BMI's Executive Summary

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The Sector At A Glance

Key Insights On The Food & Drink Sector Of Philippines

Following November 2006’s news of a potential over-supply problem in the Philippines’ poultry industry, observers are starting to say with increased certainty that the country’s agricultural industry might have turned a much needed corner. In our newly-published Philippines Food & Drink report, BMI explores the impact that improved government spending has had on the country’s agricultural industry and how sector improvement could act as a turning point for the broader economy.

Years of neglect, lack of investment and inherent structural problems have resulted in a highly inefficient agricultural industry in a country that, thanks to its topography and large rural labour force, could potentially have been an important regional industry player. However, having seen its regional peers race ahead in terms of both economic growth and attracting foreign investment, the government seems to have finally acknowledged that the potential of the sector can no longer be over-looked. Problems of oversupply of key commodities were unheard of years ago, while the idea of this surplus being of a high enough quality to offload on to the export market was even more ludicrous. These changes are a result of improved government financing for the agricultural sector and BMI believes that this will be a key driver of our export growth forecast of 9.5% to 2010. Imports in value terms are set to fall by a marginal 0.1%, a figure that once again demonstrates the Philippines’ improved self-sufficiency.

The government’s agricultural policy has had its critics. Many say it focuses purely on crops about which consumer sentiment is strong, namely rice, to the detriment of those crops that actually provide the most employment and the greatest economic contributions. Whether a bid to curry favour with the electorate or the product of a genuine wake-up call, BMI believes that the importance of these policies cannot be in doubt.

Higher agricultural output improves living standards and disposable incomes for rural workers. These workers can in turn become consumers in their own right, thus making a far greater economic contribution of their own. This stimulates the economy, increases per-capita food consumption levels and eases the gravity of rural poverty, all of which should serve to fuel foreign investment. The good news for the Philippines is that even a moderate improvement in agricultural output and a slight reduction in structural concerns, could trigger phenomenal agricultural growth. Investors have long been circling the Philippines, exploring opportunities and then declaring it too great a risk. The interest is certainly there and in BMI’s opinion, a sustained upturn in output will see investors translate this interest into capital in a bid to get a head start on their rivals.

The challenge for the government will then be to protect the interests of local players in the face of a potential international onslaught. Attracting investment is merely the first stage in improving rural spending power.

Contents

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Chapter 1 – Business Environment

Retail Business Environment Rankings

Table: Asia Pacific Retail Business Environment Rankings

SWOTS

Philippines Food & Drink Industry SWOT

Macroeconomic Outlook

Fiscal Policy

Table: Philippines - Economic Activity

Chapter 2 – Retail

Regional Overview – Private Labelling in Asia Pacific

Table: Assessment Of Private Label Qualities – By Region

Table: Leading Private Label Categories By Market Share & Annual Growth Rate

Industry Forecast Scenario

Table: Philippines Mass Grocery Retail Indicators - Historical Data & Forecasts By Format

Company Developments

Market Overview

Table: Structure Of The Philippines Mass Grocery Retail Market By Number Of Outlets

Table: Structure Of The Philippines Mass Grocery Retail Market - Sales By Format (US$bn)

Table: Average Sales Per Outlet By Format (US$mn) - 2005

Chapter 3 – Food & Drink

Regional Overview – Dairy In Asia

Table: Per-Capita Dairy Consumption (kg) & Consumption Growth In Selected Asian Markets

Table: Milk Production (000 tonnes) & Production Growth In Selected Asian Markets

Table: Dairy Production (000 tonnes) Forecasts In Selected Asian Markets

Industry Forecast Scenario

Table: Philippines Food And Drink Indicators – Historical Data & Forecasts

Industry Developments

Company Developments

Market Overview

Table: Philippines Agricultural Sub-Sector Production - Historical Data

Chapter 4 – Tobacco

Industry Forecast Scenario

Table: Philippines Cigarette Value/Volume Sales - Historical Data & Forecasts

Industry Developments

Company Developments

Market Overview

Chapter 5 – Competitive Landscape

Key Players

Table: Key Players In The Philippines Mass Grocery Retail Sector - 2005

Table: Key Players In The Philippines Food & Drink Industry - 2005

Asia Pacific Regional Company Case Studies

AEON In Asia Pacific

Table: AEON Five-year Financials (JPYmn)

Table: AEON Speciality Store Network (as at February 20 2006)

Coca-Cola Amatil In Asia Pacific

Table: Coca-Cola Amatil Five-Year Financials

Table: Coca-Cola Amatil Market Share By Country And By Beverage Sub-sector – As At Year-End 2005

Table: SPC Ardmona Market Share By Product Category

Heineken In Asia Pacific

Table: Heineken – Brands Distributed In The Asia Pacific Region

Table: Contribution Of Asia Pacific Region To Heineken 2005 Financial Performance

Kraft In Asia Pacific

Table: 2005 Kraft Global Facts

Company Profiles

SM Investments Corp

Pilipinas Makro

Philippine Seven Corp

Universal Robina Corp (URC)

Tanduay Holdings

San Miguel Corp

BMI Forecast Modelling

How We Generate Our Industry Forecasts

Retail Industry

Sources

BMI Forecast Modelling

How We Generate Our Industry Forecasts

Retail Industry

Sources

Competitive Landscape for Asia Food & Drink Reports: Sample of  
Companies Ranked

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At-a-glance perspective on the strengths, weaknesses, opportunities and threats facing each market’s food & drink industry. BMI also provides similar economic and business environment studies. Company SWOTs (Strengths, Weaknesses, Opportunities, Threats) covering all leading food and drink companies operating in each market, including competitive intelligence on geographic presence and competitive positioning of multinationals against local companies; leading products, services and brands; sales and local market share; foreign direct investment, projects, partners and acquisition strategy. Illustration of the industry via rankings tables comparing revenues, number of outlets, number of employees and registration dates. BMI analyses each company’s performance, market position, strategy and investment potential.

Network of Asain Food Sources

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BMI's Asian Food Reports are based on an extensive network of multilateral organisations, government departments, food industry associations, chambers of commerce and company reports. Information sources include: