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Hunger for Innovation and Healthy Eating Drives Filipino Food Sector

After generations of seeing food as merely needing to be filling, today's Filipino consumers are more concerned with variety, nutrition and home-sourced produce, according to exhibitors at this year's Manila Food and Beverage Expo.

Photo: Destileria Limtuaco: Countering product obsolescence via an enhanced range.
Destileria Limtuaco: Countering product obsolescence via an enhanced range.
Photo: Destileria Limtuaco: Countering product obsolescence via an enhanced range.
Destileria Limtuaco: Countering product obsolescence via an enhanced range.

According to exhibitors at this year's Manila Food and Beverage Expo, the pressure is on for producers to keep up with a growing demand for newer and healthier foods and drinks, preferably with a local point of origin. The problems in the market, however, are being compounded by a number of bureaucratic hurdles acting to stifle both the local and export markets.

Innovation is clearly driving change in the Philippine food market, with consumers constantly on the lookout for new products, especially locally-produced items with a proven health benefit. While a growing segment of the population is indeed becoming more health-conscious and more willing to pay for natural, organic products, this is still seen as something of a niche sector.

Many consumers remain price-oriented, with a substantial number of manufacturers obliged to supplement local sales with exports in order to stay afloat. At the same time, while government support has helped a number of small farmers and manufacturers devise new products or formulations, bureaucratic red tape has made it increasingly difficult for some minor producers to export their products.

Addressing the wave of change confronting the country's food and drink industry, Olive Limpe-Aw, President of Destileria Limtuaco, a Manila-based distiller, said: "There is a lot of innovation going on in the Philippine liquor industry. Consumers have become more discriminating and are always on the lookout for something new."

In response to consumer demand, Destileria Limtuaco has expanded its Philippine craft spirits line. This has seen it increase its range from one product – Paradise Mango Rum Liqueur – to five, with the addition of Amadeo Coffee Liqueur, Manille de Calamansi, Liqueur de Dalandan and Intramuros Liqueur de Cacao.

Explaining the factors driving this expansion, Limpe-Aw said: "There are so many product options available to consumers now and, thanks to digital technology, the development of new products is also much faster. This means that product obsolescence also occurs more quickly, so we all have to be continually on the lookout for changing trends and preferences or we would quickly get left behind."

Innovation is also proving important in the bread industry, with Henry Ah, one of the owners of Liberty Foodmart, a Manila-based bread and noodles retailer, believing that Filipinos are tiring of the staples, notably plain rice and the local pan de sal (salt bread). He said: "When it comes to food, people get bored easily, so you have to come up with new varieties."

To this end, Liberty has introduced a charcoal bread product, importing the charcoal powder from Japan, but using its own recipe. Ah said: "It's considered a healthy detox food, with many now favouring that option. Previously, food was just for filling up your stomach, but now people want their money's worth."

Liberty has also seen sales of its wheat bread rise by 30%, while demand for diet products, such as diet drinks and low-sugar breads, now make up half of its total sales.

One particular area proving increasingly popular among Filipino consumers is locally-produced foodstuff. Explaining this particular phenomenon, Limpe-Aw said: "What we're riding on right now is a global trend for going local. This has now become part of the Philippine mind-set, as opposed to 10 years ago when local products were always viewed as inferior."

This trend is also apparent in the increasing variety of local wines now available in the Filipino market. According to Joanna Nakamura, a Principal with Earth For Us Enterprise, a Manila-based specialist in organic produce, the local wine business is booming, with more and more varieties coming to market, particularly in the case of fruit wine.

She said: "First there was lambanog (a local vodka), then there was strawberry, now we have chocolate wines. From one fruit base to another, we keep adding, and we keep innovating. The best sellers are the guyabano and mangosteen fruit wines, largely because of the health benefits they offer. The more organic and the more natural, the better they are received."

Growth, however, is slower in the imported wine sector. Louis Maclean Far East, is a Manila-based importer of Spanish wines, as well as two non-alcoholic products. According to the company's Sales Director, Paul Raymund Garcia, even though Filipinos are drinking more wine now than before, market growth remains slow, if stable.

Photo: Nakamura: “The more organic, the better”.
Nakamura: "The more organic, the better".
Photo: Nakamura: “The more organic, the better”.
Nakamura: "The more organic, the better".
Photo: Arboleda-Young: Targetting overseas coffee buyers.
Arboleda-Young: Targetting overseas coffee buyers.
Photo: Arboleda-Young: Targetting overseas coffee buyers.
Arboleda-Young: Targetting overseas coffee buyers.

At present, red wine is still far more popular than white. This is partly because a taste for white wine has yet to be acquired by Filipino customers and partly because, with regard to healthy drinking, doctors are more willing to endorse red wines.

In the liquor industry, though, local products are coming to dominate. Garcia said: "Emperador [a local brandy] killed the gin and the vodka markets, and also ate into the beer market and the imported brandy lines. It tastes good and its price is okay. The wine market, though, has not been as affected, largely because people still like to serve wine as an alternative to brandy."

Even when it comes to chocolate, Filipino consumers are now looking for new products, particularly those with a local back-story. The Malagos Agri-Ventures Corporation, based in Davao City, a coastal commercial center on the southern island of Mindanao, specialises in making fine chocolates, with all the ingredients sourced from a single region of the country. As a sign of its success, the company's Malagos chocolate took the bronze award at this year's Academy of Chocolate.

Rex Victor Puentespina, Head of Sales and Marketing for the company, said: "Filipino chocolate is another niche product, like Cuban cigars or Parma ham. People now want to know the story behind their food and its origins. Even so, there is still a long way to go in terms of consumer education.

"Many Filipinos are still not aware of the difference between fine chocolates – which have cocoa butter and a high chocolate content – and compound chocolates, with their lower chocolate content and use of other oils. We are now hoping to break into the export market and get our brand known among international pastry chefs and confectioners."

GreenLife, a coconut product producer based in Quezon City, part of the Manila Metro district, is also focusing more on exports than on local sales, citing a lack of awareness in the local market. Frances Rubio, the company's Sales and Marketing Director, said: "For now, we're targetting exports, because of the considerable demand. We are targetting Japan and South Korea and have also received inquiries from the United States.

"There is a higher demand for coconut products in these markets than in the local market. Many Filipinos are less aware than foreigners of the health benefits of coconut oil."

Cordillera Coffee, a fellow Quezon City company, is also targetting overseas markets, particularly those in Europe. Mary Grace Arboleda-Young, the Founder of the company, said: "While more Filipinos are now favouring local coffee, selling to overseas markets allows us to give farmers a better price. There is also less demand in Asia than in Europe, where there is a bigger market for prime coffee."

Some exporters, however, have been left frustrated by bureaucratic hold ups on the part of the Philippine government. Nakamura, for instance, said that while her company had had a number of enquiries from abroad, particularly from Hong Kong, the Philippine government had yet to finish the registration of Earth For Us' guyabano wine. She said this lack of an official permit had blocked the company's plan to start exporting to Hong Kong back in 2014.

Garcia has also found bureaucratic red tape something of a challenge. Last year, port congestion delayed a shipment of the company's wine, resulting in it failing to arrive in time for the Christmas selling period, the peak time for the company's sales.

Photo: Chocolate from Malagos Agri-Ventures: A Filipino award-winner.
Chocolate from Malagos Agri-Ventures: A Filipino award-winner.
Photo: Chocolate from Malagos Agri-Ventures: A Filipino award-winner.
Chocolate from Malagos Agri-Ventures: A Filipino award-winner.

The Manila Food and Beverage Expo was held at the World Trade Center Metro Manila from 22 to 26 July 2015. More than 500 companies showcased their products to around 50,000 visitors.

Geoff de Freitas, Special Correspondent, Manila

Content provided by Picture: HKTDC Research
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