The Market Outlook & Focus For Singapore 2022 – Allianz

Fatihah Ramzi, DigitalCFO Asia | 20 July 2022

Agrifood sales in Singapore reached US$9.8bn in 2021 but is still more than 10% short of its pre-crisis level back in 2019.

Agrifood is a vertically integrated value chain that includes both alcoholic and non-alcoholic drinks as well as upstream farming and downstream food processing. Manufacturing in the agri-food sector is expected to take up a significant amount of time in the next decades. Meeting global demand in the face of supply chain bottlenecks and a robust downstream retail sector continues to be the key concern.

Due to its continuous consumption pattern, which is fueled by the increase in the world’s population and disposable income, the agrifood industry historically has not had many instances of a rapid jump in level of uncertainty. Following three years of underwhelming performance prior to the pandemic, agriculture has benefited from the increase in food commodity prices, particularly for grains and oilseeds. New changes, however, are transforming the agrifood industry’s operations and the strategic priorities:

  • As consumer preferences shift to favor more regional goods, food producers are under pressure to address labor shortages, particularly in Europe.
  • Due to their limited pricing power and the rising transit costs that retail outlets steadfastly refuse to absorb, downstream packaged food producers continue to struggle.
  • Consumers are increasingly favoring online distribution channels.
  • Given the ongoing strains on land and water, climate change may have an impact on crop output.
  • Agrifood supply chains are under pressure as a result of ongoing lockdowns designed to stop the Omicron virus from spreading throughout the world, particularly in the segment of alcoholic and non-alcoholic beverages.

The Covid-19 pandemic has had two effects on the industry: first, the number of online food delivery has skyrocketed, and second, the out-of-home food services industry is struggling as a result. Agrifood industry leaders are nonetheless optimistic about the impending pent-up demand. Agrifood players continue to look towards reshoring food processing activities of food and beverage goods as they handle the trade-off between efficiency and resilience to the economic ebbs.

The agrifood industry as a whole should continue to be in check in 2022, especially because of product substitution effects on both the demand and supply sides. However, 2022 will be difficult for individuals who were directly impacted by Russia’s invasion of Ukraine since repercussions would be seen on the prices of grains, fertilisers, energy, and shipping. The most likely industry risks are;

  • Probability of societal unrest and problems with food security in major grain-importing nations
  • Tense discussions about the present agrifood product referencing campaign between manufacturers and mass food retailers
  • Trade disputes over agrifood tariffs between Europe, the Americas, and Asia have resumed
  • Long-term effects of climate change on crop harvests

Market Focus Of Singapore

Following a growth of +7.6 percent in 2021, Allianz predicts that Singapore’s economy would expand by +4.2 percent in 2022 and +3.2 percent in 2023. Rising corporate and consumer confidence as well as foreign demand could support robust growth in 2022. Singapore’s export growth should continue to be strong in 2022, but likely being slower than in 2021 due to strong global demand. Hong Kong, China, and the United States are Singapore’s top export destinations.

The majority of Singapore’s food necessities are imported, and the country is a major player in upstream research and development efforts worldwide. Examples include its support for agri-tech development and partnerships between academic institutions and local businesses.

Due to the government’s restriction on all forms of dining, the wholesale food and beverage industry appears to have slipped between the cracks when it comes to obtaining help. Manufacturers of staple foods, on the other hand, continue to thrive since they are necessary food items.

Due to its importance as a trading hub, Singapore experienced the Covid-19 epidemic significantly more severely than the other regions of the area, despite keeping agrifood sales well over the US$9 billion threshold in both 2020 and 2021. Its agri-food sales in 2021 were $9.8 billion US dollars, although it is still more than 10% below its pre-crisis level in 2019. In 2022, Allianz predicts that sales of food and beverages will be $9.6 billion and $1.2 billion, respectively.

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