The economy in the Philippines has recovered from the 2009 recession due to government stimulus packages and a renewed trust in the government. In the fourth quarter of 2010, personal consumption expenditure (PCE), the primary driver of the Philippines economy, jumped to 7 percent.
This was the highest since the 8.4 percent growth recorded in the third quarter of 1988. The country’s GDP grew by 4.5 percent in 2011, which resulted in a per capita income of US$2,012.
The Philippines’ population has been growing by approximately 2 percent annually, currently reaching nearly 100 million. This has had a compounding effect on the demand for food and beverage products. Other factors influencing and shaping the country’s demand for food and beverage products include:
- The Filipino’s “food-oriented culture” that emphasises frequent snacking.
- The youth oriented food market (i.e. trendy products, attractive packaging and sweetened foods and beverages). Approximately 35 percent of the population is under 15 years old.
- High workforce participation by women, increasing the demand for convenience food and foodservice sales. The number of dual income households has been increasing, which has driven greater demand for food that is easier to prepare and offers shortcuts to meal preparations.
- Large volume of young workers in the 24-hour business process outsourcing (BPO) and call centre industry, spurring 24 / 7 demand for quick-service restaurants (fast-food), packaged convenience food and alcoholic beverage products.
- The western influence on the food and beverage market. Filipinos have a high regard for western food products such as hamburgers, sausages, pizza, cheese, dairy, ice cream and breakfast cereals.
- Growing food safety concerns and awareness of health benefits. More consumers have higher consumer standards.
- Improved distribution channels resulted in higher household penetration.
Regulations
The Philippines is a member of the World Trade Organisation (WTO), Asia-Pacific Economic Cooperation (APEC), United Nations (UN), Pacific Economic Cooperation Council (PECC) and implements international and regional accords and policies from these bodies.
The majority of the Philippines' import requirements are co-ordinated with WTO regulations, while others are specific to the region. The Philippines has several import regulations which New Zealand exporters must be aware of before entering the market.
The ASEAN-Australia New Zealand Free Trade Agreement (AANZFTA) was signed on 27 February 2009 and entered into force on 1 January 2010.
Under AANZFTA, New Zealand exporters can take advantage of reduced tariffs, particularly on agriculture products (i.e. zero rated tariffs on wheat and flour grains). Tariffs on beef, meat and livestock are scheduled to be eliminated by 2012 and tariffs on horticulture including juice by 2013. Approximately 95 percent of tariff lines are scheduled to be eliminated by 2020.
At present under the two-tier tariff policy in the Philippines, sensitive agricultural products such as sugar, potatoes, onions, garlic and coffee are subject to a tariff-rate quotas (TRQ).
Imports which exceed the minimum access volume (MAV) will be taxed at a higher out-of-quota rate. Imported products that do not compete with domestically produced goods face lower tariffs.
All imports are subject to value added tax (VAT) of 12 percent. This is similar to the New Zealand GST which is computed based on the landed cost of the product.
For more information on the ASEAN-Australia-New Zealand Free Trade Agreement, please visit the official website at: www.asean.fta.govt.nz
Further tariff information can be found at, the Philippines' Tariff Commission at www.tariffcommission.gov.ph.
Opportunities
Consumers are becoming more health conscious and grocery retailers are starting to increase the range of their organic products.
There are opportunities for healthier packaged food products such as vegetarian, seafood-based, all natural and organic products.
More Filipinos are expected to move to urban areas due to better work opportunities. This will increase demand for packaged food products that ease meal preparation. However, affordability will remain an important factor due to the limited disposable income of most households.
The majority of meal solutions are traditional Filipino dishes. However, there are opportunities for other Asian and Western cuisine as the market slowly evolves due to globalisation.
Wine retailers are expected to produce a better volume sale performance as wine continue to be given as gifts and consumed more at home.
Wine consumption through foodservice is also projected to demonstrate growth, due to the increasing number of foodservice establishments offering wine.
