05 July 2018
Mica Guevara / Business Development Manager / NZTE Philippines
A taste for America
With long-standing cultural and historical links between the two countries, many Filipinos love all things American – and food and beverage is no exception.
Open the pantry in any typical Filipino household and you’ll see names like Spam, Pringles, and Kellogg’s, along with many other well-known American F&B brands.
Consumers in the Philippines are used to Western-style foods and American products in particular, and that’s helped make the United States the biggest foreign player in the Filipino F&B market - with a whopping US$1 billion market share across the consumer, foodservice and B2B sectors.
18 percent of food imported into the Philippines comes from the United States. Top American imports include dairy products, red meat, poultry, processed food and vegetables, and a huge range of American snack foods - from corn chips, potato crisps and popcorn through to chocolate, candy and biscuits.
There’s room for more
So with a billion-dollar American presence in the Philippines F&B market, is there any space for newcomers to get a share?
Here are several trends creating new potential in the Philippines for New Zealand companies.
Growth is spreading beyond metropolitan Manila. Prosperity is extending out from the capital into other regions, especially Cebu which is a hotspot for resorts, hotels and international outsourcing. Retailers and foodservice companies are expanding their regional networks to serve new F&B demand – and having a distributor that can serve the whole country, including growth areas, is more important than ever.
Consumers are becoming more health-conscious. More than 6 million Filipinos now suffer from diabetes, and new taxes have been implemented for sugar-sweetened drinks. New Zealand products that suit healthier lifestyles or weight management have great potential for growth – even better if they’re conveniently packaged for healthy snacks or meals on the run.
Foodservice is big business, and growing. The Philippines is the tenth fastest-growing foodservice market in the world. With more dual-income households, more women in the workforce, and overseas remittances adding over US$30 billion a year to Filipinos’ purchasing power, eating out or ordering from a delivery service is becoming an everyday choice.
Local manufacturers are hungry for ingredients. The three largest food processors in the Philippines have nearly US$6 billion in revenue combined, and the sector as a whole is now worth almost US$30 billion. Large conglomerates and multinationals are constantly seeking high-quality imported ingredients to fuel their operations.
Three keys to success
To convert these trends into real business in the Philippines, you’ll need to think hard about your route to market, and secure the right channel partner to help you succeed.
Here are three key steps to starting a successful Philippines F&B journey:
Find your positioning in the market. Think about what’s important to your business. Do you want to be in retail, foodservice, or ingredient supply? Is your model all about margins, or volume, or a balance between the two? Also remember that most New Zealand products will be classed as premium items in the Philippines, and it’s a price-sensitive market - a good distributor can help you find the right positioning to suit your products and brand.
Find a distributor that matches your needs and your vision. You’ll be counting on your distributor to register products, leverage tariff benefits, navigate regulations, and arrange shipping to customers throughout the Philippines, as well as knowing your local competition and potential customers. The best distributors are always in demand - so once you’ve done your homework and found a qualified partner, be ready to wow them with a compelling USP that sets you apart from the other hopefuls they’ll be talking to.
Grow with your distributor and invest in the relationship. Getting your products on sale in the Philippines is just the start. You need to show your distributor that you’re committed to investing in the relationship, by visiting the market often, working on a shared sales and marketing strategy, and giving your distributor the resources and support they need to make it happen. Your distributor is an extension of your business in the Philippine market, so make sure you establish trust and maintain a transparent relationship so both parties can grow and succeed together.