ALCOHOLIC DRINKS IN THE
PHILIPPINES
Euromonitor International
October 2015
ALCOHOLIC DRINKS IN THE PHILIPPINES
LIST OF CONTENTS AND TABLES
Executive Summary ..................................................................................................................... 1
Demand for Alcoholic Drinks Starts To Stabilise After Price Increase in 2013 ......................... 1
Whiskies Stands Out As Fastest-growing Category ................................................................. 1
Emperador Inc Acquires Spanish Bodega Las Copas and Scottish Whyte & Mackay.............. 1
Emerging Consumer Preference of On-trade Consumption ..................................................... 1
Wine To Continue To Grow Significantly .................................................................................. 1
Key Trends and Developments .................................................................................................... 2
Emperador Inc Acquires Spanish Bodega Las Copas and Scottish Whyte & Mackay.............. 2
Asia Brewery Restructures Competitive Strategy With New Beer Brands ................................ 3
Whiskies, A Rapidly Growing Category .................................................................................... 3
Key New Product Launches ..................................................................................................... 4
Summary 1
Key New Product Developments 2014 ......................................................... 5
Taxation and Duty Levies on Alcoholic Drinks 2014 .................................... 9
Typical Wholesaler and Retailer Off-trade Mark-ups by Selected
Categories 2014 ......................................................................................... 10
Selling Margin of a Typical Beer Brand in Retail Channel that uses
Wholesalers 2014 - San Miguel Pale Pilsen .............................................. 10
Selling Margin of a Typical Beer Brand in Retail Channel that does
not use Wholesalers 2014 - San Miguel Pale Pilsen .................................. 10
Selling Margin of a Typical Wine Brand in Retail Channel that uses
Wholesalers 2014 - Carlo Rossi ................................................................. 11
Selling Margin of a Typical Wine Brand in Retail Channel that Does
Not Use Wholesalers 2014 - Carlo Rossi ................................................... 11
Selling Margin of a Typical Spirits Brand in Retail Channel that uses
Wholesalers 2014 – Johnnie Walker Black Label ...................................... 11
Selling Margin of a Typical Spirits Brand in Retail Channel that does
not use Wholesalers 2014 – Johnnie Walker Black Label .......................... 12
Sales of Alcoholic Drinks by Category: Total Volume 2009-2014 .............. 13
Sales of Alcoholic Drinks by Category: Total Value 2009-2014 ................. 13
Sales of Alcoholic Drinks by Category: % Total Volume Growth 20092014 ........................................................................................................... 13
Sales of Alcoholic Drinks by Category: % Total Value Growth 20092014 ........................................................................................................... 13
Sales of Alcoholic Drinks by Category by Off-trade vs On-trade:
Volume 2014 .............................................................................................. 14
Sales of Alcoholic Drinks by Category by Off-trade vs On-trade: Value
2014 ........................................................................................................... 14
Sales of Alcoholic Drinks by Category by Off-trade vs On-trade: %
Volume 2014 .............................................................................................. 14
Sales of Alcoholic Drinks by Category by Off-trade vs On-trade: %
Value 2014 ................................................................................................. 14
GBO Company Shares of Alcoholic Drinks: % Total Volume 20102014 ........................................................................................................... 15
Distribution of Alcoholic Drinks by Format: % Off-trade Value 20092014 ........................................................................................................... 15
Distribution of Alcoholic Drinks by Format and Category: % Off-trade
Volume 2014 .............................................................................................. 16
Forecast Sales of Alcoholic Drinks by Category: Total Volume 20142019 ........................................................................................................... 17
Forecast Sales of Alcoholic Drinks by Category: Total Value 20142019 ........................................................................................................... 17
Forecast Sales of Alcoholic Drinks by Category: % Total Volume
Growth 2014-2019 ..................................................................................... 17
Forecast Sales of Alcoholic Drinks by Category: % Total Value
Growth 2014-2019 ..................................................................................... 17
ALCOHOLIC DRINKS IN THE
PHILIPPINES
EXECUTIVE SUMMARY
Demand for Alcoholic Drinks Starts To Stabilise After Price Increase in
2013
Following the total volume sales decline in 2013, alcoholic drinks in the Philippines showed
signs of recovery as volume sales growth started to pick up in 2014. The decline in total volume
sales growth was largely attributed to the excise tax reform (Republic Act No 10351)
implemented in 2013, which significantly increased the prices of alcoholic drinks. Demand for
spirits started to recover with positive total sales volume growth. Wine, which was least affected
by the price increase, maintained its strong volume sales growth.
Whiskies Stands Out As Fastest-growing Category
Whiskies have been rapidly growing between 2010 and 2014. During the review period,
whiskies posted significant growth in total volume sales. This optimistic growth and continued
strength in demand is largely driven by the significant growth in blended Scotch whisky sales.
The demand is attributed to the emerging awareness of whisky drinking and the shifting
preference to imported spirits. Forecast growth for the category remains very strong and
optimistic.
Emperador Inc Acquires Spanish Bodega Las Copas and Scottish
Whyte & Mackay
Emperador Inc, through its Spanish subsidiary, Grupo Emperador Spain, completed another
acquisition from González Byass SA in February 2014. The deal is the purchase of a 50-percent
stake in Bodega Las Copas SL, a Spanish brandy producer. It will give Emperador access to its
specialised vineyards in Toledo, Spain. The brandy company also completed its acquisition of
Whyte & Mackay Group Ltd, previously owned by India’s United Spirits. Emperador UK Ltd, a
wholly-owned subsidiary of Emperador Inc, acquired a 100% stake in Whyte & Mackay Group
Ltd and subsidiaries in October 2014. The company is also gearing up to introduce new Scotch
whisky brands in the Philippines, adding to its range of growing brands.
Emerging Consumer Preference of On-trade Consumption
Stronger volume sales growth derived from a strong performance in on-trade channels.
However, a significant percentage of volume sales is still derived from off-trade sales. This is an
indication that there is an emerging trend of consumers shifting their consumption preference
from in-home entertainment to alcohol consumption when out and socialising. Alcohol
consumers who enjoy drinks in bars and restaurants are more likely to expect to pay more for
drinks and are therefore less likely to be affected by the rising prices.
Wine To Continue To Grow Significantly
Wine is expected to grow significantly in the next five years. It is least affected by the price
increase due to higher excise tax. Wine is highly attractive to the rising middle-class market and
the upscale audience remain indifferent to price movements. The performance remained strong
in 2014 and wine is predicted to continue its steady growth trend during the forecast period.
KEY TRENDS AND DEVELOPMENTS
Emperador Inc Acquires Spanish Bodega Las Copas and Scottish
Whyte & Mackay
Following its acquisition of San Bruno SA in 2013, Emperador Inc acquired a 50% stake in
Bodega Las Copas SL, also owned by Spanish wine conglomerate Gonzalez Byass SA. The
acquisition was completed in February 2014 and was worth PHP3.7 billion.
The acquisition gives Emperador access to state-of-the-art brandy production technology,
distillery plants and vineyards in various locations in Spain. The move is in line with
Emperador’s aim to position itself in the global brandy market, securing it the advantage over
competitors of specialised brandy production.
In May 2014, the company also signed an acquisition agreement with United Spirits (Great
Britain) Ltd. to acquire a 100% stake in Whyte & Mackay Group Ltd and subsidiaries for PHP31
billion. The acquisition was completed in October 2014. United Spirits, an Indian company, was
forced to sell the brand due to antitrust reasons. Under the terms of the agreement, Whyte &
Mackay will continue to supply United Spirits with Scotch whisky for three years.
Whyte & Mackay, a Glasgow-based Scotch whisky distiller, is the fifth largest maker of Scotch
and owns some of the most popular Scotch brands, including British Dalmore Single Highland
Malt, Jura Premium Single Malt, and Whyte & Mackay Blended Scotch whiskies. The acquisition
includes Whyte & Mackay’s aged whisky inventories, five distilleries and one bottling plant in
Scotland with a production capacity of 50 million litres of alcohol every year.
The acquisition also gives Emperador Inc access to Whyte & Mackay’s wide global
distribution market covering more than 50 countries. This will give the company’s flagship brand,
Emperador Brandy greater chances of dominating the global market. It also marks Emperador’s
venture into enhancing its portfolio with whisky, the second-fastest growing spirit in the world
next to brandy. The company is gearing up to introduce new Scotch whisky brands in the
Philippines by 2015.
Outlook
Scotch whisky in the Philippines has shown strong growth over recent years and has spiked
in 2014. Similarly, despite a slight slowdown, brandy continues to show growth with new players
entering the category. These growth trends are expected to continue in the forecast period.
The acquisition of Whyte & Mackay will allow Emperador to fast track growth of the Scotch
whisky category and possibly dominate the market share. During the review period, the move
has triggered reactions from other players in Scotch whisky in an effort to secure a share in the
rapidly expanding category. Diageo, owner of the Johnnie Walker portfolio which has
traditionally dominated blended Scotch whisky, has strengthened its marketing efforts for its
entry-level brand Red Label, making it available to a wider demographic in distribution channels
with more affordable price points. It has similarly beefed up the position of the Black Label brand
in the on-trade channels in major cities.
The category is expected to expand in 2015 with the anticipated introduction of new Scotch
whisky brands from Emperador’s Whyte & Mackay whisky portfolio. During the forecast period,
whisky is expected to become widely available in off-trade outlets and the introduction of new
whisky brands will significantly change the playing field.
Asia Brewery Restructures Competitive Strategy With New Beer Brands
In an effort to restructure its competitive strategy in the beer market, Asia Brewery launched
three beer brands in 2014 catering to the lesser explored consumer groups. These are a local
version of wheat beer called Brew Kettle, a reformulated Colt 45 and Japanese beer Asahi
Super Dry.
Brew Kettle is the first locally produced wheat beer in the Philippines and it is slowly gaining
popularity amongst experimental beer consumers, usually millennials and those who have
previous experience of consuming wheat beer. With the re-launch of Colt 45, the brand now
targets a wider demographic, shunning its macho image with a reformulated taste and an overall
new appearance. Asahi Super Dry was previously available through limited importation and
selected on- and off-trade outlets. In 2014, it was made widely available in off-trade outlets with
Asia Brewery’s local distribution channels. The partnership with Asahi Breweries Ltd aims to
grow the premium beer category, largely dominated by San Miguel Brewery’s San Miguel Super
Dry.
Outlook
Although beer is still dominated by San Miguel Brewery’s beer portfolio and is expected to
continue to be so over the forecast period, Asia Brewery’s new beer brands that cater to the
previously untapped segments of the beer market and competitive pricing are showing signs of
possible growth. Brew Kettle is the only available domestically manufactured wheat beer in the
market. Its economy prices are highly attractive to consumers who prefer wheat beer to lager.
Colt 45 remains a cheaper substitute of Red Horse, which leads strong beer and domestic
mid-priced lager in general. Colt 45 is set to have a larger market share to replace the absence
of San Miguel Brewery’s San Mig Strong Ice. It will also attract consumers of its all-malt strong
beer brand, Manila Beer, which has once again shifted to limited distribution.
Asia Brewery’s effort to make Asahi Super Dry widely visible through large off-trade
distribution channels is expected to affect positive growth in the premium beer category. As San
Miguel Brewery’s premium beer portfolio, San Miguel Super Dry, San Miguel Premium All Malt
and Cerveza Negra are positioned to take dominant market share in on-trade outlets, Asahi
Super Dry will take a larger share in off-trade sales. Its growth is expected to take off faster than
Kirin, which is also distributed by San Miguel Brewery.
Whiskies, A Rapidly Growing Category
Whiskies’ total volume sales have been rapidly over the review period, with a 14% total
volume sales CAGR. In 2014, its percentage growth peaked with a 27% increase in total volume
sales. This rapid growth is attributed to the emerging awareness of whiskey drinking, as well as
the steady growth of the middle class demographic to whom whiskies are highly attractive.
Other indicators are its wider distribution and new products.
There is also an apparent trend of the switch from domestic to imported spirits. This trend is
an indirect effect of the excise tax reform in alcoholic drinks. As the uniformed structure for both
imported and domestic spirits is implemented, it has become possible for imported spirits to
restructure their price bands to be able to compete with domestic brands. Also, there is
emergence of the higher-income middle class market that is now able to afford more, directing
their preference to imported brands.
Whiskies is growing rapidly in both on-trade and off-trade channels. Total volume sales from
on-trade channels (15% volume sales CAGR) grew faster than total volume sales derived from
off-trade channels (13% volume sales CAGR). This is an indication that more consumers prefer
to enjoy imported spirits in bars and restaurants to socialise. This may also be attributed to the
growing local party scene in the country as well as the rise of the ‘trendy millennials’ who are
now more aware of whisky drinking.
The majority of total volume sales of whiskies come from the blended Scotch whisky category
(48% volume share in 2014). The main drivers in this category are: Johnnie Walker Black Label
and Johnnie Walker Red Label. Total volume sales for blended Scotch whisky have been
rapidly growing over the review period. Diageo Philippines has been actively positioning its
Johnnie Walker portfolio in both the on- and off-trade channels. In terms of target market, the
company aims to widen its demographic reach to women, shedding the image that Scotch
whisky is more for the older male demographic. To build this awareness, Red Label has been
marketed as a mixer for cocktail drinks which greatly appeals to the Filipino market that largely
prefers its high-alcohol liquor consumption with sweet or fruity mixers and chasers.
There is also a steady volume sales growth in the demand for bourbon/other US whiskey.
Brown Forman’s Jack Daniel’s Tennessee Whiskey is the dominant player in this category.
Additionally, domestic economy whiskies in the other whiskies category maintains its strong
volume share.
Outlook
Whiskies is expected to continue growing during the forecast period with a 5% total volume
sales CAGR. This growth rate will result to as much as a 27% total volume sales increase in the
next five years. This growth forecast is strongly evidenced by Emperador Distillers’ acquisition of
the Scotch whisky producer, Whyte & Mackay. The company is expected to widen the Scotch
whisky product portfolio that is available in the market today. The growth will also be supported
by the growing higher-income young middle class demographic to which whisky drinking is
highly appealing.
The faster growth of sales from on-trade channels is expected to continue. On-trade sales
volume will record a 6% total volume sales CAGR over the next five years, whilst off-trade sales
will grow at a slower pace of 5% CAGR. The majority of the sales will still come from off-trade
volume sales, however the rapid growth rate in on-trade volume sales is an indication that the
trend of more people preferring to drink whiskies in bars and restaurants will prevail during the
forecast period.
Blended Scotch whisky will continue to dominate the whiskies category. It is expected to see
a 38% increase of total volume sales in the next five years. Rapid growth is also expected in
bourbons/other US whiskey.
Key New Product Launches
Key product launches include new players in the light brandy category, a new variant of a
popular bourbon drink catering to the younger age bracket and female consumers, a new
variant of a popular local RTD brand and a new addition to a craft spirit line that has been
gaining traction in the last few years.
The two new players in the light brandy category are Excelente Light Brandy, an imported
brandy from Montosco and Compañero Brandy from Tanduay Distillers. Both launched in the
last quarter of 2013, the two companies have reported sales over their expectations and have
raised their sales targets for 2015.
Brown-Forman Philippines introduced its flagship brand’s first flavoured variation, Jack
Daniel’s Tennessee Honey Whiskey. Whilst the Jack Daniel’s brand has been traditionally linked
to male consumers, the new honey-flavoured variant aims to appeal to a younger age bracket
as well as the female market. It also targets a wider Filipino audience who prefer a sweeter taste
as strong liquors such as whiskey are mixed with cola or other fruity mixers.
Along with its three new introductions in beer, Asia Brewery also launched Tanduay Ice Zero,
its spirit-based RTD line. The new variant is targeted at health-conscious consumers with its low
calorie, zero sugar content.
Destileria Limtuaco continues to strengthen its craft spirits portfolio with the new addition,
Manille Liqueur de Calamansi, a limoncello-like drink made from calamansi rind. Although
originally pegged for export, the product is now widely available in off-trade establishments such
as convenience store and supermarkets.
Outlook
Light brandy is expected to continue to grow with the introduction of new players with
affordable price points. The restructuring of the excise tax has proven to bring positive effects to
imported brandy, making it possible to introduce imported brandy with an affordable price point.
Consumer preferences are also shifting to more affordable but better tasting light brandy.
The honey-flavoured whiskey trend is expected to ride with the projected steady growth of
high-strength premixes. Filipino consumers tend to prefer sweeter variants of otherwise strong
liquor. There is also a growing awareness of whiskey drinking among the younger age bracket
and the female demographic as well as the use of whiskey for mixed drinks. It is expected to be
more popular in on-trade outlets, catering to the local party scene.
Tanduay Ice’s new low calorie variant is expected to compete with San Miguel Brewery’s San
Miguel Flavoured Beer as well as other light beer brands. The product was launched in the latter
part of 2014 and has not seen any major marketing campaigns during the review period.
Manille Liqueur de Calamansi may possibly ride with the still growing high-strength premixes
and mixed drinks trend; however it will be limited to a niche market including tourists. Owing to
its ‘craft spirits’ branding and more high-end looking packaging, the liqueur may be able to
attract a more upscale demographic with more effort in raising brand awareness.
Summary 1
Brand
Key New Product Developments 2014
NBO
Product
USP
Brew Kettle
Asia Brewery Inc
Weissbier/Weizen/W
heat Beer
Economising and offtrade appeal: First
domestically
manufactured wheat
beer in the
Philippines
Don Julio Tequila
Diageo Plc
Tequila (and Mezcal)
Premiumisation and
heritage credentials:
First tequila brand to
be considered luxury
with a very specific
production process.
Manufactured
exclusively in Mexico
Gaz
Destilería Limtuaco &
Co Inc
Spirit-based RTDs
Off-trade appeal and
on-the-go
consumption: The
only spirits-based
RTD packaged in a
pouch
Hendrick’s Gin
William Grant & Sons
Dutch Gin
Craft and small batch
offerings: The only
Bulgarian rose and
cucumber-infused
Scottish gin on the
Economising and
convenience: The
only wine liqueur and
brandy mix RTD in
the Philippine market
Vat 69
Diageo Plc
Other Blended
Scotch Whisky
Economising and off
trade appeal: One of
the first mid-priced
100% Scotch whisky
launched in the
Philippines
Source:
Euromonitor International
MARKET BACKGROUND
Legislation
Legal purchasing age and legal drinking age
The legal drinking and purchasing age in the Philippines is 18 years old. Underage drinking
and purchasing remains an issue as Filipinos start consuming alcoholic drinks in their teenage
years. While establishments are prohibited by law to sell alcoholic drinks to minors, monitoring
and implementation remains lenient. Alcoholic drinks are easily accessible by minors in
tradition retail outlets and convenience stores where age identification is not practiced.
Drink driving
Republic Act No. 10586 (Anti-Drunk and Drugged Driving Act of 2013) stipulates drunk driving
as a major offence and is punishable by law. The law mandates also government employed
traffic enforcers to conduct sobriety tests on drivers suspected of drunk driving.
In May 2014, the Department of Transportation and Communication published Implementing
Rules and Regulations (IRR) for penalising drivers caught operating a motor vehicle under the
influence of alcohol or illegal substances. Full implementation took place on 1 June 1 2014.
The IRR include guidelines for conducting sobriety tests (eye, walk-and-turn, one-leg stand
and breath tests) and the allowable blood alcohol level. The allowable blood alcohol level for
drivers of private vehicles that weigh below 4,500kg is 0.05% and 0.0% for drivers of publicutility vehicles.
Arrested violators of the act will be subjected to penalties ranging from a minimum of threemonth imprisonment plus a P20,000 fine, to a maximum of 20-year imprisonment plus a
P500,000 fine. Violators may also face license suspension or revocation.
Advertising
The Ad Standards Council (ASC) is the advertising industry body in charge of screening and
regulating the content of advertising materials across all media for all products, including
alcoholic drinks. It started operations in 2008, taking over the function of the Advertising
Content and Review Committee (ACRC) of the Advertising Board of the Philippines
(AdBoard). The ASC Advertising Code of Ethics is updated when necessary to keep pace
with consumer and societal expectations. Advertisements for alcoholic drinks in the
Philippines are required to be pre-screened by the ASC.
Advertisements for alcoholic drinks are required to display the message “DRINK
RESPONSIBLY”. For TV specifically, it is required to be shown or flashed in a separate frame
at the end of an advert.
Other stipulations state that advertisements for alcoholic drinks should not: (1) imply that the
consumption of alcoholic drinks leads to social acceptance, (2) depict the act of drinking, (3)
promote excessive drinking, (4) claim medical or therapeutic benefits and (5) be aimed or
directed at minors.
For brand websites and other promotional activities on the internet, users must confirm that
they are of appropriate legal purchase age for alcohol drinks as prescribed by the law.
Websites must contain a social responsibility statement and links to those social
organisations.
Smoking ban
Republic Act No. 9211 (The Tobacco Regulation Act of 2003) prohibits anyone under the age
of 18 from smoking, buying or selling cigarettes. The law imposes restrictions on tobacco
advertising, endorsements and sponsorship and packaging.
Smoking is prohibited in public places such as centres of youth activity (schools, youth hostels
and recreational facilities for persons under 18 years old), elevators and stairwells, fire hazard
locations (petrol stations and storage areas for flammable, explosive or combustible
materials), buildings and premises of public and private hospitals, public conveyance and
facilities (airports, transport terminals and stations, restaurants and conference halls), and
food preparation areas.
It also requires Designated Smoking and Non-Smoking Areas to display a legible and visible
sign that says "SMOKING AREA" or "NO SMOKING AREA".
Republic Act No. 10643 (The Graphic Health Warnings Law) requiring graphic health
warnings on 50% of each of the principal display areas of tobacco product packaging was
approved in July 2014. New health warnings on tobacco packaging are required to take effect
in 2016.
Opening hours
On-trade establishments such as bars and clubs are usually open from 17.00-24.00hrs.
Selected establishments have longer operating hours, with extended closing time or 24-hour
operations, according to patronage. These are common in key cities in Metro Manila and
Metro Cebu.
Off-trade establishments’ (such as supermarkets’) usual operating hours are from 09:0021.00hrs and extended closing hours on weekends. Convenience stores offer 24-hour
opening and sell alcoholic drinks around the clock except in cities that have local laws on
liquor.
For traditional sari-sari stores, which are common in residential and rural areas, operating
hours are at the discretion of the owner.
Cities such as Davao, Taguig and La Trinidad have local city ordinances that prohibit the
drinking, selling, and serving of alcoholic drinks at specified hours, usually after midnight.
Prohibitions on the consumption of alcoholic drinks are usually only observed in public
establishments and do not cover consumption in private domains.
On-trade establishments
Trends in on-trade establishments include the rise of cocktail bars, speakeasy-inspired
establishments and wine bars. Cocktail bars and speakeasy-inspired establishments serve
so-called craft cocktails and premium spirits. Selected establishments also offer food pairing
events serving premium wines and spirits
Table 1
Number of On-trade Establishments by Type 2009-2014
Outlets
Consumer Foodservice
100% Home Delivery/
Takeaway
Cafés/Bars
Full-Service Restaurants
Fast Food
Self-Service Cafeterias
Street Stalls/Kiosks
Source:
2009
2010
2011
2012
2013
2014
78,327.0
1,916.0
79,427.0
2,490.0
80,073.0
2,584.0
80,796.0
2,673.0
81,804.0
2,774.0
82,628.0
2,886.0
16,007.0
18,301.0
5,180.0
36,923.0
15,784.0
18,235.0
5,455.0
37,463.0
15,633.0
18,189.0
5,827.0
37,840.0
15,568.0
18,166.0
6,243.0
38,146.0
15,497.0
18,158.0
6,548.0
38,827.0
15,463.0
18,140.0
6,792.0
39,347.0
Euromonitor International
TAXATION AND DUTY LEVIES
Republic Act No. 10351 (An Act Restructuring the Excise Tax on Alcohol and Tobacco
Products) also known as the Sin Tax Law was implemented in 2013. The law provides a new
taxation structure that appropriates alcoholic drinks into several tiers in terms of type, selling
price and alcohol content.
Upon implementation in 2013, sparkling wines and champagnes were taxed PHP250.00 per
litre for brands priced at PHP500.00 or less per 750ml bottle, and PHP700.00 per litre for
brands priced higher than PHP500.00 per 750ml bottle. Still wines and carbonated wines
containing 14% of alcohol by volume or less are additionally taxed PHP30.00, and PHP60.00
for brands containing more than 14% but not more than 25% of alcohol by volume. The
imposed taxes increased 4% in 2014 and will continue to incrementally increase every year
thereafter.
Taxes for fermented liquors in 2014 also increased. Fermented liquors priced PHP50.60 or
less per litre will be charged an excise tax of PHP17.00 per litre, while products priced over
PHP50.60 per litre will be charged an excise tax of PHP21.00 per litre.
In 2013, an excise tax of PHP20.00 plus 15% of the selling price was added to the net retail
price per proof litre of distilled spirits. There was no increase in imposed excise tax for distilled
spirits in 2014.
The revenues from the Sin Tax Law helps the government raise funds and increase spending
on health care and support for tobacco farmers. 80% of the remaining balance of the
incremental revenues is allocated to the National Health Insurance Program, and 20% is
allocated nationwide for medical assistance and health enhancement facilities.
Table 2
Taxation and Duty Levies on Alcoholic Drinks 2014
Excise Tax 2014
Distilled Spirits
Ad valorem tax rate
Based on the net retail price
per proof
(excluding excise and valueadded taxes)
Specific tax per proof litre
Wine
(a) Sparkling wine/Champagne,
where the net retail
price (excluding excise and
value-added taxes)
per 750ml bottle, regardless
of proof is:
(a) PHP500.00 or less
(b) More than PHP500.00
(c) Still and carbonated
wines containing 14% alcohol
by volume or less
(d) Still and carbonated
wines containing more than 14%
of alcohol by volume but not
more than 25% of
alcohol by volume
(e) Fortified wines
containing more than 25% of
alcohol
by volume shall be taxed as
distilled spirits
Fermented Liquors
Includes beer, lager, ale,
porter and other fermented
liquors, except tuba, basi,
tapuy and similar fermented
liquors
where the net retail price
(excluding excise and valueadded taxes) per litre of
volume capacity is:
(a) PHP50.60 or less
(b) More than PHP50.60
(c) Fermented liquors brewed
and sold by microbreweries
or small establishments such
as pubs and restaurants,
regardless of the net retail
price
Source:
Passport
PHP17.00 per litre
PHP21.00 per litre
12.0%
12.0%
PHP29.12 per litre
12.0%
Euromonitor International from official statistics
Table 3
Typical Wholesaler and Retailer Off-trade Mark-ups by Selected Categories
2014
% mark-up
Wholesaler
Retailer
Wholesaler
Retailer
Beer
RTDs
Wine
Wh
BC
6.0
20.0
WS
70.0
30.0
15.0
25.0
Rum
30.0
15.0
30.0
25.0
T
70.0
40.0
18.0
30.0
L
70.0
30.0
30.0
40.0
OS
70.0
40.0
Source:
Notes:
Euromonitor International
Wh=Whiskies; BC=Brandy and Cognac; RTDs=RTDs and High-strength premixes; WS=White spirits;
T=Tequila (and mezcal); L=Liqueurs; OS=Other spirits
Table 4
Selling Margin of a Typical Beer Brand in Retail Channel that uses
Wholesalers 2014 - San Miguel Pale Pilsen
% retail value
2014
VAT
Retailer
Wholesaler
Excise
Manufacturer
TOTAL
Source:
Notes:
10.7
14.9
4.2
20.0
50.2
100.0
Euromonitor International from official statistics, trade associations, store checks
Based on San Miguel Pale Pilsen, PHP27.00, 320ml at convenience stores and 5% abv
Excise includes any other tax as relevant
Table 5
Selling Margin of a Typical Beer Brand in Retail Channel that does not use
Wholesalers 2014 - San Miguel Pale Pilsen
Euromonitor International from official statistics, trade associations, store checks
Based on San Miguel Pale Pilsen, PHP27.00, 320ml at convenience stores and 5% abv
Excise includes any other tax as relevant
Table 6
Selling Margin of a Typical Wine Brand in Retail Channel that uses
Wholesalers 2014 - Carlo Rossi
% retail value
2014
VAT
Retailer
Wholesaler
Excise
Manufacturer
TOTAL
Source:
Notes:
10.7
17.9
16.5
15.0
39.9
100.0
Euromonitor International from official statistics, trade associations, store checks
Based on Carlo Rossi, PHP220.00, 750ml at supermarkets/hypermarkets and 9.5% abv
Excise includes any other tax as relevant
Table 7
Selling Margin of a Typical Wine Brand in Retail Channel that Does Not Use
Wholesalers 2014 - Carlo Rossi
% retail value
2014
VAT
Retailer
Excise
Manufacturer
TOTAL
Source:
Notes:
10.7
17.9
15.0
56.4
100.0
Euromonitor International from official statistics, trade associations, store checks
Based on Carlo Rossi, PHP220.00, 750ml at supermarkets/hypermarkets and 9.5% abv
Excise includes any other tax as relevant
Table 8
Selling Margin of a Typical Spirits Brand in Retail Channel that uses
Wholesalers 2014 – Johnnie Walker Black Label
% retail value
2014
VAT
Retailer
Wholesaler
Excise
Manufacturer
TOTAL
Source:
Notes:
10.7
14.9
10.8
22.0
41.6
100.0
Euromonitor International from official statistics, trade associations, store checks
Based on Johnnie Walker Black Label, PHP1,750, 1000ml at supermarkets/hypermarkets and 40% abv
Excise includes any other tax as relevant
Selling Margin of a Typical Spirits Brand in Retail Channel that does not use
Wholesalers 2014 – Johnnie Walker Black Label
% retail value
2014
VAT
Retailer
Excise
Manufacturer
TOTAL
Source:
Notes:
10.7
14.9
22.0
52.4
100.0
Euromonitor International from official statistics, trade associations, store checks
Based on Johnnie Walker Black Label, PHP1,700, 1,000ml at supermarkets/hypermarkets and 40% abv
Excise includes any other tax as relevant
OPERATING ENVIRONMENT
Contraband/parallel Trade
There is no market for contraband products in the Philippines as local beer and spirits
manufacturers remain the biggest players in the industry. Local beer and spirits are sold cheaply
in the market and are affordable even to lower-income consumers.
Parallel trade is widespread in the Philippines, with importers of alcoholic drinks going through
alternative trade ports to avoid paying tax. Some off-trade and on-trade operators purchase
alcoholic drinks through importers in free-port zones such as Subic Bay and Clark.
Duty Free
Duty free remains an important channel for companies selling imported alcoholic drinks. It is
also a preferred channel among consumers with prices lower than in regular off-trade
establishments. Duty free shops are usually located in free-port zones, international airports and
malls in key cities with high tourist traffic such as Legazpi, Manila and Cebu.
Cross-border/private Imports
Cross-border/private imports remained negligible in the Philippines during the review period.
MARKET INDICATORS
Table 10
Retail Consumer Expenditure on Alcoholic Drinks 2009-2014
PHP million
Total
Source:
Note:
2009
2010
2011
2012
2013
2014
42,213.8
45,155.7
48,564.8
53,987.7
56,728.9
59,255.9
Euromonitor International from trade associations, trade press, company research, trade interviews,
trade sources
2014 data is forecast
Euromonitor International from official statistics, trade associations, trade press, company research,
store checks, trade interviews, trade sources
Table 19
GBO Company Shares of Alcoholic Drinks: % Total Volume 2010-2014
% total volume
Company
San Miguel Corp
Alliance Global Group Inc
Tanduay Distillers Inc
SABMiller Plc
Asia Brewery Inc
Bel Mondo Italia Corp
Suntory Holdings Ltd
Destilería Limtuaco &
Co Inc
London Birmingham
Distillers Ltd
E&J Gallo Winery Inc
Others
Total
Source:
Off-trade
2010
2011
2012
2013
2014
75.2
5.9
6.9
3.8
3.7
0.1
0.2
71.5
9.8
6.9
3.8
3.5
0.1
0.1
70.1
13.0
6.7
3.6
3.2
0.1
0.1
72.6
12.7
5.4
3.4
3.0
0.2
0.1
72.2
12.8
6.3
3.2
2.6
0.2
0.1
0.1
0.4
0.3
0.2
0.1
0.1
0.1
3.8
100.0
0.1
3.8
100.0
0.1
2.9
100.0
0.1
2.4
100.0
0.1
2.2
100.0
Euromonitor International from official statistics, trade associations, trade press, company research,
store checks, trade interviews, trade sources
Table 20
Distribution of Alcoholic Drinks by Format: % Off-trade Value 2009-2014
Euromonitor International from trade associations, trade press, company research, trade interviews,
trade sources
DEFINITIONS
Explanations of words and/or terminology used in this report are as follows:
GBO refers to Global Brand Owner, which is the ultimate owner of a brand.
NBO refers to National Brand Owner, which is the company licensed to distribute a brand on
behalf of a GBO. The NBO may be a subsidiary of a GBO or it may be a completely separate
company. Share tables at both GBO and at NBO level are provided in the report. Reference
to shares in the report analysis is at NBO level.
SOURCES
Sources used during research include the following:
Summary 2
Research Sources
Official Sources
Agriculture & Agri-Food Canada
Australian Trade Commission (Austrade)
Bureau of Customs
Bureau of Internal Revenue
Department of Trade & Industry
National Statistic Office
USDA Foreign Agricultural Service
Trade Associations
Cámara Nacional de la Industria Tequilera
Comité Interprofessionnel du Vin de
Champagne (CIVC)
Confraria Del Cava Sant Sadurni
International Wines & Spirits Association
Office International de la Vigne et du Vin
Scotch Whisky Association
Trade Press
Beverage World
Drinks International
Just Drinks
Wine & Spirits International
World Drink Trends