Foreign supermarkets aren’t the real concern

IS there anything wrong with having the bulk of the country’s premium supermarket chains foreign-owned?

The question arises after Thailand’s Charoen Pokphand Group (CP Group) said it is buying The Food Purveyor (TFP), which owns Village Grocer and Ben’s Independent Grocer.

The premium supermarket sector is controlled by two players – TFP with about a third of the market and Jaya Grocer with a 52% market share, based on 2024 estimates.

Jaya Grocer also happens to be foreign-owned, with Singapore-headquartered and US-listed Grab Holdings Ltd as its parent.

It is interesting to note that both these chains were family-founded businesses that can trace their roots back to small kedai runcit.

Credit must go to those entrepreneurs. They successfully moved up the supermarket value chain, catering to affluent consumers in big cities.

It just so happens that private equity funds seem to love supermarkets. Jaya Grocer was initially acquired by such a fund before being sold to Grab, which bought it as part of the ecosystem of consumer services it is building.

CP Group, on the other hand, is a well-known conglomerate hungry for expansion across South-East Asia in the businesses it operates.

So now that the main premium supermarkets in Malaysia are in the hands of foreign players, does this pose a threat to the country’s food security? Probably not.

Premium supermarkets account for only a small share of total grocery retail sales in the country.

The fact remains that the bulk of other supermarkets, minimarts and convenience stores remain in local ownership.

One should arguably be more concerned about other basic services dominated by foreign players. Two sectors come to mind: ride-hailing and last-mile delivery.

In the former, Grab clearly dominates the market, with its platform having largely decimated the local taxi industry.

In last mile delivery services, the government issued too many licences to foreign players, with the key ones coming from China.

With their deep pockets and long-term plans, they undercut prices and drove local competitors out of business.

Today, foreign players dominate market share in this segment. Having foreign parties controlling our ride hailing and last mile delivery services is arguably a bigger concern than the foreign ownership of premium supermarkets.