Market Information
Southeast Asia

Drink all you can: A Glimpse of the Imported Fruit Juice Market*

February 2005

Abner T. Montecalvo
Kay S. Olivas
Ma. Lourdes P. Vivo
Graduate Students
Food Systems Management (FSM) Program
University of Asia and the Pacific

Consumption of fruit juices and non-carbonated drinks in the Philippines has increased considerably from P3 billion (at current prices) in 1993 to about P7.2 billion in 2000, a hefty increase of 137% (National Statistics Office - Family Income and Expenditure Survey, 2000). In terms of share to total expenditures on non-alcoholic beverages, it grew by 3.9% percentage points to 29%.

Fruit juice supply in the country comes mainly from local production. Imports are still rather small although they have been posting consistent growth over the years.

How fruit juices are made

Fruit juices, along with vegetable juices, are "generally obtained by pressing fresh, healthy and ripe fruit vegetable." Juices are "obtained by means of mechanical "extractors" operating on the same principle as the household lemon squeezer, or by pressing, which may or may not be preceded either by crushing or grinding (for apples) in particular or by treatment with cold water or with steam (in the case of tomatoes, blackcurrants and certain vegetables such as carrots and celery)."

Trends in imported fruit juices

Fruit juices are generally imported in the form of either fruit juice extracts for use as raw material, or finished juice drinks. In the Philippines, official customs data classify the imported products according to the type of fruit (e.g. orange), form (concentrate) and state (frozen or not frozen). Fruit juices are also classified according to the degree of sweetness (Brix content).

From 2000-2004, the country imported over 9,500 tons of juices yearly worth more than US$7.5 million annually (Table 1). Imports increased at an annual rate of 14.5% on volume and 4.5% on value during the period. The leading suppliers were the United States of America (USA), Australia and Israel.

The leading juice imports during the same period were orange juice, other than concentrates, not frozen and juice of any single fruit/vegetable, other than concentrates. The former accounted for close to a fifth of the total value of juice imports while the latter, for 12%. The main country sources were the USA and Australia.

Source: National Statistics Office

Meanwhile, about 70% of the total value of juice imports is in the form of juices, other than concentrates, or finished juice drinks. The rest is accounted for by juice concentrates, the share of which has been increasing in the past five years. Imports are mostly those of fruits which are not locally grown such as apples, oranges, grapes, and grapefruit.

By fruit type, imports are dominated by orange juices (both concentrates and other than concentrates, frozen and not frozen). The leading suppliers were also Australia, the USA and Israel.

Key players

Importers of fruit juices are composed of both fruit juice or food processors and importer-distributors. As of 2003, there were 126 registered importers of fruit juices, according to the Bureau of Import Statistics. Some of these are Dole Philippines, Link Import and Export Enterprises, Sermasison Corporation, Fly Ace Corporation, Wilmington Imex Inc., Viscal Development Corporation, Flexo Manufacturing Corporation, Fresh n Natural Foods Inc., and ESPA FIL Import and Export Corporation. The top ten importers in 2003 accounted for more than half of the total value of fruit juice imports.

The juices are imported from countries like Australia, Spain, South Africa, USA, Cyprus/Nicosia and Austria. The available brands in the market include:

Source: Major supermarket chain

Regulations and requirements in the importation of fruit juices

Tariffs and taxes. Import duties are levied by the Bureau of Customs at the time of import and are required to be paid to the government before the incoming shipment is allowed entry into the country. Tariffs on fruit juices range from 1 to 10% depending on the type of fruit juice. For frozen orange juice, the most-favored nation tariff for 2004 is 7% while that with Brix value not exceeding 20 is 1%. Juices on any single citrus fruit, pineapple juice and juice of any other single fruit or vegetable enjoy higher tariffs. With the country's accession to the World Trade Organization, tariffs on almost all types of juices have undergone substantial reduction from about 50% in 1995.

Another tax paid on imported juices is the value added tax (VAT). A 10% VAT is charged on total landed cost, a value that includes the CIF cost, import duties, brokerage fees, wharfage and other charges.

Quality standards. Imported foods, beverages and agricultural food products are required to comply with certain regulations concerning food safety. The importation of packaged foods such as juices is covered by the Food and Drug Act, which ensures that Filipino consumers are provided with safe and good quality food. The Act establishes standards and quality measures for food and sets up the enforcement framework necessary to ensure a safe supply of food in the country. It covers both locally manufactured and imported products.

Conclusion

Imported juices comprised only an estimated 4% of the total consumption of fruit juices in 2000 (in terms of peso value). While they pose competition to local juices as well as other non-alcoholic beverages such fruit-flavored soda, they provide the consumers a wide array of choices - especially, juices from fruits that are not locally or commonly grown in the Philippines. It should be noted though that imported juices are priced higher than their local counterpart. Prices are affected mainly by the fluctuations in the peso-dollar exchange rate.

The market consists of those belonging to income brackets A, B and upper C, given that most imported juices command higher prices. One major player noted that there is a bright prospect in the C market. Increasing health awareness among consumers is a driving force for demand. As people become more health conscious, they learn to appreciate the benefits that they can derive from natural fruit juices.

1. As defined in the Harmonized Commodity Description and Coding System Explanatory Notes, World Customs Organization

2. There are two major reasons why fruit juices are made into concentrates within the country of origin: (1) environmental and ecological and, (2) commercial and costs. About 5/6 of freshly picked pressed fruit juice consist of water; the rest is juice. It is this 1/6 which serves as the basis for the fruit juice concentrates prior to transportation it does not make sense to transport to ship 5/6 of the end product or water or transport in trucks across half the world since this will be a waste of energy. Apart from that, it would result in prices for the finished product being driven up to acceptable levels (from www.pfanner.com).