11 Sept 2018
Philippines' Hunger for Foreign Food Sees Global Players Set to Serve
- Photo: WOFEX Manila 2018: Lifting the lid on the fast-growing Filipino food market. (Shutterstock.com/junpinzon)
- Photo: Conlin’s: Pushing back the beverage boundaries.
- Photo: Rehoo: Championing Chinese food technology.
- Photo: Manila’s World Food Expo: Full of fine foreign imports and delicious domestic dishes.
With a huge population, a rapidly expanding economy and a distinct willingness to try non-local foods, the Philippines is proving an irresistible market for culinary suppliers and food-equipment manufacturers from across the world.
With the Philippines officially one of the fasting-growing economies in Asia, attendees at the trade section of Manila's World Food Expo (WOFEX) were in an upbeat mood. Driven by a growing population, strong domestic consumption, a buoyant economy and booming tourist industry, the country's food-retail sector is one of the largest in Asia and one of the most receptive to imports.
According to a report by the United States Department of Agriculture (USDA), retail food and beverage sales in the country amounted to about US$47 billion in 2016, with imports accounting for $923 million. Coupled with its booming tourist and restaurant sector, it's not difficult to see why the country is one of the primary food and beverage markets in Asia and why so many overseas businesses are now actively targeting it.
For its part, the Flanders Agricultural Marketing Board was attending the show as a member of the official Belgian delegation. Anoek Van Wouwe, the Board's Promotion Manager for Meat, Poultry and Eggs, sees the Philippines as representing a key export opportunity and was keen to take advantage of the local consumers' confidence in European products.
Outlining the Board's strategy, he said: "We started in the Philippines last year with a project funded by the EU aimed at exporting poultry products to Asia. After extensive research, we concluded that the Philippines, Vietnam and Singapore were the best markets for Belgian poultry for a number of reasons.
"Firstly, consumers here really liked the quality of the Belgian products that were already coming in and, secondly, demand was different – but complementary – to what consumers want in Belgium, where demand is mainly for chicken breasts. By contrast, in Asia, the feet and the more bony parts of the chicken are very popular. As part of the EU, people here feel confident that Belgium will comply with its very high safety and quality standards and that really helps."
Another sizable presence came courtesy of South Korea, a significant investor in the Philippines and one of its most important tourist markets. Foodrella, a long-established producer of fruit bases and powders for smoothies, desserts and ice creams, among other products, was just one of the country's many businesses participating in the event.
Seeing great opportunity for Korean products across Asia, despite certain import restrictions, Jane Choi, the company's General Manager for International Business, said: "We believe there is a growing wave of interest in Korean food currently sweeping across the Asian markets. Our business has been growing steadily and we now attend this event every year.
"One of our most popular products is fried chicken. We are here looking for distributors for it, as well as end customers, such as restaurant chains. Under the free-trade agreement Korea has with ASEAN, local food retail outlets cannot import directly because of the regulatory requirements, but we can let consumers and catering businesses try our products and then introduce them to our distributors."
The show was not all about international brands, however, with some home-grown businesses making clear progress in the food sector. Manila-based Conlins Coffee World, for instance, has found and exploited a gap in the market, at least according to Alvin Lago, its Sales and Marketing Manager.
Explaining the company's strategy, he said: "We started out about 15 years ago and we are primarily a coffee-roasting company, supplying many local chains, hotels and restaurants. Originally, we were just a simple roaster, then we expanded to imported espresso machines and recently developed a range of locally-produced flavoured syrups.
"Over time, we have seen steady growth in coffee consumption. Although the tastes of the market may change – the current trend is cold brew – coffee consumption is always there. One of the reasons we went into the syrup business was that there were only a couple of international brands offering such a product."
A substantial portion of the show was dedicated to food equipment suppliers, with the MV Ram Trading Company one of the most prominent. A Manila-based business, it imports industrial and kitchen equipment for the food and beverage industry and is also the exclusive distributor of the Girbau brand of Spanish laundry machines.
According to Alexander Llaban, a Sales Executive with the company, business is really picking up, largely on the back of the rapid growth of the hospitality sector. Expanding upon this, he said: "The country is now booming on the tourism side. In particular, there are many projects in hotels and in the remote areas, all of which suits us.
"Our major challenge, though, is convincing our Filipino customers to purchase better-quality equipment, which is a particular issue when we are competing with Chinese imports. Overall, we prefer overseas clients as they tend to have more familiarity with the benefits of foreign brands. We generally get our local clients only after they come to us when they have previously bought cheap equipment and then found that their purchases are substandard.
"It's hard to compete with Chinese suppliers, as they have produced good copies of nearly all the equipment we sell, although the quality and after-sales service is far inferior. We also have looked into supplying Chinese equipment, but the problem is ensuring that all the spare parts are available locally so we can provide a good after-sales service."
One of the Chinese companies MV Ram finds itself in competition with is Rehoo Industrial, which manufactures in Shanghai but is headquartered in Hong Kong. Perhaps predictably, Sales Engineer Vicky Gu was defensive about the quality and after-sales service now offered by mainland suppliers.
Explaining her own company's positioning, she said: "This is our first time at this show, although we have been selling into the Philippines for about 14 years. Our advantage is not just price-related. In fact, it's a complex mix of keen pricing, quality and good after-sales service."
One of the largest exhibition stands at the show came courtesy of IB COM, Kitchen Equipment (Manila), a Malaysian consultancy with a Philippines subsidiary that provides a one-stop shop for catering outlets. Maintaining that the Philippines is now one of the best markets in Asia, Aw Wai Kheong, the company's Managing Director, said: "Before we entered the Philippines we also researched Vietnam, Indonesia, Myanmar and Cambodia. We felt that the best place for investment was the Philippines, though, because of the size of its population and its rate of economic growth.
"Although it's sometimes a challenging place to operate, a lot of potential investors have a skewed image of the country. If they spent enough time here, they would find it far better than they might have expected."
Largely agreeing, Angelyn Pearl Navida, a Local Retail Sales Agent for the company, said: "The market is good here. Filipinos love their food and we can provide them with kitchen design and fittings for restaurants, along with catering equipment, bakery materials, food service equipment and refrigeration – everything they need, basically.
"We ship in equipment primarily from Malaysia and China, but also from Italy, Germany, Turkey, Taiwan and Japan. Sometimes the smaller customers will just want to go with the cheapest Chinese supplier on offer. While we do source from China, we do careful background checks on our suppliers to ensure that the quality is good enough."
With the dangers of plastic food packaging the latest environmental bogeyman, one new start-up at the show – Manila-based Orera Technology – believed it may be able to help tackle that particular problem. Explaining both the problem and the company's novel solution, Co-founder Fran Zaida said: "We chose the Philippines as our base because the country has a huge plastic-waste problem. Worldwide, it's the third-biggest contributor to the problem.
"We, however, manufacture eco-friendly packaging alternatives to plastic and polystyrene, using fallen local areca palm fronds to create plates, bowls and trays. Additionally, we use bagasse sugarcane from China to create packaging items, such as takeaway food containers.
"Our biggest competitor is obviously plastic, which is obviously much cheaper. Otherwise, we don't have any competition. We come in at about the same price as paper, but we are more environmentally-friendly – we don't cut down trees to create our products.
"As we scale up, we will be able to bring the costs down. At this show we are looking to attract interested buyers from large chains of restaurants as they have the biggest demand for our products. Grocery stores are then next on our list."
WOFEX Trade 2018 took place from 1-4 August at the World Trade Center, Manila.
Marilyn Balcita, Special Correspondent, Manila