Alcoholic Drinks in the Philippines 2024 Market Summary
Alcoholic drinks in 2023: The big picture
Alcoholic drinks in the Philippines continued to see healthy growth in volume terms in 2023. This was within the context of a gradually improving economy, which had a positive impact on consumer spending. Indeed, the country finished with year with a GDP growth rate of 5.6%, which exceeded that of other major Asian economies, including China, Vietnam and Malaysia.
A short-lived nationwide alcoholic drinks ban took place between the 19 and 30 October 2023 during the Barangay and Sangguniang Kabataang elections, with the sale, purchase, and consumption of alcoholic beverages in public places prohibited throughout this period. However, this brief interlude failed to stifle industry growth. On the contrary, the market benefited from greater levels of mobility, as consumers returned to their busy pre-pandemic lifestyles, including reporting to their physical offices. This paved the way for more spending opportunities within retail and foodservice establishments, which facilitated overall sales.
While the strong performance of the alcoholic drinks market was to some extent, a byproduct of the country's rebound from the COVID-19 pandemic, strategic measures also played an essential role. Local and international firms, including such as Diageo Philippines Inc, Emperador Distillers, Ginebra San Miguel, San Miguel Brewery, and Tanduay Distillers, leveraged the favourable economic conditions by expanding their distribution networks into modern retail channels and implementing effective marketing campaigns, which in turn, improved the visibility of their brands.
2023 key trends
A shift towards more mindful drinking, especially amongst young adults (Gen Zs), had an impact on the marketing of alcoholic drinks in 2023. These consumers, dubbed the “sober curious” are drinking less than previous generations, whether for financial considerations, or to improve their health. As such, players focused on factors other than brand heritage and tradition in order to appeal to this demographic. For example, Asia Brewery Philippines and San Miguel Brewery offered Heineken 0.0 and San Mig Zero, respectively, which allowed consumers to socialise without drinking to excess.
Another key driver of growth, especially within spirits, was a renewed interest in cocktail culture. This has been fuelled by an increased willingness among consumers to experiment with new drinks, alongside the transformation of the bar culture in the country. Bars such as The Curator and Oto have established themselves on global cocktail scene, with the former having earned a place in Asia’s 50 Best Bars in 2023. Alongside this, spirits have benefited from greater on-premises support on the part of incumbent players, in the form of merchandising or bartending competitions, for example.
In the dominant category of beer, 2023 saw the resumption of the premiumisation trend that was interrupted during the COVID-19 pandemic. Domestic and imported premium lagers reported sizeable gains, thanks to the sustained marketing and distribution efforts of the leading players. Following the success of Asia Brewery Philippines’ Heineken, Grupo Modelo SA de CV’s Corona Extra showed rapid expansion, having gained greater visibility under its distributor, Philippine Wine Merchants. Expanded availability in convenience stores was an important factor when it came to premiumisation, given the rapid expansion io 7-Eleven chain into in urban and rural areas.
Competitive landscape
The competitive landscape of alcoholic drinks in the Philippines is dominated by domestic companies: San Miguel Brewery, Ginebra San Miguel, Tanduay Distillers, Emperador Distillers and Asia Brewery. These local players control the bulk of beer sales, as well brandy, gin, and rum. The success of these incumbent players is largely down to successful cost-containment measures which allow their brands to remain competitive in standard price segments. However, they have also embarked on premiumisation strategies to appeal to new consumers.
Compared to local giants, foreign players such as Diageo Philippines and Pernod Ricard Philippines, alongside importers such as Montosco Inc and Future Trade International, have a relatively weak presence in the overall market, due to their absence from the large beer category. Towards the end of the review period, however, Diageo Philippines and Pernod Ricard Philippines focused their efforts on improving the accessibility of their brands via modern retail distribution channels, as well as through e-commerce. In the on-trade meanwhile, they distinguished themselves by forging robust collaborations with bars and restaurants, through the promotion of various bartending and cocktail-making competitions.
Retailing developments
Small local grocers, such as sari-sari stores, retained their stronghold on the distribution of alcoholic drinks in the Philippines in 2023. The channel also managed to increase its share of volume sales during the year, as rising prices caused Filipinos to prioritise value-for-money. While larger retailers, such as supermarkets and hypermarkets, offer a wider selection of products, especially imported premium brands, traditional outlets benefited from their focus on cheaper goods, as well as their proximity to consumers’ homes.
Convenience stores continued to account for a relatively minor share of retail volume sales in 2023, despite the increasing use of discounting and promotions by incumbent players, such as Asia Brewery Philippines, Diageo Philippines Inc and San Miguel Brewery Inc, in 7-Eleven stores nationwide. E-commerce meanwhile, gained some ground, albeit from a very low base. This reflected the increasingly hectic lifestyles of consumers, for whom online stores such as Boozy and Winery offered the convenience of home delivery.
On-trade vs off-trade split
On-line channels saw faster growth than their off-trade counterparts in 2023, continuing the trend of the previous year. This was due largely to greater levels of mobility post-pandemic, including the return of consumers to their physical offices. This paved the way for more spending opportunities within foodservice establishments, particularly in the case of beer and wine. Another significant factor influencing this shift towards on-trade consumption was the revitalisation of the cocktail culture that had been abruptly interrupted by the pandemic, reinforced by competitions like Diageo World Class and Patron Specialist. However, off-trade channels also saw continued growth, in line with the gradual recovery of the economy.
What next for alcoholic drinks?
The alcoholic drinks market in the Philippines is set for further expansion during the forecast period. Beer, notably, domestic mid-priced lager, will remain by far the largest category in volume terms, as well as being the key driver of growth. This will be due to the indomitable brand equity and expansive distribution of San Miguel Brewery Inc, which will continue to produce a wide range of affordably-priced brews to cater for local tastes. However, premium lagers are also expected to grow in importance in the country, alongside the gradual; recovery of the economy and favourable demographics, including an especially youthful population.
When it comes to wine, incumbent players such as Bel Mondo Italia Corp and Emperador Distillers will look to build their distribution in modern retail outlets to maximise access to potential customers. Foodservice outlets, such as restaurants and bars, will also remain pivotal channels for wine, playing a significant role in raising consumer awareness about the various varieties available. However, in order to optimise the potential of still grape wine, alongside the more dynamic sparkling wine. it will be imperative for players to invest in marketing support, including high-profile events and social media campaigns.
Within spirits, a reinvigorated interest in cocktail culture is poised to drive continued growth within the category. This enthusiasm for innovative and artisanal cocktails will be fuelled by an increased willingness among consumers to try with new drinks, alongside greater investment on the part of the leading players in terms of on-premises trade support through merchandising and bartending competitions.
Cider/perry will also benefit from growing levels of experimentation, as consumers look for new experiences when socialising or dining out. At the same time, craft breweries such as Elias Wicked Ales & Spirits will likely help to raise the profile of cider/perry amongst locals, with imported brands being more focused on developing sales in areas with a higher expat population.
RTDs meanwhile, will see an improved performance, thanks to an increase in consumer spending within on-trade establishments. This will provide an especially favourable environment for spirt-based RTDs, which will also benefit from higher levels of visibility, thanks to the marketing and distribution efforts of incumbent players. In addition, the recent launch of G&T Ultralight by Ginebra San Miguel may encourage more local and international companies to enter the market in the coming years.
More generally, the industry will also show a growing awareness of the evolving preferences of younger consumers, including the “sober curious” who are seeking to moderate their alcohol consumption. Towards the end of the review period, for example, Asia Brewery launched Heineken 0.0, while Bel Mondo Italia Corp, the leading player in wine, introduced an alcohol-free Sparkling Strawberry under its Novellino brand. As consumer preferences continue to evolve, non-alcoholic offerings are anticipated to play an increasingly prominent role in players’ portfolios.
In terms of distribution, on-trade outlets will generate more rapid volume growth than their off-trade counterparts in line with the greater mobility of consumers. Moreover, as purchasing power improves, incumbent players such as San Miguel Brewery Inc, Diageo Philippines Inc, Pernod Ricard Inc, William Grant and Tanduay Distillers will seek to build stronger ties with foodservice establishments in order to gain greater visibility for their brands.
MARKET BACKGROUND
Legislation
Legal purchasing age and legal drinking age
The legal drinking and purchasing age in the Philippines remained 18 years in 2023, as stated in the Anti-Underage Drinking Act. Even so, some establishments, particularly small independent grocers, continue selling to minors as there is little monitoring and enforcement. In a bill entitled “Safe Hours for Children Act”, parents or guardians are prohibited from allowing their children to be in a public space from 22.00 to 05.00 without a valid reason. Passing this bill into law may help curb underage drinking, moving forward.
Drink driving
Drink driving is punishable by law under the Anti-Drunk and Drugged Driving Act of 2013 which gives authority to traffic enforcers to conduct sobriety tests for drivers who seem to be under the influence of alcohol.
In 2015, the Land Transportation Office (LTO) started to use breath alcohol analysers to test drivers whom traffic enforcers suspected of driving under the influence of alcohol (DUI). Even if they did not cause any accidents, motorists who are proven to have been DUI will be imprisoned for three months, subjected to a fine of at least PHP20,000, have their licence suspended for 12 months and their vehicle impounded.
Advertising
The Advertising Standards Council (ASC) regulates the advertising of alcoholic drinks in the Philippines. The Advertising Code of Ethics, which was first released in 2008, and sets out advertising rules that are intended to protect consumers from false or inaccurate messages, serves as the basis for its screening and regulation of advertising. This code is updated as the ASC deems fit to keep up with the changing expectations of consumers and society. The ASC’s Advertising Code of Ethics does not prohibit the use of celebrities in alcoholic drinks advertising, which makes the practice common.
Advertisements for alcoholic drinks should not: (1) imply that the consumption of alcoholic drinks leads to social acceptance; (2) depict refusing to drink as a foolish or negative act; (3) depict the act of drinking itself; (4) promote excessive or heavy drinking; (5) claim medical or therapeutic benefits; or (5) be aimed or directed at minors. A “Drink Responsibly” message is also required to be displayed in advertising materials, particularly for television. Other stipulations can be found in the ASC’s Advertising Code of Ethics.
Users must be required to confirm their age to prevent a minor from accessing brand websites. They should also contain a social responsibility statement and links to social organisations.
There were no changes in advertising guidelines on alcoholic drinks in 2023.
Smoking ban
Following President Rodrigo Duterte’s signing of Executive Number 26, the nationwide ban on smoking in public places was implemented in 2017. Specifically, the law imposes a smoking ban on the following: selected public places, which include schools, youth hostels and other centres for youth activities; places in which fire hazards are present; hospitals and clinics; public facilities such as airports and terminals; and food preparation areas.
There were no changes to the nationwide smoking ban in 2023.
Opening hours
Operating hours of off-trade channels are generally between 9:00 and 20:00. Retail establishments such as hypermarkets and supermarkets typically operate from 09.00 to 21.00, with earlier opening and later closing times at weekends. Convenience stores are typically open 24 hours a day, whilst variety or sari-sari stores open at different times, depending on the preferences of the owner. On-trade channels are often open from 11:00 to 23:00.
On-trade establishments
Towards the end of the review period, local and international brands ought to forge stronger connections with on-trade establishments, including bars and restaurants, by hosting bartending competitions, which allowed them to promote various cocktail suggestions.
OPERATING ENVIRONMENT
Contraband/parallel trade
There was limited parallel or contraband trade in the Philippines in 2023, as the bulk of alcoholic drinks come from domestic players.
Duty free
Duty free continues to be an important channel for imported alcoholic drinks. Consumers on the look-out for lower prices compared with off-trade establishments prefer duty-free shops, especially since these shops are more generous in terms of product bundling promotions. Duty-free shops can be found in international airports and malls with high tourist traffic, such as Manila, Pampanga and Cebu, as well as free-port zones, such as Subic and Clark.
Cross-border/private imports
Cross-border/private imports remained negligible in 2023, thanks to the wide availability of imported alcoholic drinks available via e-commerce and foodservice establishments.
KEY NEW PRODUCT LAUNCHES
One notable theme in new product development towards the end of the review period was low-alcohol or non-alcoholic beverages. In 2023, Ginebra San Miguel Inc, launched its G&T Ultralight Spirit Drink in two flavour varieties - lemon ginger and apple – both of which had an alcohol content of 9%. This followed on from the introduction by Asia Brewery of Heineken 0.0 in non-alcoholic beer and the launch of a non-alcoholic strawberry wine by Bel Mondo Italia Corp in 2022.
Other new launches catered to consumers’ increasing appetite for premium experiences. Emperador Distillers, for example, launched Fundador Super Special, which was promoted as a high-quality Spanish brandy. The product benefited from widespread distribution, which extended to traditional retailers.
Outlook
With the expected rise of the sober-curious trend, the market is likely to see the introduction of more non-alcoholic and low-alcohol beers, wine and spirits over the forecast period. It is also anticipated that spirits-based RTDs will attract more interest, as greater numbers of local consumers explore easy-to-drink alcoholic beverages.