Singapore’s Food and Beverage Industry Buckles Under Influx of Chinese Brands

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Diners eat out in Singapore on July 12. Photo: VCG

Closures of food and beverage (F&B) businesses in Singapore picked up this year as an influx of Chinese brands ratcheted up the pressure on locals to hold on to customers and keep costs under control.

An average of 274 F&B businesses shut down each month in the first nine months of 2024, reaching a total of 2,465, according to a new report by consultancy Knight Frank LLP. That average is up from 229 last year and 170 in 2020, when pandemic restrictions brought dining out to a near standstill in the city-state.

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Singapore saw a surge in F&B business closures, with an average of 274 shut down monthly in the first nine months of 2024, driven by increased competition from Chinese brands.
Local F&B businesses face challenges like rising rents, high material and labor costs, and limited agricultural output necessitating imports.
Many Chinese F&B chains, such as Hey Tea and Luckin Coffee, are expanding in Southeast Asia due to cost advantages after experiencing profit squeezes in China.

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Who’s Who

Hey Tea: Hey Tea is one of the Chinese F&B chains that has accelerated its overseas expansion, including into Singapore, since last year. This move is part of a broader strategy to escape market difficulties in China, where intense price wars are affecting several segments such as coffee and hotpot. These expansions target Southeast Asia due to the region's cost advantages and potential consumer dividends.

Chagee: Chagee is among the Chinese F&B chains that have accelerated their overseas expansions since last year to escape domestic market challenges. The brand is expanding into Southeast Asia, including Singapore, where it faces favorable cost advantages and consumer dividends. This expansion is part of a broader trend of Chinese F&B brands moving abroad due to increasing competition and reduced profits in China.

Luckin Coffee: Luckin Coffee, a Chinese F&B chain, has been accelerating its overseas expansion, including into Singapore, to escape a domestic market slump. This includes seeking cost advantages and consumer opportunities in Southeast Asia. In China, aggressive price wars in segments like coffee have significantly squeezed profits, with major F&B companies in Beijing experiencing a nearly 90% year-on-year profit decline in the first half of the year.

Tai Er: Tai Er is a Chinese spicy fish specialist that is among the Chinese food and beverage chains accelerating their international expansion. This strategic move aims to counteract a downturn in their domestic market, with Southeast Asia being a favored destination due to better cost advantages and market potential.

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