Rural households driving demand for consumer goods

MANILA, Philippines - Rural households  are spending more, driving the demand for fast moving consumer goods (FMCG) in the country, according to a consumer survey conducted by Kantar Worldpanel.  

In a report, Luzviminda Barra, Kantar Worldpanel Philippines commercial director,  said rural households’ spending has risen by a compounded annual growth rate of four percent from P20,610 per household in 2009 to P25,442 this year. In contrast, the annual spending of urban households rose by only two percent from P28,207 in 2009 to P31,179 this year.

“The rural sector is proving to be a very significant factor in the growth of FMCG (fast moving consumer goods) purchases today... They have contributed a total of P246 billion worth of FMCG in-home purchases over the past five years,” Barra said.

The rural sector accounted for 44 percent of total FMCG purchases.

The research firm also said  rural households’ purchases from modern channels of distribution have increased notably by nine percent  as against the three  percent growth exhibited by urban shoppers. 

Modern channels include hypermarkets, supermarkets, drug stores, department stores, personal care stores, convenience stores and online shops.

Despite the increase, traditional channels of distribution – sari sari stores, public markets and groceries – still cornered nearly 60 percent of rural households’ purchases of fast moving consumer goods.

“With the growth in the rural sector, it is important for marketers to get to know the rural market. They are having more money now,” Barra said.

Rural households in South Luzon and Mindanao led the way, spending five percent and six percent more, respectively, since 2009.

Food, beverage dominate Pinoys’ shopping list

What do Filipinos buy? Coffee, instant noodles, food seasoning, milk, hair care products and snacks stand out in the list of products Filipinos buy the most.

According to the study, the top 10 most frequently purchased brands by Filipino households  are Nescafe, Lucky Me, Surf, Milo, Ajinomoto, Bear Brand, Palmolive, Silver Swan, Oishi and Safeguard.

 The next 10 most chosen brands were Creamsilk, Maggi, Colgate, Kopiko, Coke, Datu Puti, Champion, Tide, Tang and Coffee Mate.

“Two thirds of these brands are food and beverage,” Barra said.

While food and beverage products dominated Filipino households’ shopping  list,  Barra said the survey has determined four key trends influencing the buying behavior of Filipino consumers over the five-year period.“These four trends are beauty, hygiene, health and convenience.”

Barra said rural households outpaced their urban counterparts when it came to purchases along these four themes. “As manufacturers and marketers need to take note of the four key trends affecting Filipino consumers’ attitude on purchases, they also need to take a closer look at the rural sector as its households annual spend is growing  at a faster pace than urban  households,” she said.

Beauty products stand out

On beauty, Barra said Filipino women care about their looks and 72 percent of them specifically like to improve their hair and complexion.

Filipino consumers' purchases of hair conditioners went up by 12.6 percent while spending for hand and body lotions went up by 6.3 percent.

 â€œWhat exactly is beauty to the Filipino consumer? Beauty is about being fair,” Barra said noting that the purchase of whitening products has risen by a double digit rate of 10 percent.  

On hygiene, Filipinos were found to have bought more hand sanitizers and baby wipes or wet tissues with purchases growing   19 percent and nine percent, respectively.  Filipinos also spent more on razors, panty liners and sanitary pads during the  period in review.

Apart from buying more products for hygiene, Filipino consumers are likewise choosing healthier lifestyles now with the purchase of healthy food and beverage such as cereals, yogurt, canned vegetables, biscuits, soy milk, bottled water as well as energy or sports drink, fruit or vegetable juices and powdered milk posting notable growths.

Due to the Filipinos’ on-the-go lifestyle, they are looking for fast, easy and convenient food and beverage choices and their purchases of ready-to-drink products are rising, the study said.

Kantar Worldpanel is the world leader in consumer knowledge and insights based on continuous consumer panels. The firm’s insights are used by brand owners, retailers, market analysts and government organizations.

Kantar follows the standards set by the National Statistics Office (NSO) regarding their classifications for urban and rural households. The study was conducted among 3,000 rural and urban households.