Premium grocery market rebounds with shifting F&B trends

DFI and Sheng Siong may benefit from an uptick in grocery spending.

Singapore’s premium grocery market is headed for recovery amidst a trend of higher spending per person.

Households in private residences have shown higher spend per person, according to data from the Singapore Household Survey. This indicates willingness to spend more on premium groceries, and signals a recovery in the premium grocery market, according to DBS Group Research analysts Andy Sim and Zheng Feng Chee.

Shifting F&B consumption behavior— with more Singaporeans choosing to dine home— is also pushing up supermarket sales volumes.

Grocery market for home dining experience is expected to accelerate to mid-single digit growth over the next five years, with companies like Sheng Siong and DFI to benefit, Sim and Chee wrote in a report published on 7 January 2025.

Amongst companies, DFI Retail will benefit from the expected recovery of the market.

“With ongoing store network rationalisation, including the closure of Cold Storage locations in suburban areas (with higher Housing Development Board flats [HDB] concentration), we believe DFI’s Singapore grocery segment is well positioned for a return to profitability,” Sim and Chee said.

The analysts said that DFI should have ample liquidity for corporate actions that could boost shareholder returns thanks to its recent sale of its Singapore real estate, and the conclusion of the Yonghui sale in Q1 2025.

In particular, DFII may opt to raise dividends by 50% or give out a special dividend.

Meanwhile, Thai Beverage (ThaiBev) is expected to benefit from Trump’s recent re-election and the acceleration of China +1 strategy.

The strategy—in which companies avoid investing only in China but opts to diversify their investments— is expected to benefit ASEAN economies, particularly Vietnam. ThaiBev and companies with exposure to Vietnam may benefit, the analyst said.

“With sugar, barley, corn, and soybean prices continuing to normalise, we expect margin expansion for [ThaiBev] and Japfa,” DBS Group Research said.

Improving market conditions and lower interest rates may pave the way for ThaiBev to seek a global brewery partnership, or an IPO of BeerCo, its beer unit.