The Philippines: Consumption and import of alcoholic beverages expected to rise further despite tax hike
Consumption and import of alcoholic beverages by the Philippines are expected to rise further despite the higher excise tax on the commodities due to the governments tax reform program, the Philippine Star reported on May 25.
In a report, the United States Department of Agriculture-Foreign Agricultural Service (USDA) said traders are expecting sales to continue growing by five to 10 percent each year due to robust demand.
The countrys strong economic growth, consumer demographics, and widespread acceptance of American products create an extraordinary profile that makes the Philippines an exciting market for US alcohol products, the USDA said.
Consumption of alcoholic drinks in the country has been growing at an average rate of 10 percent annually.
Early this year, President Duterte signed a law increasing the excise tax imposed on alcohol products, which retroactively took effect on Jan. 1.
The law increased the ad valorem tax on distilled spirits to 22 percent of the net retail price from 20 percent last year.
The specific tax was raised to P42 per proof litre this year, P47 in 2021, P52 in 2022, P59 in 2023, and P66 in 2024, and by six percent every year thereafter, effective Jan. 1, 2025.
For wines, tax amounting to P50 per litre will be levied on all types of wines. The rate will be increased by six percent effective on Jan. 1, 2021, and every year thereafter.
This is a departure from the previous tax structure which varied according to the wine type, price, and alcohol content. More sparkling wines are expected to enter the market boosted by the lower excise tax, USDA said.
On other fermented liquor, including beer, tax was increased to P35 per litre and is set to increase by P2 each year until it reaches P43 in 2024, and increase by six percent effective on Jan. 1, 2025, and every year thereafter.
The Philippines is the largest market in Southeast Asia for US high value food and beverage products. According to the USDA, consumption in the country is buoyed by a strong consumer base.
In 2018, 3.1 billion litres of alcohol products were consumed in the Philippines.
Beer is the most widely consumed, accounting for 76 percent of total consumption, distilled spirits account for 23 percent, while wine and other alcoholic beverages account for only one percent.
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