SINGAPORE - Consumers in Singapore are relatively unfazed by the thought of food prices heading north, with 69 per cent indicating there is enough flexibility in their household budget to absorb a rise in food prices, according to a new Nielsen report.
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Here is the press release from Nielsen:
Consumers in Singapore are relatively unconcerned by looming food inflation, with the majority (69 per cent) indicating there is enough flexibility in their household budget to absorb a rise in food prices without having to make significant sacrifices to their spending in other areas according to a report released today by Nielsen, a leading global provider of information and insights into what consumers watch and buy.
In other countries in Southeast Asia, the majority of consumers said there was enough flexibility in their household budget to handle a rise in food prices without having to make major spending cuts elsewhere, with more than three quarters (78 per cent) of Thai consumers leading, followed by Indonesia (70 per cent), Vietnam (70 per cent), Malaysia (66 per cent) and the Philippines (58 per cent). All Southeast Asian markets score well above the global average of 50 per cent.
Nielsen's Global Survey of Inflation Impact polled more than 29,000 Internet respondents in 58 countries to understand how respondents around the world of all income ranges were coping with rising food prices. The study identified the countries, categories and retail channels that were more insulated to weather hard economic times and those which were more vulnerable.
While the majority of Singaporean consumers were unlikely to make significant spending cuts to cope with rising food prices, many indicated they would look to adjust their outlay on out-of-home dining (72 per cent), new clothes and accessories (59 per cent), snack foods (49 per cent) and recreation and entertainment (45 per cent) to off-set food inflation, which are the top 4 areas where the other countries in Southeast Asia would cut back on as well.
Food categories which were most vulnerable during inflationary times included discretionary products such as candies, cookies and other sweets, chips and other snack foods, carbonated beverages and alcoholic beverages, while staple products such as meat, poultry, fish, seafood, fresh and frozen fruit and vegetables and dairy products appeared largely immune to consumer cutbacks in the face of rising food prices.
Buying items while on sale, stocking up on regular items and buying larger pack sizes were the three key actions consumers said they would take to deal with food inflation.
"As income levels steadily increase throughout the region, many Southeast Asian consumers appear to be taking the rising cost of living in their stride," said Matthew Krepsik, Executive Director of Nielsen's Marketing Effectiveness Practice in Southeast Asia, North Asia and Pacific.
"In order to appeal to a broad range of consumer classes it will be increasingly important for FMCG companies to understand the diversity of consumer demand across the region to accurately gauge purchasing power and the scale of goods and services required to meet the needs of consumers in both developed and developing Southeast Asian markets."
"If consumers are required to make trade-offs to extend their food budget, they will shift to core staples, pay more attention to promotions and special offers and look to cut back their spending on non-essential, indulgent and processed foods."
When asked about how rising food prices may influence where they purchase grocery items, shopping more often at discount stores was the most likely change cited by almost half (48 per cent) of consumers in Singapore, which is much higher than the global average of 33 per cent. Malaysia (37 per cent) Philippines (36 per cent) and Indonesia (35 per cent) also indicated they would shop more at discount stores, while in Thailand and Vietnam consumers indicated they would be most likely to grow their own food.
Consumers across Southeast Asia also indicated a strong likelihood to shop more at de-stocking and clearance stores and warehouse club stores. During times of rising food prices, consumers across all six Southeast Asia market said they were most likely to respond by stocking up on regular use items when they are on sale and purchasing only sale-priced items, with the exception of Vietnam where using social media to find specials was the most likely change consumers would make to cope with the increasing price of food.
Despite buoyant consumer confidence and rising income levels across the region, the Nielsen survey revealed a number of consumers were still living day-to-day, with more than one in two (55 per cent) Filipino and Vietnamese consumers saying they only had enough money for shelter, food and basics over the past year - 11 percentage points higher than the global average of 44 per cent.
In Malaysia close to half of consumers (48 per cent) were living on wages which only covered shelter, food and basics, as were 42 per cent of Thais, and around one third of Indonesians and Singaporeans (34 per cent).
"While Southeast Asia's middle class population is growing rapidly, there remains a large proportion of consumers in both developed and developing countries in the region who are merely subsisting," observed Krepsik. "As increased cost-of-living is realised, it is these consumers who will be most significantly impacted."