Page last updated at 10:40 Asia/Manila, Sunday, 21 February 2016 PH
Using the tagline “Sa Tamang Panahon” (At The Right Time), one can celebrate with Maine Mendoza and Alden Richard (ALDUB) the fortunate coincidence that they have been catapulted to the peak of Philippine entertainment and social networking at exactly the time when the Philippine economy is experiencing an unprecedented consumer boom. At no time in the past have we witnessed as many simultaneous endorsements for Fast Moving Consumer Goods (FMCG) by a single pair of celebrities as the Aldub duo. Without the consumer boom that is ongoing, it would have been difficult for “My Bebe Love” to earn more than P60,000,000 in the first day of showing in the Manila Film Festival, not to mention the more than P200,000,000 for the first few days! These extraordinary figures are a veritable evidence that some 75 million Filipinos representing the low to mid middle class (75 per cent of the total population) are awash with purchasing power, thanks to the $28 billion of OFW remittances and the $22 billion of earnings of workers in the BPO-IT sector, among others. Although the importers are complaining about the depreciating peso, the exchange rate of over P47 to $1 with which we ended the year added fuel to the consumer explosion.
Without waiting for the financial statements of the enterprises marketing the most popular brands, I can surmise that also enjoying double-digit growth in their sales for the whole of 2015 are such famous brands as Lucky Me, Nescafe, Surf, Palmolive, Milo, Alaska, Bear Brand, Biogesic, Ajinomoto, Safeguard, Oishi, and Great Taste, among others. I was especially impressed that the most ubiquitous brand in the Christmas baskets I received from my friends in the business community was Lucky Me of Monde Nissin. This is an example of a FMCG that cuts across all income classes, from D and E to A. Almost equally ubiquitous was the Oishi brand. From the macroeconomic point of view, I can easily predict that these brands that cater to all income levels will do even better in 2016 when election-related spending and an acceleration of infrastructure projects of the Government will add to the engines of growth of a consumer-led economy which characterizes the Philippines today.
As I discussed in previous columns about the Philippine middle class, we have to remind the business community that Philippine households which do not belong to the 25 percent who are below the poverty line of about seventy pesos per person per day are predominantly low middle-class, who cannot afford luxury goods. These are consumers who are always looking for the least expensive items to satisfy their daily necessities of food, beverage, personal care and health products, clothes, etc. They may be eating out more frequently but their favorite outlets are the fast food stores, not the expensive restaurants. Especially as regards fashion goods, expectations concerning the global brands that have entered the local scene in the last few years should be tempered. Reflecting the very inequitable distribution of income in Philippines society, the very rich are still very few and far between. That is why even with the consumer boom, the expensive global brands cannot expected to do well for some time to come. Local brands such as those of Penshoppe and Bench have a competitive advantage, especially as inflation is expected to accelerate a little as interest rates are raised all over the world, starting with the United States and as the peso will depreciate further, probably closer to P48 to $1 by the end of 2016.
This reality among the FGCGs is being replicated in the real estate sector. What will continue to do well for at least the next two to three years are the low-cost, economic and mid-level housing that can range from P800,000 to P3 to P5 million per unit. There is already an oversupply of the expensive units that go much beyond the P5 million range. No bubble is expected, however, because the buyers of these units are not over borrowed. They use their own savings to invest in real estate. As they realize that there is a glut of expensive housing units, they will not be prone to panic and sell but will just patiently wait for the next surge in demand. The next round of increased demand for high-priced units may happen as the next Administration benefits from the work done by officials like Director Lilia de Lima of the Philippine Export Zone Authority (PEZA) in marketing the Philippines to Japanese, Korean and Taiwanese manufacturing enterprises as the preferred sites for relocating their operations away from China to Southeast Asia. The increased presence of expats looking for units to lease may also materialize if we can finally amend the Philippine Constitution under more enlightened leaders who will be convinced that removing the unreasonable restrictions against Foreign Direct Investments found in our Constitution can lead to a much bigger inflow of FDIs and, therefore, of foreign managers. Meanwhile, the developers of these costly real estate products are busy extending their marketing efforts to foreign territories like Singapore, Taiwan, Korea, the Middle East and the Overseas Filipinos in the U.S. and Canada. Going back to the opening lines of this column, I am sure the investment counsellors of our AlDub pair are suggesting that they invest some of the tens of millions that they are earning, especially in endorsing FMCGs, in housing units for themselves and their relatives (not Lola Tidora), as well as in units for rental.
There is no question that the stunning success of the AlDub pair has transformed them and their respective families into members of the economic elite averaging 10 million pesos a year in income. Being very visible media and entertainment stars, they most certainly will also be warming the heart of BIR Commissioner Kim Henares as they join the largest tax payers. During this Jubilee Year of Mercy declared by Pope Francis, I thank them most for warming the hearts of millions of those belonging to the 25 percent of the population below the poverty line who in some way or another, through their neighbors, relatives or employers, are able to enjoy their wholesome shows that reinforce the virtues and values of Filipinos, such as respect for the elders, temperance in romantic relations, the ability to postpone gratification and other anti-consumerism traditions. My advice to those who are concerned about how to ensure that the AlDub success will be long-term and not just a passing fad is to be increasingly creative in getting the duo and their partners to project especially the treasured values of traditional Filipino families, especially to the ten million OFWs who have become their most faithful fans. For comments, my email address is firstname.lastname@example.org.