

Tomato Ketchup

695

312

303

260

215

212

166

140

132

103

83

61

45

40

40

23

17

14

11

6

2

SG MY PH TH MM VN

Indonesia’s Food Manufacturing Industry

Intercedent Asia

Chapter 1. Introduction & Background 7


Indonesia’s Packaged Food Manufacturing Establishments, 2013

HS Code Establishments Output (Rp bn)

Processing/preserving of meat 101 68 1,552 Processing/preserving of fish 102 1,140 23,394 Processing/preserving of fruit/vegetables 103 234 4,761 Veg and animal oils and fats 104 738 418,467 Dairy products 105 50 11,933 Grain mill products and starches 106 733 39,059 Bakery products 1071 597 9,645 Sugar 1072 144 28,096 Cocoa, chocolate and sugar confectionary 1073 75 7,010 Noodles, etc. 1074 275 8,249 Prepared meals and dishes 1075 71 1,009 Other food products, nec 1079 1,089 5,755

Note: establishments with at least 20 employees; output data (2011) Source: Intercedent Asia, Corporate Demographics, UNIDO

Strong competition at home, from multinationals such is strengthening Indonesia’s export competitiveness. Large local manufacturers, for instance Indofood Sukses Makmur, are leveraging their competitive advantages in of low production costs, distribution management, strong marketing capabilities and economies of scale. Over time and in part due to the rise of strong local brands (e.g. GarudaFood’s Sedaap, Indofood’s Indomie and Roma’s biscuits; see below) as well as natural comparative advantages in certain aspects of agri-food production, Indonesia has developed some specific packaged product strengths. According to a recent survey, nine of ten of the leading consumer brands belong to Indonesian companies.2 The Top Brand Awards for Indonesia Food and Beverage Local Brands in 20153 identified strong local food brands in a wide range of product categories: nuggets, sausages, ice cream, chocolate sparkle, cereal, jam, seasonings, fried chicken flour, chocolate bars, syrup, bread, beer, bubble gum, chips, cassava product, canned fruit, processed fish, instant porridge, soy milk, snack bars, biscuits, oatmeal, instant noodles and candy. Many of these home grown products are now being exported to other parts of the Asian region and beyond.

2 Kantar Worldpanel Indonesia, 2013 3 www.topbrand-award.com/

Indonesia’s Packaged Food Brands Manufacturing

Intercedent Asia



Top Packaged Food Brands in Indonesia

Product Leading brands

Nuggets Fiesta, Champ, So Good

Sausage So Nice, Champ

Snack bar Soyjoy, Fitbar

Sandwich cookies Oreo , Slai O'lai

Ice cream Wall's, Campina

Chocolate Silverqueen, Delfi

Breakfast cereal Energen, Koko Krunch

Jam Morin, Srikaya, Ceres

Candy Kopiko, Relaxa, Kiss

Seasonings Royco, Masako,Sasa

Canned sardines ABC, Botan, Gaga

Biscuits Roma, Khong Guan, Biskuat

Instant noodles Indomie 75.9%, Mi Sedaap

Cup noodles Pop Mie, Mi Sedaap Cup, ABC

Chile sauce ABC, Indofood

Soya Sauce Cap Bango,ABC

Cooking oil Bimoli, Filma, Sania Note: based on 7-city survey of awareness, last use and intention to buy. Source: www.topbrand-award.com/

Intercedent Asia

Chapter 2. Market Information & Trends 9


Chapter 2

Market Information & Trends

Chapter 2 considers the following aspects of market intelligence:

Singapore Market Size and Growth

Product Demand Trends

Retail Trends

Foodservice in Singapore

Packaging Trends Singapore’s 5.5m citizens spent about US$1,800 per person on food and beverages in 2014. The country’s affluent but small urban population represents a mature and increasingly saturated packaged food market. Spending on food and beverages surpassed the S$10bn mark for the first time in 2014 (see below). Nonetheless, Singapore is a much smaller packaged food market than a number of other developed and developing Asian countries, such as China, Japan and South Korea. Singapore Market Profile Country Indicators

GDP1 US$296.1 billion 2015

Per Capita GDP1 US$53,604 2015

Real GDP Growth2 2-2.5% 2015

Population1 5.52 million 2015

Ethnicity3 74% Chinese; 13% Malay; 9% Indian

Packaged Food Market Indicators

Private consumption of F&B4 S$10.0 billion 2014

Tourist spending on F&B5 S$2.3 billion 2014

Foodservice F&B purchases4 S$2.5 billion 2014

Market Growth Rate4 ~2-3% p.a. outlook

Singapore Market Size & Growth

Intercedent Asia

10 Chapter 2. Market Information & Trends


Sources: 1. IMF World Economic Outlook Database, April 2015 2. Ministry of Trade and Industry (MTI), Aug 2015 3. Singapore Dept of Statistics, Demographics of Singapore 2014 4. Singapore Dept of Statistics, Statistical Yearbook 2014 5. Singapore Tourism Board

Singapore’s strong tourist industry is also an important driver of food demand. According to the Singapore Tourism Board, tourists spent S$2.26m in 2014 on food and beverages alone. Singapore has a strong tourism infrastructure, its 134 hotels (end year 2014) providing 14.2m available room nights.

Singapore’s affluence and high level of food consumption per head will constrain future market growth rates. Most forecasters predict modest growth in packaged food sales in coming years with the sales growth rate

7,901

8,191

8,404

8,944

9,529

9,952 10,035

7,800

8,300

8,800

9,300

9,800

10,300

2008 2009 2010 2011 2012 2013 2014

Singapore Private Consumption Expenditure on F&B

Source: Dept of Statistics, Singapore

1,848

1,512

1,903

2,239 2,246 2,294 2,263

2008 2009 2010 2011 2012 2013 2014

Singapore Food & Beverage Tourist Receipts in S$million

Source: Singapore Tourism Board

1%

0.1%

3. %

4%

2% -1%

Real Growth

Current market prices

Intercedent Asia



will largely be determined by the size of the resident population, which in turn depends on government policy on immigration and foreign workers. In addition to relatively slow growth—which tends to make market entry all the more difficulty—Indonesian exporters must also contend with the dichotomy of wealthy consumers, who are still very price sensitive. The rapid pace of development and progress has dramatically increased the cost of living and doing business in Singapore, and many food retailers and food establishments are in survival mode. Many consumers are also quite price sensitive when making food purchase decisions. Over the long term, Singapore's positive long-term economic outlook and increasing inbound tourism will ensure that domestic food and beverage consumption remains high. Key product categories

Confectionery sales in Singapore, estimated to be around US$300m in 20144, are expected to grow modestly. Singaporean consumers like new and innovative confectionary products, for which they are willing to pay a premium. Although there is good potential for Indonesian confectionery, the new emphasis appears to be moving towards healthier, functional varieties that have less sugar and more natural ingredients. As consumers become more aware of the benefits of snacking healthily and in moderation, manufacturers are adapting their confectionery offerings.

Fish products are one of the most consumed foodstuffs in Singapore, with high consumption of seafood per person (over 27 kg per person in 2012). Frozen fish sales exceed preserved fish sales, but the latter are expected to grow faster. Processed fish and seafood is mainly imported from neighbouring countries like Indonesia, Malaysia and Vietnam.

Impulse and indulgence products (excluding confectionery). Singaporeans’ heightened awareness of healthy eating habits may restrict the growth of many impulse and indulgence products in coming years. These products are perceived as affordable luxuries in Singapore; consumers buy them to pamper themselves or as a reward for hard work. Leading products by sales in 2014 include pastries (S$60m), cakes (S$74m), biscuits (S$223m), ice cream (S$138m), and sweet and savoury snacks (S$126m)5.

Prepared meals. A hectic lifestyle and disinterest in cooking, as well as limited cooking ability is pushing consumers to buy quick meal solutions. Preferred prepared meals are those that promise ease of preparation and simple packaging and instructions. Some Asian dishes require many ingredients which consumers do not want to seek out. Key categories include: ready meals, canned/preserved foods, chilled processed foods and sauces.

4 Euromonitor 5 Euromonitor

Product Demand Trends

Intercedent Asia



Health and wellness products. The interest in health and wellness is not new to Singapore and consumers are becoming even more sophisticated about the types of health food they eat. Looking beyond the Health Promotion Board’s (HPB) Healthier Choice labels, many consumers have more medical knowledge and are taking their health food more seriously. Importers and manufacturers are responding by offering reduced fat and reduced salt products and more products are available in wholegrain, gluten-free and natural variations. The organic trend is also strong across all packaged food, such as organic spreads and honey, pasta, condiments, snacks and rice. Manufacturers are adding nutrients for positive health benefits.

Premium products. With more upscale fine-dining restaurants and upgraded hawker centres, consumers do not mind paying a little extra for premium and novel products. Singaporeans want food that is more superior in quality, for example fewer preservatives but richer taste. The rise of social media has accelerated the ‘foodie’ trend. Manufacturers and importers are trying to meet these changing tastes by launching premium products, such as cereals with added fruit and gourmet instant noodles.

13

16

21

51

53

80

93

103

103

105

125

126

138

238

298

444

472

647

931

Snack Bars

Soup

Meal Replacement

Spreads

Ready Meals

Chilled Processed Food

Sauces, Dressings and Condiments

Oils and Fats

Noodles

Frozen Processed Food

Canned/Preserved Food

Sweet and Savoury Snacks

Ice Cream

Baby Food

Confectionery

Dried Processed Food

Meal Solutions

Bakery

Impulse and Indulgence

Sales of Packaged Food in Singapore by Category, 2014 S$million

Source: Euromonitor

Intercedent Asia



Unique features of Singapore’s grocery retail scene are: (1) high disposable income; (2) small city-state population and land area; (3) a strong preference to eat out or eat on-the-go; and (4) shopping as a leisure activity. In recent years, shopping habits in Singapore have also been influenced by the rapid expansion of shopping malls in sub-urban areas and by general changes in affluence and lifestyle. Together, these trends have transformed grocery shopping from what was once simply a matter of necessity to a recreational, family activity. Modern grocery retailing

Singapore's modern grocery retail industry is already mature. It is also an increasingly competitive, despite the financial stability and strong spending power of the Singaporean consumer. Because of the near saturation of retail market, and its relatively small geographic size and population base, Singapore holds little attraction for new retail entrants (some global retail companies have withdrawn from the market, most recently Carrefour). The industry continues to be dominated by a small number of retail heavyweights.

Key Players in Singapore’s Mass Grocery Retail Sector

Parent Company Sales

1

(US$ million) Outlet Format

Number of Outlets

NTUC FairPrice 2,279.8

NTUC FairPrice Supermarket 94

Cheers Convenience Store 124

FairPrice Express Convenience Store 23

Xtra Hypermarket 4

Finest Supermarket 7

Dairy Farm International

11,008.3

Cold Storage Supermarket 105

Market Place Supermarket N/A

Shop ‘n’ Save Discount Supermarket N/A

Giant Hypermarket 7

7-Eleven Convenience Store 549

Sheng Siong 544.3 Sheng Siong Supermarkets 37

Source: BMI Note: 1 2014 data or latest year

Local Supermarket Chains NTUC FairPrice is Singapore's leading food retailer with close to 300 outlets, including hypermarket, supermarket and convenience formats. It its own fresh-food distribution centre and centralised warehousing as well as distribution arm (see Distribution chapter). It was the first Singaporean retailer to introduce self-scan technology in February 2014. http://www.fairprice.com.sg/

Retail Trends

Intercedent Asia



Sheng Siong Group, another leading retailer, operates 37 stores using competitive pricing to appeal to the low-to-middle income consumers. It also accents convenience with most of its stores open 24 hours. http://www.shengsiong.com.sg/ Giant was founded 1944 and developed its reputation low to middle income consumers. Its stores mushroomed to a total of more than 61 stores including Giant Express, Giant Supermarket and Giant Hypermarket. http://www.giantsingapore.com.sg/ As competition intensifies, retailers must gain market share in order to grow rapidly. This strategy may impact Indonesian exporters as retailers will want to stock their shelves with popular products. For the modern grocery format chains, so-called “premiumization” will be a continuing trend, with supermarket retailers to continue expanding their in-store product offerings. Convenience stores Convenience stores are numerous being well adapted Singaporeans hectic urban lifestyles. Dual-income families are already the norm in Singapore, and for these households 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 convenience store scene is dominated by chains owned by NTUC FairPrice (Cheers and FairPrice Express), and Dairy Farm International's 7-11 stores. The stores sell mostly imported packaged products, including a small number from Indonesia (e.g. Captain’s Table tuna). Service station convenience stores providing a wide range of products are also popular among drivers. Provision stores The Singaporean market also includes many small family-owned provision stores. While these shops charge lower prices than supermarkets or convenience stores, their share of the grocery market declined in recent years, as Singapore urbanites perceive shopping as a leisure activity. Singapore also has wet markets, run under the auspices of the Housing & Development Board, the Ministry of Environment and the Jurong Town Corporation.

Intercedent Asia



Internet Grocery Retailing Home delivery by provision stores and supermarkets has long been a feature of Singapore’s grocery market and it is therefore no surprise that Internet retailing has gained traction. According to Euromonitor, the sudden growth in online grocery shopping can be attributed to several factors: (a) the rising usage of mobile devices; (b) insufficient time for consumers to physically visit stores; and (c) familiarisation with and growing trust in online purchasing. Albeit from a low base, in 2014 online retailers such as Giant Online, and FairPrice Online have reported a rapid uptake in online sales. Warehouse and delivery infrastructure have improved due to technological advancements, enabling the stocking of fresh food. With more products online, consumers are more inclined to do their entire grocery shopping over the Internet. Packaged food also represents the bulk of sales because these products do not need to be handled, unlike fresh food. Only 1.6% of packaged food was bought from online retailers in 2014, which leaves plenty of room for further growth.

Singaporeans spend around S$8.3bn each year on eating out, a figure that has been rising by about 5% per year.6 In 2013, there were about 6,750 establishments in the food and beverage (F&B) services industry, an increase of 1.2% 2012. Restaurants accounts for the largest number of outlets by type with 2,480 or 37% of the total number of food service establishments. There are 453 fast food outlets and 374 catering companies in Singapore and 3,444 other establishments (including cafes, snack bars, food courts, pubs/bars, canteens). Singapore’s foodservice industry received a boost from the opening of the two integrated resorts and shopping centres, which provided more space for new players to enter the market, and for existing players to expand. The number of outlets is likely to continue growing albeit at a slow pace as the expansion of the resident population and growth in tourist arrivals slows in coming years. At the same time, foodservice outlets will evolve and adapt to consumers’ changing lifestyles by adopting new in-store concepts and product positioning. Consequently, the value of packaged food sold to the foodservice industry will continue to climb. Annual spending on food and beverages by foodservice operations in Singapore is an impressive S$2.5bn, based on a 2013 survey of food service establishments (see below).

6 Key Indicators of Food & Beverage Services, 2013 – Singapore Department of Statistics

Foodservice in Singapore

Intercedent Asia



Singaporeans typically work long office hours; one in five working more than 11 hours a day, and many continuing to work even after they get home. This work-life imbalance makes spending time buying groceries and preparing meals at home very troublesome. Singapore consumers are therefore increasingly dining out and dining in cafes, food stalls and restaurants or purchasing food on-the-go is becoming more frequent. With rising discretionary income, this trend is also feeding into the premium end of the foodservice market.

Structure of Singapore's Food Service Industry (No. of Establishments)

Source: Dept of Statistics, Singapore Note: 1. Cafes, snack bars, food courts, pubs/bars, canteens, etc.

Restaurants

2,480 (37%)

Other Food Service 1

3,444 (51%)

Fast Food Outlets

453 (7%)

Caterers

374 (6%)

F&B Spending by Food Service Operations, 2013

Source: Dept of Statistics, Singapore Note: 1. Cafes, food courts, pubs/bars, canteens, etc.

Restaurants

S$1,003m

Other Food Service 1

S$1,003m

Fast Food Outlets

S$251m

Caterers

S$338m

Intercedent Asia



93% of Singaporeans in a 2014 survey7 said they are passionate about food, but few of them are confident of their cooking skills. The majority of respondents (46%) feel that 'limited' best describes their ability in the kitchen, a further 19% claim to be 'culinary disasters'. It is more palatable for these bad cooks to simply dine out instead of trying to prepare elaborate meals at home, hence the decline in home-cooking boosts the patronisation of foodservice outlets. Alternatively, the exposure to international cuisine as well as gourmet food is producing a ‘foodie’ culture that inspires consumers to try their hand at cooking at home, often using ready-to-cook or ready-to-serve packaged food. Singapore consumer are coming to rely more on packaged food and ingredients to hasten their food preparation and cooking time. MNCs such as Nestle, are focused on “creating ingredients that save preparation time in the kitchen to boost productivity, without compromising on flavour or flair”. Packaged food trends in foodservice

Packaged food will further penetrate the foodservice market. Foodservice outlets cannot meet consumers’ expectation for fast service using in-store cooking and preparation. Hence, convenient packaging, ready-to-cook packaged food and products in international flavours will be in demand in foodservice as well as retail outlets.

Consumer tastes are becoming more premium. Artisanal bread, cakes and pastries (meaning hand crafted) exemplify this premium trend. However, not all foodservice outlets are able to hand-make their baked goods in store, therefore they purchase the products from elsewhere.

Singaporeans often prioritize the visual over taste as all notable meals are photographed and shared using social media.

Total Number of Food Service Establishments in Singapore

7 Electrolux Asia Pacific Food Survey 2014

5,854 5,969

6,181

6,464

6,672 6,751

2008 2009 2010 2011 2012 2013

Total Number of Food Service Establishments in Singapore

Source: Dept of Statistics, Singapore

2008-13 CAGR | 3%

Intercedent Asia



High demand foodservice products categories are as follows (2014)8:

Dried processed food: 82,300 tonnes

Bakery products: 42,300 tonnes

Oils and fats: 41,700 tonnes

Frozen processed food: 23,700 tonnes

Canned/preserved food: 17,000 tonnes

Ice cream: 16,500 tonnes

Sauces, condiments: 16,200 tonnes

The higher growth foodservice categories are: frozen processed food, noodles, impulse products, sauces and condiments, and meal solutions. New trends in packaging include innovations designed to reduce packaging cost and waste, use sustainable biodegradable packaging materials and create more flexible packaging options. Singapore is home to ~250 packaging companies9 and wants to position itself as a centre of innovation for the materials used in packaging as well as packaging design. Leading institutes in this regard are the Materials Centre of Innovation (within the Institute of Materials Research and Engineering) and the Food & Innovation Resource Centre10. Another useful resource is the Packaging Council of Singapore.11 Smaller pack sizes are in demand in Singapore as household size continues to contract and demand for convenience grows. Singapore’s busy consumers, when not eating out at restaurants or hawker centres, prize home cooking convenience and want to minimize time spent on food preparation. Hence growing demand for ready-to-eat meals. Consumers also want compact packaging, so that snacks can easily fit into school bags or office backpacks. They should be re-sealable to maintain freshness. There is also growing concern for the environment and hence more recyclable packaging. Some local manufacturers are also becoming more environmentally conscious and minimising packaging to reduce waste. Indonesia exporters should therefore consider flexible re-sealable packaging options, especially for snack foods. The convenience theme in packaging innovation extends to ease of use. Singaporeans’ frenetic lifestyle is expected to drive the need for convenient packaging as consumers remain too busy to cook at home. For this reason, ingredients in ready simple-to-cook formats will be preferred. Retailers are also moving to smaller value pack sizes to appeal to cost conscious consumers. One tactic, especially employed in the convenience

8 Euromonitor estimates 9 Spring Singapore 10 www.a-star.edu.sg/imre; www.firc.com.sg 11 www.packaging.org.sg/

Packaging Trends

Intercedent Asia



store channel, is to cut pack sizes while maintaining unit prices. This gambit can also result in excess packaging to maintain the illusion of more generous pack size. The demand for food in small portions that can be finished in one sitting is likely to increase. Many packaged food companies such as Bon Café International, Nestle, F&N Foods, have signed up to the Singapore Packaging Agreement12 (SPA), a joint initiative by government, industry and NGOs to reduce packaging waste, which constitutes one-third by weight of land-scarce Singapore’s domestic waste.

12 www.nea.gov.sg/energy-waste/3rs/singapore-packaging-agreement

Intercedent Asia

20 Chapter 3. Singapore Trade in Packaged Foods


Chapter 3

Singapore Trade in Packaged Foods

High packaged food product opportunities into the Singapore market include baking preparations, waffles and wafers, milk and cream and cereals. Sauces/condiments and chocolate products are also leading product categories by total value. Singapore imports over S$100m annually of ‘other food preparations’, chocolate and chocolate preparations’, baking preparations’ and milk/cream. Trade trends examined in chapter 3 include:

Singapore Packaged Food Imports

Singapore Foods Imports by Product

Singapore Packaged Food Exports With almost no farming land and limited fishing grounds, Singapore is heavily dependent on food imports. Over 90% of the city-state’s food is imported from overseas. Local farms can produce only a small amount of the food that Singapore eats: 8% of vegetables, 8% of fish and 26% of eggs. Major sources of food supply include Australia, New Zealand, the US, Brazil and especially the Asian region, including near neighbours Thailand and Malaysia. Being a major transhipment port and a significant F&B manufacturing and foodservice and tourism hub, demand for packaged food has been growing strongly in recent years, up 11.2% per year (CAGR, 2010-14). Previously, import demand for packaged food was underpinned by Singapore’s substantial population growth, up 17.8% in the five year period from 2006 to 2011 to reach a total of more than 5 million. Population growth was mainly driven by a very welcoming immigration policy, leaving Singapore with a much higher proportion of foreign residents than its neighbouring Asian countries.

Singapore Packaged Food Imports

Intercedent Asia

Chapter 3. Singapore Trade in Packaged Foods 21


This diverse demographic background has also influenced the local culinary culture, integrating a variety of regional and international cuisines. Moving forward, the rate of population growth will slow down as the government limits immigration in response to public disquiet about overcrowding. This in turn will constrain import demand growth for packaged food. Singapore imports many types of package food. The fastest growing food import categories (2010-14), aligned with Indonesia’s strength in exports, are: (1) baking preparations; (2) waffles and wafers; (3) milk and cream; (4) cereals; and (5) prepared/preserved pineapple. Singapore’s largest imports by value in relation to packaged food are,

Other food preparations—a catch-all miscellaneous category

Chocolate and other food preparations containing cocoa—as used in manufacturing and foodservice

Baking preparations—driven by the expansion of artisanal and other bakeries

Sauces and preparations—for retail use and for us in quick service and other restaurants

Sweet biscuits Some identifiable proportion of these imports will either be used in the local food processing industry or perhaps re-exported to regional markets (see Singapore Packaged Food Exports below). Hence, import demand growth may reflect more than increasing local consumption.

931

647 798 857

1,011 1,161

1,590

1,763

2,203

2,521

0

500

1,000

1,500

2,000

2,500

3,000

1996 1998 2000 2002 2004 2006 2008 2010 2012 2014

US$

mill

ion

s

Singapore Imports of Packaged Food, 1995-2004

Source: UN Comtrade

2010-14 CAGR | 11.2%

Singapore Food Imports by Product

Intercedent Asia

22 Chapter 3. Singapore Trade in Packaged Foods


Source: UN Comtrade; HS Codes 1517, 16, 1704, 1806, 19, 20, 21

Owing to the country’s limited market size, Singaporean food processors usually want to expand abroad. For Singapore manufacturers to grow, they need to move beyond domestic operations and become a regional player—although the domestic market will remain an important profit centre also. Singapore’s exports of food products reached S$8.2bn in 2014, almost doubling in value since 2009 (see table below).

Merchandise Exports by Commodity Section

In S$ million 2008 2009 2010 2011 2012 2013 2014

Food 4,903.8 4,718.2 5,455.3 6,663.2 6,230.0 7,063.7 8,231.7

Coffee, tea, cocoa, spices & manufactures

1,240.4 1,183.6 1,322.5 1,905.4 1,445.3 1,394.7 1,718.4

Fish, seafood & preparations 544.5 446.3 502.7 505.1 445.0 409.6 406.8

Vegetables & fruits 306.5 270.6 307.8 396.5 388.8 411.6 459.6

Source: International Enterprise Singapore.

473

255

126

108

106

80

70

69

50

43

41

36

27

24

23

18

12

12

11

11

10

Other food preparations


Baking preparations

Milk/Cream

Sauces and preparations

Biscuits (sweet)

Other prepared fish, nes

Sugar confectionery

Shrimps/prawns, prepared or…

Cereal related pereparations

Ice Cream

Pasta (noodles)

Waffles and wafers

Edible oils

Soups and Preparations

Ground nuts, prepared or preseved

Tomato ketchup/sauces

Tunas, etc.

Margarine

Pineapple, prepared or preseved

Soya Sauce

Singapore Total Imports of Packaged Food by Product, 2014

Imports Value (US$ million)

2009-14 CAGR

8%

10%

-0.2%

8%

1%

7%

-0.2%

18%

17%

2%

7%

11%

9%

8%

3%

10%

10%

14%

37%

14%

15%

Singapore Packaged Food Exports

Intercedent Asia

Chapter 4. Indonesia’s Competitive Position 23


Singapore imports most of its packaged food from the ASEAN countries (see Chapter 4 for more on ASEAN’s role). The EU is particularly strong in baking goods, waffles and wafers as well as chocolate products. Japan is strongest in soups and sauces; Australia in Margarine and milk products and to a lesser extent in tomato sauce and seafood. China also has a significant presence in a range of product categories—most prominently in packaged nuts, soya sauce and shrimps and prawns.

Source: UN Comtrade; UN Comtrade; HS Codes 401, 151710, 151790, 160414, 160420, 160520, 1704, 1806, 1901, 190230, 1904, 190531, 190532, 200811, 200820, 210310, 210320, 210390, 2104, 2105, 2106

Milk/cream

Margarine

Edible oils

Tunas, etc.

Other prepared fish, nes

Shrimps/prawns, prepared or preserved

Sugar confectionery


Baking preparations

Pasta (noodles)

Cereal related pereparations

Biscuits (sweet)

Waffles and wafers

Ground nuts, prepared or preseved

Pineapple, prepared or preseved

Soya sauce

Tomato ketchup/sauces


Soups and Preparations

Ice cream

Other food preparations

Singapore Total Imports of Packaged Food by Country, 2014

EU ASEAN US China Australia Japan Other

Singapore Packaged Food Imports by Country

Intercedent Asia

24 Chapter 4. Indonesia’s Competitive Position


Chapter 4

Indonesia’s Competitive Position Malaysia, due to its proximity and land access, and Thailand, due to its sheer scale of export production have much larger shares of the Singapore Packaged food market than does Indonesia. Key issues reviewed in chapter 3 include:

• Indonesia in the ASEAN Context • Indonesia’s Brand Presence – Retail • Local Packaged Food Competition

Among the major ASEAN countries, Indonesia ranks a distant second to Thailand as a net exporter of packaged food (balance of exports less imports). In 2014, Thailand’s packaged food exports, as defined by HS codes listed below, contributed more than US$10bn to the country’s merchandise trade and balance of payments. This export scale provides Thailand with a strong competitive advantage.

ASEAN’s Packaged Food Trade Balance 2014

Country Net exports (US$m)

1 Thailand 10,035

2 INDONESIA 2,479

3 Vietnam (2013) 1,729

4 Malaysia 1,312

5 Philippines 81 Source: UN Comtrade; Note: HS codes 1517, 16, 1704, 1806, 19, 20, 21

Singapore imports large volumes of packaged foods from ASEAN. However, Indonesia’s share of Singapore’s imports of packaged food products is quite small across almost all the product categories.

Indonesia in the ASEAN Context

Intercedent Asia



Singapore imports of all types of packaged food from Malaysia have risen sharply since the turn of the century. However, over the past 5 years, imports of package food from Indonesia (14% CAGR, 2010-14), Vietnam and the Philippines have grown much more rapidly.

6 10 3 7

6 2

0.8 2 3

2 0.3 0.5 0.3

8 0.1

3 1.2 0.3 0.5 0.03

51 46 45

37 34 33

24 21 19 19

15 11 11

3 9

6 7 7 5 4

Shrimp/Prawns, preparationsOther prepared fish, nesSauces and preparations

Milk/CreamBiscuits (sweet)

Chocolate and preparationsBaking preparationsPasta (incl. noodles)Sugar confectionery

Ice CreamCereal related preparation

Tuna, etc.Edible oils

Pineapple, prepared or presevedSoups and preparations

Waffles and wafersGround nuts, prepared or preseved

MargarineSoya Sauce

Tomato Ketchup

Singapore Imports of Packaged Food from ASEAN, 2014 in US$million

From Indonesia

From ASEAN (incl

Malaysia, Philss, Thailand, Myanmar, Vietnam)

Source: UN Comtrade

0

100

200

300

400

500

600

1996 1998 2000 2002 2004 2006 2008 2010 2012 2014

US$

mill

ion

s

Singapore Imports of Packaged Food from ASEAN Countries, 1995-2004

Source: UN Comtrade; Note: HS codes 1517, 16, 1704, 1806, 19, 20, 21

Malaysia Thailand Indonesia Viet Nam Philippines

10-14 CAGR

14%

7%

8%

13%

13%

Intercedent Asia



The following analysis of selected products (processed fish, confectionary, sauces/condiments/seasoning and pasta (noodles) reveals the following trends:

Indonesia usually ranks 3rd or 4th as an exporter of these products to Singapore, behind Malaysia and Thailand

Malaysia is far and away the most successful exporter to Singapore across all these packaged food products

The Philippines and Vietnam have yet to achieve the same market penetration as Indonesia.

SINGAPORE IMPORTS: 2014 Processed Fish

Imports

from ASEAN (US$ m)

Imports from ASEAN

(% share)

Imports from ASEAN

CAGR (2011-14)

Philippines 2.5

13.8%

Thailand 19.0

-1.8%

Vietnam 16.1

11.3%

Malaysia 31.0

-1.0%

INDONESIA 10.7

0.2%

Note: HS1604 – processed fish

Imports of processed fish from Vietnam and the Philippines have been growing strongly, albeit from a much smaller base.

SINGAPORE IMPORTS: 2014 Confectionary

Imports

from ASEAN (US$ m)

Imports from ASEAN

(% share)

Imports from ASEAN

CAGR (2011-14)

Philippines 1.3

18.8

Thailand 3.3

-4.4

Vietnam 0.9

-2.4%

Intercedent Asia



Malaysia 13.3

7.2%

INDONESIA 2.9

-6.3%

Note: HS 1704 – sugar confectionary

In recent years, Malaysia has consolidated its position as the dominant ASEAN supplier of sugar confectionary to the Singapore market.

SINGAPORE IMPORTS: 2014 Sauces, Condiments and Seasonings

Imports

from ASEAN (US$ m)

Imports from ASEAN

(% share)

Imports from ASEAN

CAGR (2011-14)

Philippines 1.9

13.2%

Thailand 10.2

10.3%

Vietnam 0.6

13.6%

Malaysia 41.6

8.4%

INDONESIA 3.0

6.0%

Note: HS 2103

Malaysia and Thailand together account for almost all of ASEAN sales of Sauces, Condiments and Seasonings to Singapore; Indonesia’s share is relatively minor at the current time. Growth in this segment has been strong for all ASEAN exporters.

SINGAPORE IMPORTS: 2014 Pasta (Noodles)

Imports

from ASEAN (US$ m)

Imports from ASEAN

(% share)

Imports from ASEAN

CAGR (2011-14)

Philippines 0.6

19.2%

Thailand 4.6

5.8%

Vietnam 1.3

-2.5%

Intercedent Asia



Malaysia 14.1

6.8%

INDONESIA 1.8

-2.7%

Note: HS 190230

Despite Indonesia home strength in packet noodles (Indofood), Malaysia and Thailand again account for most all of ASEAN sales of pasta (noodles). Moreover Indonesia’s share has been falling. Within ASEAN, Indonesia would normally expect to enjoy a competitive trade advantage over non-ASEAN suppliers due to low or zero intra-ASEAN tariffs under the ASEAN Trade in Goods Agreement (ATIGA). For example, the Most Favoured Nation (MFN) import duties levied by Thailand, Vietnam and the Philippines on packaged foods are 30%, 20% and 15% respectively.13 This is not the case for Singapore, which presents a uniform zero tariff rate to all packaged food exporting countries. A partial store audit of Indonesian package foods in Singapore’s leading grocery retail establishments (including NTUC, Cold Storage, Giant supermarkets) revealed the following current level of market presence: Confectionery

Product Manufacturer Brand

Peanut Chocolates PT Perusahaan Industri Ceres (Bandung) Chacha

Cappucino Candy PT Mayorah Indah Tbk (Jakarta) Kopiko

Gummy Candies PT Yupi Indo Jelly Gum Yupi

In a crowded category, Indonesia must compete for shelf space with multinational brands (e.g. from Kraft and Nestlé) often made in Malaysia or Thailand. Biscuits (sweet)


Oreo Cookies PT Mondelez

Oreo

Most rival biscuit brands are from Singapore, Malaysia, Australia and also Taiwan, China, and the Philippines. Canned/Preserved Food


Canned tuna Sirena (Aust) Pty Ltd Sirena

Canned tuna PT Blambangan Foodpackers Captain's Table

Canned tuna PT Blambangan Foodpackers Giant

13 www.DutyCalculator

Indonesia Brand Presence - Retail

Intercedent Asia



While Indonesia is clearly strong in tuna exports to Singapore, there are many competing brands of tuna from Thailand as well as China (including US Bumble Bee brand).

Dried Processed Food


Coconut Cream Powder PT Pulau Sambu Kara Green Bean Powder na Tree Brand

Dried foods are varied and imported from a wide variety of countries, depending on local agricultural crops, e.g. chickpeas from Turkey, black fungus from China. Noodles

Product Manufacturer Brand Instant noodles Indofood CBP Sukses Makmur Tbk

Jakarta - Indonesia Indomie

Instant noodles PT Surya Pratista Hutama World O'Noodles

Indofood Sukses Makmur Tbk PT has clear leadership in the noodles market at home and its products sell in most large grocery outlets in Singapore. Noodles are also imported from Thailand, the Philippines, Korea, China, Taiwan and Malaysia. Indonesian exports also face home grown competition local Singaporean manufacturers Hup Huat Noodles Pte Ltd and Nissin Foods (Asia) Pte Ltd (popular Myojo brand).

Made-in-Indonesia tuna, as sold in up-market Cold Storage supermarkets

Made-in-Indonesia tuna, as sold in Shell service stations in Singapore (also in Cold Storage, Giant supermarkets)

Intercedent Asia



Indonesia noodle brands, as sold in Cold Storage and Giant. Ice Cream


Ice cream PT Unilever Indonesia Tbk Walls Conetto Ice popsicles PT. Keong Nusantara Abadi Wong Coco

This category is crowded with imports from Malaysia, Thailand and New Zealand.

Chilled/Frozen Processed Food


Frozen prawns Angka Okeanoss

Bulan Pork Lean (Bulan Island, Batam) Bulan Fresh

Beans n/a Chef

Indonesian package food exports had little or no discernible retail presence in the following categories:

(a) Cakes / Pastries / Snacks The competition is local and from Malaysia, but also as far afield as Norway and Japan—even for cakes

(b) Edible oils The competition is mainly from Thailand, Singapore and Malaysia. There are a lot of white label products packaged in Singapore as well imports from Malaysia of a variety of oil products (e.g. sunflower, peanut). Local manufacturers include the company Cheng See Oil Factory Pte Ltd.

(c) Spreads Many sources, such as from Poland - Nutella, from China - Skippy Peanut Butter, from the US – Planters brand, from UK – Jams/Marmite/Bovril, from Australia – Honey.

Made-in-Indonesia ice cream, as sold in Giant supermarkets

Intercedent Asia



(d) Sauces and condiments This large category dominated by Asian importers did not appear to include Indonesian products. Products on the supermarkets shelves were mainly from Singapore and Malaysia. There is fish sauce from Vietnam, China and Thailand; soya sauce from China and spices from Malaysia and China. No Indonesian packaged food brands make it into the top brands by sales in Singapore for any product category for data are available.

Myojo

Ferrero

Eclipse

Magnum

Uncle Tobys

Woh Hup

Khong Guan

Post

Kraft Singles

Campbell's

Gardenia

Knife

Skippy

San Remo

Nissin

Kit Kat

Ricola

Häagen-Dazs

Nature Valley

Maggi

Jacob's

Quaker

Perfect Italiano

Heinz

Sunshine

Sunbeam

Nutella

Barilla

Maggi

Kinder Bueno

Fisherman's Friend

Magnolia

Quaker Chewy

Lee Kum Kee

Oreo

Koko Krunch

Chesdale

Knorr

Bonjour

SCS

Peter Pan

Maicar

Nong Shim

M&M's

Mentos

Ben & Jerry's

Alpen

Tai Hua

Arnott's

Honey Stars

Président

Swanson

FairPrice

Golden Circle

Planters

Pasta Zara

Koka

Van Houten

Hi-Chew

King's

Alive

Tiger

Ritz

Kellogg's Mueslix

Philadelphia

Progresso

Top-One

FairPrice

St Dalfour

Arrighi

Other

Other

Other

Other

Other

Other

Other

Other

Other

Other

Other

Other

Other

Other

Noodles

Chocolate

Sugar

Ice Cream

Snack Bars

Sauces

Biscuits

BreakfastCereals

Cheese

Soup

Baked Goods

Oil and Fats

Spreads

Pasta

Top Brands of Packaged Food in Singapore by Product

Source: Euromonitor

Leading Packaged Food Brands in Singapore

Intercedent Asia



Multinational brands have typically been more successful in Singapore in packaged food. However, there are domestic players who manufacture packaged food, particularly ‘Asian’ products, with more local and ethnic flavours which are not within the expertise of MNCs. The headquarters of the leading brands are as follows: Noodles

Myojo & Nissin (Singapore); Maggi (Switzerland); Nong Shim (S. Korea); Koka (Singapore) Chocolate

Ferrero (Italy); Kit Kat (Switzerland); Kinder Bueno (Italy); M&Ms (USA); VanHouten (Belgium) Sugar

Eclipse (USA); Ricola (Switzerland); Fisherman’s Friend (UK); Mentos (Holland); Hi Chew (Japan) Ice Cream

Magnum (Germany); Häagen Dazs (US); Magnolia (Philippines); Ben & Jerry’s (US); King’s (Singapore) Snack Bars Uncle Toby’s (Australia); Nature Valley (USA); Quaker Chewy (US); Alpen (UK); Alive (Singapore) Sauces Woh Hup (Singapore); Maggi (Singapore); Lee Kum Kee (Hong Kong); Tai Hua (Singapore); Tiger (Singapore) Biscuits Khong Guan (Singapore); Jacob’s (Malaysia); Oreo (US); Arnott’s (Australia); Ritz (US) Breakfast Cereals Post (US); Quaker (US); Koko Crunch (Switzerland); Honey Stars (Switzerland); Kellogg’s Mueslix (Canada) Cheese Kraft Singles (US); Perfect Italiano (New Zealand); Chesdale (New Zealand); Président (France); Philadelphia (UK)

Intercedent Asia



Soup Campbell’s (US); Heinz (US); Knorr (Germany); Swanson (US); Progresso (US)

Baked Goods Gardenia (Singapore); Sunshine (Singapore); Bonjour (Singapore); FairPrice (Singapore); Top-One (Singapore) Oil and Fats Knife (Malaysia); Sunbeam (Singapore); SCS (Singapore); Golden Circle (Malaysia); FairPrice (Singapore) Spreads Skippy (US); Nutella (Italy); Peter Pan (US); Planters (US); St Dalfour (UK)

The government promotes a strategy of source diversification and a minimal degree of self-sufficiency for a small number of food items such as eggs, fish and leafy vegetables. While Singapore promotes locally grown food as a buffer against supply disruptions, the reality is that the country remains almost wholly dependent on imports to feed itself. The main edible crops cultivated in Singapore are vegetables. The vegetable and food crop production in local farms are mainly leafy vegetables and bean sprouts. Local fish production comprises mainly fish farms although Singapore also imports, exports and tranships fish caught by foreign vessels. The Jurong Fishery Port (JFP) is a major fish landing and distribution point in Singapore, handled 51,200 tonnes of fish in 2014. There are 141 seafood processing establishments licensed to manufacture fishery products in Singapore and 117 floating fish farms (100ha), producing high-value fish like groupers and seabass for the live fish market and supermarkets. Seafood imports (123,000 tonnes in 2014) massively outweigh local production (6,300 tonnes in 2014) 14. Singapore is a significant and successful processor of various types of packaged food in its own right (see table below). Singapore food processors are mainly small and medium enterprises. These companies span 17 sub-sectors, ranging from flavours, sauces, ready meals, noodles, deli meats, sausage making, confectionery, chocolates and snack foods. Many food manufacturers are keen to venture overseas and some have gained footholds in various countries, including the ASEAN region and the

14 AVA

Local Packaged Food Competition

Intercedent Asia



Middle East. However, due to a combination of its high cost environment, small domestic market and minimal agricultural base, Singapore is not an attractive location for international F&B investment; according to Singapore’s Economic Development Board (EDB) there have been no significant new investments in F&B manufacturing for the past six years.

Selected Singaporean Manufacturers in Profile Petra Foods Singapore's leading chocolate confectionery manufacturer, which also distributes in many other countries (Indonesia is an important international operation), has developed its own brands (e.g. Delfi, SilverQueen). Strategy: Product innovation, increase in portfolio expansion, brand building to tap changing consumer confectionery demand. Investment in high-growth markets will continue to be the focus, including Indonesia and the Philippines.

Yeo Hiap Seng Ltd YEO’S has successfully established itself as a household brand not only in Singapore, but also in many other countries around the world. Yeo Hiap Seng Ltd is engaged in manufacturing and distribution of food and beverage products, including ready-to-drink teas, soy drinks, and juice drinks, water as well as sauces, culinary pastes, condiments, canned curries, instant noodles and vermicelli, spreads, and canned/jar food products. Strategy: Re-focus on F&B business developing its brand internationally.

QAF Ltd QAF imports and distribute a variety of F&B products including meat, milk and dairy products, frozen vegetables, soups, pastries, confectionery, sauces, spreads, snack products and juices. Customers include the foodservice sector and food manufacturers, fast-food chains and restaurants, supermarkets, wholesalers, independent retail outlets, hotels, hospitals, bakeries, in-flight kitchens and sea vessels. It manufactures ‘Gardenia’, the best-selling packaged bread in the Singapore, Malaysian and Philippine markets. Strategy: Innovation of product offerings to drive sales and higher sales in the Export and Foodservice divisions, particularly in the branded categories.

Intercedent Asia

Chapter 5. Regulatory Environment 35


Chapter 5

Regulatory Environment

Chapter 5 considers the regulatory environment for imports of packaged food in Singapore. In general, there are no duty barrier and non-tariff barriers and few regulatory impediments—so long as stringent prescribed regulations are followed. Key issues covered: • Import Tariffs and Non-tariff Barriers • Import Regulations • Environment, Social Health and Safety Requirements • Labelling and Packaging Requirements • Certification Organisations

Singapore is generally a free port and an open economy; more than 99% of all imports into Singapore enter the country duty-free. Import duties in Singapore apply only to the so-called “sin taxes”: liquor, tobacco, motor vehicles and petroleum products. No duties are applied to imports of packaged foods whatever their country of origin and market access is easy for all importers of packaged food products.

Goods and Services Tax All goods imported into Singapore or manufactured in Singapore are subjected to a 7% Goods and Services Tax (GST). This tax is applied on an ad valorem basis on all goods, including food. The GST taxable is calculated based on the Costs, Insurance and Freight (CIF) value plus all duties and other chargeable costs. An increase in the rate of GST from the current 7% to 10% is widely anticipated. Non-tariff barriers Singapore maintains one of the most liberal trading regimes in the world. One of the few non-alcoholic packaged food products to face import restrictions relates to the import and sale of chewing gum, which is restricted for social reasons. Singapore’s Agri-Food and Veterinary Authority (AVA) also tests all imported shipments of meat and poultry and

Import Tariffs and Non-tariff Barriers

Intercedent Asia

36 Chapter 5. Regulatory Environment


does not accept raw and uncooked poultry and meat products that contain salmonella bacteria that exceed AVA’s high microbiological standards. Although Singapore has few border impediments, it continues to maintain an active industrial policy. The policy is implemented mainly in the form of a wide array of tax concessions and holidays, especially relating to certain sectors. Despite implementing tax reforms that lowered the corporate tax rate from 26% to 22%, thereby reducing the value of existing tax incentives, the latter continue to be widely used in attempts to attract foreign investment and direct it into high-value-added activities. Where these tax concessions provide a commercial advantage to local manufacturers of food product they could represent a non-tariff barrier. Singapore’s regulations regarding processed food are relatively rigorous. Importers are required to source products from regulated establishments where the food is produced under proper sanitary conditions. Traders and manufacturers must adhere to quality assurance procedures that are acceptable to the AVA. To enforce this, AVA demands the importers submit certified-true-copy documents, from the food safety authority of the country of origin, certifying that the imported food product is produced or manufactured by a licensed or regulated premises. In order to import processed food products companies must also register with the AVA’s Quarantine & Inspection Group (QIG). All traders who wish to import, export or tranship food products are required by law to obtain a relevant trader’s licence. Trading companies and similar businesses must be registered with the Accounting and Corporate Regulatory Authority (ACRA) before conducting business in Singapore. ACRA issues a Unique Entity Number (UEN) to all Singapore-registered companies. An import permit is required for every import consignment of processed food products. Traders may apply for the import permits by declaring their food imports prior to importation into Singapore through the Tradexchange Portal15. The system will then route the declaration to AVA for processing. Upon approval, the import permit for the consignment is incorporated in the Cargo Clearance Permit printed at the trader's terminal. Importers may appoint an agent to apply for permits on their behalf. Import Requirements and Documentation Companies must make an inward declaration for all goods imported into Singapore. All imports, except import for trade samples for which the total value is below US$286 (S$400) is not subject to payment of duty and/or GST, require an import permit although this is a formality and

15 Tradexchange Portal web: https://www.tradexchange.gov.sg/tradexchange/index.html

Import Regulations

https://www.tradexchange.gov.sg/

Intercedent Asia



statistical requirement. While customs clearance for most goods is automatic, with minimal administrative delays, some imports such as processed food products must be registered with customs as well as AVA.

Import Permit Application Process

Importers of all goods (including non-controlled items) into Singapore are required to: Obtain an IN Permit through TradeNet® before goods are imported

into Singapore, and Pay the import duty (if applicable) and/or GST due at the prevailing

rate at the time of importation

Source: AVA

Intercedent Asia



Customs Regulations16 In Singapore valuation for customs purposes is based on the Customs Valuation Code (CVC). The primary basis for Customs value is the transaction value of the imported goods when sold for export to Singapore. Where goods are dutiable ad valorem or specific rates may be applied. An ad valorem rate, which is most commonly applied, is a percentage of the Customs value of the imported goods. A specific rate is a specified amount per unit of weight of other quantity. Cost, insurance, freight, handling charges and all other charges incidental to the sale and delivery of the goods are taken into account when the duty is assessed. Exporters are required to ensure that the declared values of goods have not been undervalued or the Customs and Excise Department will increase the values declared. Severe penalties may be imposed on traders attempting to evade duty.

Sale of Food Act17

The Sale of Food Act (SFA) is the main body of law on food sale standards in Singapore. The objective of SFA is to secure the wholesomeness and purity of food, fix standards and to prevent the sale of articles which are dangerous or contaminated, unsafe or unfit for consumption, as well as pre-packed foods which are not properly labelled or labelled in a misleading manner.

Food Regulations stipulate food safety and specification standards, permitted additives and their maximum limits, tolerable limits for chemical residue and standards for labelling and advertising.

Processed food products imported into Singapore are subject to the SFA, which stipulates regulations on:

Packaging

Sale by date/expiration date

Labelling requirements

The minimum or permitted levels of certain constituents of each food type

Singapore's import restrictions relate mainly to environmental, health and public security concerns, with the exception of rice, which is subject to import licensing for reasons of maintaining food security and price stability. All imported processed food products are subjected to inspection and approval by the Ministry of Environment’s Food Control Department and

16 For more information on Singapore Customs – Import Requirements refer to www.customs.gov.sg/ 17 www.ava.gov.sg/docs/default-source/legislation/sale-of-food-act/51web_saleoffoodact1

Environment, Social Health and Safety Requirements

Intercedent Asia



the Health Sciences Authority. Certain food products have been identified through trend studies and classifieds as high risk products hence, requires pre-market assessment such as laboratory testing reports and health certificates to ensure the safety of the products. Health certificates, issued by the authorities of the country of origin must contain the following details:

• Description of product and packaging (incl brand, trademark, if any) • Quantity, by weight • Name and address of the processing establishment • Name and address of consignor • Name and address of consignee Safety Requirements Submission of laboratory test reports to AVA is not required for imported food items other than periodically specified—currently including soy sauce, oyster sauce, beef extract and products thereof, coconut products (milk, grated, jelly, shelled). In general, AVA tests food products for the following test parameters. The parameters tested for each food product depends on the hazards.

Chemical tests Microbiological tests

SPS measures Singapore's Sanitary and Phytosanitary (SPS) measures are stringent, with each imported consignment of food products subject to checks by Singapore Customs. For some products, mainly meat and poultry, the

Intercedent Asia



authorities permit imports only from specific countries and, in some cases, only from accredited establishments in those countries. A Good Manufacturing Practices (GMP) certification scheme provides independent verification and certification that basic manufacturing practices and prerequisites necessary for the implementation of an effective Hazard Analysis Critical Control Point (HACCP) food safety program are being followed. GMP food safety management enhances consumers’ confidence in traders’ commitment to producing and trading excellence, safe food. Compliance with GMP requirements entails minimum common sense sanitary and processing requirements applicable to all food processing establishments. Many food industry companies have implemented the GMP certification scheme for food processing as the foundation for other quality and food safety management systems, including HACCP, ISO 22000, SQF and ISO 9001. Other relevant certificates:

ISO 22000 is a Food Safety Management System that can be applied to any organization in the food chain, ‘farm to fork’. Becoming certified to ISO 22000 allows a company to show their customers that they have a food safety management system in place.

The SQF Certificate provides assurance that a product, process or service complies with regulatory, international and scientifically proven standards for safety.

ISO 9001 is the title of a standard document that outlines the requirements an organization must maintain in the quality system, which includes a set of policies, processes and procedures required during planning and execution in the core business area of an organization.

For more information see: http://www.sgs.com/~/media/Global/Documents/White%20Papers/SGS_SSC_FSSC_22000_White_Paper_EN_web_LR.ashx

General Labelling Requirements All imported or locally manufactured pre-packed food for sale in Singapore must be labelled with basic information such as name of food, ingredients, net content and source. This also applies to pre-packed foods that are intended for human consumption and offered as a prize, reward or sample for the purpose of advertising.

Labelling and Packaging Requirements

http://www.sgs.com/~/media/Global/Documents/White%20Papers/SGS_SSC_FSSC_22000_White_Paper_EN_web_LR.ashx

http://www.sgs.com/~/media/Global/Documents/White%20Papers/SGS_SSC_FSSC_22000_White_Paper_EN_web_LR.ashx

Intercedent Asia



Labelling requirements are fairly standard, including a list of ingredients, allergens, quantity/weight, the name and address of the importer (or local manufacturer) and the country of origin of the food. Labelling requirements do not apply only if the food is weighed, counted or measured in the presence of the purchaser or where the food that is loosely packed at the retailer’s premises.

General Labelling Requirements in Singapore

1. Name or description of food:

An acceptable common name or description which is sufficient to indicate the true

nature of the product.

2. Statement of ingredients:

All ingredients and additives used in the product are listed in descending order by

proportion of weight.

3. Allergen Labelling:

This includes the declaration of foods and ingredients (including components of

compound ingredients) that are known to cause hypersensitivity.

4. (i) Quantity:

The net quantity of the food in the package expressed in terms of (i) volumetric

measure (for liquid food products) (ii) net weight (for solid food products) or (iii)

either volumetric or weight measure for semi-solid or viscous products.

(ii) Drained Weight:

This is the weight of the food minus the liquid medium; and applies only to foods

packed in liquid medium.

5. Name and address of the local manufacturer or importer:

Name and address of the manufacturer, packer or local vendor.

Sample of Labelling

Intercedent Asia



6. Country of origin of food

(For imported foods only):

Name of the country of origin of the product. Name and address of your company as

the importer, distributor or agent in Singapore.

7. Font Height/ Language

Information should be in printed letters not less than 1.5 mm in height. Information

should be printed in English

Note: For more information on ingredients listing, Nutrition, Health and other claims, please visit http://www.ava.gov.sg/explore-by-sections/food/labelling-packaging-information/labelling-guidelines-for-food-importers-manufacturers) Source: AVA

Additional labelling requirements relate to specific circumstances, such as where the products have a limited shelf life, contain artificial sweeteners, make nutritional claims, cater to special dietary needs, etc.

Additional Labelling Requirements

Requirements Details a. Date Marking of Expiry Date

(The date-marking must be

permanently marked or

embossed on the package, and

printed in letters not less than

3mm in height)

Currently, only products with limited shelf-lives need to be date-marked, such as:

Infant food;

Perishable/short shelf-life products such as tofu, pasteurised milk and some

other milk products;

Products whose quality may deteriorate over time such as vitamin drinks and

cooking oil;

Products such as raisins and breakfast cereals that are susceptible to

contamination, for example, insect infestation, after prolonged storage

b. Advisory statements for

food containing certain

sweetening agents

To restrict the consumption of some food categories have to be included in the

labels if the product contains certain sweetening agents (e.g. acesulfame-K,

saccharin, etc.) added at the maximum permissible levels.

c. Labelling of Special Purpose

Foods

Special purpose foods are foods formulated to cater for the special dietary needs of specific groups of consumers. These include sugar-free foods, low-calorie foods, diabetic foods, etc. These foods must be labelled clearly to indicate their special suitability, and must meet the statutory nutrition labelling requirements.

d. Nutrition labelling To be in the form of nutrition information panel is required when nutrition claims or permitted health claims are made for pre-packed foods. The information declared in the panel must include the energy, protein, fat and carbohydrate contents of the food. The nutrients indicated in the nutrition claim must also be declared.

e. Specific labelling for certain

food categories

E.g. Irradiated food, whole grain, milk, fruit wine, milk, pre-packaged edible fats and

oils etc.

f. Advisory statements for

certain ingredients

Products containing certain ingredients (e.g. royal jelly, aspartame, etc.) need to be labelled with the relevant advisory statements or any other statements to the same effect (e.g. “Warning: This product may not be suitable for asthma and allergy sufferers”).

Singapore’s AVA also monitors the safe use of plastic packaging. To safeguard consumers' health, Singapore Food Regulations also stipulate that imported food packaging does not migrate any harmful substances to the food. The responsibility to ensure safety compliance is with the producers

http://www.ava.gov.sg/explore-by-sections/food/labelling-packaging-information/labelling-guidelines-for-food-importers-manufacturers

http://www.ava.gov.sg/explore-by-sections/food/labelling-packaging-information/labelling-guidelines-for-food-importers-manufacturers

Intercedent Asia



of the plastic packaging material who have to conduct prior use tests on their products to ensure that they comply with Singapore law. Local regulatory authorities may conduct safety tests on plastic food packaging. The AVA also conducts safety assessments to ensure that the plastic food packaging and containers available on the market are safe for their intended use. Useful Government Contacts for Indonesian Exporters of Packaged Food Agri-food and Veterinary Authority of Singapore (AVA) Aims/services: The main government agency that ensures safety and health standards in Singapore. It also governs all food products imported to Singapore. http://www.ava.gov.sg/ Singapore Customs Aims/services: Singapore Customs serves as a crossroad of the international trade and maintains requirement of trade facilitation, security and regulatory compliance. http://www.customs.gov.sg/ Health Promotion Board (HPB) Aims/services: The HPB acts as the main driver for national health promotion and diseases prevention programmes as well as to increase the quality and years of healthy life and prevent illness, disability and premature death. http://www.hpb.gov.sg/

The National Environment Agency NEA regulates the food retail industry in Singapore to ensure that food sold at retail outlets is prepared hygienically. www.nea.gov.sg/public

Certification agencies in Singapore offer certification to help companies stand out from the competition and build consumer confidence.

AsureQuality is a certification body for FSSC 22000, a certification scheme for Food Safety Management Systems ISO 22000 and PAS 220 standards. www.asurequality.com.sg/

SGS is a global leader in certification, including Safe Quality Food (SQF),FSSC 22000 (Food Safety System Certification) and Best Aquaculture Practices (BAP). www.sgs.sg/

TÜV SÜD offer the Food Safety System Certification 22000:2010 (developed by the European Food and Drinks Confederation), based on the existing standards ISO 22000, ISO TS 220021: 2009) and ISO TS 22003, for the food manufacturing industry. The scheme is endorsed by the Global Food Safety Initiative (GFSI). www.tuv-sud-psb.sg

Certification Organisations

http://www.ava.gov.sg/

http://www.customs.gov.sg/

http://www.hpb.gov.sg/

Intercedent Asia

44 Chapter 6. Distribution Channels


Chapter 6

Distribution Channels

Singapore’s distribution system for imported goods is fairly simple; foods are mainly distributed via importers/distributors of which there are many to choose from due to the city-state’s traditional role and an entrepot and transhipment port. Key issues discussed in this chapter: a. Importers & Distributors of Indonesian Foods b. Distributors of Malaysian and Thailand Foods c. Pricing & Payment Terms Generally, importers who represent foreign brands will be responsible for the market development of the brands, advertising and promotion and increasing distribution reach to all retailers. The large supermarket chains and up-market retailers import western-type products directly from source countries (e.g. Cold Storage Singapore (1983) Pte Ltd), consolidators and distributors for their own outlets. Small retailers buy from local distributors. Products imported directly, including jams, confectionery, biscuits, salad dressings and pre-packed meats, tend to be sourced from Europe and North America. Products procured from local importers are more likely to be products from the Asian region, including Indonesia. These products typically include dry groceries, tropical fruit, frozen chicken/ parts, local sauces and ethnic foods. In foodservice, large restaurant chains (e.g. McDonalds) or hotel chains may import directly from overseas to ensure franchise standards. Alternatively, Quick Service Restaurants (QSRs) may have exclusive contracts with importers/distributors. SME operators, will typically purchase products through local agents, wholesales and supermarkets. Singapore based importers and distributors of packaged foods are numerous and yet few specialise in importing solely or mainly from Indonesia. Most distributors that carry Indonesia products will also import

Importers & Distributors of Indonesian Foods

Intercedent Asia

Chapter 6. Distribution Channels 45


from other ASEAN countries, China, Japan and Korea or elsewhere. However, some distributors are specialised by product categories (e.g. candy or seafood). Distributor specialisation may also reflect the retail channel or trade channel. Some selected distributors of Indonesian package food products include the following companies: Selected Distributors of Indonesia Packaged Foods Exports

YLF Marketing Pte Ltd (confectionary) 12 Woodlands Loop, #04-03, S(738283) Tel: +65 6755 0177 Website: www.ylfgroup.com/ Newell Impex Trading (noodles) 10 Anson Road, #31-10, International Plaza, S(079903) Tel: +65 9129 5998 Wong Coco Pte Ltd (ice cream) No. 3 Sungei Kadut Way, S(728771) Tel: +65 6269 4031

Website: www.juicycubes.com/ Delfi Singapore Pte Ltd (confectionary)

111 Somerset Road, #08-05, S(238164) Tel: +65 6897 7487/ +65 6477 5600 Website: www.petrafoods.com/ AustAsia Food Pte Ltd (dairy) 42A Horne Road, S(209066) Tel: +65 6396 3323 Website: http://greenfieldsmilk.com/ Do Better Trading (frozen seafood) No. 5 Jalan Tepong, #01-02, S(619326) Tel: +65 6779 1748 Website: www.dobetter.com.sg/ Sinhua Hock Kee Trading Pte Ltd (shrimp flakes, candy) 463 Tagore Industrial Ave, S(787832) Tel: +65 6552 6668 Website: www.sinhuahockkee.com/ Cold Storage Singapore (1983) Pte Ltd (various) Tampines North Drive 2, #03-01, S(528765) Tel: +65 6274 9112 Website: https://coldstorage.com.sg/

Source: Intercedent Asia

Singapore has numerous importers/exporters and distributors, many of which are actively seeking opportunities for product line expansion. Examples of Singapore importers of Malaysia and Thai products are as follows:

Distributors of Malaysian and Thai Foods

http://www.ylfgroup.com/

http://www.juicycubes.com/

http://www.petrafoods.com/

http://greenfieldsmilk.com/

http://www.dobetter.com.sg/

http://www.sinhuahockkee.com/

https://coldstorage.com.sg/

Intercedent Asia

46 Chapter 6. Distribution Channels


Confectionary: Tong Guan Food Products Pte Ltd started in Singapore in 1973, and has gradually expanded into Malaysia and Thailand. www.tonggarden.com.sg/ Sauces: Started as a noodle stall in Singapore’s Chinatown, Woh Hup Food Industries Pte Ltd progressed to a Noodle House Restaurant and manufacturer of noodles and sauces under its brand name. www.wohhupfood.com Biscuits: Ja Lan Tiong Pte Ltd is an importer. It claims its products are represented in >2,500 retailers, including around 200 supermarket and hypermarket outlets. Products include cookies, candies and canned fruits and especially biscuits, mainly from Malaysia. www.jalantiong.com/. General: Li An Foodstuff holds exclusive agencies for several food products (noodles, biscuits, snack food). With 30 staff, it distributes to >1,000 Singapore outlets (hypermarkets, supermarkets, convenience stores, provision shops and petrol kiosks). www.lianfood.com/ Edible Oil: Lam Soon Pte Ltd sources products from factories in Malaysia and Thailand. In order to suit needs of evolving consumer trends, Lam Soon is continuously rejuvenating its brand portfolio and product quality and packaging. www.lamsoongroup.com/ Canned Tuna: Clouet Trading Pte Ltd is the authorised agent for the AYAM brand and products are sourced Thailand, among others. Its products exclude preservatives, added MSG or added trans-fat. www.ayambrand.com.sg/ Frozen meat products: PIN Corporation Pte Ltd is among the largest importers of meat products in Singapore. It sells to supermarket chains, wholesalers, manufacturers, wet markets, caterers and restaurants and sources from major frozen meat exporting markets, including Thailand. http://pincorpn.com.sg/ Importers of Indonesian food products noted that generally in terms of quality and price, Indonesia is “pretty similar to the rest ASEAN including Malaysia and Thailand”. Pricing, while important, is not always the main consideration for the marketing of food products. Taste can be more important than price in Singapore. As one distributor noted,

Singaporeans prefer spicy food from Indonesia as compared to Malaysia food products. The Indonesia market is huge but they offer only limited products.

Pricing & Payment Terms

Intercedent Asia

Chapter 6. Distribution Channels 47


Payment terms Payment terms are reportedly quite standard and straightforward. As described by four Singapore importers of Indonesian product:

Distributor A: “Standard procedures for companies are either cash payment or bank guarantee.”

Distributor B: Standard procedure of cash payment (“we have had no issues with pricing”).

Distributor C: Telex Transfer (TT) payment.

Distributor D: The standard terms are LC (Letter of Credit) or cash; they pay us upon arrival of goods.

Distributor E: TT payment. The cargo is shipped from Indonesia, we are faxed an invoice and TT payment is made.

Intercedent Asia

48 Chapter 7. Market Entry Advice


Chapter 7

Market Entry Advice

Singapore importers and distributors believe that Indonesia has competitively priced products, many of which are well suited to the tastes of the Singapore market. Weaknesses in Indonesia’s product offering include a lack of variety of products, especially compared with the wide range of Thai and Malaysian products, and need for more product customization, including flavours and packaging to differentiate products. The final Chapter reviews the following:

Packaged Food Exhibitions

Packaged Food Importers & Distributors

Product Differentiation & Value Proposition

Halal Packaged Food Products

Singapore Food Product Opportunity Heat Map

Visiting the Singapore market will help exporters better appreciate the market opportunities, supply chain issues and acceptable price points. Attending or participating in relevant Singapore (or Indonesian) trade shows is a good way to learn about the market and the marketing of packaged food products. Food and Hotel Asia is the biggest food show in Singapore, but there are many other specialized events as well.

Trade Show Website Location Date

Food and Hotel Asia A biennial show with ~3,000 exhibitors and incorporating specialised events such as Food Asia, Hotel Asia, Bakery & Pastry, among others.

http://www.foodnhotelasia.com/

Singapore Expo

12 - 15 April 2016

Packaged Food Exhibitions

Intercedent Asia

Chapter 7. Market Entry Advice 49


Food & Beverage Fair 13th edition, visitors can expect hundreds of exhibitors showcasing local, Asian and international foods.

www.foodandbeveragefair.com.sg/

Singapore Expo

17 – 20 March 2016

Trade Expo Indonesia

Showcases the best Indonesian

exports across a range of

industries. In 2014, the 29th

edition attracted more than

10,000 visitors

http://www.tradexpoindonesia.com/

Int’l Expo, Jakarta

21 - 25 October 2015

Choosing the right distributor is the key to establishing a sustainable market presence. Reflecting the small size of the Singapore consumer market, the packaged food distributors in Singapore are primarily made up of independent small-to-mid-sized local distributors, often family owned businesses. The best way for Indonesian exporters to take advantage of Singapore’s mature yet affluent market is to enter into an agreement with a reputable, trustworthy, and well-connected distributor or agent. Important factors to consider when selecting an importer/distributor partner for a long-term relationship will include:

Relevant customer base: a loyal clientele from diverse sectors such as retail (modern 18 and general trade), airlines, major hotels, cafes/restaurants, educational institutions, local and MNC enterprises, restaurants, food service companies, ship chandlers and wholesalers.

Long established presence: at least 10 years of committed distributor experience in the Singapore market.

Experienced one-stop provider: wide selection of related packaged products including popular and established brands in Singapore.

Prompt and efficient distribution services to the customer: including next day delivery, if important.

Dependable customer support: dedicated sales consultants and administrative services (it may be best to work with one dedicated partner, given the small size of the market).

Customised service with competitive pricing: repackaging to suit customers’ needs as required.

Logistics expertise as required: importation, warehousing, packing and transportation, etc.

Distribution in Malaysia: Most distributors in Singapore will have close affiliates in Malaysia, which could facilitate access to this market.

18 The mass grocery retail sector is highly concentrated, providing excellent distribution avenues for processed foods. It

also means that for retail sales access to shelf space with the leading grocery retailers is very important.

Packaged Food Importers & Distributors

Intercedent Asia



Per capita food consumption levels in Singapore are among the highest in the region, giving manufacturers access to a high-spending market, one in which the take up of new products can be very rapid. The downside is that Singapore is an open and hotly contested market. Consequently, packaged food products should be differentiated from the competition as much as possible. This may involve innovative flavourings and/or attractive packaging. Companies should identify and emphasize points of differentiation, which should be communicates effectively to Singapore trade partners and consumers.

“Indon Mee, Mee Sedap – taste is distinct and similar to Singaporeans and it is highly sought after”. (Singapore distributor) Products should also present a strong value proposition. This will in part reflect competitive pricing19. It may also entail effective communication of product attributes and brand values based on a good understanding of the market dynamics. To this end, Indonesian exporters are advised to a. Seek out local Indonesia manufacturers or exporter associations or

relevant industry bodies for shared wisdom on export marketing and/or outbound logistics.

b. Marketing should include product promotion and brand building, including use of product promoters and marketing (besides product quality, appearance, colour and freshness are also important in the Singapore market).

c. Set up a representative office in Singapore—if the volume justifies the investment—to build and strengthen customer networks.

An important food trend in Indonesia is the growing demand for Halal products. This is a significant market segment in Singapore also. According to the 2010 Singapore Population Census, around 15% of the population is Moslem, a proportion which will support consumer demand for halal-certified products. Nearby Malaysia has recently emerged as an important regional research and production hub for halal products, mainly targeting the Middle East. It is both a competitive threat and opportunity in this regard. Made-in-Indonesia Halal packaged products will find a niche market in Singapore, given Indonesia its own impressive credentials in this regard: The World Halal Food Council (WHFC) recently chose the Indonesian capital of Jakarta as the location for its headquarters. While any opportunity assessment is highly product specific, the following Heat Map offers some indication of where the best generic market opportunities may lie based on four parameters: (1) Indonesia’s global exports (capability); (2) the growth rate of Singapore food imports

19 Several Singapore distributors of Indonesia products noted the importance of this aspect.

Halal Packaged Food Products

Product Differentiation & Value Proposition

Singapore Opportunity Heat Map

Intercedent Asia

Chapter 7. Market Entry Advice 51


(previous 5 years); (3) the value of Singapore food imports from ASEAN; (4) Indonesia’s share of ASEAN’s food exports to Singapore.

Singapore Packaged Food Product Opportunity Heat Map

Product Indonesia

Export Capability

Singapore Import Growth

Singapore Import Value

Strength of

Competition

Shrimp/Prawns, preparations Very

Positive Positive

Other prepared fish, nes Neutral


Biscuits (sweet) Chocolate and preparations Baking preparations Negative

Pasta (incl. noodles) Sugar confectionery Ice Cream Cereal related preparation Tuna, etc. Edible oils Pineapple, prepared or preserved

Soups and preparations Very

negative

Waffles and wafers Ground nuts, prepared or preserved Margarine Soya Sauce Tomato Ketchup

Note: Red and pink = positive indicator for Indonesian exports. Dark blue and blue = negative indicator for Indonesian exports. Source: Intercedent Asia

Intercedent Asia



Appendix I: HS Codes for Indonesia’s Main Packaged Food Exports

The selection of packaged food commodities for inclusion in the report was based on the following criteria: (1) High value product categories (typically above US$10m in value terms) (2) ‘Packaged’ products (excluding bulk commodities such as crude coconut oil or palm oil) (3) Lowest 6- or 4-digit HS codes (see below for descriptions)

High Value Indonesian Exports of Food Products to the World, 2014

Notes: Commodities highlighted in yellow are the focus of analysis in this report. Source: UN Comtrade

HS Code US$ Kgs US$ Kgs Description

0401 Milk/Cream - not Concentrated, Powdered or Sweetened

All others very small 17,070,808 18,515,509 Milk/Cream - not Concentrated, Powdered or Sweetened

15 Oils & Fats

1511 17,464,904,662 22,892,386,926 Palm Oil and its Fractions - not chemically modified

151190 13,258,163,322 17,165,566,597 Palm Oil and its Fractions - simply refined

1513 2,484,350,171 2,251,251,300 Coconut, Palm-Kernel or Babassu Oil and their Fractions - not chemically modified

151311 533,738,813 443,268,032 Coconut (Copra) Oil - Crude

151319 409,920,711 328,150,647 Coconut (Copra) Oil and its Fractions - Refined, not chemically modified

151321 389,300,189 401,266,716 Palm Kernel or Babassu Oil - Crude

151329 1,151,390,458 1,078,565,905 Palm Kernel or Babassu Oil and their Fractions - Refined, not chemically modified

1516 176,620,271 135,471,89 Animal/Vegetable Fats or oils and their Fractions - Hydrogenated, etc

151620 176,518,665 135,391,253 Vegetable Fats or oils and their Fractions

1517 778,219,079 807,252,653 Margarine and edible mixtures/Preparations of animal/Vegetable Fats, oils or their Fractions

151710 82,886,574 97,184,473 Margarine

151790 695,332,505 710,068,180 Edible mixtures/Preparations of animal/Vegetable Fats, oils or their Fractions

16 Meat, Fish and Seafood Preparations

1601 69,071 53,084 Sausages, and similar products, of meat

1602 30,368 33,448 Other prepared or preserved meat, etc

1603 461,573 340,717 Extracts And Juices of Meat, Fish or Crustaceans, Molluscs or other Aquatic Invertebrates.

1604 397,809,581 106,329,621 Prepared or preserved fish, fish eggs

160414 311,834,057 70,814,418 Tunas, Skipjack and atlantic Bonito - prepared or Preserved, Whole or in Pieces

160420 39,513,617 17,026,227 Other prepared fish, nes

1605 737,471,708 60,832,501 Custaceans, molluscs, etc, prepared or preserved

160520 260,350,089 11,823,607 Shrimps, prawns, prepared or preserved

1704 Sugar confectionery, incl. chewing gum

132,465,622 48,202,740 Sugar confectionery, incl. chewing gum

1806 Chocolate and other Food Preparations Containing Cocoa

45,052,915 14,972,651 Chocolate and other Food Preparations Containing Cocoa

19 Cereal, flour, starch, milk preparations and products

1901 61,166,276 27,817,881 Food preparations of cereals, flour, starch, malt or milk (e.g. baking/pastry mixes, malt extract, infant food)

1902 224,587,489 135,746,231 Pasta

190230 211,910,278 126,878,243 Pasta, nes (noodles)

1903 4,961,549 9,434,714 Tapioca and Substitutes prepared from Starch in Flake, Grain, Pearl, Sifting or Similar forms

1904 40,296,090 16,725,110 Prepared Foods, relating to cereal products (e.g. corn flakes)

1905 394,489,290 129,605,011 Bread, Pastry, Cakes, Biscuits, and other Bakers' Wares

190531 214,702,345 66,947,367 Biscuits - sweet

190532 139,782,051 43,920,145 Waffles and wafers

20 Vegetable, fruit, nut, etc, preserved

2008 190,586,478 185,272,315 Preparations of fruits and nuts (uncooked)

200811 11,175,770 3,781,299 Ground nuts, prepared or preseved

200820 165,689,555 171,150,689 Pineapple, prepared or preseved

21 Miscellaneous Edible Preparations

2103 119,317,891 39,435,79 Sauces, mixed Condiments and Seasonings, Mustard Flour and Meal, and prepared Mustard

210310 14,202,159 9,682,680 Soya Sauce

210320 1,662,642 1,320,216 Tomato Ketchup and other Tomato Sauces

210390 103,427,517 28,418,221 Sauces and Preparations nes and mixed condiments or seasoning

2104 6,109,793 968,613 Soups and Broths and PrepArations thereof; Homogenized Composite Food PrepArations

2105 23,487,532 7,626,800 Ice Cream, etc.

2106 303,167,636 126,494,480 Food preperations, nes