Juan dela Cruz now holds quite a good profile as a consumer. Based on recent findings, the three words that best describe him are: confident, smart, and attractive.

His confidence is exceptional, as shown in his standing in the Nielsen Global Survey Consumer Confidence Index: he garnered 121 points, making him the second most confident and optimistic consumer in the world*. This was the highest level reached by the Philippines since the fourth quarter of 2010. The index ranks the country next only to Indonesia with 124 points, or about 30 points above the global average of 94 (see Figure 1).
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Figure 1. Nielsen Global Consumer Index, Q2 2013
In an article by GMAnews, Stuart Jamieson, the managing director of Nielsen Philippines said that “a growing number of consumers are entering the middle class in the Philippines, driving the positive outlook we are observing”**. This statement could be supported by a recent World Bank update which claims that private consumption accounts for more than 70% of the GDP***. The 6.2% growth in private consumption as of May 2013 could be attributed to overseas workers’ remittances and increased employment in the business process outsourcing (BPO) industry.

But Juan’s confidence is even coupled by his smarter shopping decisions. Recent market trends prove that his preferences gear more towards affordability, convenience, and trust.

A research by Nomura, a Japanese financial firm, remarks that Filipinos, with an average per capital annual income only at $1270, have a preference for affordable goods, and that it is too early for premium-priced products to dominate the market because living standards are still low (see Figure 2, 3, and 4). It mentioned the example of Haagen-Dazs, with a shrinking market share compared to competitors that sell at a lower price like Selecta of RFM Corporation and Magnolia of San Miguel Pure Foods Co. 
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Figure 2. Level of Spending of Filipinos, 2013
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Figure 3. Breakdown of Household Final Consumption Expenditure (Private Consumption) by Nomura Research
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Figure 4. Percent of Household Expenditure on Food and Non-Alcoholic Beverages, Nomura Research
In terms of practicality and convenience, more and more working Pinoys move away from home-cooked foods and instead opt to dine out at restaurants and food stalls, or avail of ready-to-eat meals at supermarkets. A Euromonitor report talked about a growing demand for instant noodles, pasta and ready-to-eat canned food as well as coffee mixes and pre-mixed hot drinks. The rising phenomenon of online shopping and the increase in convenience stores that are right around the corner also prove how Juan now prefers to shop with the least hassle possible.

While shopping, Juan also looks for brands that he could trust. Nomura further explains that strong brand equity and scalable operations will be a modern firm’s competitive edge. According to a news article in Interaksyon, the modern Filipino firm should keep an eye on providing innovative shopping experience, creative marketing strategies, and attractive packaging and products which lure Filipinos. Nomura also predicted modern Filipino consumers to be more discerning and more brand-conscious****.

The confident and smart Filipino consumer serves as an opportunity for many foreigners who plan on tapping the Philippine consumer market. Nomura enumerated some internationally recognized names that might soon enter the market or expand current operations*****:
  • STARBUCKS CORP. plans to add another 100 stores in the Philippines in the next four years
  • DUNKIN’ BRANDS plans to open 50 stores in the next five years
  • COLD-STONE CREAMERY may enter the Philippines and open 15 stores in the next five years beginning in mid-2013
  • FAMILY MART plans to open an estimated 600 outlets in Indonesia and the Philippines via 50-50 joint venture between Ayala Land Inc. and Rustan’s Group

These are all good signs for the consumer goods industry in the Philippines. In the first place, the Philippines has always been a consumption-driven economy. So far so good for Juan whose increasing confidence coupled by his smarter decisions attract more and more foreigners and encourage local manufacturers to be more competitive, further ensuring higher income for the country. 

Sources: 
Dinglasan, Rouchelle. "Filipino middle class drives spending” Nielsen global survey | Economy | GMA News Online."  GMANetwork.com. 
     <http://www.gmanetwork.com/news/story/318755/economy/business/filipino-middle-class-drives-spending-nielsen-global-survey> (accessed August 
     11, 2013).
** Ibid. 

*** Poverty Reduction and Economic Management Unit. "Philippine Economic Update: Accelerating Reforms to Meet the Jobs Challenge." World 

     Bank. <www.worldbank.org/content/dam/Worldbank/document/EAP/Philippines/Philippine_Economic_Update_May2013.pdf> (accessed August 8, 
     2013).
**** Cuevas-Miel, Likha . "Filipino consumers becoming more discerning, more brand-conscious - Nomura." Interaksyon.com 

     <www.interaksyon.com/business/67712/filipino-consumers-becoming-more-discerning-more-brand-conscious---nomura> (accessed August 8, 2013).
***** News, GMA. "Nomura: Intl brands keen to ride on PHL boom - Yahoo! News Philippines." Yahoo! Philippines News. 

     <http://ph.news.yahoo.com/nomura-intl-brands-keen-ride-phl-boom-021029521.html> (accessed August 9, 2013).

(Taken from GMA News.com, Economy Section, July 23, 2013)

by: Emilio Antonio | Marcella Karaan | Julian Martinez | Ivy Zuniga 



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