Required Report: Required - Public Distribution Date: April 06, 2021

Report Number: RP2021-0012

Report Name: Food Processing Ingredients

Country: Philippines

Post: Manila

Report Category: Food Processing Ingredients

Prepared By:

Approved By: Morgan Haas

Report Highlights:

Following two years of contraction, the Philippine food manufacturing sector is expected to expand 1
percent in 2021. Household consumption expenditures of food and non-alcoholic beverages remain
relatively strong, up 5.3 percent year-over-year in the fourth quarter of 2020. Philippine food
manufacturing continues to offer excellent opportunities for a number of U.S. products, including but
not limited to dairy, milling wheat, and raw materials for processed meat products.

THIS REPORT CONTAINS ASSESSMENTS OF COMMODITY AND TRADE ISSUES MADE BY USDA STAFF AND NOT NECESSARILY
STATEMENTS OF OFFICIAL U.S. GOVERNMENT POLICY
Market Fact Sheet: Philippines

Market Outlook Philippines: Quick Facts CY 2020

Demographics
The Philippines is an emerging market with a young, 110 million population (July 2021 est.)
growing working-age population. GDP is expected to 1.49% population annual growth (July 2021 est.)
grow 5.5 percent in 2021. 52% under 24 years old & median age of 24 years old
47% urbanization rate
Agricultural Exports to the Philippines 13% resides in Metro Manila (capital city)
76% speaks English & 98% literacy rate

The Philippines Gross Domestic Product (GDP)

is the ninth GDP: $370 billion GDP per capita: $3,330
largest export GDP growth rate: -9.5% GDP PPP: $1,025 billion
market of U.S.
agricultural Agricultural & Related Trade
products. The Exports to PH: $12.9 billion PH Exports: $6.8 billion
United States
remains the Consumer-Oriented Agricultural Products:
largest single- - Pork - Beverages
- Beef - Confectionary
country supplier
- Poultry - Fruits & vegetables
of agricultural - Dairy - Food preparations
products with a
22 percent market share. U.S. agricultural exports Top Quick Service Restaurants: Jollibee, Mc Donald’s, Mang
remained resilient in 2020, reaching a record $3.2 Inasal, Chowking, Shakey’s, KFC and Burger King
billion.
Top Supermarkets: SM, Robinson’s, Puregold Price Club,
Metro, Gaisano, and Landmark
Food Processing Sector
Top Convenience Stores: 7-Eleven, Mercury Drug, Ministop,
Following a second year of contraction in 2020, the
Alfamart, and All Day
food manufacturing sector is expected to remain
relatively stagnant with upside potential in 2021, Top Warehouse Clubs: S&R and Landers
growing 0-3 percent. Around 90 percent of food
production is consumed domestically. Sources: Euromonitor, Global Agricultural Trade System,
International Monetary Fund, The World Factbook, Trade
Retail Food Sector Data Monitor, The Economist, World Bank
Philippine Statistics Office, Department of Trade and
Retail was positively affected by COVID-19 and Industry, FAS Manila research
expected to further increase 10 percent in 2021 over
Strengths Weaknesses
2020 levels. Convenience stores, supermarkets, and
Strong preference for U.S. High cost of shipping
hypermarkets made headway during COVID with
ingredients. Continued freight compared to Asian
online shopping. An increase in purchasing power patronization due to perceived countries
boosted warehouse clubs and awareness of imported higher standard and quality
products and have at times faced shortages due to
COVID-related supply and demand shocks. Opportunities Challenges
A strong growing economy and a Effects of COVID 19 in
young and growing working-age the economy and
Food Service Sector population ensures an increase in government regulations
purchasing power from on-line impose restrictions on
COVID-19 related measures greatly hurt the
shopping and food delivery transportation and
foodservice sector, which declined -34 percent in 2020, applications logistical concerns
and there is no current prospect of recovery in 2021.
Food service providers that still remain in operation
have generally shifted to online delivery platforms and Contact: FAS/Manila <agmanila@usda.gov>
curbside pickups.

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 I. MARKET SUMMARY
According to industry sources, the outlook for 2021 food manufacturing performance remains
relatively stagnant at 0-3 percent growth,
which while below the long-term 6 percent Av era g e Ca pa city Utiliza tio n Ra te
by M a jo r Secto r
average would be an improvement over the 80
previous two down years. 75
70
Following supply disruptions in March-April 65
2020 and designation as an essential industry, 60
capacity utilization rates continue to fall. 55 .Food Manufacturing
Value of production in January 2021 dropped 50 .Beverages

18 percent year-over-year. 45
40

Meanwhile, the sector remains buoyed by 35

30
household consumption expenditures of food

Sep

Sep

Sep
Jan

May

Jan

May

Jan

May

Jan
Mar

Mar

Mar
Jul

Jul

Jul
Nov

Nov

Nov
and non-alcoholic beverages, which were up
5.3 percent in fourth-quarter 2020 over 20191. 2018 2019 2020 2021

400 Va lue o f Pro duct io n Index ( Va PI) Va lue o f Pro ductio n Index (Va PI)
fo r Fo o d M a nuf a ct uring & fo r Fo o d M a nufa cturing a nd
B ev era g es ( 2 0 0 0 =1 0 0 ) B ev era g es (2 0 0 0 =1 0 0 )
300 375
y = 6.2143x + 203.53
275
200
y = 17.018x + 80.457 175 .Food Manufacturing
.Food Manufacturing .Beverages .Beverages
100 75
Jan

Jan

Jan

Jan

Jan
Oct

Oct

Oct

Oct

Oct
Jul

Jul

Jul

Jul

Jul
Apr

Apr

Apr

Apr

Apr
2016 2017 2018 2019 2020
Source: Philippine Statistics Authority

Advantages and Challenges of U.S. Supplier in the Philippines:

Advantages Challenges
Philippine food manufacturers have Competition from alternative suppliers to the
demonstrated a willingness to pay a premium Philippines with preferential market access
for U.S. raw materials and ingredients. agreements.
Higher patronization to warehouse clubs has Competition from more efficient regional
increased familiarity with imported products, manufacturers for U.S. supplies.
including ingredients, often sold in
bulk/family size.

1National Accounts of the Philippines, Philippine Statistics Authority. https://psa.gov.ph/national-

accounts/sector/Household%20Final%20Consumption

3
II. ROAD MAP FOR MARKET ENTRY

Entry Strategy
Trade events, all of which remain Date Event
virtual, still present good platforms to
June 16-19, 20201 Manila Food and Beverages Expo
meet Philippine food manufacturers.
August 4-7, 2021 World Food Expo Autumn
Import Procedure
For information on the import procedure, please consult the following reports:
 Philippines: FAIRS Annual Country Report
 Exporter Guide

Distribution Channels
As an archipelago the Philippines has
several ports, though chief among them
are Manila for the island of Luzon in
the north, Cebu for the Visayas in the
center, and Davao for Mindanao in the
south.

Special Economic Zones

The Philippine Economic Zone Authority (PEZA) provides incentives, including duty-free entry,
for agricultural raw materials and ingredients used for the manufacture of products primarily
destined for re-export. For detailed information on the Philippine special economic zones, access
the PEZA website.

Market Structure

Dairy is the Philippines’

leading food manufacturing
sector, and given the
Philippines is an insignificant
producer, this has presented
strong opportunities for a
variety of imported dairy
ingredients, particularly as
incomes have risen.

Declining animal feed

production reflects the
Philippines ongoing battle
with African Swine Fever, which has greatly reduced swine inventories and local pork
production. It has also directly impacted opportunities within the processed meat industry, which
has grown increasingly reliant on imported raw materials, including mechanically-deboned meat.

4
The Philippines has adopted
Va lue o f Pro ductio n Index (Va PI) fo r Fo o d
a wheat-based food culture M a nufa cturing Sub - Secto r (2 0 0 0 =1 0 0 )
as shown by the relative
500
growth of the bakery
450
industry in recent decades.
400
Wheat-based products, such 350
as noodles, also represent a 300
near majority of 250
miscellaneous foods. As 200
such, the majority of the 150
local milling industry is 100

Jan

Sep

Jan

Sep

Jan

Sep

Jan

Sep

Jan

Sep
Mar
May

Mar
May

Mar
May

Mar
May

Mar
May
Jul

Jul

Jul

Jul

Jul
Nov

Nov

Nov

Nov

Nov
built for wheat (as opposed
to rice) and has 2016 2017 2018 2019 2020
demonstrated strong ..Processed meat and fish ..Dairy products ..Animal feeds
preference for U.S. quality.
Va lue o f Pro ductio n Index (Va PI) fo r Fo o d
Processed fruits and
M a nufa cturing Sub - Secto r (2 0 0 0 =1 0 0 )
vegetables generally reflect
the processing of local 800
700
produce and has presented 600
only niche opportunities for 500
imported raw materials to- 400
date. 300
200
100
Local production of coconut 0
Jan

Sep

Jan

Sep

Jan

Sep

Jan

Sep

Jan

Sep
Mar
May

Mar
May

Mar
May

Mar
May

Mar
May
Jul

Jul

Jul

Jul

Jul
Nov

Nov

Nov

Nov

Nov
oil and high competition of
vegetable oils within the 2016 2017 2018 2019 2020
region have present little
..Bakery products ..Rice, corn and flour milling
opportunity for the United
..Miscellaneous foods ..Vegetable/animal oils and fats
States.

A break-down of the key Va lue o f Pro ductio n Index (Va PI) fo r Fo o d

M a nufa cturing Sub - Secto r (2 0 0 0 =1 0 0 )
sub-sectors follows below.
1600
1400
1200
1000
800
600
400
200
0
Sep

Sep

Sep

Sep

Sep
Jan

May

Jan

May

Jan

May

Jan

May

Jan

May
Mar

Mar

Mar

Mar

Mar
Jul

Jul

Jul

Jul

Jul
Nov

Nov

Nov

Nov

Nov

2016 2017 2018 2019 2020

..Sugar ..Coconut products ..Processed fruits & vegetables

5
 Pro cessed M ea t & Fish Da iry Pro ducts

Slaughtering and meat packing

1% Processing of fresh milk and
cream
Production processing and 1%
preserving of meat and meat 0%
products
Canning/packing of fish and other
marine products Manufacture of powdered milk
4% 4% 2% (except for infants) and 2%
3% condensed or evaporated milk
Drying of fish and other marine
products (filled, combined or 17%
reconstituted)
7%
Smoking of fish and other marine Manufacture of butter, cheese 4%
products and curd
Manufacture of fish paste (bagoong)18% 11%
and fish sauce(patis)
60% 66%
Processing of seaweeds; Manufacture of ice cream and
manufacture of agar-agar or sherbet, ice drop, ice candy and
carageenan other flavored ices
Production of fishmeal/prawn feeds

Manufacture of milk-based
Manufacture of unprepared animal
feeds from fish, crustaceans and infants' and dietetic foods
mollusks and other aquatic animals
Processing, preserving and canning
of fish, crustacean and mollusks,
n.e.c. manufacture of fishball, etc.

Rice, Co rn, a nd Flo ur M illing Veg eta ble/Ani ma l O ils a nd Fa ts

Production of crude vegetable

Rice/corn milling oil, cake and meals, other than
virgin coconut oil (see class
1041)
11% 5% 9%
Cassava flour milling

38% Manufacture of refined coconut

and other vegetable oil
Flour milling except cassava (including corn oil) and
flour milling margarine

51%
Manufacture of unprepared 86%
0% Manufacture of unprepared
animal feeds from grain milling animal feeds from vegetable,
residues animal oils and fats

6
 B a kery Pro duct s Pro cessed Fruits & Veg eta bles

Manufacture of flour mixes and Canning/packing and

prepared blended flour and preserving of fruits and fruit
dough for bread, cakes, biscuits juices
or pancakes
0%
Manufacture of starches and Canning/packing and
starch products preserving of vegetables and 0%
1% 4% vegetable juices 2%
3%

Baking of bread, cakes, 18% Manufacture of fruit and

pastries, pies and similar vegetable sauces (e.g. tomato
'perishable' bakery products, sauce and paste) 24%
including hopia and doughnut 45%
making 39%
Baking of biscuits cookies, Roasting of nut or manufacture
crackers, pretzels and similar of nut foods and pastes
dry bakery products
38%
26%
Manufacture of ice cream cones Manufacture of perishable
(apa) and wafers (barquillos) prepared foods of fruit and
vegetables, such as: salad,
peeled or cut vegetables, tofu
(bean curd)
Manufacture of snack products Processing and preserving of
such as corn curls, wheat fruits and vegetables, n.e.c.
crunchies and similar products

M iscella neo us Fo o ds B ev era g es

Manufacture of macaroni, noodles,
couscous and similar farinaceous products 0% Distilling, rectifying and blending
of spirits
Manufacture of food products, n.e.c.
1%
Fruit wine manufacturing
1%
Manufacture of mayonnaise, salad 0%
dressing, sandwich spread and similar 3%
products 2% 2% 0% Wine manufacturing, n.e.c. 0%
Manufacture of ice, except dry ice
3% 2% 1% 4% 0%

Manufacture of candies (excluding

Manufacture of malt liquors and
chocolate candies) and chewing gum 5% malt 26%
7%
Manufacture of flavoring extracts and food 45% Manufacture of soft drinks except 25%
coloring
drinks flavored with fruit juices,
9% syrups or other materials
Manufacture of chocolate and cocoa
products including chocolate candies Manufacture of drinks flavored
with fruit juices, syrups or other 0%
Manufacture of vinegar 23% materials 41%
Manufacture of bottled water
Manufacture of chocolate and sugar
confectionery products, n.e.c.
Manufacture of sports and energy
Coffee roasting and processing drink

Manufacture of prepared meals and dishes Manufacture of other beverages,

n.e.c.

7
Leading Philippine Food Manufacturers
 San Miguel Food and Beverage Inc  Unilever RFM Ice Cream, Inc.
(meat, dairy, coffee, margarine) (dairy)
 Nestle Philippines Inc (dairy, non-  RFM Corp. (ice cream, beverages,
alcoholic beverages) and pasta)
 Universal Robina Corp. (snack  Mead Johnson Nutrition, Inc.
products, noodles, beverages, and (powdered milk)
coffee and cream)  New Zealand Creamery, Inc. (dairy)
 Coca-Cola Beverages Philippines,  General Milling Corp. (flour and
Inc. (non-alcoholic beverages) bakery products)
 Monde Nissin Corporation (snack  Mega Fishing Corp. (fish)
products, and noodles)  Gardenia Bakeries, Inc. (breads)
 Pepsi-Cola Products Philippines, Inc.  Monde M.Y. San Corp. (crackers
(non-alcoholic beverages) and biscuits)
 Century Pacific Food, Inc. (meat and  Red Ribbon Bakeshop, Inc. (cakes
fish, dairy, other processed foods) and pastries)
 Pilmico Foods Corporation (flour)  Goldilocks Bakeshop, Inc. (cakes
 Alaska Milk Corporation (dairy) and pastries)
 Foodsphere, Inc. (meat and fish)  Liwayway Marketing Corp. (snack
 Modelez Philippines, Inc. (dairy) products)
 Cargill Oil Mills Philippines, Inc.  Frabelle Corp (meat products)
(oils and fats)  Ram Food Products (pasta, noodles,
 Zenith Foods Corporation (food peas, garbanzos, canned fruits)
products)  Oleo-Fats, Inc. (oil and fats)
 Philippine Foremost Milling
Corporation (flour)

Trends
 Local food manufacturers have started online selling direct to consumers, through
volumes remain limited.
 Rise of resellers, small and medium enterprises, including some featuring food
ingredients
 Stay-at-home orders continue to keep many workers and children at home, which (1) has
fueled demand for pantry items, including baked goods and mixes, canned goods,
cooking oils, milk, and snack foods as well as products, larger package sizes, and
products with extended shelf-life (e.g., dehydrated and frozen products) as well as (2)
allowed consumers to redirect their discretionary spending on purchasing premium
products.
 Increased interest in larger or commercial packages being sold to end-consumers
 Local manufacturers are investing in plant-based meat alternatives for snacks and meals
as well as those advertising health properties

8
 III. COMPETITION
Competition remains particularly fierce with ASEAN,
China, Australia, and New Zealand as each benefit from
preferential market access and favorable proximity to the
Philippines. Europe competes for select products but
faces similar constraints as the United States.

For trade data:

(USDA) Global Agricultural Trade System
Philippine Statistics Authority
UN Comtrade | International Trade Statistics Database

IV. BEST PRODUCT PROSPECTS CATEGORIES

Products Present in the Market which have Good Sales Potential

 Milling wheat  Pulses
 Dairy  Bases & seasoning
 Meat & poultry  Processed fruits & vegetables

Products Not Present in the Market but which have Good Sales Potential
 Ingredients for plant-based food manufacturers

Products Not Present Because They Face Significant Barriers

 Rice (tariffs)  Corn (tariffs)

VI. KEY CONTACTS AND FURTHER INFORMATION

 USDA Manila  Philippine Federation of Baker’s

Association
 Philippine Food Processors and
Exporters  Philippine Chamber of Food
Manufacturers Inc
 Philippine Association of Food
Technologists, Inc  Federation of Philippine Industries

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