The global food and beverages (F&B) market is expected to grow by 1.5 times in the next 5 years and Asia Pacific is currently the largest region in the F&B market1. Asia’s population is expected to grow to 4.5 billion and take up 65% of the world’s middle class by 2030.
Coupled with digitally savvy consumers and increased demand for healthy and sustainable options, consumers in Asia are expected to double their spending on food to more than US$8 trillion by 20302. In addition, with the shift in consumer acceptance towards food delivery during the pandemic, Asia Pacific is expected to be the largest cloud kitchen market3.
Bank on Singapore’s fame as a food paradise and its strong reputation in food safety and quality. You have a competitive advantage in your overseas ventures because of your strong Singapore brand.
1 The next 5 years in this sentence refers to the time period 2021-2026. Food And Beverages Global Market Opportunities and Strategies Report, The Business Research Company, 2022. 2 The Asia Food Challenge Report 2021 – Harvesting the Future, PWC, Rabobank, Temasek, 2021. 3 UOB FDI Advisory, 2022
Understand the palate of your target customers in the overseas market to position your branding. Tastes and preferences can vary across regions in the same country. Be prepared to adjust your product to suit local tastes and find the market’s acceptable price points. It is also important to understand the marketing norms, such as effective outreach platforms to your target consumers, and invest adequately in marketing efforts to ensure visibility with consumers.
Find opportunities such as trade shows, pop-ups, export and distribution of food retail products to test your products in the overseas market and define your unique selling points. You may also consider exploring low capital expenditure formats such as cloud kitchens to test the market readiness of your food products and concepts.
An F&B business requires setting up a physical presence. Do you want to set up your own company-owned outlets, or work through joint ventures with local partners? How about a franchise model for quick and easier access to the market? Weigh each option’s pros and cons. If you are entering a new market through joint venture or franchise approaches, it is important to understand the capabilities, networks, and track record of the partner, to ensure that they can provide sufficient guidance, such as information on supply chain, legal matters or good locations for your outlet, and help your brand grow in the market.
Fancy opening your next restaurant in China?
China has a thriving food services scene which is increasingly more vibrant with a variety of cuisines and concepts. In 2018, China launched its own Black Pearl Restaurant Guide, which lists more than 700 restaurants, including foreign brands, across 26 cities4. This guide is an alternative to Michelin Guide, coined to reflect local consumer preferences from a Chinese perspective.
Many Singapore food services businesses (e.g., Putien, BreadTalk Group, Jumbo Group) have expanded their footprint in China via both physical outlets as well as onboarding of digital platforms like Meituan and Ele.me as more Chinese consumers turn to online delivery and food reviews.
Key growth opportunities: Demand for unique dining experiences and healthy food
With a population of 1.4 billion and growing affluence, China’s private consumption is expected to reach US$12.7 trillion by 20305, with the food services sector estimated to reach a market size of US$914 billion by 20276. This provides a good opportunity for food services businesses overseas and those new to the market.
Increasingly discerning Chinese consumers will demand new and unique dining experiences and have stronger preferences for brands that are aligned to their values and interests, e.g., healthier food options. China’s consumer market is also fast-moving, and consumers have greater access to information through digital platforms (e.g., food review, table reservation, food delivery apps, etc.). An online-to-offline strategy would significantly enhance customer engagement for food services businesses in the market.
Set up food service formats that appeal to locals
When setting up a food services business in China, it is useful to note regional differences. For instance, in Tier 1 cities such as Beijing, companies could consider ‘grab and go’ restaurant formats, especially in central business districts where office workers have a stronger preference for quick service concepts. For lower-tier cities where family occasions remain prominent, full-service restaurants remain a popular option.
Find out more on how you can enter China here. To understand the steps needed to successfully bring your brand to China, download our guide here.
4 ‘China’s answer to Michelin Guide, the Black Pearl Restaurant Guide, is seen as a better judge of Chinese cooking’; SCMP, 26 March 2022 5 ‘Chinese consumer spending is set to double by 2030, Morgan Stanley predicts’; CNBC, 29 January 2021 6 ‘China Food Service Market Report 2022: Market will Reach $914.09 billion by 2027 – Full-Service Restaurants holds Lion’s Share’; Research and Markets, 29 April 2022
SEA’s Biggest Consumer Market and a Promising Demographic Profile
Indonesia is the fourth most populous economy in the world after China, India, and the United States, with a population of more than 270 million. 20% of the Indonesian consumers are middle class and this segment is expected to continue growing7, with the middle class projected to make up 75% of the population by 2030 and driving up consumption including food expenditure. In addition, Indonesia has a young population with a median age of 29.9 years old, and its increasingly digital-savvy population (73.7% or 202.6 million are internet users)8 has led to the rise in popularity of online food purchases.
Your company can take advantage of this rising demand.
Online-to-offline Business Opportunities
The pandemic had accelerated the growth of food delivery and online groceries, with Indonesia currently being the largest food delivery service market in Southeast Asia and accounting for 31% of the total food delivery value of the region9. This has led to more online-to-offline (O2O) opportunities for F&B companies as they tap on new revenue streams such as ready-to-cook meals, and cloud kitchens as an alternative to brick-and-mortar stores since they require lower capital expenditure.
Preference for Dine-in Experience and Local Flavours
Mall culture is strong and valued by Indonesians as it is a family destination for many. Indonesian consumers generally enjoy savoury flavours and carbohydrate-heavy meals so localisation of food is important for companies to succeed in the market. For instance, international brands such as McDonald’s Indonesia and Taco Bell have incorporated rice in their menu for Indonesia.
Find out how you can enter the Indonesian F&B market.
7 World Bank, 2020. 8 Digital 2021: Indonesia, Kepios, We Are Social, Hootsuite Inc., 2021. 9 SEA e-conomy report, Google, Temasek, 2020. Region refers to Thailand, Singapore, Malaysia, Philippines, Vietnam and Indonesia.
The United States (US) alone accounts for 25.1% of the global food services industry – the size of its food industry grew to US$800.1 billion (S$1.1 trillion) in 2021.
Strong consumer spending on food services
In particular, quick service and fast food restaurants are popular in the US, accounting for over 40% of the entire food industry.
US gateway cities, such as New York, Los Angeles, or San Francisco, are cosmopolitan and open to different cuisines. American consumers have diverse tastes and are accustomed to having many choices. Singapore’s F&B businesses will find many opportunities in these cities, as well as a customer base with sufficient spending power.
Approaching the US market
Although opportunities abound, the US market is highly competitive and saturated. Be prepared to invest both capital and resources in market research, branding and marketing activities to break into the market.
One key decision to make is your business model in the US. Depending on your business objectives, you may choose to incorporate your business in the US or work through third parties. Your business structure, as well as the state you choose to operate in, will result in different regulatory and taxation obligations.
Sourcing for ingredients for your food business is easy in the US due to its well-developed ethnic grocery sector and global trade links. Singapore businesses rarely have to obtain your own licenses for imports to support your food services. However, do take note of the US immigration and labour laws when planning your staffing.
Learn how you can open and operate a food services establishment in the US with our US Consumer Food Guide.
10 Source: US Bureau of Labor Statistics.