Singapore: bite-size market shows a taste for snacks - includes related information on Singapore food rules

AgExporter, Oct, 1994

Whether you're new to the idea of exporting overseas or you're already operating an established business, exporters are constantly looking for niche markets where they can successfully sell their agricultural products. This month, AgExporter magazine focuses on several niche markets for products such as snack foods, pet foods, and--even gator meat.

In a world that now munches on more than $1 billion in exports of U.S. snack foods a year, the 2.8 million consumers on the tiny island nation of Singapore may get lost in the din. But for U.S. exporters with an appetite for Asian growth markets, this bite-size market could be worth a taste.

According to trade data from the U.S. Bureau of the Census, U.S. sales of snack foods (excluding nuts) to Singapore have tripled since 1989, reaching a record-high $11.3 million in 1993. And figures for the first five months of 1994 show continued growth--up 20 percent from year-earlier sales.

In 1993, Singapore ranked No. 12 among the top U.S. export markets in this food category. The United States is one of its three leading outside suppliers, along with Malaysia and Thailand.

Although estimates of overall growth in the country's snack food market range widely, the outlook for future sales looks promising. Prospects appear to be particularly bright for such items as fruit chips and other "healthy" snacks, biscuits, mini-snacks, soybean snacks and new and unusual products. Opportunities also exist to further penetrate the market for potato, corn and tortilla chips.

At the same time, however, the snack food sector is exceptionally fluid and dynamic, as it is in most high-income markets. New products continually enter the arena, often pushing older items off the shelves. Competition is strong and plentiful from other exporters, as well as from Singaporean processors, some of whom produce major brand-name chips and other snacks under license from U.S. or foreign firms.

Snacks Range From Familiar to Exotic

The Singaporean market features many of the same snacks that are familiar to U.S. consumers, from a variety of chips and other extruded snacks (cheese curls) to popcorn, candy snacks, biscuits and crackers, nuts and dried fruit. Other snacks less familiar to Western tastes include dried peas and beans, prawn and fish crackers and dried cuttlefish.

By their nature, snack foods are purchased on impulse and generally do not need refrigerated storage space. They are also a profitable product line for retailers. For these reasons, snack items are widely available on the island in supermarkets and neighborhood grocery stores.

Upscale supermarkets and convenience stores tend to carry more imported and expensive snack food items. Outlets that serve upper income consumers and expatriate segments of the market include Sogo, Cold Storage, Kimisawa, Daimaru, Tierney's and Jason's supermarkets and 7-Eleven. Retailers who serve middle and lower income consumers tend to stock less expensive, locally produced and more traditional snacks.

Service stations have taken on an increasingly important role in the distribution of snacks. A growing number of service stations, particularly the 24-hour outlets, carry snacks, and many have started to stock some imported items. A visit to one service station found several flavors of Ruffles Potato Chips from the United States.

Trade statistics compiled by the Singaporean government classify snack foods in the category of "crisp savoury products." According to these statistics, total imports of these products from all sources increased by more than half between 1988 and 1992, from 1,371 metric tons to 2,088 tons.

In 1992, the United States was the leading supplier with a 37-percent share of total snack food imports by volume, up from 21 percent in 1988. Malaysia was second in 1992, with a 29-percent share, followed by Thailand at 10 percent. In 1988, Malaysia had held the top position, with 55 percent of the import market. In addition to the United States, other suppliers such as Japan and Taiwan are also gaining market position.

Although no figures are available, snack food production within Singapore is also very sizable, led by such companies as Britannia, Keebler and Ken Ken. Overall, Singapore is a net exporter of snack foods, reflecting local production for export as well as the re-export of imported products.

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Assessments of Market Growth Vary

In interviews with Singaporean retailers and importers, estimates of volume growth in the consumer market for snack foods ranged from 1 to 2 percent a year to 5 to 10 percent. Retailers were generally found to be more upbeat in their assessment than importers and distributors. Whatever the growth rate, per capita consumption of snacks remains well below U.S. levels, and several factors are contributing to market expansion.

These include higher disposable incomes among young adults and increased allowances for children, permitting them to buy their own snacks and go out more often to the cinema and other places where snacks are readily available. At the same time, a ban on the sale of snack foods in schools was identified as a major factor constraining market growth. One major retailer reported increased sales of all snack foods during school holidays.