Opportunity knocks for organics in Singapore

AgExporter, June, 2004

An estimated 50,000 consumers in highly urbanized Singapore paid $4.7 million in calendar 2002 for organic products. Most were imports, since only a limited selection of organic vegetables is supplied through domestic production.

Low tariff barriers encourage U.S. exports to Singapore. While Australia and New Zealand dominate the organic fresh produce import market in Singapore, the United States has captured most other organic food product sales. Due to their proximity and developing organic certification programs, however, Thailand and Malaysia promise to be future alternative sources of organic produce.

Who Buys Organics?

While most Singapore residents are emerging as potential customers for organic foods, certain groups have been long-time consumers. The large expatriate community, made up of Western and Japanese professionals and their families, buy organic products regularly. A second group of buyers consumes organics for health reasons.

Top Sellers

Brown rice, a key staple in the Asian diet, is the most-purchased organic product. Other popular items include grains like whole flour, corn flour, barley and soybean products as well as cereals like oatmeal, corn flakes and wheat bran, and vegetables and fruits.

Asian processed foods such as noodles, seafood and some varieties of cereal flours offer good growth opportunities for organic suppliers. Also, for consumers with allergies, gluten- and wheat-free organic foods provide options.

Most precooked organic foods tend to be Western-style or vegetarian. Products that are routinely found in the organic sections are pasta and fresh and dried fruits and vegetables. Some U.S. manufacturers offer a few sauces and oils with Asian flavorings--salad dressings, ketchup, tamarind sauce and sesame seed oil.

Prices Limit Appeal

Organic products are usually sold in smaller packages due to their usually limited shelf life and higher cost. They command premium prices ranging from 100 to 300 percent of non-organic equivalents. So far, the average Singaporean deems traditional fresh foods to be the nutritional equals of organics and is not willing to pay a stiff premium for an organic product. Local restaurants, too, have largely bypassed organic menus.

Promotion, Pricing Paramount

It is important to have a good relationship with an established importer who has knowledge of the market. Given the low awareness of the average Singapore consumer for organic products, an effective marketing and promotional effort to differentiate organic products and reasonable pricing must be part of a successful sales campaign.

To encourage increased consumption of organic food, the premium over non-organics should be kept below 50 percent. In order to expedite product acceptance, the importer needs to be aware of the benefits of organic products and have product information at hand.

Co-sponsoring workshops with importers, wholesalers and retailers helps reinforce the advantages of organic products.

With improved certification requirements in place, domestic organic farms, which sell fresh produce, could complement the offerings of U.S. exporters.

Packaging is critical too. It should be attractively designed and properly sealed to protect against Singapore's hot, humid environment.

Specialty Retailers

Specialty stores that carry a wide range of organic products tend to locate near areas where expatriate families live. These stores usually buy in sizeable quantities, dividing products into smaller packages before putting them on shelves.

Super- and hypermarkets carry a limited range of organic products. But as demand picks up, more of these stores are beginning to expand their organic offerings.

Singapore Policy Re: Organics

Singapore has no immediate plans to set up an organic certification process. The AVA (Agri-Food and Veterinary Authority of Singapore) assures the safety and quality of foods imported into the country.

However, the Food Control Department of the Ministry of Environment and the Consumers Association of Singapore monitor the labeling on organic foods.

Organic products that make health claims are categorized as either pharmaceutical or foodstuffs. Pharmaceutical products face strict regulations with regard to sale and promotion, while health claims for foodstuffs on product packaging are banned.

Labeling Requirements

Although not mandated by law, most organic food labels also display the logo of the certifying group. AVA does require food suppliers to Singapore to clearly label their products with:

* Names and addresses of manufacturer and importer

* Ingredients

* Weight (in metric)

* Dates of manufacture and expiration

Gateway to Southeast Asia

This highly industrialized economy operates one of the world's busiest ports, gateway to Southeast Asia. Consequently, Singapore is exceptionally dependent on trade.

In 2002, Singapore's trade in goods equaled 273 percent of its gross domestic product. Imports and exports of all goods added up to an impressive $249 billion. Agricultural imports alone registered a total of $3.3 billion per annum for the last three years.