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Philippines Food and Drink Report 2009
Business Monitor International, Jan 2009, Pages: 56
This Philippines Food Drink Report provides independent forecasts and competitive intelligence on Philippines's food and drink industry.
In keeping with its size and multi-category presence, South East Asian food and drink giant San Miguel Corporation (SMC) continues to dominate developments in the latest Philippines Food & Drink Report for 2009. Most notable has been the company’s independent listing of its domestic beer business, San Miguel Brewery (SMB). Among several interests being spun-off or disposed of in order to raise capital, the beer unit performed strongly on its stock market debut, despite local trading uncertainty which saw SMC slash the price and volume of shares on offer.
Using funds raised via its restructuring, SMC intends to pursue its long sought after diversification into heavy industries and telecommunications. Far from reflecting a search for higher growth opportunities, SMC’s latest actions belie the potential of the dynamic local beverage sector. Thanks in part to SMC’s presence, the Philippines has a developed alcoholic drinks sector, SMC having helped establish the sort of industry best practices that drive consumption growth. To 2013, the forecasts for the value sales of alcoholic drinks to increase by 51.8%, while value sales in the similarly dynamic soft drinks industry will climb by 29.2%.
These forecasts explain the ongoing interest in the country’s drinks sector among both local and international investors. November 2008 saw China’s Hangzhou Wahaha enter the local soft drinks sector, while Japanese beer giant Kirin’s PHP59bn (US$1.26bn) bid for a 43.25% stake in newlyindependent SMB further underlines the potential of the local beer sector.
Of course, the opportunity the country’s beverage sector represents must be viewed against the backdrop of corresponding risks, chief among these being a forecast slowdown in the local economy. It is expected that Philippines’ GDP growth is to slow in 2009. While the country is expected to avoid the economic contraction forecast for many Asian states, declining consumer spending, hurt by slowing remittances from international workers and shaken consumer confidence, will hit the domestic demand-driven economy hard. Rising unemployment, from an already high level, is an additional risk. A shaky 2009 must, however, be viewed within the context of a favourable medium-term picture and investors should continue to target the market in anticipation of the long-term rewards on offer in 2010 and beyond.
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