Description of Industry
With a lacklustre economic growth of 1.3% in 2012, Singapore advance with a 3.7% growth in GDP in the second quarter of 2013 as compared to 0.2% in the preceding quarter. Singapore’s food & beverage (F&B) services industry contributed approximately SGD 9.7 bn or 3.2% to the country’s total GDP of SGD 305.2 bn
In 2011, the F&B services industry comprised about 6,500 establishments, up 4.5% from a year ago. Total operating receipts of the F&B industry stood at SGD 7.11bn in 2011, an increase of 12.1% compared to 2010. Total value added of the industry increased 11.7% to SGD 2.49bn. On a per establishment basis, operating receipts and value added also rose by 7.3% and 6.9% to SGD 1.1mn and SGD 385,000 in 2011, respectively.
Industry Driving Forces
Singapore’s F&B industry is highly competitive; hence there is a need to call for continuous innovation to cater to consumer demands, which is growing more complex over time. Some of the key industry trends are highlighted below:
Product demand and offering
As consumers are becoming more aware of their health, unprocessed and functional food for health has begun to gain increasing popularity, where functional food nowadays is more likely to be for specific illnesses and thus can overcome limitations of conventional food. Besides, many consumers have shifted to cooking fresh food at home due to greater concern of nutritional facts for health reasons. This has, in turn, driven growth in the number of culinary lesson for those people who seek to improve their skills. There are also demand for healthier food in all sector, especially in the fast food restaurants sector, whereby there is a need to show case their nutritional value of each of the food, so that consumer would have a choice to avoid those unhealthy ones.
Going green and sustaining it
With the impending climate change, consumers are also wiser nowadays in choosing products which are eco-friendly. Often times, buyers would consider produce made from good farming practices and ethically treated livestock meat. F&B providers that are generous in their corporate social responsibility efforts also take a notch as compared to those who are not. Especially in light of scandalous food issue of the tapioca products, or Taiwan pearls that is being consumed with milk tea, there was more attention on these products which the buyers had to pay more attention and detail to. In recent news, during the haze period, there was also a growing sentiment among the consumers to boycott product that are not eco-friendly, such as food produced in Indonesia by the company that participate in the slash and burn tactic of creating more land.
More emphasis on innovation
Due to higher consumer demand for healthy F&B products, businesses are integrating nutrition in their products while ensuring value-for-money and quality taste. Since this industry is highly competitive, businesses are into innovating. Common in the scene are those who provide breakfast not only in the morning, but for the whole day, concept dinning for the middle to higher class, and international cuisine. Another business innovation would be the use of high technology to improve efficiency of the food service to cater to the consumer demand, such as having an Ipad menu and up to date system to compute the data.
Varying pricing strategies
To make their products more accessible, most F&B outlets are engaging in low cost pricing, making gourmet cuisines like Italian, French and American dishes and selling them in an affordable price available even in food courts, coffee shops and hawker centres. Some F&B establishments still opt to maintain their niche, while some try to cater to all classes for a larger market share.
Porter’s Five Forces
Rivalry among competitors
Competition is often fierce within the food retail industry, which comes from the view of...
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