Food and beverage market in the Philippines

The modernisation of food retailing in the Philippines is throwing open new opportunities for New Zealand exporters of food and beverage products with an already well-established market there for New Zealand dairy exports.

Thanks to a growing urban population, there are opportunities for New Zealand exporters of vegetarian, seafood-based, and natural organic products as well as high quality meat and wine. 

Market structure

  • The country's consumer spending is fuelled by two major groups, the Overseas Filipino Workers, (OFWs) and the Business Process Outsourcing (BPO) sector. OFWs totalled $23 billion in 2011 while BPO earnings were projected to reach US$11 billion.
  • Supermarkets and hypermarkets, dominate the distribution of the US$9.1 billion packaged food market in 2011, followed by other grocery retailers and small grocery retailers.(i)
  • Grocery retail sales totalled US$32 billion in 2010, 67 per cent of the market dominated by other grocery retailers. Sari-sari stores, small independent stores, remain the largest grocery channel in terms of total sales. (ii)
  • Spending on grocery products rose among middle and high income consumers in urban locations and while grocery retail sales grew by 24 percent during the period 2005-2010, hypermarket experienced the most rapid growth, 33 percent in 2010. (iii)
  • Independent foodservice outlets took up close to 80 percent of the foodservice market in 2010, with sales totalling US$ 8.2 billion. Jollibee Foods Corp has the largest market share followed by McDonald's Corp.
  • Modern convenience stores are on the rise led by 7-11, Mini-Stop, Shell Select and Caltex Star Mart and they sell more quality imported products than the local equivalents.

Growth drivers

  • The Philippines' population is growing by around 2 percent annually, reaching nearly 100 million, leading to an increasing demand for food and beverage products.(iv) Personal consumption expenditure jumped to 7 per cent in the fourth quarter of 2010.(v)
  • Filipinos eat up to five times a day and frequently snack. The youth-oriented market - around 35 percent of the population is under 15 years old - is fond of attractive packaging and sweetened food and beverages.
  • With the number of dual income households increasing there is growing demand for easy to prepare food. As more people move to urban areas for work, an increased demand for packaged food products is also anticipated.(vi)
  • There are large numbers of young Filipino workers in the business process outsourcing and call centre industry, who are big consumers of western-style fast food, packaged convenience food and alcoholic beverages.
  • Wine has been popular with Filipinos living in urban areas and this trend will spread more widely to other regions. From 2010 to 2015, sales volumes are expected to grow by compound annual growth rates of 8.3 percent. (vii)
  • There is a growing halal meat market for beef, lamb and goat meat with ethnic Muslims accounting for 5 per cent of the total population.

Import trends

  • The Philippines is New Zealand's 7th largest food and beverage export market with exports totalling US$436 million in 2010.(viii)
  • The Philippines relies almost entirely on imports for its dairy products. In 2010, the country received almost 50 per cent of its dairy imports, cheese, milk, milk powder and dairy-based bakery, from New Zealand, valued at US$729 million.
  • Food and beverage imports into the Philippines totalled $5.9 billion in 2010, divided mainly among cereal, dairy and food preparation products.
  • New Zealand was the third largest importer of meat to the Philippines in 2011, after India and Australia.

Market entry and development

Market entry strategies

  • Establishing relationships with local importers / distributors who know local tastes and regulations, is the best route for entering the Philippines market.
  • Having the capacity to promote your brand through advertising and product sampling is very important.
  • While New Zealand products have a reputation for quality and product consistency, Filipino consumers are also price sensitive and will switch products quite easily.
  • New Zealand suppliers should be prepared to adjust formulations, package size and design to meet changing consumer trends.
  • It is recommended that New Zealand exporters of meat create a premium beef brand such as Wagyu or Black Angus to help differentiate it from "industrial meat."
  • For some exporters, working with a New Zealand -based export consolidator who sources and supplies a variety of products for smaller volume requirements can work well.

Regulatory information

The Philippines is a member of the World Trade Organisation (WTO), Asia-Pacific Economic Cooperation (APEC).

Under the ASEAN-Australia New Zealand Free Trade Agreement (AANZFTA) New Zealand exporters have reduced tariffs on agriculture products and beef, meat and livestock tariffs were eliminated in 2012. Tariffs on horticulture including juice are to be eliminated by 2013 and 95 per cent of tariff lines by 2020. For more information go to AANZFTA website.

Under a current two tariff policy, agricultural products such as sugar, potatoes, onions, garlic and coffee are subject to tariff-rate quotas.

All imports are subject to value added tax of 12 percent, for more information go to www.asean.fta.govt.nz.

For further tariff information go to www.tariffcommission.gov.ph.

All food imports must be registered with the Philippines Bureau of Food and Drugs (BFAD)Generally food regulations are based on guidelines from the Codex Alimentarius Commission.

All food imports must satisfy the Hazard Analysis and Critical Control Point (HACCAP) standards.

For more information on registration, go to the Republic of the Philippines Department of Health website.

Market resources and contacts

Government

Philippines Bureau of Food and Drugs (BFAD)

Bureau of Plant Industry (BPI) 

Bureau of Animal Industry (BAI) 

Industry 

Hotel and Restaurant Association of the Philippines (HRAP) 

Philippine Food Processors and Exporters Organisation, Inc

Integrated Food Manufacturers Association of the Philippines 

Meat Importer and Traders Association of the Philippines

Trade Events

From Farm to Fork: The Philippines Food Expo 2016 

Sources

(i)Euromonitor International, 20 December 2011, Packaged food in the Philippines.
(ii)Euromonitor International, 10 March 2011, Grocery Retailers in the Philippines.
(iii)Euromonitor International, 10 March 2011, Grocery Retailers in the Philippines
(iv)Worldstat info, Philippines,en.worldstat.info
(v) National Statistical Coordination Board, 2 February 2011, Fourth Quarter 2010
(vi)Euromonitor International, 20 December 2011. Packaged food in the Philippines.
(vii)Euromonitor International , 14 March 2011, Wine in the Philippines.
(viii)International Trade Centre, Trade Statistics for International business development.

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