Singapore food prices: House brands fly off shelves

FairPrice to continue discounts
5% rebate will be on till end of April, costing the chain $4m - but sales up
Lim Wei Chean & Jessica Lim, Straits Times 26 Feb 08;

THE 5 per cent discounts on prices of 500 essential items sold under the NTUC FairPrice house brand will continue for another two months.

The supermarket chain said they will be offered till the end of April in the light of rising food prices here.

The discounts on items ranging from rice to bread and condensed milk were initiated last December and were to have been withdrawn this Friday.

FairPrice will take a $4 million hit for the 41/2 months of discounts, but rising sales of its house brand items are likely to more than make up for this.

Yesterday, the chain's managing director Seah Kian Peng noted that 'many people have kept asking what would happen when discounts end'.

Singaporeans have been grappling with rising food costs for some months now, as suppliers worldwide hike prices in the wake of rising costs of raw materials and production.

Yesterday brought another bit of bad news in this regard: After seasonal adjustment, the latest Consumer Price Index (CPI) was 1.5 per cent higher than last December's. Food prices were cited as one of the top four reasons for the rise.

These went up by 1.1 per cent in January over December, due to increased demand for fresh fish, poultry and pork, as well as more expensive cooked food just before the Chinese New Year period.

Compared with January last year, food prices are up 5.8 per cent.

To cope with rising costs, Singaporeans are turning to cheaper house brands and frozen foods, following Prime Minister Lee Hsien Loong's advice earlier this month to buy these to save money, since there is little difference in quality between them and branded goods.

FairPrice's Mr Seah said the demand for house-brand products has been 'overwhelming' in the last two months.

Sales of items like vegetable oil have gone up by 300 per cent and wholemeal bread, by 50 per cent.

Two other supermarket chains, Cold Storage and Giant, also reported rises in the sale of house-brand items of between 10 and 20 per cent last year, compared to 2006.

Carrefour, which offers its house brand for more exotic items like Camembert cheese, gherkins and pate, saw double-digit growth in its house-brand items last year over 2006.

The bestsellers: Bread, rice, toilet tissue, vegetable oil and baby diapers.

Going forward, Mr Seah said he did not expect the pressure on prices to ease.

He also hinted that the prices of house-brand items might go up, although they would always be 10 to 15 per cent cheaper than their branded counterparts.

He assured consumers that the chain was also looking at other ways for Singaporeans to save a buck, such as by opening a 'no frills' store which stocks basic essentials at rock-bottom prices.

Other supermarkets are expanding their range of house-brand products.

Giant hypermarket, which has about 1,000 types of house-brand products, launched another 25 in the last three months.

FairPrice, which has 2,000 now, plans to introduce another 1,000 in five years.

In the meantime, manufacturers of branded items, feeling the competition, are broadening their offerings.

Mr Jason Ng, 33, who owns Swee Heng Bakery, said: 'Our sales are affected. Now we are producing wholemeal and corn bread to try to win our customers back. It can't be helped, we cannot compete with large supermarkets when it comes to price.'