Current Market Condition of Food and Beverages in the Philippines

The Philippines economy is small and has one of the lowest GDP per capita rates ($US3,200) in
the whole of Asia. However, between 2003 and 2007, GDP grew by over 50% in terms of its
local currency and in 2007 real GDP grew at over 7% (although in 2008 GDP dropped to 4% as a
result of the financial crisis), making it one of the worlds fastest growing economies. This has
largely been driven by strong domestic demand, economic reform, relative political stability, and
the successful exports of services (e.g. telecommunications, business outsourcing), labour, and
manufactured goods and resources.1
Euromonitor reports that the Philippine economy is growing at a healthy pace and steady rates of
growth are expected in the medium term. The real growth rate of the Gross Domestic Product,
(GDP), grew 4.8% in 2012 to US$416.7 billion on a purchasing power parity, PPP, basis. Real
GDP should grow by 5% in 2013. Though this represents a slowdown from the forecast of 5.5%
in 2012, the economy will still be expanding faster than its potential. Even though economic
headwinds will likely slow exports of electronics, strong fiscal spending, low interest rates, and
resilient remittances from overseas Filipinos will continue to drive the economy. 2
The Philippine retail sector continues to modernize and expand, fostering steady sales of a wide
range of Food & Beverage, (F&B), products. Supermarket chains are opening large, Westernstyle stores in Metro Manila, Cebu, Davao and other key provincial cities such as Bacolod,
Cagayan de Oro and Iloilo. At least some of the recent improvements in the retail sector can be
attributed to the passage of the Retail Trade Liberalization Law in 2000, which allows foreign
retailers to operate independently in the Philippines. In response to liberalization, local
supermarket chains undertook positive changes to modernize their stores, stream-line operations
and broaden their line of imported products. The retail sector is dominated by companies such as
Metro Gaisano, Robinson's Supermarket, Rustans/ Shopwise Supercenters, SM Supermarket
and S&R.3
Sales in the Philippine Hotel, Restaurant and Institutional (HRI) food service sector have grown
by 99% over the past five years to an estimated US$4.25 billion in 2012. Restaurants were the

1 http://www.dpi.vic.gov.au/agriculture/investment-trade/market-access-andcompetitiveness/markets/philippines/analysis-of-the-food-sector-in-philippines
2 http://www.foodexport.org/resources/countryprofiledetail.cfm?itemnumber=1030
3 http://www.foodexport.org/resources/countryprofiledetail.cfm?itemnumber=1030

top contributors with US$3.7 billion (87%), hotels and resorts with US$377 million (9%), and
catering and other food service institutions with US$163 million (4%) in estimated gross sales.4
A booming economy, the proliferation of malls and shopping centers throughout the country, and
a growing influx of tourists have all contributed to this strong growth. According to industry
interviews, roughly 25% of all consumer-oriented F&B product imports flow through this
sector.5
According to the 2011 Annual Survey of Philippine Business and Industry on Hotels and
Restaurants, the number of restaurants (including fast-food chains, casual dining outlets, cafes
and bars) grew from 72,200 outlets in 2007 to 80,000 outlets in 2011, an increase of 11%. It is
anticipated that the number of restaurants will continue to grow by 2% to 5% annually as the
Philippine economy continues to strengthen and major shopping malls throughout the country
continue to flourish.6
Post anticipates continued growth in F&B import demand through 2013 (and beyond) across a
wide spectrum of products, with some of the fastest growth potential in convenience, gourmet,
and healthy, natural, and organic categories.7
There are over 11,000 food and beverage processing companies in the Philippines producing a
wide variety of products that rely heavily on imported ingredients such as meat and poultry
products, fish and marine products, dairy products, processed fruits and vegetables, seasonings,
and fats and oils. The small to medium size industries are mostly family-owned. Unlike other
countries in the region where multinationals dominate the food processing industry, local
companies such as San Miguel, RFM Corporation and Universal Robina Corporation hold a
large share of the Philippine food-processing sector.8
Food manufacturing, including food and beverage processing remains the Philippines' most
dominant primary industry accounting for more than 40% of total output in manufacturing. The
industry contributes approximately 20% of GDP per year.9

4 http://www.foodexport.org/resources/countryprofiledetail.cfm?itemnumber=1030
5 http://www.foodexport.org/resources/countryprofiledetail.cfm?itemnumber=1030
6 http://www.foodexport.org/resources/countryprofiledetail.cfm?itemnumber=1030
7 http://www.foodexport.org/resources/countryprofiledetail.cfm?itemnumber=1030
8 http://www.foodexport.org/resources/countryprofiledetail.cfm?itemnumber=1030
9 http://www.foodexport.org/resources/countryprofiledetail.cfm?itemnumber=1030

Food and beverage manufacturing is an important component of the Philippine economy. In

2009, gross value added in food manufactures and beverage industries reached Php 903.7 billion
at current prices, contributing 58 percent of total manufacturing output and 12 percent of the
country's gross domestic product (GDP). In real terms, the sector contributed nearly half of total
manufacturing output and 11 percent of GDP.10
The industry has generally grown over the past five years, with real growth of 4.8 percent per
year. The key growth drivers include the consumers' increasing demand for convenience, the
growing number of working women (and hence, less time for home cooking), fast-paced and
changing lifestyles, as well as the changing retail and distribution landscape.11

Table 1 - Total Family Spending on Processed Foods and Beverages, 2009 (in million pesos)

Expenditure Item

Amount

Percent Share

Cereal and cereal preparations

83,299

20.4

Other roots and tubers including preparations

2,732

0.7

Processed fruits and vegetables

5,409

1.3

Meat and meat preparations

50,322

12.3

Dairy products and eggs

74,536

18.3

Fish and marine products

31,441

7.7

Coffee cocoa and tea

33,932

8.3

10 http://www.dpi.vic.gov.au/agriculture/investment-trade/market-access-andcompetitiveness/markets/philippines/analysis-of-the-food-sector-in-philippines
11 http://www.dpi.vic.gov.au/agriculture/investment-trade/market-access-andcompetitiveness/markets/philippines/analysis-of-the-food-sector-in-philippines

Non alcoholic beverages

44,360

10.9

Food n.e.c*

60,365

14.8

Alcoholic beverages

21,850

5.4

Total family spending

408,246

100

Note: * Food not elsewhere classified; includes sugar products, cooking oil, margarine, sauces,
other spices and seasoning and other food n.e.c
Source of basic data: NSO Family Income and Expenditure Survey12
There were 882 processed food and beverage establishments2 with employment of 20 and over,
according to the NSO's Annual Survey of Philippine Business Establishments, 2008. These
establishments employed a total of 150,955 workers with value of output reaching nearly Php
640 billion. The figures include about 78 establishments engaged in the manufacture of
beverages with total employment of 14,014 persons and value of output of about Php 93.6
billion.13
Meanwhile, there were some 80 processed food and beverage companies included in the
Philippines' Top 1000 Corporations, with total gross revenues of close to Php 688 billion in
2009. About a fourth of the gross revenues were contributed by the leading companies in the
manufacture of malts and liquors, some 14 percent by milk manufacturers (except infant's milk)
and 12 percent by softdrink manufacturers.14

12http://www.dpi.vic.gov.au/agriculture/investment-trade/market-access-andcompetitiveness/markets/philippines/analysis-of-the-food-sector-in-philippines
13 http://www.dpi.vic.gov.au/agriculture/investment-trade/market-access-andcompetitiveness/markets/philippines/analysis-of-the-food-sector-in-philippines
14 http://www.dpi.vic.gov.au/agriculture/investment-trade/market-access-andcompetitiveness/markets/philippines/analysis-of-the-food-sector-in-philippines

Partial list of players in the processed food and beverage industry

Processed foods - Milk and dairy products

Alaska Milk Corp.

Arce Dairy, Inc.

Fonterra Brands Philippines, Inc.

Kraft Foods (Philippines), Inc.

Magnolia, Inc.

Nestle Philippines

New Zealand Creamery, Inc.

Unilever RFM Ice Cream, Inc.

Yakult Philippines, Inc.

Sauces and condiments

Del Monte Philippines, Inc.

HDR Foods Corp.

Lorenzana Foods Corp.

Marigold Commodities Corp.

McCormick Philippines, Inc.

Silver Swan Manufacturing Corp.

Southeast Asia Food, Inc. / UFC Philippines, Inc.

Biscuits and cookies

Commonwealth Foods, Inc.

Croley Foods

Monde M. Y. San Corp.

Monde Nissin Corp.

Republic Biscuit Corp.

URC

Snackfoods

Commonwealth Foods, Inc.

Leslie Corp.

Liwayway Marketing Corp.

Regent Food Corp.

Universal Robina Corp. (URC)

Beverages - Juices and teas

Cenmaco, Inc.

Del Monte Philippines, Inc.

Dole Philippines, Inc.

Kraft Foods (Philippines), Inc.

Marsman-Drysdale Foods Corp.

Pepsi Cola Products Philippines, Inc.

Philippine Beverage Partners, Inc.

RFM Milk and Juice Division

San Miguel Corporation

The First Enterprises, Inc.

URC

Zest-O Corp.

Alcoholic beverages

Asia Brewery, Inc.

Diageo Philippines, Inc.

Distileria Bago, Inc.

Emperador Distillers, Inc.

Ginebra San Miguel

San Miguel Corporation

Tanduay Distillers, Inc.

Processed fish

A. Tung Chingco Mfg Corp.

Ayala Seafoods

Bagumbuhay Industrial

Century Canning Corp.

Chattrade Enterprises

Columbus Seafoods Corp.

Maunlad Canning Corp.

Universal Canning Corp.

Processed fruits and vegetables

Dalisay Sweets

Del Monte Philippines, Inc.

Dole Philippines, Inc.

Florence Foods Corp.

Jo-na's International Philippines, Inc.

Queen Food Mfg.

Ram Food Products, Inc.

Noodles and macaroni

Monde-Nissin Corp.

Nestle Philippines

Nissin URC

URC

Zest-O Corp.

Processed meat

A. Tung Chingco Mfg. Corp.

CDO Foodsphere

Pacific Meat Co., Inc.

Swift Foods, Inc.

The Purefoods-Hormel Company, Inc.

Bottled water

Asia Brewery, Inc.

Coca-Cola Bottlers Philippines Inc.

Nestle Philippines, Inc.

Philippine Spring Water Resources Inc.

URC

Waters Unlimited, Inc.

Coffee

Commonwealth Foods, Inc.

Nestle Philippines, Inc.

San Miguel Corp.

Universal Robina Corp.

Softdrinks

Asiawide Refreshments Corp.

Coca Cola Bottlers Philippines, Inc.

Cosmos Bottling Corp.

Interbev Philippines, Inc.

Pepsi Cola Products Philippines, Inc.

Source: Center for Food and Agri Business, University of Asia and the Pacific15
Most of the companies are located in Luzon, catering to the large Metro Manila market, which
has a night population of about 11.5 million in 2010. The daytime/work day population could be
about 14 million. Some are concentrated in Mindanao such as in the case of fish canning,
seaweed processing and pineapple processing.16
Philippine processed foods and beverages are among the country's leading export products. In
2009, exports amounted to US$1.2 billion with a robust growth of 11.6 percent per annum from
only US$782 million in 2005. Shipments consisted mainly of processed fruits and vegetables,
fish and seafood preparations, sugars and sugar confectionery, cereal, flour, starch, milk
preparations and products, and dairy products, and edible animal products. The key markets
include the United States (US), Asian countries like Japan, South Korea, Indonesia, Malaysia,
15 http://www.ats-sea.agr.gc.ca/ase/6212-eng.htm
16 http://www.ats-sea.agr.gc.ca/ase/6212-eng.htm

Thailand, Taiwan, Singapore and Vietnam, as well as countries in the Middle East such as Iran
and the United Arab Emirates.
Meanwhile, imports grew by 9.8 percent per year to nearly US$2 billion in 2009 from a little
over US$1.4 billion in 2005. The leading product categories include dairy products, eggs, honey,
edible animal products, miscellaneous edible preparations, meat and edible meat offal, cereal,
flour, starch, milk preparations and products, and milling products, malt, starches, inulin and
wheat gluten. The major country suppliers include New Zealand, Australia, US, India, Thailand
and Ireland.
The trade balance has consistently been negative, with imports outpacing exports by nearly
US$800 million per annum during the last five years.17
The Philippines is a net importer of processed foods and beverages, just like most of its
Association of Southeast Asian Nations (ASEAN) neighbours. In 2009, its imports outpaced
exports by US$789 million, the third highest deficit after Singapore (US$962) and Malaysia
(US$960). It paled in comparison to Thailand, Indonesia and Vietnam, which managed to post
trade surpluses.

Table 2 - Processed foods and beverages: Trade Balances of ASEAN Countries, 2009
(in US$ millions)

Country

Exports

Imports

Balance

Brunei

169

(168)

Cambodia

33

486

(453)

Indonesia

4 420

2 734

1 686

Laos

35

216

(181)

Malaysia

3 386

4 346

(960)

17 http://www.ats-sea.agr.gc.ca/ase/6212-eng.htm

Myanmar

43

484

(441)

Philippines

1 195

1 984

(789)

Singapore

4 094

5 056

(962)

Thailand

12 173

1 964

10 210

Vietnam

3 606

3 048

559

Source of basic data: International Trade Centre (ITC)18

18 http://www.ats-sea.agr.gc.ca/ase/6212-eng.htm