Singapore food firms move production abroad: Climbing the value chain or hurting brand?

Recent decisions by major homegrown food manufacturers like Gardenia, Yeo Hiap Seng (Yeo's), and Asia Pacific Breweries Singapore (APBS) to shift large-scale production out of Singapore are not signaling a decline in the country's food industry standing. Instead, experts suggest these moves represent an evolution of Singapore's role, transitioning from a manufacturing base to a hub for ideas and higher-value activities. This shift involves concentrating on product development, market research, food safety, and regional management within Singapore, while relocating labor-intensive production to lower-cost regional markets.

Companies are increasingly adopting hybrid operating models. Ms Chong Ri Jia, CEO of food production firm FoodPlant, notes that the focus is shifting from deciding whether to stay in Singapore to determining which activities are best suited for local operations versus regional ones. Agility, innovation capability, and speed-to-market are becoming as crucial as manufacturing scale. This strategic realignment allows firms to leverage regional cost advantages for mass production while retaining core competencies and innovation in Singapore.

“

Made in Singapore carries meaning because consumers associate it with trust, quality, food safety and reliability. If too much production shifts out, we risk weakening that identity over time.

However, this trend is not without potential drawbacks. Saktiandi Supaat, chairman of the People’s Action Party’s Government Parliamentary Committee for Finance, and Trade and Industry, acknowledges the valid concern that a continuous outflow of production lines could dilute the strength of the "Made in Singapore" brand. This brand is highly valued by consumers for its association with trust, quality, food safety, and reliability. A significant reduction in local manufacturing could erode this identity over time, necessitating careful monitoring and strategic adjustments.

Rising costs related to labor, land, and energy in Singapore are the primary drivers behind these relocations. Over the past two months, Yeo's announced consolidation of can manufacturing in Malaysia, APBS is reallocating production to its regional breweries in Malaysia and Vietnam, and Gardenia is moving its bread production to Malaysia. While these moves reflect a strategic adaptation to regional economic dynamics and a move up the value chain, the potential impact on Singapore's manufacturing reputation requires ongoing attention.

“

Firms are adopting hybrid operating models, where large-scale production may be regionalised, while higher-value functions such as product development, process engineering, quality systems and regional management remain anchored in Singapore.