Exporters see alcoholic product shipments to the Philippines rising by as much as 10 percent annually despite higher excise taxes that put imported spirits at a price-disadvantage against locally produced liquor, a Global Agricultural Information Network (Gain) report said.
The Gain report said American traders are “optimistic” their sales of alcoholic product to the Philippines will grow 5 percent to 10 percent each year despite higher taxes.
The US exported a combined volume of nearly 4.8 million liters of beer, distilled spirits and wine to the Philippines in 2018, according to the report.
Of the total volume, US shipped 242,000 liters of beer, 352,000 liters of distilled spirits, primarily whiskies and 4.2 million liters of wine. The report added that the US is the third top supplier of alcohol products to the Philippines with a 9-percent market share.
“The country’s strong economic growth, consumer demographics and widespread acceptance of American products create an extraordinary profile that makes the Philippines an exciting market for US alcohol products,” the report read.
Citing Euromonitor International data, the report said Filipinos consumed 3.1 billion liters of alcohol products in 2018, about 76 percent of which or 2.3 billion liters were beer.
Filipinos consumed about 723 million liters of distilled spirits and 22.1 million liters of wine in 2018, according to the report.
“Consumption has been growing at an average rate of 10 percent annually,” the report read.
Based on Republic Act 1147, the ad valorem tax on distilled spirits was increased to 22 percent of the net retail price plus specific annual taxes starting this year from P40 per proof liter to P66 per proof liter by 2024.
The specific tax will also increase by 6 percent annually starting 2025.
“The ad valorem tax puts imported alcohol products at a price disadvantage compared to alcohol products made from locally sourced ingredients,” the report read. The law levies a P50 per liter tax on wines, except for fortified wine containing more than 25 percent alcohol by volume which shall be taxed as distilled spirits. The tax will increase by 6 percent annually starting next year.
“More sparkling wines are expected to enter the market boosted by the lower excise tax,” the Gain report read.
The report noted that the specific tax on other fermented liquor, such as beer, was raised to P35 per liter this year and will increase by P2 per liter annually until it reaches P43 in 2024. Likewise, the tax on these alcoholic products will increase by 6 percent annually starting 2025.
The Gain report noted that the Philippines is the largest market in Southeast Asia for US high-value food and beverage products.