Consumer Profile – Philippines

Key demographic indicators

In 2021 the Philippines had a total population of 111.0 million, making it the seventh most populous country in the Asia Pacific region, and thirteenth most populous country in the world. The Philippines is forecast to grow at a CAGR of 2.9% from 2005-2030, reaching 123.7 million in 2030. In 2021, the population was close to evenly split between urban and rural, with 53.3% of the population living in urban areas and 46.7% living in rural areas. The urban population is expected to reach 57.4% by 2030.

In 2021, 28.2% of Filipino households were part of the middle class, while 16.4% of Filipino people lived below the national poverty line. 9.7% of those living in urban areas lived below the national poverty line in 2021, while rural poverty stood at 23.6%. Overall, the percentage of the population living in poverty has fallen at a CAGR of 2.8% since 2005. In 2021, 2.0% of the population lived on $1.90 a day or less, and 7.8% lived on $3.10 a day or less.

In 2021, the population of the Philippines was split almost evenly by gender, with 50.2% of the population being male and 49.8% being female. The population is forecast to be split perfectly, with 50.0% being male, by 2030. The median age of the population was 26.0 years in 2021, a significant increase from 21.2 years in 2005. The median age of the population is set to continue rising, reaching 28.7 years by 2030.

In 2021, 35.3% of the population was below the age of 18, 60.0% was between the ages of 18 and 64, while 5.7% was above the age of 65. In 2030, the proportion of the population below the age of 18 is forecast to fall to 31.5%, while the proportion between the ages of 18-64 is expected to rise to 60.9%, and the proportion of the population above the age of 65 is also expected to rise to 7.6%. The Philippines is currently benefitting from a demographic dividend, as the proportion of its population in the economically productive years of their lives rises.

Philippines' vital statistics

The total fertility rate in the Philippines in 2021 was 2.5 births per woman, down from 3.5 in 2005. The fertility rate is expected to fall further to 2.3 births per woman in 2030, while remaining above the rate necessary for population replacement. From 2005-2030, the average age of women at childbirth is forecast to remain virtually flat, going from 28.8 years in 2005 to 28.9 years by 2030. The average age of women at their first childbirth is expected to rise slightly from 23.1 years to 23.2 years over the same period.

Household structure in the Philippines

Couples with children were by far the most common household in 2021 and are expected to remain so in the immediate future. In 2021, 57.3% of Filipino households were couples with children, down from 63.1% in 2005 and forecast to fall to 55.6% by 2030. Mixed households accounted for 14.2% of households in 2021, while single parent families made up 8.3%. Couples without children made up 11.2% of households, while single person households accounted for the remaining 9.1%. Single person households are forecast to see the fastest growth from 2005-2030, reaching 11.0% of all households by 2030.

The number of children per household in the Philippines is falling. In 2005, there were more households with four or more children than with only one child. By 2030, the proportion of households with four or more children is forecast to have fallen from 28.2% to 11.6%. Meanwhile, the proportion of households without children is forecast to rise from 27.9% to 41.8% over the same period.

Business environment and economic indicators

In 2021, the Philippines had a GDP of US$394.0 million. The Philippine economy has entered the coronavirus pandemic with an impressive record of growth, having seen continuous positive real GDP growth since the Asian Financial Crisis of 1997. The Philippine economy suffered a sharp decline in 2020, with GDP falling 8.0%, with declines in tourism, remittances, and exports hitting the country hard. The Philippine economy is rebounding however, as global demand returns. The GDP of the Philippines is forecast to exceed pre-pandemic levels in 2022. The economy is forecast to see growth at a CAGR of 8.4% from 2005-2030, reaching a value of US$901.4 billion by 2030.

Youth unemployment is high in the Philippines, reaching 20.7% in 2020 due to the coronavirus pandemic. Average gross income in the Philippines was US$4,190.8 in 2021, up from US$1,811.40 in 2005. Average gross income is forecast to grow at a CAGR of 6.2% from 2005-2030, reaching US$8,138.10 in 2030. In 2021, 22.6% of the population aged 15+ had primary as their highest level of education attained, while 45.7% of the population had secondary as their highest attained level of education. 29.7% of the Philippine population had attained higher education. By 2030, the proportions of the population which had primary, secondary, and higher education as their highest attained level are forecast to be 21.9%, 46.6%, and 30.0%, respectively.

Food and beverage expenditures and preferences

In 2021, total consumer expenditure on food and beverages in the Philippines was US$125.3 billion, while expenditure per capita was US$1,128.1. Total consumer expenditure on food and beverages grew at a CAGR of 6.4% from 2016-2021, and growth is forecast to accelerate to a CAGR of 9.8% from 2021-2026. 90.4% of consumer expenditure on food and beverages was spent on food, with bread and cereals being the largest category. Bread and cereals saw US$40.0 billion, or 31.9% of total consumer expenditure on food and beverages. From 2021-2026, growth across all subsectors is expected to be rapid, with each category forecast to grow at a CAGR between 9% and 10%.

In 2021, total retail sales of packaged food in the Philippines were equal to US$16.1 billion, with US$6.0 billion, or 37.2%, spent on staple foods. Processed meat and seafood was the largest category of staple foods, with retail sales of US$2.7 billion in 2021. Consumer expenditure on packaged foods grew at a CAGR of 7.0% from 2016-2021, and growth is expected to fall slightly to a CAGR of 6.8% from 2021-2026. Growth among snacks is expected to be fastest among super categories, occurring at a CAGR of 7.6% from 2021-2026.

Retail sales of packaged food saw a spike in 2021, as Philippine consumers shifted towards cooking at home, while consumers also began stockpiling foods, especially rice and noodles. Sales of packaged rice are also benefitting from a shift towards e-commerce. 2020 also saw a surge in demand for yoghurt, due to a perception that yoghurt boosts immune strength. Consumers have also been shifting towards larger packaging sizes, and food delivery services have been recording strong growth.

Filipino meals tend to pair a carbohydrate, such as rice bread or noodles, with a form of protein such as fish, chicken, or beef. Sales of processed meat and seafood saw a huge 18.8% growth in retail sales in 2020. The sector benefitted from large numbers of consumers spending time at home, as well as lower income consumers seeking out cheaper canned goods during an economic downturn. As the pandemic subsides, growth in this sector is expected to slow, however growth among shelf stable seafood is expected to remain strong. Meanwhile, due to rising prices of pork, there is speculation Philippine consumers may increasingly shift in favor of other sources of protein, such as fish or chicken.

Total consumer expenditure on non-alcoholic beverages was US$9.7 billion in 2021, with mineral waters, soft drinks, and juices accounting for US$7.7 billion. The pandemic saw a significant negative impact on the demand for "better for you" beverages, as many consumers opted to simply drink water.

Sales of alcoholic drinks in the Philippines saw a sharp decline in 2020, with the volume consumed dropping by 21.8%. The impact of the coronavirus was exacerbated by a temporary ban on the consumption of alcohol imposed by the Philippine government in early 2020. Although the sector has partially bounced back, the off-trade has seen strong growth while the on-trade continues to struggle. Sales volume is expected to see strong growth in the coming years; however, sales are not forecast to return to pre-pandemic levels until 2024.

Consumption of alcoholic beverages was led by beer, which accounted for 64.4% of consumer expenditure on alcoholic drinks in 2021. Consumers are becoming increasingly interested in variants of beer that have low alcohol contents, particularly younger consumers.

Consumer trends and opportunities

Accelerating growth in consumer spending

Consumer spending in the Philippines is rising fast. As the country benefits from robust economic growth. From 2016-2021, consumer spending in the Philippines grew at a CAGR of 6.1%, registering negative growth in 2020 and bouncing back in 2021. From 2021-206, growth of consumer spending in the Philippines is forecast to accelerate to a CAGR of 9.9%. Consumer spending is forecast to rise from US$287.3 billion in 2021 to US$460.1 billion in 2026. In 2021, consumer expenditure on food accounted for 39.4% of total consumer expenditure, up from 38.7% in 2016. Consumer expenditure on food is expected to grow at a CAGR of 9.7% from 2021-2026.

According to Global Trade Tracker, the Philippines is a net importer of agri-food and seafood products, with imports of US$20.3 billion, and exports of 8.0 billion, making for a trade deficit of US$12.3 billion. Moreover, the Philippines has a trade deficit of US$221.4 million in agri-food and seafood products with Canada. Top Canadian exports to the Philippines in 2021 included frozen swine, ham, swine offal, and wheat.

The Philippines imports substantial quantities of wheat, which are then milled to make bread or noodles, which are valued for their convenience.

The population of the Philippines is quite young on average, leading to high demand for convenience foods. Philippine consumers have tended to prefer smaller packaging sizes; however the coronavirus pandemic has seen shifts in favor of larger packaging.

Food outlets have increasingly been trending towards premiumization. and personalized shopping, as the middle class continues to expand. Stores have also been focusing on developing products that are perceived as healthy. The trend towards premiumization is increasing demand for imported foreign products, while the pandemic has caused consumers to value products from countries with sanitation standards they perceive as trustworthy. Meanwhile, the rise of at home cooking and the sale of do-it-yourself meals have created opportunities for the import of foreign ingredients.

Consumers are increasingly shopping at supermarkets and hypermarkets, as consumers have been seeking to minimize trips to crowded public places. Supermarkets, which were responsible for 51.8% of retail sales of staple foods in 2020, saw their market share jump to 55.5%. E-commerce also saw a spike in its market share, while convenience stores saw their market share fall.

Growth of snacks

The market for snacks in the Philippines saw almost flat growth in 2020 and 2021, as consumers spent more time at home and children's classes moved online. However, growth of snacks is expected to accelerate rapidly, as consumers become less homebound. In the Philippines, purchasing of biscuits as a snack for school lunches is common, and as classes move offline biscuits are expected to see a strong resurgence. More discretionary snacks, such as sugar confectionary, are expected to see strong growth, as consumers return to a more impulsive lifestyle. However, sugar confectionary is also expected to see headwinds from a population of consumers that is increasingly wary of the health consequences of sugar.

The snack sector is also seeing a strong influence from rising concerns about health and wellness, as plant-based products gain popularity. Plant-based ice cream is becoming increasingly popular, as consumers are eager for an indulgent snack that they can feel good about eating. Consumers of ice cream are also becoming more concerned with the quality of ice cream.

Health and wellness

Consumers in the Philippines have been becoming increasingly interested in health and wellness prior to the coronavirus pandemic, and the pandemic has accelerated these trends. Philippine consumers are particularly interested in products they believe can boost their immune function. Weight management products have also been seeing increased consumer interest, particularly as the coronavirus pandemic has disproportionately impacted the overweight.

Fortified and functional packaged food, which dominates the Filipino health and wellness packaged food sector, has been benefiting. Fortified and functional foods have been seeing particularly strong growth among milk and flavoured milk drinks, with these products also benefitting from a desire among consumers to boost their immunity.

Consumers have also been shifting away from sugary beverages, in part due to increasing wariness of the health effects of sugar, the imposition of a sugary beverage tax in 2018 by the Philippine government, and by the pandemic which has been keeping children out of schools. The juice sector is forecast to continue negative growth, and soft drinks are expected to record slow growth in the coming years. Sales of bottled water, meanwhile, are recording strong growth. Philippine soft drinks are being increasingly marketed as healthy, and new products are being offered with reduced sugar and claims that they boost immunity.

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Resources

• BC Ministry of Agriculture. Market Guide for BC Agrifood and Seafood Exporter: the Philippines, (accessed on July 11, 2022)
• Canadian Food Exporters Association. NEWS: Philippines – Temporary Decrease in Tariffs for Fresh, Chilled and Frozen Pork Imports, May 2021
• Euromonitor International. Alcoholic Drinks in the Philippines, June 2022
• Euromonitor International. Better For You Beverages in the Philippines, January 2022
• Euromonitor International. Fortified/Functional Packaged Food in the Philippines, January 2022
• Euromonitor International. Packaged Food in the Philippines, February 2021
• Euromonitor International. Processed Meat, Seafood, and Alternatives to Meat in the Philippines, December 2021
• Euromonitor International. Soft Drinks in the Philippines, January 2022
• Euromonitor International. Weight Management and Wellbeing in the Philippines, September 2021
• Global Trade Tracker, 2021
• United States Department of Agriculture. Exporter Guide: Philippines, November 2021

Consumer Profile – Philippines
Global Analysis Report

Prepared by: Brendan Dwyer, Student (Co-op)

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