Food retail grows into a $60 billion industry

MANILA, Philippines — The country’s food retail industry will continue to expand, with total sales expected to reach a record high $60 billion, as the coronavirus disease pandemic has forced people to consume and shift to delivery of food items.

In the latest report of the United States Department of Agriculture-Foreign Agricultural Service (USDA-FAS), the food retail market is seen to increase by 20 percent from $50 billion last year.

“Since the start of the COVID-19 outbreak, consumers have been increasingly cooking food at home, driving a surge in purchases of local and imported food and beverage products from supermarkets and online portals,” USDA said.

“This unprecedented shift from food service to food retail has created opportunities for more US food and beverage grocery products to enter the market,” it said.

The Philippines is an emerging market with a service-based economy backed by a demographic sweet spot. Prior to the COVID-19 outbreak, the country was set to become an upper middle economy this year.

Of last year’s total sales, modern retail accounted for half.

USDA said retailers with strong digital presence are likely to fare better this year as consumers move toward e-commerce since the start of the outbreak.

“Modern retailers are ramping up efforts to strengthen their digital presence and take advantage of this growing trend,” USDA said.

To lessen the movement of people, local governments have deployed farm-to-market rolling stores in middle and upper income areas.

Lower-income consumers still opt to buy from stores that sell low-priced packaged food products and other cooking ingredients, and from traditional wet markets that sell meat, poultry, seafood, fruits and vegetables.

While online grocery stores and delivery platforms have been around for a while, only recently did consumers embrace its features to cope with social distancing measures.

USDA said 25 to 30 percent of shoppers shifted to five online platforms.

More are also expected to move in the coming months as user interfaces are improved, out of stock situations are addressed, and delivery times are shortened.

The Philippines is the largest market in Southeast Asia and the ninth largest export market in the world for US agricultural products, importing a total of $2.89 billion in 2019.

The US also remains the Philippines’ largest supplier of  food, beverage and ingredient products with a 24 percent market share.

This was followed by the EU, China, Indonesia and Australia with total imports of consumer-oriented food growing annually at an average of 10 to 15 percent over the last five years.

“While domestically produced items account for about 80 percent of the total food supply, traders remain optimistic that sales of imported products will continue to grow because they offer variety and consumers view US products in particular as superior in quality,” USDA said.