2004 Nov Issue
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Five win 'Best of the Best' awards from among 500 top retailers in Asia-Pacific
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Asia's demand for canned food on the rise

According to a recent Euromonitor International report, sales of canned food in Malaysia last year were sluggish, compared with notable increases in the monthly sales of fresh, chilled and frozen foods in hypermarkets and super­markets. Conversely for retail stores in China's urban areas, the report showed canned food gradually overtaking fresh produce as the most widely consumed.

Growing trade is also bringing more foreign canned food into India and China, where it is mostly consumed by high-income earners. Nevertheless, reported Euromonitor, canned food still constituted a very small portion of packaged-food sales in India in 2003, with sales for canned vegetables alone making up only Rp38 million (US$832,968).

In contrast, the consumption of canned fish and other seafood is going strong in Indonesia, according to Euromonitor statistics. Canned seafood, including fish, collectively enjoyed a 57% share (or 19,620 tonnes) of the country's total canned-food sales volume last year. This was up 9%, compared with 7.6% in CAGR (compound annual growth rate) for canned seafood in the review ­period.

Even canned ready meals, which registered a better sales-volume growth of 10.5% in 2003, were fish-based.

Indonesia's canned-pineapple producers have also been actively catering for the world market.

In his paper presented at a UNCTAD (United Nations Conference on Trade and Development) workshop in Thailand in April 2001, Prayogo U Hadi, agricultural economist with the Indonesian Ministry of Agriculture's Agency for Agricultural Research and Development, highlighted that the average export share of canned-pineapple in Indonesia for the 1990-99 ­period had reached 86.42% in quantity and 80.46% in value.

In contrast, the country's fresh and dried pineapple achieved only 2.16% in average export quantity and 1.98% in average export value for the same period.

Hadi's report further stated that the government was a key driving force behind Indonesia's booming canned-pineapple industry. Besides granting companies infrastructural support and the right to operate pineapple plantations for 30 years and beyond, the government also granted tax holidays on imported canning machinery and growers during unproductive stages.

In Singapore, Euromonitor had anticipated close to 5% sales growth in canned products for 2003 to nearly S$100 million (US$60.1 million), stemming largely from increased home consumption as a result of the severe acute respiratory syndrome (SARS) outbreak from March-May last year.

Andrew Teo, CEO of Singapore-based canned-food manufacturer Twin Food International, said canned food would come in handy for consumers wanting to stock up on supplies in the event of a SARS or bird-flu outbreak, or other unforeseen circumstances.

Teo also sees a strong and growing demand for canned-food convenience by the food-service industry. “Restaurants, hotels, ships and airlines — [for example], prefer semi-processed food for quick and cost-efficient operation,” he said.

Goh Joo Hin Pte Ltd (GJH) is one of a few companies in Singapore that command a major share of the regional market with its strong branding, reliable quality and affordable prices.

“GJH also engages reputable and established factories, which enable it to deliver on its promise of quality products to consumers,” said Wayne Goh, GJH's COO.

Comprising a host of brand names like New Moon, Mili, Shanghai B2 and GuLong, GJH's canned range has sold well on the basis of convenience, reliability and hygiene.

Dairy Farm International, one of the republic's leading retail-chain owners, has also reported that although more consumers are going for the convenience and variety of chilled and frozen ready-to-eat meals, canned food produced under its private labels, First Choice and No Frill, continues to do well.

At Dairy Farm's Cold Storage Supermarkets, canned vegetables, such as corn and mushroom, emerged the best sellers last year among the outlets' canned-food range, including tuna, sardines and chicken broth.

Cold Storage Supermarket's senior merchandising manager, Shum Poh Choo, said the company decided to produce canned food under its own labels following research showing the initiative to be more economically and commercially viable.

“These products have proven to be very popular with customers and, in some cases, the private-label products are among the top three sellers in the canned-food category,” she added.

To remain competitive in the market, industry players are looking for new ways to improve the quality of their canned food.

Shum said that Cold Storage has put in place quality-control and R&D processes to deliver superior canned products to its consumers.

To maintain consistent quality, the supermarket group has drawn up a list of ‘product specifications' standards to ensure that its suppliers' products meet stringent food-safety regulations.

“We have also enlisted the assistance of a third party to test all new private-label products. R&D is an ongoing process in our private-label programme, and specific resources are allocated to manage this within the group,” Shum added.

Marketing is equally important to beefing up a brand's market share.

Said Goh of GJH: “GJH understands the market requirements well and is continuously adding exciting new products to our existing range to ensure that our consumers' needs are met. At the same time, innovative packaging, marketing activities and positioning are carved according to each brand's strategy.”

Besides quality control and R&D, Teo of Twin Food also finds strong international branding and marketing, along with competitive pricing, integral to the success of his company's canned fruits and seafood.

Twin Food also hopes to branch out to new and healthier ready-to-cook meals and semi-prepared dishes for busy consumers.

“Canned-food producers must also provide reliable and credible services, have a strong understanding of the process, as well as work closely with their customers and suppliers as business partners,” Teo maintained.

Market players believe that the success of a canned-food business also hinges on other factors.

“Canned food is a volume business. Building an international sourcing capability, developing a strong team and giving quality assurance to customers [are crucial for success],” said Teo.

“Our strong international network in more than 25 countries, with strategic partners and offices, key international customers and suppliers give us an upper hand in this business,” he said.

Regionally, industry experts believe that Thailand and China offer better opportunities for canned-food production. The two countries offer more competitive operational costs and can provide the space required for a labour-intensive industry like food canning, said Goh.

“Further, regulatory requirements like HACCP, ISO, GMP, etc will help enhance and maintain high-quality standards,” he added.

The abundant natural food resources, efficient manufacturing capability as well as cheap and efficient labour in China and Thailand also make them ideal production grounds for canned food, affirmed Teo.

With quality control, targeted marketing efforts and a focused approach in meeting customer demand, canned-food manufacturing and retailing in Asia could soon be riding the skies in market share and profits.

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