Middle East conflict driving surge in costs of up to 60%, threatening Singapore brands’ global ambitions
Shipping delays and higher freight rates are adding further strain, squeezing profit margins.
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SINGAPORE: Homegrown snack company The Kettle Gourmet is taking its distinctly local flavours beyond Singapore’s shores, expanding into markets such as Malaysia, the Philippines and China.
But like many local lifestyle brands, its plans to go abroad are increasingly being tested by the rising cost of doing business.
Material costs – such as plastic, which is primarily made from petroleum – have surged by around 60 per cent in the past month, driven in part by the ongoing conflict in the Middle East.
Shipping delays and higher freight rates are adding further strain, squeezing profit margins.
The Kettle Gourmet, which specialises in gourmet popcorn, is now hoping for more government support to sustain its expansion.
Its chief financial officer Chan Zi Wei noted that the coverage from grants like those from Enterprise Singapore has dipped from about 70 per cent to 50 per cent.
“Expanding overseas is not actually not very cheap - so the investment we get to put in is actually pretty high, especially the marketing cost,” Mr Chan said.
He pointed out that the company needs support in terms of cash flow, as approval for claims can take up to six months to a year.
“I think for us, mainly, is the delay in grants that … makes it a bit tough in terms of cash flow,” he added.
“Also, for example, capital investment in manufacturing is usually pretty high, so we do hope that sometimes (we can get) a progressive kind of disbursement rather than waiting for a few months after getting approval to get the amount.”
Nevertheless, he said schemes like the Double Tax Deduction for Internationalisation Scheme, where companies planning to expand overseas can claim a 200 per cent tax deduction on qualifying expenses, have helped to cushion the impact of rising costs.
FASHION, ART BRANDS ALSO IMPACTED
Other local brands are facing similar challenges.
Fashion brand Shop With The Sisters, which has a mostly online presence and has expanded into Malaysia and Indonesia, is grappling with rising logistics and inventory costs, as well as higher platform fees.
It has raised prices by up to 50 per cent over the past year even as revenue grew 20 per cent, supported by a stronger customer base built through pop-ups.
"It's really a struggle to sell things online now with high platform fees. It's actually very, very ridiculous. We have to mark up our prices also,” the company’s co-founder Aqaiyah Nor Azman told CNA.
“Having pop-ups like this, we can maintain our prices and also meet our customers, and sometimes people would want to feel and touch the fabric of what they like. It helps a lot in the sales,” she added.
Art brand ByJolyn, which has ventured into Australia, is also feeling the squeeze.
While its sales grew by about 15 per cent over the past year, material costs such as fabric and paper have risen by roughly 30 per cent, alongside a 10 per cent increase in shipping costs – cutting into margins and adding pressure on overseas operations.
Its founder Jolyn Kang said she is now working on setting up another pop-up in Malaysia as her global audience expands.
The brand is now calling for more collaboration with Singapore-based intellectual properties to boost reach and competitive advantage.
“I know a lot of Korean IPs are very popular. But I feel like if they give Singaporeans IP a chance, we will be able to grow from there," noted Ms Kang.
POP-UPS, TRADE FAIRS KEY TO GROWTH
As costs continue to climb, entrepreneurs say more support – from funding to mentorship – will be crucial in helping local brands navigate increasingly challenging conditions as they expand overseas.
For The Kettle Gourmet, its revenue has almost doubled since 2022, driven largely by partnerships formed through pop-ups and trade fairs both locally and abroad.
Events like ARTBOX, Singapore’s largest creative festival featuring over 250 brands from across the region, have become key platforms for exposure and growth.
With more than 50,000 visitors annually since 2023, about 20 per cent from overseas, such events are helping brands connect with international consumers and distributors.
That has translated into tangible opportunities for The Kettle Gourmet.
Some of them are coming back every year to get our products and they have interest in bringing the products back to their countries as well,” Mr Chan said.
“So from there, we told them: ‘Why not come to our trade fairs if you are able to? That's where we actually share more, and then we link up from there.”
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