BOON TO COLD CHAIN LOGISTICS: Food retail sales seen hitting P3T

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    Food retail in the Philippines is projected to reach up to $60 billion in 2020, up 20 percent from a year ago fuelled by population growth and propelled mainly by the pandemic the past eight months.

    Tom Over, JLL Philippines director for Capital Markets, in his presentation at the Asia CEO Forum on Wednesday, cited the findings of the USDA Cold Chain Innovation Hub which also said SM and Puregold alone have both seen a 15-percent increase in sales through 2020 as demand shifts from the traditional wet markets to fresh and frozen which Filipinos will consume from local supermarkets.

    Over also noted the prevalence of upscale supermarkets as well as smaller formals like mid-size and convenience stores in addition to the growing adoption of electronics commerce.

    These food shopping and consumption trends as well as the surge in demand for pharmaceutical products in turn are seen driving the growth of the cold chain logistics industry.

    “Population growth over the last five years and the average income that reflect that growth… all leading to larger and wider domestic consumption of food, beverages, clothing, housing,” Over said.

    Over said there has been a 57-percent growth in online revenues for merchants on the Grab app which added another 12,000 new merchants the past months while supermarkets like Merrymart, SM and Robinsons accelerated their online grocery.

    Another opportunity for cold storage is the calls for vaccine storage.

    Over said the need to access medicine during this time of the pandemic also creates opportunity for the cold chain logistics.

    Grade A cold storage facilities for health products stands at over 5,000 square meters (sq.m.)

    Across the Philippines , JLL recorded 350,000 sq.m. of cold storage stock, and another 200,000 sq.m. of cold and dry storage.

    The Philippines, Over said, is still relatively underserved citing data from the Cold Chain Alliance which showed the Philippines had one of the lowest per capita in cold storage stock in 2018 at 0.03 cubic meters compared to Vietnam of 0.1 and the US of 0.5.

    But while there are opportunities, Over said cold storage prospects in the Philippines are limited by very high construction cost especially that these are very highly specialized facilities which could be more expensive to build than an office building.

    Over said the Philippines still lags behind in logistics in Southeast Asia, at 60th in Word Bank Logistics Performance Index versus Singapore, Thailand and Vietnam.

    But over said there have been some very good signs in the market in 2020 in relation to the cold storage industry, including recent investments by two multinational companies as well the move towards high technology. (I. Isip)