Page 59 - FoodFocusThailand No.167 February 2020

SURF THE AEC

only a few low plain. Ports also lack development and Strategies
condensed. These underlying problems are drawbacks for • The Philippines food market offers great potential. The expansion
retail stores to distribute goods. of FDI in IT-BPO sector in big cities also drives potential for food industry.
• OECD criticized the Philippines’ government policy Thai investors should focus on penetrating the market in big cities that
to subsidize only some of the agricultural products, which are home to IT-BPO headquarters such as Manila, Cebu, Davao, Subic,
drives retail food price to increase and farmers’ low interests and Clark.
in cultivate other products. • Organizers should not overlook the fact that Filipinos enjoy
celebration. Events that could potentially introduce Thai goods to local
Opportunities consumers are, for example, Beer Festival, International Food Festival,
• The consumption potential increases relatively with and Thai Food Festival.
the disposable income that expands among the middle • Hotels can also be good distribution spots for Thai food products
class and the upper class (especially labours in the IT-BPO as tourism are expanding.
sector as the Philippines is stepping up to compete with • Beer market is also very interest, but investors should find strong
India) which will boost for higher processed food sales. local partners. Heineken, for example, partners with Asia Brewery to
• The country’s main sources of income are 1) overseas penetrate and compete with local giant competitors.
Filipinos who send the money back home, 2) FDI in IT-BPO • Energy drinks are performing well, including Red Bull. The market
sector, and 3) tourism, which stabilize the economic is attractive to IT-BPO workers who need to work 24/7. The market is
dynamic. still unsettling and consumers are open to new products.
• Each year, the Philippines imports large amount of • The key to access the Philippines processed food market is to
goods from Thailand. In 2018, the country imported from compete with local brands. Interestingly, Thai goods can offer competitive
Thailand for about USD 1 billion, increasing 82% from the price due to the benefit from AEC and 0% import tariff via ASEAN FTA.
year prior. Main products include rice and rice products, However, it is important to consider a partner who has a clear, thorough
sugar, beverages, sauces, condiments, seasoning, wheat, understanding about the local market and is strong enough to compete
processed food, corn, tapioca products, dairy and dairy with local gigantic players.
products. • Chained restaurants/chained Thai restaurants is a strategy that is
• CP Philippines can be the distribution center for Thai highly recommended for festive country like the Philippines. The country
restaurant chains. is also a new travel destination in ASEAN.
• Food products from Thailand benefits from 0% tariff
via ASEAN FTA.
• Tourism is a new source of income for the Philippines
as more tourists are coming to visit the country, especially
the 7,000 purely natural islands. As of now, tourism
accounts for 10.6% of the country’s GDP (Source:
Wikipedia) and could benefit the food industry.
• The Philippines had been a colony of western
countries for more than 300 years and investments in IT-
BPO by international IT companies allow Filipinos to be
easily opened up to western food.
• Expansion of large consumer product stores have
pushed for the development of logistics systems and
distribution systems, which benefit food producers.
• Cold storage businesses received good development,
which encourages the processed food businesses.
• Thai restaurants are very popular in the Philippines.
• More and more Filipinos are keen to shop for healthy
food products, which is in sync with the strength of Thai
food producers.
Obstacles
• Despite the accelerating growth of consumer product
store networks, the growth only limits within large cities.
The low expansion in suburban areas could diminish the
growth in food sector.
• Rules and regulations remain complicated and often
get readjusted. Getting permission, especially for food and
cosmetics, usually takes a long time.

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