Why Asia-Pac's growing middle class bodes well for Dairy Farm

Asia-Pac’s middle class to balloon to 1.7b in 2020.

According to DBS Imagining Asia 2020 report, Asia Pacific’s middle class is expected to reach 1.7bn in 2020 from 525m people in 2009 on the back of higher disposable income. The expected increase in income will drive consumption demand.

Dairy Farm, being a direct proxy to consumption growth in Asia, is set to benefit from this growth.

Here's more:

Dairy Farm (DFI) is a leading pan Asian retailer, operating over 5,600 supermarkets, hypermarkets, health and beauty stores, convenience stores, home furnishing stores.

DFI offers exposure to rising Asian consumption as its retail operations are diversified across Asian markets, with different store formats targeting various consumer segments.

Food consumption in Asia and ASEAN set to double by 2020 grow. We project that food consumption in the Asia Pacific region to grow by 7% CAGR to reach US$2.2bn in 2020 from US$1.1bn in 2010.

In ASEAN, food consumption is expected to grow at 5.6% CAGR to US$606bn by 2020.

Diversified retail operations. DFI offers exposure to non- discretionary retail consumption in the Asia Pacific. In contrast, we note that most its key competitors in the various markets are not as widely geographically diversified as DFI.

Regional supermarket demand to grow at an average of 6.5%-7% p.a. Hypermarkets as well as markets in Indonesia, and China are poised to grow the fastest within Asia.

According to forecasts by BMI and Marketline, the average industry growth in DFI’s key markets falls between 6.5 7% from 2012 to 2017 fuelled by higher demand for food, higher disposable income, and population growth.

DFI’s
store network is well covered in the Asia Pacific and will be a beneficiary of this regional growth trend.

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