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Philippines Food and Drink Report 2011
Business Monitor International, Jan 2011, Pages: 68
The Philippines Food and Drink Report provides industry professionals and strategists, corporate analysts, food and drink associations, government departments and regulatory bodies with independent forecasts and competitive intelligence on Philippines's food and drink industry.
BMI View: Still-low food consumption levels and a relatively less explosive growth outlook mean that the Philippines continues to lag a number of its regional peers in terms of food and drink industry investment opportunities, in spite of favourable demographics and significant market immaturity in some industry sub-sectors. That said, rising incomes, a young population and innovative new product development will continue to drive growth in some product categories, notably convenience retail and soft drinks.
Headline Industry Data
- Food consumption to increase by 31.3% to 2015, although healthy population growth means that the increase in per capita terms will stand at a more modest 19.7%
- One of the country’s most dynamic industry sub-sectors, and certainly the one with the most substantial levels of multinational investment, Philippine soft drink sales will increase by 33.1% to 2015 in value terms
- Reflecting the steady premiumisation trend underway in the country, alcoholic drink value sales growth will outperform volume sales growth to 2015, at 30.8% and 21.1% respectively
- Mass grocery retail sales growth will stand at 33% to 2015. Hypermarkets will outperform, with growth of 63.4% forecast; their vast selling power meaning that just a few new store openings are required to provide a massive boost to growth
Headline Industry Developments
Soft Drink Investment Remains Robust – US soft drinks giant The Coca-Cola Company (TCCC) has renewed its strong commitment to the Philippines with plans to increase its Philippine investments by a further US$1bn over the next five years. In another indication of sector dynamism, South Korean beverage producer Lotte Chilsung, the beverage subsidiary of conglomerate Lotte Group, has announced that it will acquire a 34.4% stake in Philippine Pepsi bottler Pepsi-Cola Products Philippines (PCPP) for KRW118.4bn (US$101.9mn), as it seeks to improve its geographic diversity. Retail Performance Impresses – Expansion drives from leading Philippine retailers SM Investments and 7-Eleven franchisee Philippine Seven fuelled strong nine-month revenue and earnings growth. SM Investments saw retail sales increase by 10%, to PHP92.7bn, contributing to total business growth of 12%, to PHP124.3bn. The company benefited from ongoing multi-format expansion, with SaveMore a particular beneficiary of its expansion drive. Philippine Seven meanwhile expanded its total network (franchised and company-owned stores) from 400 at the end of Q309 to 520 by September 2010. The increase contributed to a doubling of 9M10 earnings to PHP178mn and a 31% increase in nine-month sales to PHP6.6bn.
Risks to Outlook
Philippine private consumption is heavily reliant on remittance inflows from Philippine workers abroad. A significant slowdown in remittances is not our core scenario and yet any reduction due to increased unemployment or wage declines for Philippine workers abroad could have a negative impact on domestic consumption.
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