Bak Kwa
Local bak kwa makers are adopting different pricing tactics this year as they navigate a landscape of rising component, rental and labour expenses.
Fragrance still sells its signature sliced tender bak kwa for about S$60 a kilo – the same as last year – despite a 5 per cent increase in overall production costs, said its director of operations Tan Cheng Kwee.
Similarly, the jerky at Peng Guan Bak Kwa goes for S$56 a kilo in spite of 15 per cent higher costs. It is absorbing the expenses and reducing its margins to retain its regular customers, said owner Zhang Ziyue.
Kim Joo Guan, meanwhile, has raised the price for 1 kg of its gourmet traditional bak kwa to S$74 from S$72 to account for higher production costs, which are up about 10 per cent. But director Arthur Ong said this adjustment is moderate, with the company absorbing a portion of the cost.
The retailers said that key ingredient costs, such as those of pork and sugar, have jumped. Tan also cited higher compliance fees for food safety, quality assurance and operational standards.
They are facing upward pressure on wages and steeper rents as well. Zhang said rental is up about 15 per cent across Peng Guan’s plant and stores.
Ong highlighted a stronger demand for premium gift sets this year. Tan agreed, pointing to products seen as “premium yet reasonably priced”.
Hampers
Gift-givers should prepare for higher prices as operational costs mount.
But Noel Gifts has kept its price tags unchanged for its signature two-metre-tall hampers – they still retail for S$988 each – as well as its fresh fruit and flower baskets, which had a 5 to 10 per cent jump in demand this year.
Nonetheless, raised prices “could be inevitable in the future”, said general manager Kim Wong, flagging the climbing costs of rental, manpower and delivery.
Others are already making adjustments.
Monica Jain, founder of The Hamper Story, said manpower and raw material expenses have gone up 5 per cent. The business also became GST-registered this year. Together, these factors led to a 4 to 5 per cent year-on-year increase in final selling prices.
To protect its margins without “overburdening” consumers, the company is directly procuring raw materials and collaborating with local producers for fresher, competitively priced products.
Its management of supply and demand has allowed it to handle a year-on-year sales growth of 80 to 100 per cent. Jain added that the average selling price per hamper has risen by S$15 to S$20, reflecting stronger purchasing power and a preference for premium goods.
Pineapple tarts
Pastry-makers are also feeling the pinch of rising costs, but have decided to keep prices sweet. Old Seng Choong has reported an 8 per cent increase in overall production expenses. One of the most significant cost variables is seasonal, skilled labour, said Daniel Tay, who relaunched Old Seng Choong as a tribute to his father's now-defunct confectionery shop. Meanwhile, the prices of commodities such as sugar, flour and speciality premium dairy imports are much higher than they were the year before. Operational expenses from logistics to utilities continue to trend upward, too. Still, to keep the “must-have” festive treats accessible and the brand competitive, Old Seng Choong is absorbing the steeper costs. A 12-piece box of its pineapple tarts continues to sell for S$38.80. Similarly, Swiss Cottage Bakery noted a 3 to 5 per cent rise in costs, but kept its pineapple tarts and rolls – which are now sold out – at S$16.90 a bottle. This considers customers’ budgets and helps the bakery stay competitive, said director for event operations Foong Cheng Hon. Though Swiss Cottage explores flavours “that move with the crowd” – case in point: its pistachio series – he observed that traditional pastries “still take the top spot”.
Mandarin oranges
In the mandarin orange market, consumers can expect stable pricing – or even savings. Costs – and therefore selling prices – have remained broadly stable, said SLH Fresh Fruits general manager Ang Eng Guan, noting that a good harvest brought better-quality imports. At Sin Kian Choon Trading – or SKC Fruits – a 2 kg box of hong mei ren oranges is going for S$12.60 this year. That is down from S$13.60 last year, which manager Ng Jun Qian attributed to lower supplier prices. But for the premium-grade version of the fruit as well as the pa pa gan variety, higher rainfall during the growing season led to smaller yields and higher rejection rates. Insofresh founder Lee Ying said this pushed the costs of securing them up by 15 to 20 per cent, and raised selling prices by about 20 per cent. The weather conditions for large yong chun lukan were more favourable, but their supply was slightly tighter. Insofresh had to increase its prices by up to 10 per cent, due mainly to higher local operating and logistics expenses. Ang said costs of “traditional oranges” such as lukan and ponkan are continuing to decline, with suppliers finding that demand has not kicked in. He noted that consumers are gravitating towards higher-quality varieties such as hong mei ren, pa pa gan and Jeju hallabong, and are even willing to pay more for better packaging, especially when gifting. One surprise this year was the entrance of a new variety called huang mei ren – which Ng brought in after receiving inquiries for it. But he does not expect demand for it to match that of chun jian and hong mei ren, SKC Fruits’ best-selling oranges.
COMPILED BY BT GRAPHICS: HYRIE RAHMAT, BT