Every Food & Beverage (F&B) entrepreneur, or aspiring ones ought to know that running a business in Singapore is no walk in the park.
Of 216 food business owners, 48% admitted that they are struggling to stay afloat when interviewed by SPRING Singapore for a study of the F&B landscape in 2015, last year.
It is no secret that our local F&B market is in a turbulent time.
We have witnessed the rise and fall of countless business operations unremittingly, throughout recent years.
Hang in there, our local F&B entrepreneurs.
Things are about to change.
Before we get onto exploring 2017's internationlisation insights, we need to be filling you in on the most pressing SME news.
The Business Times in a latest article report, addressed local SMEs' across all industrial sectors's discouraging year of 'weak economic growth' across all industrial sectors, experiencing a great slump in business throughout the year.
This bleak struggle is expected to continually last through the upcoming year, 2017. It comes as no surprise that our local F&B industry, consistently topping industries across the board with the highest feuding market aggression, is currently living out its worst days. First, get a scoop on latest SME concerns in a summary glance below:
Singapore's SME News & Stats Update (2016-2017)
- Q4 2016 - Q1 2017 SME Index registered lowest profit expectations, and second lowest Overall Index score in 7 years (with the lowest score recorded just 2 quarters ago).
- According to SME Development Survey, the percentage of SMEs that continued bearing an international presence fell 2% to 52%, within this year.
- The survey also reported financing and cash flow difficulties as the main emerging issue local SMEs currently face, rising from 6% to 22%.
- Head of enterprise at KPMG Singapore, Mr Chiu Wu Hong, identified the rise of distruptive technologies and uncertainty over global trade policies as biggest internationlisation obstacles affecting SMEs operating locally, inclusive of those that have ventured overseas.
- In The Business Times news report*, SME insiders revealed the general sentiment looming in the local industry as one of pessimism, worry and caution.
- The most highlighted news in the report, echoed by Singapore Business Federation (SBF), is all local SMEs' need for a 'serious consideration' of an internationalisation strategy, especially in 2017's market economy.
- All SMEs are forewarned to expect gloomier and weaker market conditions with higher votality in 2017; a predicted year of economic downturn, worsened.
- "No Longer Business As Usual For SMEs", The Business Times (oneasia)
(Read full article here)
Branching Out: The Only Way Forward
April this year, Singapore Manufacturing Federation (SMF) and International Enterprise Singapore (IE Singapore) both addressed the urgent need for homegrown F&B enterprises to, "look beyond the local market and continue to persist innovating and transforming their business models" in order to keep up with new benchmarking (international) standards, and to secure a future foothold in the global food industry.
Yes, you're hearing us right. Singapore's F&B industry is currently at a prime spot to infiltrate international markets, crossing new frontiers to reach new internationalisation success.
We peg down the top 5 reasons why F&B businesses in Singapore (big or small), should waste no more time to embark on an internationalisation plan, or face great losses having missed vast business expansion opportunities abroad. Don't snooze, you'll lose!
5 Factors Pushing Local F&B Businesses To Go Global Now:
- World-class Establishment
As our Deputy Prime Minister (DPM), Mr Tharman Shanmngaratnan once said,
"You can’t imagine Singapore without its Food”.
Long prided for being referred to as a “food paradise”, Singapore's international recognition is earned from our wide variety and unique blend of ethnic Asian cuisines, always finished with a modern cosmopolitan touch. More significantly, our F&B industry has earned itself a “Made in Singapore” branding title, accrediting our world-class food security standards.
Click to read more. This reputation props a great edge for our F&B entrepreneurs when competing against market rivals abroad; especially with an on-going surge of demand for “healthier” and “quality” food, reflected in latest global F&B consumer-value drivers.
(Global New Products Database, 2015)
- Riding The Smart Wave Of Asia’s Booming Economy Despite repressing global economic downturns in other sectors, Asia’s F&B industry emerged with the highest economy growth rate in the world. Also this year, Euromonitor International (Market Research Singapore) made the equitable forecast that Asia’s boom is not only here to stay, but expected to continually grow to outpace all Western countries in forthcoming years. Local SMEs from any industry that venture overseas for business expansion especially in ASEAN, are expected to enjoy a substantial growth of 5.2% over the next 5 years. (Singapore Business Federation, 2016) The good news don't end here. Congruently, IE Singapore 2016 reports have been steadily reflecting high and rising consumer demand for Asian flavours, and an exponential growth of local food exports to regional markets in the Middle East, USA and ample number of other non-Asian countries. It is a great pity that few local food business owners are snagging this lucrative opportunity to supply this hot demand.
- Diversifying From A Saturated And Unprofiting Local Market Needless to say, operating a business in a highly lucrative industry has its fair share of frustrations. Our F&B entrepreneurs are under immense pressure when remodelling their business, constantly in fear of fizzling out from the F&B scene. Finding another fitting food brand for a profiting and amicable business partnership is a quagmire with diversed market conditions in such a time. Singapore's F&B Industry 2015 Statistics report found that the average local F&B business runs at an annual loss of 8 per cent, and takes an average of 2 1/2 years to recoup their initial investment. Evidently, with current exorbitant operational set-up costs and soaring maintenance fees, opening a franchise business locally is sadly not in the cards for most business owners. What's most distinctly unhelpful, is the high influx of foreign investors aggressively and increasingly tapping into Singapore’s lucrative F&B sector; stifling an already saturated market to an even higher degree. It comes as no surprise that many of our F&B entrepreneurs are backed to a corner, finally keeling over when faced with extended periods of business unprofitability.
- Excellent Technology Infrastructural Support With technology being the cardinal driving force across all industries and e-commerce's emergence as a primary global business model today; we ought to rejoice having our main business operations based here in Singapore. Above all, the most credible advantage working in favour of our F&B entrepreneurs is Singapore’s excellent global (and regional) network connectivity and first-rate online media access. Living in a digital time, this technological functionability and accessibility exposes local F&B businesses to vast internationlisation opportunities through and across all digital spheres in their highest efficiencies.
- Strong Governmental Subsidiary Funding And Support Our local government doubled their support for homegrown F&B enterprises through multiple ways such as grants, schemes and initiatives to help boost the quality of their development and internationalising endeavours. In a few highlighting examples,
SPRING Singapore stepped it up this year with these new initiatives:
- GEMS (Go the Extra Mile for Services)
- CCI (Customer Centric Initiative)
- Industry Standards
- Any qualified SME project receives 50% subsidiary in funding
IE Singapore beefed up internationalisation scheme support along with additional grants and increased subsidiary funding:
- Double Tax Deduction for Internationalisation (DTDi)
- Market Readiness Assitance (MRA) Grant
- Knowledge Resources
(eg. IE insights, Market Guides, Research Databases, Singapore Trade Statistics)
- Learning and Networking
(eg. iAdvisory Seminars, Free Trade Agreement (FTA) Programme)
- Financial Assistance and Co-funding
(eg. iMAP, MAIP, MRA grant)
- Talent Initiatives Training Course
If these factors combinedly launch great opportunities for local F&B businesses to penetrate international markets, why are most unable to maximise these leverage?
Today, we address the main "stumbling block" setting our local F&B entrepreneurs back from reaching their internationalisation goals.
Starting with a few critical questions:
How do you grab the attention of consumers, attract them to your F&B website & have them convinced to patronise your food business (or purchase your food product) by the end of their online browsing session?
We're not forgetting that the cup is running over with tons of other eligible competitors with similar food menus all targeting a similar crowd, vying for a piece of the same pie.
Secondly, with an overhaul of information overhaul online this day and leads pouring in from all direction, how are you making sure your marketing and sales teams are not wasting time and money strategizing in misdirection, chasing their own tails repeatedly over?
Rapid digital transformations have completely disrupted former sales and marketing's strategy direction.
Sales courses have made a complete switch from offline to online.
Traditional marketing is done for (they just don't work on consumers anymore). We hate to be the ones telling you, but so will your business if you continue clinging onto yesterday's marketing paradigms.
eg. hard-selling, advertising through print media, radio, expos and tradeshows Thanks the accessbility of modern day technology (eg. search engines, online channels, media platforms), consumers now make the rules of the game and are in control of the entire sales process.
Now, is your Digital Marketing strategy one that's good enough to outlast your F&B business in this race?
Your business needs to be equipped with a full Digital Marketing Strategy for a systematic co-ordination of varying inbound (personalised and specialised) strategies, each with a clear functioning focus to reach its individual sales/ business goal. On top of that, your strategy needs a versality that is able to compete and withstand the torrid market battle out there.
Yes, you might have spent a hefty sum putting together or heavily invested in a modern, stunning web design for your retail e-commerce or webpage:
But is it achieving any of your sales objectives, or profiting your business at all?
Is it even drawing the right traffic first and foremostly, reaching the ideal audience your business is targeting for?
In essence, do you have a Digital Web strategy?
We've stressed countlessly in previous articles and we'll stress it again.
Having a visually appealing web design alone will no longer cut it for any business; what more one that needs to stand out in a most saturated and contenting market competition.
Advanced Digital Marketing (ROI proven) builds on a combination and series of inbound strategies devised by strictly-structured processes.
Get vital info for a concrete Digital Marketing foundation here.