Wine to Singapore

(Last updated: 15 Aug 2008)

Trends and opportunities

The market

Alcoholic drinks in Singapore are reasonably expensive because of high taxes, which have held consumption down to some extent. However, Australian wines have steadily increasing in popularity over the last decade, as Singaporean consumers have become more cosmopolitan in their dining and drinking habits. They are more aware of the excellent wines available from Australia.

The wine sector is generally classified into on-premise and off-premise trade. Wines sold on-premise can range from over S$40 to a few hundred dollars. Wines The majority of the wines sold in the retail store level are priced between S$18 to S$40. Boutique wines sold at wine shops and retail stores are normally priced S$50 onwards.

Factors which are bringing about change in wine consumption include:

• Increased tourist and hotel sector activity. Increases in the numbers of hotels and, consequently, hotel restaurants have increased distribution access to three sectors: local consumers, expatriates and tourists. The same has been the result of an increase in other licensed premises that sell wine.
• A broadening of retail access for wines. There has been an increase in the numbers of retail outlets stocking wines. Many, which formerly stocked spirits, primarily cognac, brandy and beer, are now stocking wines. Currently, wine consumption is increasing while demand for other alcoholic beverages is shrinking.
• Singapore is experiencing a proliferation of new food and beverage outlets with many of these new restaurants having their own wine cellars.

There is also a trend among the more sophisticated locals to buy wines for consumption at parties and celebratory events, although ‘Bring Your Own (BYO)’ schemes are still quite rare in Singaporean restaurants. BYO normally attracts a corkage fee of up to S$30.

More than a quarter of a million Singaporeans, on average, visit Australia as tourists every year. Many of these tourists will return with an interest in fine Australian wines. Students who have studied in Australia also bring back an affiliation with 'Down Under' products.

Opportunities

In 2007, Australia's market share in Singapore accounts for 37 per cent (15.5 million litres) of bottled still wine in terms of volume. Although Singapore is currently saturated with a proliferation of wines, opportunities for Australian wineries lie in boutique wines. As with other labels, Australia will have to be competitive in price, strategic advertising and promotions.

Competitive environment

Fragmentation in Singapore's wine sector has developed over the past years and it is now possible to find in Singapore almost any wine from any part of the world.

The effects of increasing affluence have boosted wine consumption over the past few years. Most of the major Australian wine labels; such as Penfolds, Lindemans, Wolf Blass, Jacob's Creek, BRL Hardy and Wyndham Estate; are available and there is an increasing selection of wines mainly from Australia, France, Italy, USA, NZ and Chile.

Singapore's supply of wines comes from all of the major wine producing countries of the world. The importers involved in the wine trade include:

• Companies with links to producers, eg. Foster's Group 
• Mainstream importers of alcoholic beverages comprising local trading companies with solid links to suppliers and often a long history of activity in the sector
• Retailers, ie. wine specialist retail stores
• The larger importers, some of whom are the wholesaling arm of major retailers
• Specialist wine wholesale merchants and a number of general trading companies who import small quantities for commodity-style distribution in Singapore
• Industry knowledge reveals that a re-export base is very important for most wine distributors, as the volume being consumed in Singapore is too small to be viable in the long term

Tariffs, regulations and customs

Although, Singapore is regarded as a free port, all alcoholic beverages are subject to high excise duties. The importation of all intoxicating liquors and tobacco products into Singapore is subjected to duties and seven per cent Goods & Services Tax (GST) on the cost, insurance and freight value (CIF) plus the duties payable.

Excise duty on wine and sparkling wine is S$70 per litre of alcohol and a GST of seven per cent is added to the base retail price by the retailers. Champagne and sparkling wine also incur the same duty of S$70 per litre of alcohol.

Goods imported for storage in a licensed warehouse must be declared to customs at the time of importation. Both the GST and customs duty payable at importation will be suspended. The GST and customs duty will be payable when the goods are removed from the licensed warehouse for use.

The importer or his agent has to be registered with Singapore Customs and maintain a security, in the form of a bank guarantee or insurance bond with Customs for transactions involving dutiable liquors and tobacco products.

Duties and GST have to be paid before the alcoholic beverages and tobacco products are released for sales/consumption locally. The importer or his agent has to apply for an In-Payment (duty and GST) permit electronically via the TradeNet® System prior the products are released for local sale or consumption. The importer or his agent has to make sure that the intoxicating liquors meet the requirements which are specified as follows:

• The computation of duty for liquors will be based on the classification code, unit volume and alcoholic strength as declared in the Inward Permit. Extraction of liquor sample for duty assessment is not necessary unless required by customs.
  
  
• Duty payment may be made for direct import of commercial and non-commercial quantities of liquors without bonding into a licensed warehouse. Where the duty rate is based on per litre alcohol, the actual alcoholic strength should be used to assess the duty payable.

Industry standards

Imported wines are subject to The Sale of Food Act, administered by the Food Control Division of the Agri-food  Veterinary Authority of Singapore (AVA). The AVA regulates the safety of all imported or locally produced food until just before it hits the retail market.

The Sale of Food Act Chapter 283 (the Act) gives regulations on: 

• packaging
• sale by date/expiration date
• labelling requirements

Marketing your products and services

Market entry

Singapore has many distributors handling wines and spirits today, including commodity traders who might become involved in the market from time to time, especially during the main buying season, November to February.

Some recommended methods for selling into Singapore include:

• Appointing an importer or distribution partner
• Liaising directly with individual wine shops or bottle shops equivalent in Australia

The tourist, tourism related and food/beverage service markets are very important as restaurants and bars purchase from a number of sources in order to obtain a good price and variety for their stocks. Variety in stocks is quite important as Singaporeans don’t have loyalty to any wine supply country and are quite adventurous when it comes to switching to new wines and tastes. Most hotels will attempt to purchase key wine supplies direct from importers rather than through other channels.

The low to mid-range priced wines are normally sold at the retail store level. Supermarkets generally carry inexpensive wines and labels that are retailed between S$18 to S$30 or on special offer.

Higher priced wines are distributed through wine shops and on-premise outlets such as wine bars and fine dining restaurants. Singapore's serious wine consumers don’t usually purchase premium wines at supermarkets with their more routine shopping. Specialist wine shops are still the leading retail outlets for premium labels.

Some barriers still exist:

• Wine is still not part of Singapore's local food culture. Cognac (from a traditional aspect) and beer (a long time in the market with good local brewers who have invested heavily in developing the market) have become part of the local beverage culture.
• Wines are generally believed to be an accompaniment to Western-style meals. There is also a belief held by Singaporeans that there is a formal etiquette as to how they should be consumed.
• Heavy penalties for drink driving offences and vigilant police have had adverse effects on wine consumption, especially during the festive seasons.
• Poor storage conditions and inventory management of wines sometimes results in the poor quality of some of the wines being retailed in Singapore. Some distributors don’t know the proper storage of wines, which require careful handling in Singapore's hot, tropical climate.
• The National Environment Agency (NEA) has extended the smoking ban to hawker centres, coffee shops and entertainment outlets. This has led to a drop in on-trade consumption of alcoholic beverages.

Product education is very important for the development of the wine industry. Some distributor/suppliers are attempting educational programs through various means. For example, by using direct marketing techniques to get the message across, holding tasting sessions, direct mailing from supermarkets to regular customers and running wine appreciation seminars for locals in the more affluent areas of Singapore, clubs and business functions.

Individual brand owners promote and advertise their wines through sampling and advertising in the local newspapers. The advertising and promotion strategies are varied, depending on individual brands.

Austrade Singapore with the support of the Australian Wine & Brandy Corporation also runs a series of programs on a regular basis.
 

For instance, the Singapore-Australian Wine Education Award (SAWEA) was a very successful educational program organised in collaboration with the Singapore Hotel & Tourism Education Centre (SHATEC) and the Singapore Australian Wine Importers Group (SAWIG). Its objective was to emphasise and invest in young personnel in the hospitality industry, the quality and philosophy of Australian wine. The education award which was set up in 1993 with the support of AWBC, ran over a period of 10 years to educate and encourage recent graduates and young service staff working in the hospitality trade to learn more about wines, particularly Australian wines, and to build greater awareness and confidence in the dissemination of Australian wine knowledge to the general public.

Distribution channels

Wines are usually imported by agents/distributors that service retail outlets (about 245 supermarkets outlets), wine shops and Singapore's very substantial food service sector (hotels, restaurants, airline caterers, ship chandlers, hospitals, clubs, etc).

Off-trade consumption of wine accounts for slightly more than 70 per cent of the total volume sales of wine.

For some years now, both large supermarket chains, NTUC Fairprice and Cold Storage, do some direct importing of Australian wine. This trend is expected to continue, although it is not favoured by the traditional importers/agents.

Transport

Larger consignments of wine are normally shipped in 20ft or 40ft containers, while smaller consignments are airfreighted by pallets.

Links and industry contacts

Wine–related resources

Australian Wine & Brandy Corporation – www.wineaustralia.com

Government, business and trade resources for Singapore

Agri Food and Veterinary Authority – www.ava.gov.sg
Singapore Customs – www.customs.gov.sg