PETpla.net Insider 09 / 2017

EDITOUR PET planet Insider Vol. 18 No. 09/17 www.petpla.net 19 foreign investors, maintain the posi- tive growth trend and create new jobs, large investments are being made for the development of infrastructure, reducing bureaucracy, fighting against corruption, and reformation of the fiscal system. In addition to China and Japan, the USA is the most important trade partner and is where almost three of the total of eight million OFWs (Overseas Filipino Workers) live and work. An economic rapprochement with China is leading the Philippines to expect high levels of inward invest- ment. The service sector is boom- ing; call centres and online support, accounting and software development combine to make up 59% of total GDP. This sector is helping to fuel the growth of the middle class working in the country. The Philippines has now replaced India as the top country for outsourced telephone services. It is a founding member of ASEAN and one-third of its exports are electronic goods; 75% of which them are semi- conductor electronics. The government is aiming to achieve a yearly growth of 3% in the renewable energy sector by 2030, with the Philippine Energy Plan, by which means it is seeking to pro- vide one-third of total energy gen- eration with renewable power. The Philippines‘ primary energy sources are coal and natural gas, although hydropower and geothermal energy plants are becoming more and more significant. Get in touch with… PET and local trends The Filipino population loves soft drinks: that much is clear. With 60% of the market by sales, the soft drinks industry is leaving other drink types behind; bottled water, for exam- ple, which accounts for only 10% of market sales. Returnable glass is still often used for soft drinks bottles, mainly for competitive pricing reasons; despite strong growth in recent years, PET sales have not yet overtaken glass bottles. Since Coca-Cola Femsa acquired Coca-Cola Bottlers Philip- pines from Coke Bottling Investment Group (BIG) in 2013, sales of PET bottles have risen by 75%. Glass bottle sales have declined over the same period, by three per cent, but still just lead in total sales. Flexible aluminium/plastic packaging, in third place, has seen a small marginal growth in sales. This could change soon, as Coca- Cola Femsa looks to expand in the popular PET single serve sector, over the medium term. It has already suc- cessfully introduced 300ml and, more recently, 250ml packages – sizes that have previously been used with reusable glass bottles. Pepsi, too, is experimenting with the single-serve trend, with the launch of individual 300ml and 345ml PET bottles. The growth in this sector is chal- lenged restricted by the Philippines’ geographical situation. Transport – and, consequently, shelf life – is faced with major hurdles that it has to cope with; first and foremost, by the huge number and spread of inhabited islands. They all need to be served with food and beverages, which leads to complex logistics in preserving and conveying goods. However, Coca- Cola is planning to tackle this prob- lem by constructing new plants in a number of different locations. The water market, which is small in comparison to that of soft drinks, is expected to see double-digit growth rates over the next five years. PET bottles have been the main choice of packaging in this sector and have enjoyed a constant market share of approximately 93%. Bottling compa- nies are focusing tightly on smaller bottles here as well: 350ml and 500ml sizes in particular. Philippine Spring Water Resources is expanding, in order to react effectively to forecast growth and in pursuit of a strategy to supply the local market with more of its own water products. Asia Brewery Inc. has expanded its “Absolute” distilled water brand portfolio with the launch of a 250ml bottle for children; in so doing it has capitalised on the ban on the sale of sugary drinks in schools. Canned soft drink distributors had the lowest percentage of sales in the country in 2016, with approximately 3%. According to expert information, Coca-Cola Femsa’s estimated 50-60% market share makes it the largest soft drink manufacturer in the country. Fili- pinos are among the largest consum- ers of Coca-Cola products worldwide. With almost 30% market share Pepsi- Cola Products Philippines (PCPPI) sits in second place; RC Cola from AsiaWide is in third. Smaller bottling companies have expanded the market with additional water brands, a trend that is set to continue in 2017. Asia Brewery Inc.‘s “Summit” mineral water and “Absolute” distilled water are the most significant local brands. The Philippine Spring Water Resources bottling company is the market leader in terms of pro- duction capacity; its main product, Macro-economic data the Philippines Population 2016 104.2 million Population growth 2016 1.56% p.a. GDP 2016) US$ 304.9 billion GDP growth rate 2016 6.9% GDP per capita 2016 US$ 2,753 Import / export 2015 (2014) US$ 70.2 (67.7) bn US$ 58.6 (61.8) bn National debt 2016 42.1% of GDP Unemployment 2016 5.7% Inflation 2016 1.8% Sources: Federal Foreign Office, AHK (Chamber of Foreign Commerce), GTAI, WKO (Austrian Chamber of Commerce), World Bank