Philippines Food and Drink Report 2012

BMI View: Domestic demand conditions in the Philippines are expected to soften in 2012. While remittance growth has held up well in recent months despite a deteriorating external economic environment, it is likely to be relatively muted in 2012 as poor economic climates in the US and EU weigh on employment in the developed world. The recent floods in the Philippines are likely to place another dent in the country’s near-term consumer growth story, as consumers suffer damages to their properties and a loss of wealth. A bright spot underpinning the 2012 Philippine consumer outlook is the likelihood of milder price pressures in the economy, which should provide some reprieve to consumer purchasing power.

Headline Industry Data (local currency) ?? 2012 per capita food consumption = +3.9%; compound annual growth rate (CAGR) forecast to 2016 = +3.8% ?? 2012 alcoholic drinks value sales = +5.2%; CAGR growth forecast to 2016 = +6.4% ?? 2012 soft drinks value sales = +7.3%; CAGR growth forecast to 2016 = +7.4% ?? 2012 mass grocery retail sales = +6.3%; CAGR growth forecast to 2016 = +6.6%

Industry Developments WTO’s Ruling Has Mixed Implications For Spirits Industry: A recent ruling by the WTO confirmed that the Philippines’ high excise taxes on imported spirits are inconsistent with the WTO’s regulation that member states are not allowed to tax imported spirits differently from domestically produced spirits. On the one hand, WTO’s ruling could level the playing field between imported and domestically produced spirits in the Philippines, in turn providing the local spirits sector with greater dynamism. On the other hand, the greater influx of foreign brands would inevitably threaten the market share of domestic spirits producers such as Ginebra San Miguel and Tanduay Holdings. The magnitude of trade barriers in the Philippine spirits market has protected the dominance of domestic spirits producers, and these companies are at greatest risk from a potential liberalisation of the country’s trade regulations. An Attractive Market For Food Producers: US-based doughnut and coffee chain Krispy Kreme Doughnuts has entered an agreement with Philippines-based franchise The Real American Doughnut Company to launch 23 outlets in the Philippines over the next five years. Meanwhile, Philippine healthcare product manufacturer Splash plans to acquire an 80% stake in food producer Barrio Fiesta Manufacturing for PHP472mn (US$11.1mn). The purchase excludes the Barrio Fiesta restaurant brand. Splash is keen to develop the Barrio Fiesta name into a core player in the local food market, at first promoting a line of condiments and essential foodstuffs.

Risks To Outlook The risks to our near-term domestic demand outlook are weighted to the downside, as the precarious state of the global economy threatens to further derail the domestic outlook of the Philippine economy. The Philippine consumer sectors could feel knock-on effects from not only weakening external demand but also slower remittance and tourist arrival growth.

Table of contents

Chapter 1 - Executive Summary

Chapter 2 - SWOT Analysis

Philippines Food Industry SWOT

Philippines Drink Industry SWOT

Philippines Mass Grocery Retail Industry SWOT

Chapter 3 - Business Environment

BMI’s Core Global Industry Views

Table: Agricultural Commodity Prices

Table: Core Views Q

Asia Pacific Business Environment Ratings

Table: China Food & Drink Risk/Reward Ratings – Q

Table: Asia Pacific Food & Drink Risk/Reward Ratings – Q

Philippines’ Food & Drink Risk/Reward Rating

Macroeconomic Outlook

Table: Economic Activity

Chapter 4 - Industry Forecast Scenario

Consumer Outlook

Food

Food Consumption

Table: Food Consumption Indicators – Historical Data & Forecasts

Canned Food

Table: Canned Food Value/Volume Sales – Historical Data & Forecasts

Confectionery

Table: Confectionery Value/Volume Sales – Historical Data & Forecasts

Drink

Hot Drinks

Table: Hot Drinks Value Sales – Historical Data & Forecasts

Soft Drinks

Table: Soft Drinks Value Sales – Historical Data & Forecasts

Alcoholic Drinks

Table: Alcoholic Drinks Value/Volume Sales – Historical Data & Forecasts

Trade

Table: Trade Indicators – Historical Data & Forecasts

Mass Grocery Retail

Table: Mass Grocery Retail Sales – Historical Data & Forecasts

Table: Sales Breakdown By Retail Format Type

Chapter 5 - Food

Key Industry Trends And Developments

McDonald’s Versus Jollibee In FastFood War

Jollibee Banking On Dynamic Asian Growth

An Attractive Market For Food Producers

Market Overview

Organics

Food Processing

Agriculture

Chapter 6 - Drink

Key Industry Trends And Developments

WTO’s Ruling Has Mixed Implications For Spirits Industry

Eyeing The Philippine Drinks Potential

A Stark Contrast Between Ginebra’s And SMB’s Results

Market Overview

Soft Drinks

Alcoholic Drinks

Chapter 7 - Mass Grocery Retail

Key Industry Trends And Developments

Expansion Innovation Driving Positive Financials

Market Overview

Table: Structure Of The Philippines Mass Grocery Retail Market By Estimated Number Of Outlets

Table: Structure Of The Philippines Mass Grocery Retail Market – Sales By Format (US$bn)

Table: Structure Of The Philippines Mass Grocery Retail Market – Sales By Format (PHPbn)

Table: Average Sales Per Outlet By Format –

Chapter 8 - Competitive Landscape

Key Players

Table: Key Players In The Philippines Food Industry

Table: Key Players In The Philippines Drink Industry

Table: Key Players In The Philippines Mass Grocery Retail Sector

Chapter 9 - Company Monitor

Food

Alaska Milk Corporation

Universal Robina Corp (URC)

Drink

Tanduay Holdings

San Miguel Brewery (SMB)

Mass Grocery Retail

SM Investments – Retail Business (SM)

Philippine Seven Corp

Chapter 10 - Risk/Reward Ratings Methodology

Table: Rewards

Table: Risks

Weighting

Table: Weighting

Chapter 11 - BMI Food & Drink Industry Glossary

Food & Drink

Mass Grocery Retail

Chapter 12 - BMI Food & Drink Forecasting & Sourcing

How We Generate Our Industry Forecasts

Sourcing

Related research categories

By sector: General drinks

By market: Philippines (in Asia)