Market Analysis for Juice in Singapore
Within the fruit beverage market, Undue Is positioned as a niche product whereby the target market re willing to pay a premium for a better quality and pure freshly squeezed Juice without the addition of water, preservatives, additives or sugar (Undue 2008). International manager Mathew Barlow Is quoted In reference to expansion of operation to Singapore that, “Singapore is a great export location for us at the moment because they have similar trading regulations, a sophisticated English speaking market, a cafe and deli food culture and there’s no major trade restrictions or need to change packaging”. Stared 2008). 2. 2. Market Size and Outlandishness’s population size currently sits at an estimate 4. 5 million people (CIA 2008). Despite having a smaller consumer base in comparison to Australia, Singapore estimated Gross Domestic Product per capita of 2007 was $48,900 where Australia has a low $37,500 (CIA 2008). Singapore also boasts a steady GAP real growth rate of 7. 5% proving Singapore to be a stable economy with signs of continuous prosperity which will allow for consumers to purchase Undue in the future (CIA 2008).
Consumer trends in Singapore has seen an opening for Undue to enter the market by he ‘growing health awareness encouraged by public health bodies’, in addition to ‘being one of the key trends influencing the soft drinks industry in Singapore’ (Remuneration 2008). The current competitors operating in Singapore have recognized the change in consumer taste by adapting their product lines. This has been most evident by fruit/ vegetable Juice and tea which ‘saw the most new product Introductions’ (Remuneration 2008).
By local manufacturers recognizing and adapting to such trends, It Is evident that Singapore will be a highly competitive market for Undue to enter, however, there s still opportunity to enter due to the ‘strong performances from fruit/vegetable juice, bottled water, RED tea and functional drinks in 2006’ (Remuneration 2008). With regard to the political and economic factors of Singapore, a report by the 1 OFF government ‘will continue to maintain Singapore appeal for foreign direct investment (FAD) ‘which has been evident by reducing the corporate tax rate’.
The government has also been ‘offering rebates in industries it is trying to nurture and maintain free trade agreements with its main trading partners’. The current globally effected US Sub-prime mortgage crisis did not noticeably affect Singapore financial sectors or currency, retaining domestic consumer confidence. The report also forecasted stable growth in demand of its main manufactured exports of electronic, transport engineering and pharmaceutical goods for the years 2008 and 2009. 2. 2. Market Characteristics mentioned in the market definition above, Singapore has similar features to that of Australia in regards to how the market is segmented and distributed. The significant increase in consumer spending in Singapore has revived Undue the opportunity to take maximum advantage by distribution to large supermarket chains as well as supplying to cafes, restaurants and delis that are featured within the city state. This distribution chain can be classified as between selective and intensive.
Singapore features 3 main supermarkets being Collaborate, Overprice and Giant Hypermarket. This is very similar to the oligopoly of the three major supermarket chains (Coles, Woolworth and Franklins) that Undue supplies to in Australia. The pricing of 100% fruit Juices in Singapore is similar to Australian pricing. For example, Australia’s Beerier apple Juice that is 2. 4 liters in volume costs $5. 50 Singapore Dollars ($4. 30 ADD), where in Australia it is priced at $4. 34 (Cold Storage; Coles; EX 2008).
This information suggests that Undue should have a similar pricing strategy in place if it is to enter the Singapore market. As of 2003, Singapore initiated a bilateral trade agreement with Australia known as SHAFTS (Singapore Australia Free Trade Agreement). “SHAFTS offers greater opportunities in goods and services to a wide range of Australian exporters, furthers threatens trade and investment links, eliminates Singapore tariffs and provides cheaper inputs for Australian businesses on a range of products. ” (Stared 2008).
A main feature of this bilateral trade agreement relevant to Undue is the removal of all tariffs on Australian exports to Singapore, eliminating an expense that would affect profit margin or pricing of Undue products. Singapore proves to be an adequate market to enter by its higher GAP and growth rate, trading ties with Australia, geographic position, consumer tastes and growing spending trends. It is therefore evident to conclude that Undue has an opportunity to expand operations into this new market which will increase sales and in turn, profitability. 2. 2. Target Market Behavioral focusing on consumer trends it should be noted that Singapore geographic position alongside the equator provides a tropical and humid climate all year round, allowing for a market of chilled drink sales unaffected part of a South East Asian diet in which recent trends have found that Singapore ‘are more aware of the attributes of pure fruit Juice and more willing to pay the price’ (Boris 1993). Consumer trends seem to project a ‘growing health awareness encouraged by public health bodies’, which has been ‘one of the key trends influencing the soft drinks industry in Singapore’ (Remuneration 2008).
It is to be noted that growth in fruit and vegetable Juice consumption in Singapore has been fast-paced, to say the least. Singapore consumed 13,071,000 liters of Juice in 1992, up from 5,644,000 liters in 1988′ (Boons 1993). Undue should note that Singapore’ most favored fruit Juice preference seems to be citrus fruits, where lime Juice is considered ‘one of the most popular’. Sales worldwide in citrus fruit Juice saw ‘a strong growth surge of nearly 110 percent was seen between 1990 and 1991, with most of this increase being retained in Singapore for consumption’ (Boris 1993).
Pineapple Juice also has a high preference where ‘total imports increased 70 percent between 1991 and 1992, with all of this being retained in Singapore for consumption’ (Boris 1993). Consumer purchasing behavior has shown increases in spending, indicated by the Meat and Livestock of Australia (ML) report, which detailed “Singapore retail sale f food and beverages grew by 21% during January 2008 compared with the same time last year” (ML 2008). Statistics also showed that there was a 1. % from 2007-2008 increase in ICP expenditure in consumer spending on food, with a 6. 6% increase when comparing January 2007 with January 2008 (Singapore Statistics 2008). From the consumer trends and behaviors mentioned, conclusions can be drawn that not only are Singapore raising their household expenditure on food and beverages, they have a strong yearly consumption of fruit Juice and are willing to pay more for quality products which greater satisfy their tastes.