San Miguel Philippines has Dominated the Beer Market in the Philippines

Monday 19 August 2013, Amsterdam

Due to challenging economic circumstances, the beer market in the Philippines was generally flat and fairly non-eventful in 2012 with limited NPD. Of the top five umbrella brands controlling over 99% of the market, only Red Horse (San Miguel Philippines) managed to see growth. As a result the leading brewer maintained volumes whilst the competition suffered minor, but only minor, sales contractions. Asia Brewery has also indicated strong opposition against proposed measures that would impose a 140% increase in taxes on low-priced beer, which represent the bulk of sales, amid publicly reports fears that such a measure would lead to a collapse of the market. This has cast a shadow of concern over the beer category in the Philippines for 2013, but with a full picture of its consequences yet to be resolute.

A flat year

Following 2% growth in 2011, which was already significantly down on the previous year's performance, 2012 saw a flat beer market with most umbrella brands losing volume. The main bright spot came from Red Horse (+2%). It was largely the performance of this leading brand that prevented the whole category from dipping into a decline. Discount beers suffered the biggest volume loss (-1%), mainstream (eg Red Horse) and premium brands (San Miguel Light) overall were more stable. Brand shifting was a major inhibiting factor stunting category development. In addition, San Miguel Pale Pilsen, the number two brand, lost out as its audience is getting older and shrinking. But, despite flat volume sales, the San Miguel brewery reported a 5.7% increase in total revenues in 2012.

Red Horse prevents market fall

Red Horse, the extra strong lager sold by San Miguel Philippines, is the outstanding brand in terms of volume and achieved the greatest increase in incremental volume last year as most of the competition saw sales dip. Its market share increased by one percentage point rising up to just under 56% of category sales. Stable mate San Miguel did not fair so positively. Whilst the recently introduced (2011) flavored variants expanded well off their low base, the only other variant to see any gain was San Mig Light. It appeals to the calorie-conscious, although it carries an Abv of 5%.

A restrained performance in 2012

San Miguel Philippines, the local operator for the San Miguel Corporation, managed to maintain sales last year whilst all of its competitors suffered to some extent. In terms of incremental volume losses, the main casualty was Asia Brewery which saw a volume drop of almost 37 th hl (-2%). In fact San Miguel's positive performance was only possible because Red Horse, the ultimate brand leader in the market, managed to add a little volume to counterbalance contractions elsewhere in the brewer's portfolio. Red Horse has seen consistent annual growth but the momentum suffered in 2012 with sales up by less than 2% (it grew by almost double-digits in 2010).

New sin taxes imposed on alcohol in 2012

Value Added Tax (VAT) is levied on the sale of goods and services and on the import of goods (based on the total landed cost) into the Philippines. The current VAT rate is 12% of the gross selling price or gross value. Any excise tax on the goods is also part of the gross selling price.