THE FOOD industry is better positioned to withstand the impact of the Middle East crisis, as demand for food remains resilient despite rising prices and slowing economic growth, Jose Ma. A. Concepcion III of the Go Negosyo organization said.
“If you are in the food and restaurant business, you have the ability to survive. Especially if the entrepreneur can serve good dishes, he will make it through,” he told BusinessWorld on the sidelines of the BusinessWorld Economic Forum earlier this week.
“In the food sector, the industry is running well. Filipinos like to eat, so there will always be demand,” he added.
Gross domestic product grew by a weaker-than-expected 2.8% in the first quarter, amid the lingering effects of last year’s corruption scandal and soaring oil prices triggered by the Middle East fighting.
Meanwhile, the consumer price index accelerated to 7.2% in April, exceeding both the Bangko Sentral ng Pilipinas’ forecast and target.
Mr. Concepcion, who is also president and chief executive officer of RFM Corp., said the listed food manufacturer is planning to expand operations.
“We are doing very well. Selecta now is the number one ice cream ever since we parted with Unilever and we are expanding,” Mr. Concepcion said.
“We have grown the market; We are into milk, pasta, and many others while we continue to have our flour mill. So I am very optimistic,” he added.
In a disclosure to the stock exchange, RFM reported a 10.3% increase in attributable net income to P342 million in the first quarter.
However, Mr. Concepcion warned businesses against making abrupt decisions while conditions remain fluid.
“You don’t want to make a decision abruptly because it’s very hard to predict the situation. So you remain conservative first, do not be too aggressive, until this situation eases off, and in time it will ease off,” he said.
“You always have to measure the risks. If your business is not affected by these conditions, then go ahead. If your business is affected by these conditions, then be more cautious,” he added.
China Bank Capital Corp. Managing Director Juan Paolo E. Colet said demand for food is likely to remain resilient as it is a basic necessity.
“That said, inflationary pressures from the Middle East crisis would make ordinary consumers more cost-conscious and could push demand towards options that provide better value for money,” he said via Viber.
Mr. Colet said the impact on restaurants would depend on their market positioning and cost structures.
“Restaurants might pass on increased input costs to customers, but they have to be careful about this because they risk losing patronage or pushing customers to alternatives,” he said.
“While overall sector revenues could weather the crisis, we might see margin compression to sustain sales and defend market share,” he added. — Justine Irish D. Tabile
