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Larger-scale manufacturers with overseas markets are more likely to move operations out, say observers<\/p>\n
[SINGAPORE] The recent moves by two home-grown food and beverage (F&B) firms to downsize their Singapore operations and shift parts of their manufacturing overseas raise questions about whether others might follow. <\/p>\n
Tiger Beer maker Asia Pacific Breweries Singapore (APBS) said on Mar 24 that it would phase down large-scale brewing operations<\/a> in Singapore and move them to Malaysia and Vietnam. <\/p>\n A week later, on Mar 31, beverage brand Yeo Hiap Seng announced plans to consolidate its canned-drink manufacturing<\/a> in Malaysia.<\/p>\n While it is not new for home-grown firms to expand production beyond Singapore, the latest moves could signal a broader intensification in the regionalisation of the Republic\u2019s F&B sector, say industry observers. <\/p>\n But not all firms are equally positioned to make that leap. Larger manufacturers with significant scale and markets beyond Singapore\u2019s shores are more likely to do so than smaller players.<\/p>\n The Business Times<\/em> takes a closer look at why this trend seems to be intensifying, and the types of companies that might follow suit.<\/p>\n Get the insights delivered to your inbox.<\/p>\n<\/div>\n<\/div>\n It is not unheard of for Singapore\u2019s home-grown F&B firms to regionalise operations. <\/p>\n Household names, such as Gardenia bread maker QAF and soft-drink manufacturer Fraser and Neave \u2013 which formed Tiger Beer as a joint venture with Heineken<\/a> in 1932 \u2013 have long-established production bases outside Singapore<\/a>, drawn by lower land and labour costs.<\/p>\n Such moves also align with the Republic\u2019s broader economic strategy of shifting away from lower-value, labour-intensive manufacturing towards higher-value activities such as services, finance and advanced manufacturing.<\/p>\n However, post-pandemic disruptions to energy, logistics and commodity markets have deepened the push towards regionalisation, said Chong Le Jia, chief executive officer of small-batch food manufacturing facility Foodplant.<\/p>\n \u201cFirms are increasingly re\u2011evaluating production footprints as long\u2011term strategic choices, rather than short\u2011term cost adjustments, \u201d she said.<\/p>\n One such strategic priority is ensuring supply-chain resilience, with firms distributing production to mitigate geopolitical risks, freight disruptions and concentration exposure. <\/p>\n Ben Charoenwong, an associate professor of finance at Insead, flagged technology as another driver behind regionalisation. <\/p>\n Tech advancements such as automation and digital supply-chain coordination have made it \u201cfar easier today\u201d for a company to produce in Johor, Malaysia, even as it continues to manage, brand and innovate its products from Singapore, he said.<\/p>\n Chong said that companies producing at scale are more likely to regionalise \u201cas their economics change materially once production exceeds domestic demand\u201d.<\/p>\n As local brands grow their customer bases beyond Singapore, proximity to the foreign markets they serve becomes a competitive lever, she explained. These companies may move production closer to foreign consumers to lower costs, improve responsiveness and support regional distribution. <\/p>\n Conversely, some remain in Singapore as their competitiveness is anchored in capability, not cost, highlighting the trust premium associated with being made here, Chong added.<\/p>\n \u201cThese factors matter for innovation-led companies, premium brands and those manufacturing for regulated markets.\u201d<\/p>\n Prof Charoenwong noted that companies with a smaller operating scale may find that cost differences between Singapore and elsewhere do not justify the disruption and complexity of relocation.<\/p>\n They may also stay when their competitive advantages are tied to Singapore-specific assets, including access to specialised talent and integration with government-linked supply chains.<\/p>\n Ultimately, the \u201ctipping point\u201d for Singapore companies to move operations overseas is when competitors start producing at \u201cmeaningfully lower costs\u201d from nearby locations, said Prof Charoenwong.<\/p>\n \u201cBoth Yeo\u2019s and APBS cited the need to optimise capacity utilisation and strengthen manufacturing efficiency, which suggests they\u2019d reached a point where the cost gap became operationally significant.\u201d <\/p>\nNavigate Asia in
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