Filipinos have a hearty appetite for food service, food retail and food processing.
Food service involves upscale restaurants, local and international quick-service restaurants (QSRs), cafes and kiosks. For convenience, labor-saving and consistent supply, most require imported processed vegetables, including potatoes and tomatoes.
In 2022, the Philippines food service sector generated $13 billion in revenue, according to the latest Market Brief on Processed Vegetables released by the US Department of Agriculture (USDA).
It projects an annual growth rate of 8 to 10 percent over the next five years. Notably, QSRs accounted for over half of the total revenue share.
Food retail is dynamic, with a diverse mix of traditional retailers and modern grocery channels. With more stores in rural areas, the surge in grocery delivery services and the increasing adoption of e-commerce, the sales value of food retailing in the country reached $33 billion in 2022, according to the USDA report.
Food retail is expected to maintain steady annual growth of 6 to 7 percent over the next five years.
While mid- to high-income consumers seek a wide variety of vegetables to meet their dietary needs and enhance their culinary options, garlic and onion are the two staple aromatics without which almost every Filipino dish would be incomplete.
Food processing and the gross value added it generates reached $32 billion in 2022. It is projected to expand at a rate of 5 to 6 percent annually over the next five years, driven by rising incomes.
Processors are constantly seeking reliable sources of vegetable ingredients to develop new product lines that cater to consumer demands, including recent trends such as immunity boosters and plant-based foods.
All three sectors show growth, the USDA report observed, citing figures from Euromonitor, a London-based market research analyst.
Obviously, the processed vegetables that have the best prospects are the vegetable varieties that are not extensively produced locally. But so are cooking staples like garlic and onions, which are susceptible to price shocks, and those that offer convenience and wellness.
Effective marketing efforts from American suppliers should highlight the extended shelf life, convenience, consistency, cost savings, improved food safety, ability to overcome seasonal limitations and year-round availability of processed vegetables, the USDA report recommended.
The US faces strong competition due to a tariff disadvantage, as the Philippines applies a Most Favored Nation (MFN) tariff rate on imported products that are not sourced from any of the country’s free trade agreement partners. The MFN tariff rates range from 3 to 15 percent.
However, despite the higher prices resulting from this disadvantage, Filipinos generally prefer US processed vegetables due to their superior quality and assurance of food safety, the USDA report observed.
