Philippine F&B sector may expand 6% this year

MANILA, Philippines — The Philippine food and beverage (F&B) retail sector is projected to expand by six percent this year as the economy continues to reopen, according to the United States Department of Agriculture (USDA).

In a report, the USDA’s Foreign Agricultural Service (FAS) said it expects a six percent sales growth in the Philippines’ food and beverage industry “with loosened quarantine protocols and the economy boosted by the recent national elections.”

This projection comes after food and beverage retail stores managed to grow in 2021, with sales rising slightly from $23.75 billion in 2020 to $24.36 billion last year, based on data from Euromonitor International.

“While striving to ensure safety and prevent a surge in COVID cases, the government has slowly reopened the economy to allow operations and businesses to recover through easing of mobility restrictions,” it said.

The USDA-FAS also cited improved employment rates and wages, plus the resumption of face-to-face school classes and on-site work as contributing factors in the increase in food and beverages purchases.

“Some consumers have slowly shifted to buying from brick-and-mortar food retail stores. Other retail stores supplying restaurants have gained sales as more consumers resume dining in restaurants in the city and traveling out of town,” the agency said.

The Philippine Statistic Authority (PSA) said the household final consumption expenditure grew by 10 percent in the first quarter versus the last quarter of 2021.

In terms of jobs, the country saw jobless rate at 5.7 percent in April, its lowest level since the pandemic began. However, the unemployment rate rose again in May to six percent.

The report noted that food and beverages expenditure continued to come from the upper-class and the growing middle-income consumers while most of the population opted for thriftier spending, sometimes resorting to low-cost products.

“Prices of products continue to rise due to elevated input costs, an effect of higher inflation,” the USDA-FAS said.

Citing data from the National Economic and Development Authority (NEDA), food and non-alcoholic beverages registered a 4.9 percent inflation in May, a 22 percent increase from April, and a 2.8 percent year to date increase.

To counter the rising cost of food products, the Department of Trade and Industry (DTI) releases suggested retail prices to help consumers check prices, it said.

Meanwhile, the report said e-commerce would also play a key role in boosting retail sales as more consumers prefer online services.

Data from Euromonitor International showed food and drink e-commerce sales surged from $312 million in 2020 to $738 million in 2021.

“More consumers shifted from traditional retailers to modern retailers offering more dependable supply and convenience through e-commerce,” the USDA-FAS said.

“The robust growth in e-commerce sales persists as retail stores continuously enhance online services. Modern retail stores tap households through improved digital marketing presence,” it said.

The report noted that more stores use third-party platforms such as Lazada, Shopee, GrabMart, and Metromart while transitioning consumers to their platform.