GAIN Report - RP8041 Page 3 of 15UNCLASSIFIED USDA Foreign Agricultural ServiceAdvantages and Challenges for US exportersAdvantages Challenges
U.S. ingredients are highly regarded for quality andproduct consistency.Competition and cheaper prices from otherexporting countries.A young population heavily influenced by Westernhabits and culture through local media. Plusincreased demand for convenience.Limited disposable income and availablecheaper alternatives in a very price sensitivemarket.Proliferation of malls and accompanying expansionin the retail and dine out establishments especiallyon American franchises that require Americaningredients.Available supply from regional facilities licensingAmerican brands and an abundant domesticsupply especially on fresh vegetables, poultryand seafood products.Market is far from saturated with plenty of room forgrowth in the regional areas of the Philippines witha growing middle class market.Deficient distribution and cold chain systems inplace.Global tightening of supply and a strong localcurrency plus an increasing dependence onimported ingredients.High prices, increasing cost of production andcompetition for supply from other foreignsuppliers.The Philippines is strategically located to serve as aregional hub for food processing and is emerging asthe “new entry point to Asia”, especially as theregional free trade agreements take effect.Foreign investment often faces bureaucraticred-tape.
Road Map for Market Entry
A. Entry StrategyNew—to-market exporters should consider the following when planning to enter the market:
Filipino businessmen value interpersonal relationships and U.S. exporters should workto develop and maintain close contact and if able, make regular visits to their client
While there is an increasing trend to import directly, especially by the large multi-products companies, a majority still rely on traders or agents.
Competitive pricing as compared to other imported suppliers. While Americanproducts are usually highly regarded for their high quality and product consistency -which is a competitive advantage – end-users are highly price sensitive thatprocessors may switch to other suppliers if they think the market cannot accept priceincreases at this time.
Willingness to adapt to changes in the market requirements such as adjustments informulations, package sizes and design as dictated by the changing consumer trends.
Willingness to work with one or several importers. Exclusive distributorshipagreements are difficult to enforce in the Philippines while parallel imports arecommon.