Transcript: East Asia Market Realities - Singapore

Jeidy Ng, NZTE Business Development Manager, Singapore: Hello, everyone. So today I’m going to share with you three things about Singapore: firstly, the market overview, followed by the key trends, opportunities and the challenges, and lastly is how to break into the market and be successful.

So, firstly, the market overview: Singapore is a gateway to South East Asia and it is the hub for a lot of international travellers. It is also well-known as a financial hub and the Singapore government wants to position it as the logistic hub and regional health hub.

Many of you may have been to Singapore before and noticed that it is a multiracial society. It has 5.6 million population but 20 percent of the population is foreigners. Three-quarters of the Singaporean citizens and permanent residents are Chinese; the rest are Malays, Indians and Eurasians. 

Most Singaporeans are educated and well-travelled. Ninety-five of the population has travelled abroad for leisure in the past two years, this higher than the Asia-Pacific and global averages, so therefore they’re exposed to many international brands.

It is estimated that 90 percent of the food consumed in Singapore is imported from around the world. Sixtey percent of Singaporeans use social media to read reviews and access promotional activities while shopping, so they also make online purchase at least once a month. Singaporeans are discerning consumers and a top concern is value for money. So that’s the market overview of Singapore.

Let’s move on to the key challenges, opportunities and what are the key trends.

So one of the key trends in Singapore is all about healthy lifestyle and ‘go natural’. This is something familiar to you all. Well, healthy lifestyles and going for natural products is a way of life in New Zealand. Singapore government has a very holistic approach to its health and encourages healthy lifestyle. In 2016, the Ministry of Health has declared war on diabetes. From 400,000 diabetics in 2016, the number is projected to reach one million by 2050, so this is about one-sixth of the total population, hence you can see this a major concern for the government.

HPB, which is the Health Promotion Board of Singapore, has launched initiatives to encourage the adoption of healthy new options, hence having a healthy choice symbol on the packaging is important. HPB has also rolled out the Healthy 365 campaign last year and gave out step trackers to the registered citizens to keep them active and healthy.

In order to attract the citizens to stay active they have created several challenges for the citizens to participate and win prizes so whatever the Singapore government says, the corporate companies and the citizens will adapt and follow. I know  a lot of my friends have registered for the step trackers and I have one here myself too, so as of today I just walked about a thousand steps so still a long way for me to go for me to achieve at least 10,000 steps a day to keep me active and healthy. So you can see the website at [unintelligible] if you like to find out more about the campaign. 

Because of the government campaign and the consumers becoming more health conscious, supermarkets are growing the health and wellness category so they have a dedicated space to display more healthy, natural and organic products. So this category is growing year on year with more health and natural product offerings to the consumers.

So one of the key [unintelligible] which is cold storage has started to display point of sales materials to communicate the product benefits in the stores. Packaged foods that are not naturally healthy has grown in sales by 50 percent in the past six years. 

Consumer food services have also grown in healthy meal offerings, including online food delivery that have provided convenience for the consumers. Healthier choices, such as the option to swap white rice with brown, is becoming is easily available at more eateries and the effort of HPB, so health conscious consumers demand better-for-you products that are healthier and higher in function and benefits. There’s also greater demand for food products consumed by the children and the elderly to be more natural and healthy. Some may even go for organic foods.

However, we all know that not all products can fall under this [unintelligible] on this category and not all will get the healthy choice symbol. But there are other opportunities and ways to bring into the Singapore market. For example, chocolates and ice cream products – these less healthy products are still loved by the Singapore consumers and is a growing category.

There are also opportunities for high value products. Singaporeans are prepared to pay premium for quality products. As Singaporeans became more affluent they’re also becoming more willing to spend more on their food and the lifestyle. This explains why Singapore became the first country in Asian covered by the Michelin Guide.

Just to summarise some key trends and opportunities in Singapore market if I move on to the challenges: so number one, the government campaign on healthy lifestyle, number two, demand for products that are healthier, natural and higher in functional benefits is growing, and number three, the opportunities in high value products.

Now let us look at what are the key challenges in Singapore. Singapore is a highly competitive market. Australia, US, EU, Brazil, China and South Africa, just to name a few countries, they all export similar consumer products including temperate climatic fresh fruits and vegetables, meat and seafood, juices, alcoholic beverages as well as processed foods into Singapore. As mentioned earlier, it is estimated that 90 percent of food consumed in Singapore are all imported from around the world.

As the market for consumer oriented products is very open and easily accessible there’s fairly quick entry for newcomers, leading to the market being flooded with F&B players. So in both retail and food service sectors they’re beset by manpower challenges, sky-high property values and fierce competition for prime real estate. So with consumer food services growing, expenses are high on ingredient purchases, wages and rental. The retail sector is also being challenged by growth in ecommerce. The economic slowdown in the past years and growing popularity in the ecommerce has pressured store-based retailers. 

Dairy Farm Group has witnessed these challenges. The majority of New Zealand products are sold via cold storage chain, which is part of the Dairy Farm Group, and during November 2017 the CEO of the Dairy Farm Group issued a circular stating that they would be operating strictly on 'one in, one out' listing policy after rationalised products that fell in the bottom 10-20 percent of the sales contribution. 

What does this mean? This means that if cold storage decide to list a new product they have to remove one of the products from the shelf which is slow moving, so when you’re proposing new products for cold storage you need to understand the category you are playing, who are your competitors and why is your product better than the competitors’. So if your products are currently in cold storage you need to ensure your products are selling well by investing in your brand and marketing activities to create brand awareness and consumers’ demands. This will help the sales too if your products are selling into [NTBC] fair price which is the biggest retail chain in Singapore so as other channels. So in a nutshell, Singapore is a highly competitive market in both retail and food services sectors. 

Now let’s go to the thing I want to share with you today, which is how to penetrate Singapore and be successful. Firstly, as much as possible your messaging has to be consistent with the government agenda. Remember what I said earlier, whatever the government said, the corporate companies and the citizens will adopt and follow. The Singapore government public messages carry significant weight in Singapore so a healthier choice symbol on the packaging always helps. So if your products do not have the healthier choice symbol, highlight the health and functional benefits on the packaging. So I have an example here, a brand from Australia called ‘New Vitality’. They do not have the healthier choice symbol but they have relevant messaging, targeting the health conscious consumers and manage to get a big spacing in cold storage and placed within the health and wellness section.

Second, in a crowded place like Singapore you need to have a unique selling proposition that differentiates your product from the competitors and tells a compelling story that your product is better. This is because Singaporean is spoiled for choices for high value products including food at a low price such as in the traditional food stores that we call the [health] centres. 

So it is important to give brand equity. Singapore consumers are brand- conscious so the New Zealand companies can capitalise on this if they have good brand equity. With a strong brand equity, the consumers have overlooked the fact that some of the products are not made in the country of brand origin, so one example here is the Kinder Bueno made by Ferrero, is a foreign looking and innovative brand from Italy. The products sold there are made in Italy, Poland, China and India.

Thirdly, customise your products either through product formulation, packaging or communications, so an example for product formulation, customisation is the seven industry leaders in Singapore which are Coco-Cola, F&M Foods, Malaysia Dairy Industry, Nestlé, PepsiCo, Pokka and Yeo Hiap Seng. All of them have committed to a maximum sugar content of 12 percent for all the drinks sold in Singapore by 2020. This is to align with the government war on diabetes campaign.

So as for the packaging customisation, here are two examples: Kit-Kat and Wolf Blass wine which has recently launched their Chinese New Year packaging for in just February this year. You see Wolf Blass have a gold label with a dog picture because this year is the Year of Dog in the Chinese lunar calendar, and Kit-Kat has 12 Chinese zodiac printed on the box, so this not the right picture and I have the example on my desk later; you can take a look. So they are perfect for a Chinese New Year gift. This encourages purchases from the consumers and it symbolises prosperity.

A good example for customised communications and marketing is Kellogg’s breakfast cereals. Kellogg’s have different range of products targeting at different group of consumers. Product messaging on the packaging and premiums are catered for the specific target groups, so the kids' range comes with [unintelligible] characters and games on the pack, and adult range comes with product health benefits, communicating to the consumers and they’re giving away collectible [premiums] to the adults.

So in summary, being a New Zealand brand or ‘made in New Zealand’ is not good enough in this highly competitive market. You need to do more than just place your products on the shelves. So what is the unique selling proposition of your product? And how do you communicate that to your target consumers? You will have higher chance of success in Singapore if you remember three key things that I just shared with you earlier. Number one, right on the government campaign on healthy lifestyle and communicate the health benefits or the functional benefits of the products to capitalise on the growing health and wellness trend. Singaporeans are increasingly turning health conscious and there’s a lot of government push for a healthier Singapore. 

Number two, you need to build brand equity. Have consistent communication to tell a brand story with unique selling proposition.

And number three, customise your products if you can, be it product formulation, packaging, all communication to suit local consumers’ needs and aspirations.

So most of you maybe wondering by now is it worth your while to export to Singapore since it is highly competitive in a relatively small market. After all, it’s just a little red dot on the map, right? And the answer is yes, of course you would like to go there. Why? Because Singapore is a gateway to South East Asia. It is the hub for a lot of international travellers, therefore it's a great platform to showcase your brand, so if your brand is successful in Singapore you’ll be seen as a leading brand. Countries from the neighbouring region will want to import your products to their country and you’ve heard one billion market size in the Philippines. Who doesn’t want that – right?