Food and beverage to Malaysia

Trends and opportunities

The market

Between 2015 and 2020, Malaysia’s food sales are expected to grow more than 7 per cent year on year (Source: PwC 2015). Malaysia’s food and beverage sector is increasingly sophisticated and influenced by health and convenience trends. Consumer awareness of nutrition and healthy lifestyle has created the demand for functional, minimally processed fresh, organic and natural foods.

There has been a significant shift in recent years from buying commodities such as fish and rice, towards higher value imported items including meat, dairy, wine, confectionery and organic foods. The food retail sector is also undergoing a transformation as more consumers move from purchasing their goods from wet markets to supermarkets, and increasingly through the use of home-delivery services.

What differentiates the Malaysian food scene is its multi-ethnic population consisting of Malays, Chinese and Indians, including sizeable expatriate and Western communities. This creates a demand for a variety of different fresh and processed food, ingredients, beverages and Halal-friendly products. With 60 per cent of the population of Islamic faith, Malaysia is a market for Halal food as well as being a hub for re-export to other Muslim countries. Currently, the estimated value of the global Halal food industry is US$700 billion (Source: EuroMonitor 2015).

Opportunities

Booming food service channels

The food service sector presents some of the best potential opportunities for Australian exporters. High urbanisation in Malaysia has resulted in consumers changing their meal patterns, favouring dining out instead of eating in after long working hours.

The rise of retail

International mass grocery retailers are transforming the local retail landscape from traditional neighbourhood grocers into one-stop-shop ‘superstore’ outlets. Consumers are brand and origin conscious as they relate to brands that they know are quality. The introduction of private labels to Malaysian consumers has created the option for customers to enjoy value for money retail products at one convenient location.

Halal meat

Rising consumer affluence and demand for Halal meat has increased the opportunity for more high quality Australian red meat to gain access to the Malaysian market. This is supported by Australia’s Halal integrity program, which is benchmarked against Malaysia’s Halal standard.

It is also important to note that slaughterhouses must be inspected and approved by the Islamic Development Foundation of Malaysia (JAKIM) before exporting its meat products into Malaysia. Find out more about Halal guidelines.

Dairy

Malaysia’s demand for all types of dairy products, either for local consumption or further processing, has increased significantly over the years. According to Dairy Australia, Malaysia imported a total of 51,100 tonnes of dairy products in 2015 which consisted mostly of liquid milk, whey and natural milk products, butter and fats, cheese and yoghurt. New Zealand holds the largest market share in Malaysia at 29.2 per cent, followed by USA (16.8 per cent) and Australia (9.7 per cent). While New Zealand dominates the supply of liquid milk in Malaysia, Australia has the leading market share position in cheese, yoghurt and butter categories.

Fruit and vegetable

Although Malaysia offers a variety of agricultural products, Malaysians tend to favour imported fresh produce. Australia’s fresh and safe credentials, as well its proximity to Malaysia, makes it an attractive choice for sourcing fruit and vegetables. In 2015, Malaysia consumed A$1.1 billion worth of imported fruit and vegetables, with Australia contributing approximately A$7 million (Source: Trade Map 2016).

Fish and seafood

Malaysia has a very high per capita consumption of seafood, more than 52 kg per person each year (Source: United Nations Food and Agriculture Organisation 2014). Fish is considered a cheap source of protein compared to mutton or beef. Substantial demand exists for all kinds of seafood, ranging from local fish (e.g. carp and tilapia) to more expensive gourmet delicacies (e.g. abalone, oyster and lobster).

Wine

The Malaysian wine market value is estimated at A$125 million, with a total imported volume of 10,384 tonnes in 2015. Australian wines account for 45 per cent of the Malaysian market share. Between 2013 and 2015, the value of Australian wine exports to Malaysia rose 56 per cent to more than A$54 million, maintaining its lead in supplying the market ahead of France, Chile and Italy (Source: Trade Map 2016).

Wine is poised for growth, largely driven by the growing food services sector, tourism and consumer perceptions of wine being a type of beverage that reflects premium lifestyle. Domestic consumers are price-sensitive and are more likely to drive demand in the mid-price range, with tourists and large expat communities more likely to drive demand in the premium segment.

Non-alcoholic beverages

Malaysia is an important market for drink manufacturers. The soft drinks sector is being fuelled by ongoing marketing investment and strong competition. Beverage processors are importing exotic fruit juice concentrates and juices to be processed (and blended) locally to meet the growing demand for imported exotic fruit juices or blends such as grapefruit, pomegranate and cranberry.

There is an opportunity for fruit juice exports to Malaysia, especially with the reduction of tariffs for single and mixed fruit juice under MAFTA. The import of retail packs is expensive, and imports of apple and orange juices are most popular.

Packaging & labelling requirements

The Malaysian Ministry of Health legislates on labelling, including the design and label content under the Food Act 1983 (Act 281) and Regulations. The label for specific products must include the following information:

Processed food

  • name and description of food
  • list of ingredients
  • nutrition information
  • declaration of food additives
  • net contents
  • expiry date
  • contact details of manufacturer and importer
  • country of origin.

Wine

  • all information and contact details of manufacturer and importer
  • country of origin
  • primary ingredients used in production
  • minimum content by volume
  • must give specific description of the product, the alcoholic content in bold-faced lettering of a non-serif character NOT LESS than 12 point size lettering, stating the words “ARAK MENGANDUNGI __% ALKOHOL”(i.e. Liquor containing __% alcohol). The required font size of 12 point is used to alert non-drinkers, especially Muslims, that the product contains alcohol and is not for their consumption.

Security Stamp

All liquor and wine importers/distributors/retailers must have their products labelled with security stamps. This exercise is done to reduce counterfeiting and smuggling of liquor and wines into the country. These security stamps must be put on the cover of the liquor/wine bottles as an anti-tempering mechanism and they are torn each time the bottles are opened.

The security stamps come in three colour codes:

  • red = import duty has been paid
  • green = duty free
  • purple = locally produced/bottled

Market entry

For most food and beverage products, the key to market entry success is to engage with a dedicated local importer or distributor. It is advisable for Australian suppliers to collaborate with their appointed importer or distributor to develop a plan of action to establish and grow their brand to maximise the potential for success over the long term.

Only companies that are licensed are able to handle import procedures and bring products into the market. Most imported food and beverages are channelled through importers/distributors who use different channels to sell to a range of end-users including retailers and food service companies.

Some major supermarket chains may buy products directly from selected overseas suppliers. This is to minimise costs and is usually done for selected large volume product lines. However, the 2nd tier supermarket chains and the local convenience stores are still importing selected product items through importers/ agents due to their lack of adequate central warehousing, processing and delivering facilities. 
Most food service sectors, such as hotels, restaurants and fast food operators, prefer not to handle the direct import from a large number of individual suppliers overseas for their own requirements of food and beverages. Hence, importers/ distributors generally undertake the distribution of food and beverages directly, with only a small quantity being handled by a few wholesalers.

Tariffs, regulations and customs

The Australian food and beverage industry has made significant market access gains and secured tariff reductions under the Malaysia-Australia Free Trade Agreement (MAFTA), Australian business has had greater business opportunities in the Malaysian market since January 2013.

Please visit the Department of Foreign Affairs and Trade website for comprehensive information on the MAFTA.

There are five key areas with regulated import requirements in Malaysia and it is important to be aware of the following:

Dairy

  • An import permit application is required by the Department of Veterinary Services (DVS) Malaysia from the local importer for all dairy products.
  • Fresh Liquid Milk imports are regulated by a Tariff Rate Quota under the jurisdiction of the DVS Malaysia (DVS reserves the rights on these quotas).

Meat

  • An import permit application is required by DVS Malaysia from the local importer.
  • Beef, lamb and mutton must be supplied via DVS and JAKIM approved abattoirs in Australia.

Wine

  • An import permit application is required by the Royal Customs and Excise Department of Malaysia.
  • The excise duty on alcoholic beverages including beer, wine and ciders shifted to an alcohol volume based tax instead of a volume based tax on 1 March 2016. Excise duty on wine is RM150 per 100 per cent volume per litre. Excise duty for sparkling wine is RM450 per 100 per cent volume per litre. Excise duty for beer made from malt is RM175 per 100 per cent volume per litre. There is a further six per cent GST on the total value.

Fruit and Vegetable

  • The Federal Agricultural and Marketing Authority (FAMA) legislates the Grading Packaging and Labeling of Agricultural Produce (GPL Regulation) requiring all fresh imports to be labeled in Bahasa Malaysia on the product content and specifications (on all cartons). Fresh produce should be graded according to either the MS Standards, Codex Standards or the Country of Origin Standards.

Fish and Seafood

  • An import permit is required by the Fisheries Development Authority of Malaysia for all fish and seafood.
  • The Ministry of Health, Malaysia, requires that a health certificate accompany all imports of fish and seafood.
  • Compliance with Malaysian food laws and regulations, which are among the most sophisticated in Southeast Asia.

Industry-related links

Approved International Islamic Bodies Recognised by JAKIM
Australia Malaysia Business Council
Bursa Malaysia (Stock Exchange)
Central Bank of Malaysia (Bank Negara)
Department of Statistics Malaysia
Department of Veterinary Sciences (DVS)
Economic Planning Unit (EPU)
Federal Agricultural Marketing Authority
Fisheries Development Authority of Malaysia
Food Act 1983
Food Regulations 1985
Malaysia Australia Business Council
Malaysia External Trade Development Corporation (MATRADE)
Malaysian Investment Development Authority (MIDA)
Ministry of Foreign Affairs of Malaysia
Ministry of International Trade and Industry (MITI)
Official Portal of The Government of Malaysia
Royal Malaysian Customs Department

 

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