Food, beverage retail sales to grow by 10%

MANILA, Philippines — The country’s food and beverage (F&B) retail sector is seen to grow by 10 percent this year, according to the United States Department of Agriculture (USDA).

In its latest report, the USDA’s Foreign Agricultural Service (FAS), said Philippine F&B retail sales are expected to remain strong this year.

“However, major market share shifts within the sector have and are continuing to develop and solidify as an ongoing consequence of longstanding COVID-19 countermeasures in the country,” the USDA-FAS said.

“Specifically, FAS Manila sees hypermarkets, convenience stores, warehouse clubs, and supermarkets all growing at a double-digit pace and more than offsetting further expected declines in traditional retail,” it said, referring to traditional retailers such as sari-sari stores and wet markets.

The USDA cited data from Euromonitor International which showed that sales of F&B retailers rose by four percent in 2020 to $26 billion.

The report also highlighted the shift of companies to online services websites and mobile applications, including Lazada, Shopee, GrabMart, and Metromart, as well as marketing in community groups using Viber, Messenger and Telegram.

“While consumers initially turned to e-commerce for continued access to products and as a safety measure against COVID-19, it is likely to remain an increasingly preferred option post-pandemic,”the report said.

Despite accounting for a small portion of the market, the USDA reported that e-commerce of food and beverages surged to $216 million last year from $70 million in 2019.

For this year, the USDA projects that this will further grow by 30 percent to $280 million.

“The modernization of the Philippine retail sector continues its acceleration under COVID-19 restrictions, which have greatly shifted consumer buying habits to choose upscale vendors and online solutions,” the USDA said.

“With the continued plight of the food service sector, retail sales are expected to remain strong,” it said.

The food service sector declined by 34 percent in 2020 largely due to COVID-19 related measures and it continues to be affected today.

The USDA pointed out that food service providers that still remain in operation have generally shifted to online delivery platforms and curbside pickups, while larger chain restaurants have made in-roads selling ready-to-cook meals in retail.

“As consumers have continued to avoid and/or be restricted from enjoying food service, food and beverage retailers are increasingly offering premium selections to satisfy consumer demand.” the report said.

Moreover, the USDA also cited that the pandemic has challenged the sales of most traditional F&B retailers due to their dependence on foot traffic.

“Traditional retailers historically offered an advantage by covering both cities and remote areas, though consumer habits have shifted away from them in favor of options offering more dependable supply, safety, and convenience,” the USDA said

Someconvenience stores, particularly those near offices and schools have continued to see declines in their sales due to the restrictions brought about by the pandemic.

Modern retailers, on the other hand, have continued to expand to new areas in cities and provinces as well as extended delivery services, provided personal shoppers, and offering more payment channels.

The report also highlighted the emergence of new market segments namely the resellers and customer-to-customer sales, which offer products without a retail store.