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Singaporean Pets Pant for U.S. Pet Food
Pet food producers who sell
to Singapore animal lovers will have no problem sniffing out
profits in this fast growing market. Almost all the pet food is
imported, and Singaporean pets are chowing down. For the past
five years, retail sales of pet food have doubled, increasing 10
to 20 percent a year.
U.S. exporters supplied over 2,300 tons of dinners in 1996, approaching a C.I.F. (cost, insurance, freight) value of $3 million (U.N. Food and Agriculture Organization’s trade data).
While this market may be small by some standards, Singapore serves as a retail product showcase for Southeast Asia. Due to its affluent, ethnically diverse population, it’s viewed as a product test center, offering entry into the regional market.
Singapore trade data indicates that 5,300 metric tons of pet food, worth $16-20 million, was imported in 1996. Primary beneficiaries of this largesse--the pampered pooches of Singapore. Though this pet population is not increasing, doting owners provide amply for them.
Appealing to doggie connoisseurs at this time: chicken and rice flavors, which are in short supply because the market is currently flooded with beef-based products. The coming flavor sensation, lamb and rice, is reputedly good for doggie dermatitis, which crops up often in Singapore’s warm, humid climate. Another trendy flavor for Fido--turkey and barley.
Singapore’s kitty population has traditionally purred for fishy flavors. Most recent trends, however, include chopped liver. And then there are the ever-popular prawns. One humane note here: Tender-hearted Singaporeans feed so many neighborhood strays, that a new market for less expensive dry cat food has sprung up in recent years.
Vacuum Packs, Smaller Packs
Ninety percent of the pet food exported to Singapore is dry. Most commonly used packaging for dry pet foods: paper and aluminum bags. Due to long shipping times and dramatic climate changes, vacuum packaging is the most effective, a package process only ANF has successfully developed at this time.
Exporters need to keep in mind one reason that smaller size bags sell best: customers usually don’t have cars. Most- often purchased sizes for dry dog food: 4 to 8 pounds and 15 to 18 pounds. Wet foods are packaged in cans ranging from 200 to 800 grams.
Stiff Markups Take a Bite Out of Profits
While there are no tariffs on imported pet foods, import markups range from 25 to 50 percent, and retail markups add about 30 percent. Those yummy pet treats suffer even higher markups, sometimes as much as 100 percent.
Through their high-quality products and continuing promotions and advertising, U.S. brands such as Eukanuba, IAMS, Science Diet, ProPlan and Eagle continue to enjoy strong market shares.
The strongest competition these companies face is from Australia, which sells the No.1 dog food in Singapore--Pedigree (it’s canned)--while Friskies leads the cat food contingent.
Australia has used effective promotions and advertising, particularly through television, to develop its market share. Moreover, Australia’s abundant raw supplies and proximity make for competitive advantages over the United States.
Japan provides stiff competition in the pet snack and treat products. These doggie and kitty treats are known for their eye-catching and elaborate packaging. Contributing to their popularity--the large number of Japanese expatriates living in Singapore and the enticements of higher margins offered to shop owners by Japanese manufacturers.
Supermarkets sell most of the pet food in Singapore. The breakdown: Supermarkets (60 percent), pet food shops (30 percent), kennels and pet hotels (8 percent) and veterinarians (2 percent).
Prospects for Growth
Dog food is expected to still be the big pet food seller, with the convenience and health benefits of dry kibbles enhancing sales. Other categories are also expected to do well: The demand for cheaper cat food is expected to increase, and treat, snack and vitamin sales will perk up.
Dry food produced by U.S. manufacturers will continue to dominate the market, as picky customers appreciate their advanced technology, quality and hygiene standards. Australia will remain the major source of canned food. India, which recently entered the market, enjoyed strong sales in 1996, but the future of this supplier is unclear.
As always, price will influence owners who may have cut back on discretionary purchases in the wake of the recent Asian crisis.
Tips for Entering the Market
Perhaps the most important decision a pet food exporter can make in this market is selecting the right distributor. Good working relationships with middlemen also count, and further enticing them with high margins won’t hurt either.
Another proven marketing activity: Donate puppy chow to breeding farms to encourage breeders to feed puppies your products. New owners usually continue to feed their pets with the same products.
Promotional advertising campaigns usually need to run six months in this market to be effective.
More Information Is Available
Want more specifics? A complete copy of the market brief this article was based on, which contains market contacts and retail prices, is available from:
Agricultural Trade Office
American Embassy
PSC 470
FPO AP 96534-0001
1March 1998 exchange rate: $1 = SD1.63.
___________________________
This article was based on a market brief submitted by the
Foreign Agricultural Service’s Agricultural Trade Office in
Singapore. Tel.: (65) 737-1233; Fax: (65) 732-8307.
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