“While price remains a key consideration, grocery operators are increasingly gravitating toward niche product opportunities, such as ultra-premium quality, health and wellness, free-from products and products popularized by food influencers on platforms like YouTube.”
MANILA, Philippines — The country’s sales of private label products in the food and beverage sector are expected to hit to nearly $900 million this year, driven by Filipinos’ growing demand for such brands, according to an international agency.
The United States Department of Agriculture–Foreign Agricultural Service in Manila (USDA-FAS Manila) projected that sales ofprivate label products would reach $896 million.
“In the past five years, private label products have made up an average of seven to 10 percent of grocery food and beverage sales in the Philippines, higher than the Asia-Pacific average of six percent,” the USDA-FAS Manila said in a report.
Private label food and beverage products are items that carry the so-called house brands of various supermarkets, hypermarkets, membership clubs, convenience stores and even small grocers.
Examples of which are the SM Bonus brand of the SM Markets and the Pure Basics brand of Puregold Price Club, according to the USDA-FAS Manila.
This year, sales of private label products are expected to account for seven percent of the projected $12.8 billion total sales of food and beverage grocery sector, according to the report.
Based on industry interviews, the private label products can be categorized into three distinct models: primary essentials such as fresh and frozen foods (Model A), mix of essentials and premium quality items like breads and ready-to-eat meals (Model B) and select or niche products such as wellness items (Model C).
The USDA-FAS Manila said grocery brands that follow Model A target to increase the share of their private label sales from seven to 10 percent over the next five years.
Meanwhile, brands following Model B aim to double the share of their private label items to 15 percent within the next five years with a focus on offering more premium-quality products, the USDA-FAS Manila added.
Lastly, grocery brands following Model C want to maintain the share of their private label products at seven to 10 percent, the report added.
The report also pointed out that some high-end grocery stores such as The Marketplace, S&R and Landers have been continuously increasing their stocks of foreign private label brands because of growing demand locally.
These stores undertake the direct importation of the foreign products to take advantage of “better prices and exclusivity,” the USDA-FAS Manila said.
The international agency noted that consumers buy foreign private labels as they perceive them as a “balance of quality and affordability,” it added.
“They (high-end grocery stores) meticulously curate their selection, prioritizing those with a diverse product range and proven track record in other markets,” the report said.
“The top sources of foreign private labels are the United States (30 percent), followed by the ASEAN region (14 percent) and Australia (12 percent),” it added.
The USDA-FAS Manila said some grocery operators are aiming to double their private label portfolios within the next five years. This, the international agency pointed out, would provide “significant” opportunities for US exporters to supply American food and beverage products to the Philippines.
The USDA-FAS Manila said some of the growth opportunities in terms of private label products are in baby food, baked goods, cereals, ice cream, cocktails mixes, specialty coffee, snack foods, salad dressings, among others.
“While price remains a key consideration, grocery operators are increasingly gravitating toward niche product opportunities, such as ultra-premium quality, health and wellness, free-from products and products popularized by food influencers on platforms like YouTube,” the USDA-FAS Manila said.
The international agency earlier projected that the country’s food and beverage grocery sales this year could grow by five percent year-on-year to over almost $13 billion.
“This growth is expected to continue at a compound annual growth rate (CAGR) of five percent over the next five years, outpacing the broader Asia Pacific market’s projected CAGR of four percent,” the USDA-FAS Manila said.
The international agency noted that three major conglomerates – SM Markets, Puregold Price Club and Robinsons Retail – account for half of the domestic food and beverage grocery sector.