BMI View: While the Philippine economy continues to expand at a healthy rate and despite its expanding base of young consumers, we believe that the country offers limited potential in its grocery and food and drink markets. Multinational investment has been slow to penetrate the market, which in itself continues to present numerous challenges to players in the sectors. Issues such as widespread poverty, highly uneven income distribution, under - developed mass grocery retail networks and high levels of unemployment will continue to weigh on the consumer outlook.
Headline Industry Data (local currency)
2014 per capita food consumption = +4.68%; compound annual growth rate (CAGR) forecast 2013 to 2018 = +4.46%
2014 alcoholic drinks value sales = +7.97%; CAGR growth forecast 2013 to 2018 = +7.03%
2014 soft drinks value sales = +7.89%; CAGR growth forecast 2013 to 2018 = +7.89%
2014 mass grocery retail sales = +7.39%; CAGR growth forecast 2013 to 2018 = +7.03%
Del Monte Pacific Enters New Joint Venture And Proposes Share Sale : Philippine food and beverage company Del Monte Pacific Limited (DMPL) disclosed in December 2014 that it was to enter into a joint venture (JV) with two Europe based companies. The JV will result in the construction of a facility in the Philippines that will preserve the quality and shelf life of fruit and vegetables. Spain based Nice Fruit SL will provide the technology that preserves the nutrients and integrity of the produce handled at the plant. Nice Fruit SL will be the majority stakeholder in the JV with 51% and DMPL will have a 35% stake. UK based Ferville Ltd, while being a minority financial investor, was instrumental to developing the JV and will hold a 14% interest.
Century Pacific Completes Successful IPO : The initial public offering (IPO) of Philippines-based food company Century Pacific was oversubscribed by 3.5 times the base offering and raised PHP3.2bn in fresh capital, reported the Manila Bulletin in December 2014. The price range for the IPO was originally set at PHP12.50-14.50 (USD0.28-0.32) a share and in the end 230mn shares were sold at PHP13.75 each. The funds generated from the sale will be used for the firm's expansion. The listing was completed on May 6 and later declared the Philippines' 2014 Deal of the Year at the Assets Triple A Awards.
Pepsi-Cola Products Philippines To Invest PHP650mn In New Facility : US-based food and drink company PepsiCo's Philippines division, Pepsi-Cola Products Philippines (PCPPI), announced in September 2014 that it was investing PHP650mn (USD14.57mn) to establish a snack food manufacturing facility in the Philippines. The company plans to build a local manufacturing facility, which would allow it to produce, sell and distribute snack foods in the country. 'The snack food investment will allow the company to further build and expand its business and markets venturing into a product line that is complementary to its existing beverage business,' the company said. The firm is planning to implement its snack food facility by H215.
Japanese FamilyMart Adds Franchising To Its Philippine Expansion Plans : In September 2014, Japan-based FamilyMart confirmed its intention to use franchising packages to accelerate its expansion in the Philippines. The minimum cost of a franchise was set at PHP4mn, with finance packages available through the Bank of the Philippine Islands. The company is also looking to raise capital through an IPO. At the time of writing, there were 65 Family Mart stores in the Philippines and the number was expected that to grow to 100 by the end of 2014. The company has a target of opening a total of 500 stores in the country by 2018.
Philippines Seven Continues Its Expansion Drive : Philippines-based retailer Philippines Seven plans to double its 2014 spending to open 300 new stores and refurbish another 100 existing stores, Bloomberg reported in August 2014. This follows the major investments in expansion and refurbishment of its store network over the previous two years, which cemented its position as the Philippines' largest convenience-store chain with more than 1,100 stores.
Emperador Distillers Confirms Whyte And Mackay Acquisition : Emperador Distillers, a Philippines-based subsidiary of Alliance Global Group, signed an agreement in May 2014 to acquire the UK-based Whyte and Mackay spirits business from United Spirits for GBP430mn (USD729mn). As part of the acquisition, Emperador will take on a global portfolio of Scotch whisky, malt and grain distilleries and brands that include Dalmore and Tamnavulin. Emperador will also supply United Spirits with an unspecified amount of Scotch whisky over the coming three years.