14 December 2019
The state of the food and beverage industry in Malaysia
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In order for any business to thrive and succeed it must understand its target market and be flexible enough to provide the type of products or services which will meet ever-changing needs. The industry itself will only succeed when individual businesses are receiving positive results. There is often a need for the government to lend a hand in order to enable local business to thrive and play a part in international trade. This is especially true in the food and agriculture industry where product standards need to be high and kept in line with environmental requirements.

Great strides

In South East Asia, in Malaysia, the Government has made great strides in its efforts to increase food production and liberalise trade in the Food and Beverage sector (FAB). This goal is made more significant by its diverse and ever-growing multi-cultural population. The Food and Beverage Industry is seeing an average annual increase of 7.6% and reflects an enhancement in private consumption and lifestyle. These positive results are attracting attention from foreign businesses abroad and now the FAB sector has become a primary area for investment by the government in Malaysia.

Retail growth

Malaysia is catching up with the west not only in new food processing technologies but in how consumers expect to buy food products. But of course, these two factors are intrinsically linked. The idea that most of the food products are bought from market traders is no longer true. Malaysia has a growing food retail market which comprises of small-scale retailers, large scale retailers, convenience stores and petrol marts. Large scale retailers (such as Tesco’s) are definitely on the rise in towns and city centres. The presence of these retail giants means that imported goods are made available to the buying public in Malaysia – so offering a much more diverse and varied selection of food products.

Online services

New technologies are certainly making tentative strides in the Malaysian Food and Beverage Industry, but it is still early days for online services. As much as it could not be considered to be available to all, big retailers such as Tesco, Jaya Grocery and Sam’s Groceria offer their customers a delivery service. However just as the west have couriers, third party services are used to deliver food (Happy Fresh, Red Tick and Honestbee). The fact that these companies are thriving suggests that it is a growing sector in the economy and again reflecting an enhanced wealthier lifestyle within Malaysia.

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Food outlets

Partly because of its multi-cultural population, Malaysia has nurtured a rich and diverse food service which offers both local and international cuisine. Visitors will find restaurants, cafes bars and fast food outlets. The fact that they continue to thrive shows that more people are able to dine out in a country where there is a a new-found wealth for the average man in the street.  Recent studies suggest that on average, Malaysians spend the major part of their disposable income on dining out.  It needs to be noted that because 60% of the population is also Muslim, all food served needs to be certified Halal by the Department of Islamic Development (JAKIM).

Food processing

Studies show that the Malaysian food sector is growing 5% annually. Overall it is still on target next year to be the preferred market for food production and distribution of Halal foods. Though this sector is predominantly local Malaysian businesses, there has been great new investment from international companies.

Export in the food and beverage industry

To compliment the growth of the thriving home market it is good news that the export industry has been making headway for many years now. Malaysia’s most significant exports are in the oils and fats sector. In fact, the country is one of two of the largest exporters of palm oil in the world. Agriculture plays a major part in exports – especially as premium fruit and vegetables are exported to the Middle East and Europe – and offers extra income and opportunities for local farmers Overall, the food and beverage sector accounted for just under 10% of the total exports in 2017.

The future

Looking to the future, consumer demand for convenience foods is expected to keep growing which in turn will lead to smaller pack sizes at affordable prices. As the internet is likely to play a larger part in the market, the bigger retail brands are taking to the road to promote their brands – marketing campaigns and events are likely to include anything which will attract clients to the brand.

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