In recent months, we’ve shared insights for major high-income consumer markets including Germany, France and Hong Kong. While these established markets offer large food markets and affluent consumer bases, it’s often difficult to get a foot in the door considering the sheer number of competitors already in the market. As such, it’s a good idea to expand your export horizons and look towards promising emerging markets. One such market is the Philippines! The country’s F&B industry is worth over US$35 billion and experienced a 6% growth rate in 2023 according to the USDA. With its large population of over 115 million people, rising urbanisation levels and strong growth prospects, it’s certainly a market to watch. So let’s check out a few key trends!
Interest in Health and Functional Foods Continues
As we’ve seen around Asia and the broader global economy, the spotlight on health and wellness isn’t expected to disappear anytime soon. 99% of the Filipino population has expressed their desire to adopt healthier eating habits. This trend translates into a rising demand for known superfoods like coconut, soybean spread and moringa, fresh fruits and vegetables as well as better-for-you drinks such as kombucha. Filipinos also want products with reduced salt, sugar and fat. Plus, they want more from brands when it comes to how they market healthy foods. They want better visibility of reformulated products, more information on product benefits and clear and informative nutritional labels.
Alcohol as a Major Category of Opportunity
When it comes to alcohol, the Philippines is a market for any Australian manufacturer to consider. Whether you’re producing craft beer, gin or wine, there’s an opportunity in the Philippines. Gin producers should view the Philippines as an especially promising market, as it houses the world’s largest gin market at 43% of global consumption. Beer is also a big area of opportunity. The Filipino beer market is set to reach a sales value worth US$13 billion in 2027 and is set to grow faster than any other food and beverage category with a compound annual growth rate of almost 15% towards 2027. At the same time, there’s a growing demand for low and zero-alcohol options as the sober conscious movement takes flight amid growing consumer health concerns.
Plant-Based Options Grow in a Largely Meat-Eating Market
Meat and dairy dominate the F&B retail space in Singapore, with meat alone reaching a retail value sales figure of over US$9 million in 2022. And that’s no surprise given the Philippines’ reputation for meat-heavy dishes including chicken adobo, kare kare, sisig and chicharon. But this doesn’t mean the plant-based market isn’t growing. In fact, the Philippines was ranked the highest amongst 11 other Asia Pacific markets in terms of consumer openness to plant-based foods, with 62% willing to try meat-free and dairy-free products. Growing environmental concerns coupled with rising concerns about high cholesterol and other heart-related diseases are pushing locals to explore vegetarian and vegan alternatives to their favourite foods, including tofu, mushroom and seitan. And businesses are responding accordingly. For instance, fast food chains including Burger King and Army Navy have started offering plant-based burgers and burritos on their menus.
Brands and Consumers Alike Making Sustainable Choices
Sustainability is another hot topic in the Philippines. While part of this may be due to the global rise in conscious consumerism, the Philippines’ especially high susceptibility to extreme events such as cyclones and storms is certainly a contributing factor. While this focus on sustainability is manifesting in demand for plant-based foods, this isn’t the only area that it’s manifesting in within the F&B industry. Foodservice outlets and retailers are scrapping single-use plastics and instead opting for paper bags or compostable take away boxes. Consumers are also looking to make more sustainable purchases, including avoiding food wastage, looking for recyclable or eco-friendly packaging, using refillable items and buying from ethical brands. But as household budgets are squeezed, it’s getting harder for consumers to actively choose more sustainable foods and beverages which often come with a higher price tag. As such, sustainability concerns may take a back seat until cost pressures simmer down.
New Flavours on the Horizon
While traditional flavours will always remain a popular choice for Filipino consumers, they’re also exploring new flavours and new combinations. The combination of sweet and sour (or ‘swicy’) food is a hot topic in the Philippines. From spaghetti to chicken dishes, anchovies and snack foods, Filipinos love blending spicy and sweet flavours to create unique and exciting dishes. With Korean culture becoming more popular and prevalent in all areas of Filipino life–from music to television–it’s also unsurprising that consumers are looking to try Korean dishes. Korean desserts and sweet snacks are especially in demand, including cream-filled croissants and honey pastries.
Convenience in Purchasing and Preparation
Another global trend popping up in the Philippines is the demand for convenience–whether that’s convenience in terms of the way foods are prepared or the way they’re bought and delivered. Over the last few decades, the Philippines has experienced rapid urbanisation with over half of the population now living in cities. This figure is expected to grow exponentially, with almost 85% of citizens projected to live in cities by 2050. The country has also seen a significant rise in the number of single-person households.
These factors have created an increasingly time-poor consumer base, boosting demand for categories like prepared foods, frozen foods and canned foods. Consumers are also shopping closer to home, visiting smaller format supermarkets and convenience stores more frequently to buy snacks for on-the-go or ready-to-eat foods to consumers in transit, at work or at home. Categories including salty snacks, energy/sports drinks and ready-to-drink beverages like coffee and tea are especially popular purchases from convenient stores.
Premiumisation Hampered By Low Incomes and High Inflation
Listed as a low-to-middle-income country by the World Bank, Filipino consumers on average are more price-conscious and frugal than other export markets we’ve explored around Asia and the Middle East. Frugality and resourcefulness have always been deeply ingrained in Filipino culture, and the cost pressures experienced during the pandemic only served to boost value-seeking behaviours. This has seen many Filipinos make the switch to retailers’ private label brands, especially for staples like bread and vinegar.
As inflation coupled with high unemployment rates continues to put pressure on Filipino households, this means most opportunities for growth will exist around low-to-mid-priced F&B products, making it harder for premium brands to gain a foothold in the market. But this doesn’t mean that the premium market is non-existent. While the premium market is certainly smaller than other Asian markets, exporters can find opportunities targeting consumers aged 25-49 who are most likely to purchase imported, premium F&B products. This market is also growing, with young consumers aged 18 to 44 making up the largest consumer segment in the Philippines, demonstrating promising opportunities for exporters.
Now, if you’ve read a few of our blog posts by now, you may have noticed some common threads connecting each market–from the USA to Europe, the Middle East and Asian markets (including the Philippines), we can see a few major global trends developing in the F&B sector, including:
- The rise of the health-conscious consumer. The global pandemic had understandably global consequences for health and wellness, with consumers paying more attention to nutritional labels. They’re looking for low-fat, low-sugar and low-sodium foods plus options that are high in protein, fibre and key vitamins and minerals. They’re also seeking out targeted functional foods, with gut health and immunity-boosting foods hitting the spotlights in recent years.
- The switch to plant-based options. Meat and dairy remain an essential part of consumer diets across the world. But a slow and gradual shift towards plant-based foods is happening. Whether for environmental, health or animal welfare reasons, consumers are choosing to reduce their consumption of meat, dairy and seafood and instead opt for choices like coconut yoghurt, almond milk and plant-based meats.
- The online grocery shopping phenomenon. It’s no secret that the pandemic and technology have revolutionised the way we shop. We’re shopping closer to home and many aren’t even stepping foot outside their front door. Instead, consumers are taking advantage of retailers’ own online shopping or delivery options or even leveraging quick-commerce via third-party delivery partners.
- Convenience as the way to consumers’ hearts. The modern consumer is often leading an increasingly busy, time-poor lifestyle. They’re looking for ways to cut corners and save time wherever they can, with food prep becoming a big part of this. Whether it’s a microwavable ready meal, pre-prepared salad or frozen hot meal, global consumers want options that allow them to spend less time in the kitchen and more time enjoying the company of friends and family.
- Balancing quality and price more important than ever. It’s no secret that global consumers are feeling the pressure of inflation. While some markets are more affected than others, consumers almost universally are seeking to cut costs on their grocery shop. This includes shopping at discounters and seeking out special deals and promotions. But while cutting costs has become a priority, many consumers remain uncompromising on quality. The premiumisation trend is on the rise, with the pandemic prompting consumers to indulge themselves in higher quality produce. As such, retailers and manufacturers alike need to balance their availability of premium products with reasonable price points.
- The growth of conscious consumerism. As Millennials and Generation Z become the largest global cohort of consumers, we’re seeing a shift in key purchasing factors. As concerns around climate change intensify, younger generations are looking to make a difference–starting with the foods and beverages they buy. This includes seeking out organic options, plant-based and certified sustainably harvested produce. But it’s not just the planet they care about–but people too. They want ethically-manufactured foods, such as options which are FairTrade certified.
We hope you’ve found these insights on the Philippines market helpful. As always, if you’ve got any questions or want to discuss export opportunities for your company, feel free to drop us a line at Export Connect – we’d love to hear from you.