March 31, 2023
(press release)
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The Philippines’ hot drinks sector is set to witness premiumization, spurred by product innovations by leading companies and the recovery of the hospitality industry. As the cost-of-living crisis subsides and the economy recovers, more Filipinos will go for specialty tea and coffee. As a result, the Philippines hot drinks sales are projected to reach PHP147.8 billion ($2.6 billion) by 2027, registering a compound annual growth rate (CAGR) of 7.9% over 2022–27, according to GlobalData, a leading data and analytics company. GlobalData’s report, ‘Philippines Hot Drinks – Market Assessment and Forecasts to 2027’ reveals that the hot coffee category will register the fastest value CAGR of 9.1% over 2022–27. Tim Hill, Key Account Director at GlobalData Singapore, comments: “To accelerate economic recovery, the Philippines authorities lifted most of the domestic and border-entry COVID-19 restrictions in 2022. Additionally, the government promoted in-person attendance at educational institutions and offices. The surge in public outdoor movement and tourist activity bolstered both retail and on-premise sales of hot tea and hot coffee in 2022. As a result, the per capita expenditure (PCE) on hot drinks in the Philippines increased from $11.9 in 2017 to $16.5 in 2022. However, this lagged the Asia-Pacific average PCE of $22.2, and the global average PCE of $34.5, indicating ample room for future growth.” Bobby Verghese, Consumer Analyst at GlobalData, notes: “Among the distribution channels, convenience stores accounted for the highest share of hot drinks sales in the Philippines in 2022, as most Filipinos preferred to shop for groceries at stores near their homes out of fear of infections and due to inflationary pressures. The hypermarkets & supermarkets and food & drinks specialists channels also benefited from the increasing consumer out-of-home activities.” Hill adds: “Instant coffee, which dominates the hot coffee market in the Philippines, will continue to gain ground in the immediate future as consumers revert to their hectic pre-pandemic lifestyles and high inflation prevails. However, as the economy recovers and household disposable incomes rise, more consumers will trade up from instant coffee to fresh ground coffee. This will spur purchases of sophisticated coffee machines and coffee capsules for at-home consumption. While the Philippines is traditionally a coffee-drinking nation, the demand for healthy and functional teas is also on the rise. The growing varieties of tea on offer on retail store shelves and in modern cafés are propelling value sales of hot tea.” Verghese concludes: “Tea and coffee producers, including Nestlé, Mayora, and Universal Robina Corporation—the top three companies in the Philippines hot drinks market in 2022—are gearing up to launch innovative products to stimulate the consumer shift to higher-quality premium products. The proliferation of cafés and tea shop chains will also stimulate premiumization. Accordingly, GlobalData projects the Philippines’ per capita expenditure on hot drinks to surge to $21.2 by 2027.”
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