FOOD purchases by Filipino households, particularly middle-income class earners, will drive the country’s food retail sales upward by 5.5 percent to a record-high $50 billion from $47.4 billion this year, according to a Global Agricultural Information Network (GAIN) report.
The GAIN report, prepared by the United States Department of Agriculture Foreign Agricultural Service in Manila, estimated Philippine food retail sales last year at $47.4 billion from $44.98 billion in 2017.
“The Philippines’s food retail market in 2018 was valued at $47.4 billion, and is forecast to reach nearly $50 billion in 2019,” the report read.
“Filipino households spend more than half of their budget on essentials including food. Purchases of food and nonalcoholic beverages comprised almost 40 percent of household expenditures in 2018,” it added.
The report noted that most modern grocery retailers are in Metro Manila and other key areas where most middle-income earners reside.
It estimated that there are more than 10,000 modern food retailers nationwide, led by Supervalue Inc. (SM) with 645 outlets.
“Three supermarket chains dominate the Philippines’s food retailing, but only account for 20 percent of total sales, with much of the rest comprising traditional food retailers. Supervalue [SM] is the market leader, followed by PureGold and Robinsons,” it said.
“Other Supermarket chains include Metro Retail, Super8, WalterMart, AllDay Supermarket, and the warehouse clubs S&R Membership Shopping and Landers Superstore,” it added.
Modern grocery retailers, such as hypermarkets, supermarkets and convenience stores, are starting to affect traditional grocery retailers such as sari-sari stores and wet markets as they target the same consumers, the report said.
“Among modern grocery channels, convenience stores serve as the biggest threat to traditional grocery retailers because they are targeting the same locations,” it said.
“Convenience stores have several advantages over traditional grocery retailers, such as a wider assortment of products, air-conditioned outlets and dining stations,” it added.
However, the report pointed out that the higher price tags of goods sold in convenience stores hinder its expansion over traditional retailers that still offer affordable items for consumers.
“Overall, modern grocery retailers still have a long way to go to saturate the market,” it said. “The number of traditional grocery retailers in urban areas, especially Metro Manila, may slowly decline, but this format will remain particularly strong in the provinces and rural areas.”