MANILA, Philippines — An expanding middle class in the Philippines is expected to give more Filipinos greater financial flexibility to choose healthier food options, something that food and grocery delivery services in the country could take advantage of to drive stronger growth.
Fitch Solutions, a unit of the Fitch Group, said in a report on Friday that average Filipino households’ disposable incomes are projected to grow by an average of 8.4% a year over the medium term. That means annual average disposable incomes are expected to hit P567,900 in 2026, up from the projected increase to P413,900 this year.
This should give more Filipino families greater bandwidth when considering their dietary choices, as they trade up price points for premium and healthier foods. Excluding Filipino staples, data compiled by Fitch Solutions said consumers are mostly spending on fresh and preserved fruits and dairy products. Consumption of fruits is predicted to grow by an average of 8.6% annually in the next 5 years while spending on dairy products is seen growing 8.3% a year.
At the same time, the Fitch unit reported that the value of fresh fruit imports has also grown exponentially, indicating the growing demand for fresh fruits consumption in the Philippines. The country imported $27.3 million worth of edible fruits and nuts in 2002. This figure has grown exponentially in the last 20 years, reaching $736.9 million in 2021 based on the latest data available.
And not even red-hot inflation could stop consumers’ appetite for healthier food choices, as household disposable incomes are seen outpacing consumer price growth from 2022 until 2026. For this year alone, the Fitch unit forecasts inflation to average 5.6%, above the government’s 2-4% annual target, while disposable incomes are predicted to grow at a faster year-on-year rate of 9.3%.
“We spotlight the growing healthification trend in the country, particularly amongst the growing middle to high income earners,” Fitch Solutions said. “These households are likely to be more conscious of their health benefits of their food choices.”
Food delivery boom
This “healthification”, in turn, could provide some tailwinds for the local food and grocery delivery service industry, which was among the rare winners during a pandemic that crippled mobility.
Fitch Solutions said Filipino cuisine is already seeing the effects of this growing demand for healthier food options. For example, local food manufacturer Alano Lees Food Manufacturing launched its signature Mushroom Chicharon, a vegan-free alternative to the popular Filipino snack that is traditionally made of pork belly. Elsewhere in the country, Diet in a Box, a Cebu-based food delivery company, has positioned itself as a go-to for healthier foods.
Moving forward, Fitch Solutions said the projected growth in disposable incomes would also benefit the food delivery sector. An expanding urban population and deeper mobile penetration in the country should also add fuel to the industry’s growth.
“Rising rates of urbanization, the expansion of the middle class and high rates of mobile internet adoption also contributed to the rise of delivery services in urban centers like Manila, where time-poor consumers have the disposable income to pay a premium for home-delivery options,” the Fitch unit said. — Ian Nicolas Cigaral