Food and beverage to the Philippines
Trends and opportunities
The Philippines’ expanding economy continues to generate higher purchasing
power, which in turn fosters a growing retail, food service and food
manufacturing sector. Metro Manila still represents 50 per cent of total
retail sales in the country, but the economic activity is spilling into
regional urban centers. Increased incomes in the middle and higher income
groups will continue to bring about opportunities for premium food and
beverage offerings in the retail and food service sector.
Food and drinks spending is expected to show a strong growth of 8.8 per
cent annually between 2017 and 2021. In 2021, the food and non-alcoholic
drinks category will be valued at A$ 164 billion and will account for 37 per
cent of essential spending of disposable income (Source: BMI Research, ‘Asia Food and Drink Insight January 2018’).
The Philippines remains a net food importer, with imports of food and drink
forecast to expand up to A$ 8 billion in 2018.
- Markets are concentrated in Manila and Cebu, but expanding to other
- The value of the grocery retail sector grew by 4 per cent in 2016 with
ongoing mall and supermarket expansions (Source: Euromonitor, ‘Grocery Retailers in the Philippines’, January
- Supermarkets are seeking to increase the range and variety of imported
- Some supermarket chains are interested in direct importation, with more
focus on premium/high end products not offered by other retailers
- Online grocery services may become another option for shoppers. Online
operators have started to emerge in 2017 but the uptake is slow and
challenging due to the relatively low e-commerce penetration among the mass market,
along with logistics/transport inefficiencies (Source: BMI Research, ‘Asia Food and Drink Insight January 2018’).
Food service and manufacturing
- There were 84,500 Consumer food service units (café/bars, full-service
restaurants, fast food, street stalls/kiosks, cafeterias, among others) in
2016. This number is expected to reach 88,178 units by 2021 (Euromonitor, ‘Consumer Food Service in the Philippines Country Report’,
). This sector requires a high volume but consistent supply of food
- Domestic food service growth is set to be spurred by tourism growth, both
from domestic and foreign tourists
- Franchising is a common platform for food service companies and
quick-service restaurants, with new food franchises continuing to come on
board. Australian franchises currently in the Philippines include Pie Face,
Toby’s Estate, Harry’s Café de Wheels, Where’s Marcel?, Gelatissimo,
Roll’d, and Wasabi Warriors
- Domestic processors dominate the manufacturing sector, mostly for canned
products, baked goods, snacks, and confectionery.
The Philippines needs to import most of its dairy requirements. In 2016,
the local production was at 4.7 per cent and imports were at 95.3 per cent.
Australia only supplied A$ 97.61 million worth of dairy products or 4 per
cent of the Philippine dairy imports compared to New Zealand at 43 per
cent, the US 23 per cent, and Germany 5 per cent (Source: National Dairy Authority, ‘Philippine Dairy Update’, September
The demand is still highly skewed for commodity-type products (e.g. milk
powder) but a growing demand and awareness for high value products (e.g.
cheese, yoghurt, butter, and UHT milk) is also evident.
The Philippines is Australia’s 10th largest market for dairy (Source: Dairy Australia Presentation, August 2017).
Beef and lamb
Pork and chicken continue to be the most consumed proteins in the
Philippines, with per capita consumption of 15 to 16 kilograms and 10
kilograms, respectively. Beef consumption is smaller but is expected to
grow to 5.9 kg in 2020 (Source: BMI Philippines Agribusiness Report Q1 2018). Due to
limited local beef production, the country is largely relying on
imports, mostly by processors but demand from food service and retail is
also growing. Currently, 81 per cent of beef imports go into processing, 12
per cent into retail, and 7 per cent into food service
(Source: Meat and Livestock Australia Philippine Country Office
Presentation, July 2015).
In 2016, Australia supplied 37.77 million kilos of beef or 40.3 per cent of
the total beef imports, making it the top supplier to the Philippines.
Australia is also the top supplier of lamb, supplying the market with 84
per cent of the total lamb imports, compared to 15 per cent from New
Zealand and 4.7 per cent from the US (
Source: Bureau of Animal Industry Meat and Meat Products Importation CY
Wine and Spirits
Wine sales in the Philippines currently amount to 20 million litres. This
is expected to increase to 28 million litres by 2021, with an average
growth of 8.8 per cent year on year
(Source: Euromonitor, ‘Wine in the Philippines Country Report’, June
However, this only translates to a constant 0.2 litres per capita wine
spending and consumption in the same period ( Source: BMI Philippines Food and Drink Report Q4 2017).
As of February 2017, the Philippines is Australia’s 5th top
emerging market, its 10th largest Asian export market, and its
24th largest market overall with a A$ 7 million export value
(Source: Wine Australia email 2017). Australia has over 300 wine labels
available in the Philippines, with 79 per cent reds and 21 per cent whites.
By volume of wine imports, the US is the top source, followed by Australia.
Other major wine sources are Spain, France, Chile and South Africa.
While the Australian share in the total Philippine imports is small and
there appears to be room for growth, demand is low for new Australian
labels as most importers and distributors only want to increase the
penetration of their current Australian labels in the food service and
retail channels. However, there is a growing appetite for beer and spirits.
Processed food and beverage products
There are still a few distributors who require new products to add to their
range, to be supplied to the food service and retail channels. However,
most of the demand for processed food and beverage products are coming
directly from retailers who want to offer unique brands that will only be
available in their stores. These types of opportunities are mostly for
consolidators who can offer a wide range of products that will be supplied
directly to the supermarkets.
Austrade and Hort Market Insight Report
Opportunities also exist for exporters to supply Australian fresh fruit produce during unique cultural festivals, particularly those that feature fruits as gifts or offerings. Further insight into the specific opportunity in Philippines can be found in the
There is strong competition from other countries for beef, lamb, dairy,
wine and processed foods. More US and European brands are better known in
the market, but Philippine consumers are starting to become familiar with
Australian brands and their reputation for quality and safety.
Tariffs, regulations and customs
The ASEAN-Australia New Zealand Free Trade Agreement (AANZFTA) has been in
place since 1 January 2010. This has contributed to the competitiveness of
Australia’s products relative to other foreign export sources. Food and
beverage products which now enjoy zero tariffs are:
beef and lamb (previously at 10 per cent and 5 per cent, respectively)
cheese (previously at 3 per cent)
confectionery, including chocolate (previously from 3 to 15 per cent)
wine (previously from 5 to 7 per cent)
beer (previously from 15 per cent).
See the ASEAN Tariff Finder
for more information on applicable tariffs under the AANZFTA.
Except for meat (unprocessed) and fresh produce, the Philippine Government
levies an expanded Value Added Tax (VAT) of 12 per cent on all food and
In 2012 the Government also introduced the ‘Sin Tax’, which has led to
price increases on wine, spirits, and beer at all price points. The tax is
incremental and will go up by 4 per cent each year. In November 2017,
the Philippine Senate has also approved new taxes to be imposed on
sugar-sweetened beverages at a rate of Php 10 per liter of volume capacity.
Food and beverage products need to be registered with the Food and Drug
Administration (FDA) by designated importers and distributors. Importation
of products can only be done once FDA registration is completed (once the
importer has been issued a License to Operate (LTO) and a Certificate of
Product Registration (CPR).
The process and timeframe for registering imported products with the Food
and Drug Administration is estimated to take a minimum of four months.
Meat products may require registration with the Bureau of Animal Industry
or the FDA, depending on the type of meat product.
Australian packaging labels are accepted by the registration agencies,
unless there are claims on the labels.
Marketing your products and services
The market entry strategy for most Australian companies exporting to the
Philippines is to partner with a local distributor, usually as part of an
exclusive arrangement. This distribution partner will handle importing and
customer liaison. The Philippines is a relatively small but growing market,
and the size of this market is usually best served by only one exclusive
Other companies may also offer partners in the Philippines:
contract manufacturing and packing in Australia
working with an Australian consolidator to share distribution with
other Australian companies that have a synergistic product range.
Consolidators typically work with retailers who import their products
directly from Australia.
This does not mean it is easy to break into the market. Companies need to
be actively involved in marketing and promoting their brand. Price remains
a key selling point.
Success is most likely to be achieved through adopting a strong
customer-focused marketing strategy and significant market research.
Marketing support is often expected by distributors, as this is the common
practice of other foreign sources of food and beverage products.
Once the products are handled by importers/distributors, another strategy
used by distributors is to first work with food service accounts over
retail accounts to avoid listing fees. Costs of entry of new products into
the supermarkets in terms of listing fees is approximately A$ 125 per stock
keeping unit (SKU) per store. Because of this, distributors do not have the
full range of SKUs in the supermarkets, but only choose the top selling
SKUs to avoid the huge ‘investment’ in the entry of their products in the
As the Philippine market can still be considered relatively small, have in
place only one exclusive distribution arrangement for the market.
The more established importers/distributors have a nationwide distribution
network. However, a distributor that can cover the main markets of Manila
and Cebu (which will cover about 80 per cent of the business) may also be
preferred for the initial entry in the market.
Some distributors may work only with either the retail or food service
channels, but other distributors cover both channels.
Sea freight to the Philippines from Australia takes approximately four
weeks, with transhipment points in Singapore or Hong Kong. Manila is the
main port, followed by Cebu (Visayas) and Subic (Luzon). Sea freight is
generally used by most exporters.
Airfreight takes eight-12 hours and is the only option for perishables, but
available space on flights is at a premium.
Cold storage and quality control can be a problem, as the market has an
underdeveloped logistics and infrastructure system. Exporters should work
closely with local distributors to ensure products are stored and
transported in a way that does not affect quality and shelf life.
Links and industry contacts
Bureau of Animal Industry
Department of Agriculture
Food and Drug Administration
National Meat Inspection Service
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