The Transformation of Food Retail in the Philippines

Abstract

From a small base by the end of the 1990s, modern retail (the chains selling at least some food) in the Philippines grew very rapidly in the 2000s, at thrice the rate of the country's GDP growth. Reaching 13 billion USD of overall sales by 2010, 5.25 billion USD of this amount came from food sales. While much of the policy debate about market development focuses on export markets, we will show that supermarkets in the Philippines already sell twice the value (volume priced at export prices) of food that is exported – and modern retail is growing faster. Modern retail has reached 45 percent of urban food retail – already beyond the share of the middle class in the population, and about 35 percent of the national food market – from a tiny fraction of that figure two decades ago. Modern food retail is itself rapidly transforming – with a rise of fresh produce sales, industry concentration, format diversification off-mall into formats that permit greater market penetration, and emerging procurement system modernization. While traditional food retail (and even most aspects of modern food retail) in the Philippines track international experience, the lack of major foreign presence even after retail foreign direct investment (FDI) liberalization in 2000 is a puzzle about which we present hypotheses. Given the already large and increasing importance of food retail modernization in the Philippines, this theme should enter the agrifood research mainstream and be the subject of systematic field survey analysis in order to start discerning its impact on consumers, farmers, wholesalers, and processors.