Part 2: Industry/ Market Feasibility

A. Industry Attractiveness
Number of Competitors
There are a lot of competitors within the food industry. Restaurants and mobile food
service operations led the industry with 4,312 establishments comprising 72.2% of the total
number of establishments. Short-term accommodation activities follow with 1,279
establishments (21.4%) and 285 establishments (4.8%) accounted for beverage-serving
activities. For event catering and other food service operations combined is registered at
95 (1.6%).

Age and Growth Rate of the Industry. According to mordorintelligence.com's report,

during the forecast period (2019-2024), the food service market in the Philippines is
growing at a CAGR of 4.5%. Following strong economic success in recent years and a rise
in the number of food service establishments, revenues in the food service industry in the
Philippines continued to rise. In addition, establishments increased due to an increase in
the frequency of eating out driven by growing affluence, increasingly occupied lifestyles,
the demand for convenience, and the entry of several international brands into the food
service industry in the Philippines.
The food service market in the Philippines is highly driven by the rise in value-
conscious consumers willing to try out new restaurants with a wide variety of menu choices
such as exciting international and local cuisine, which will probably find favor in this
market for the future as well. Moreover, Food and beverage imports as per the Philippines
National Statistics Office totaled $4.7 billion in 2007 from all sources and an estimated 60
percent of these are raw materials or ingredients used in food processing.

Average Net Income for Firms in The Industry

Average net income for firms in the industry is high. The food service industry is
composed of all forms of food retail. This includes fast-food chains, food kiosks, cafes,
bars, take-out and delivery stores, and full-service restaurants.The Philippine food service
industry, in 2016, generated P535.9 billion in revenues on the back of 84,503 food outlets
operating in the country. This year, revenues are seen to top P616 billion with 3,126 more
food service establishments in operation than there were in 2016. For the year 2020 and
2021, revenues are expected to reach 637.3 billion and 656.5, respectively.

Degree of Industry Concentration

The industry’s degree of concentration is concentrated. With a strong economic
performance in recent years and the increase in the number of foodservice establishments,
the sales in the Philippines foodservice market continued to increase. This year, revenues
in food service are seen to top P616 billion with 3,126 more food service establishments in
operation. The insatiable demand for food comes from our enormous population of 106.5
million whose median age of 24.3 years old due to a rise in the frequency of eating out
influenced by the growing affluence, increasingly busy lifestyles, the desire for
convenience and the entry of several international brands in the Philippines foodservice
industry. The foodservice market in Philippines is highly driven by the rise in value-
conscious consumers willing to try new restaurants with a wide range of menu options
including interesting international and local cuisines, which also cater to an increasingly
busy lifestyle, will likely find favor in this market going forward. Moreover, the food
service industry is seen to expand in tandem with the growing population and rising
incomes. For the year 2020 and 2021, revenues are seen to reach P637.3 billion and P656.5,
respectively.

Stage of Industry Life Cycle

The stage of the industry’s life cycle is in its growth phase. Over the last century,
the global population has quadrupled. In 1915, there were 1.8 billion people in the world.
Today, according to the most recent estimate by the UN, there are 7.3 billion people — and
we may reach 9.7 billion by 2050. This growth, along with rising incomes in developing
countries (which cause dietary changes such as eating more protein and meat) are driving
up global food demand. The demand for food is expected to grow substantially by 2050.
A major factor for this increase is world population growth. Demographic projections have
a high degree of certainty, so projections of future world food needs based on population
growth are quite reliable. The other major factor contributing to this increase is rising
incomes of individuals, especially those living in developing countries. Although
increasing the incomes of millions of people in the world is a great benefit to those
individuals, it does increase food needs and demands on the world’s agricultural resources.
In addition to population growth, food needs will rise due to the increasing incomes of
people in developing countries as they move from low income into the middle class. Rising
incomes are generated by growing world economies. Although projections of future
economic growth are more tenuous than projections of population growth, there is a general
consensus that the world economy will expand in the long-term in spite of the current
financial problems in the developed world.

Importance of the Industry’s Products and/ or Services to Customers

The industry’s products and/or services to customers may be ambivalent, a want or
a must have depending on the product and consumer given that there are is a broad list of
products that fall under this industry. Food and beverages are staples and are fundamentally
part of our basic needs making the food industry “a must have” and a need. Desserts may
fall under the “would like” to have under this said industry as a whole but in the viewpoint
of the dessert industry specifically and considering the factors of its product offering and
behavior and motivation of the market, the importance of the products within may vary.
Along with the demand that is rooted from the country’s population of 106.5 million that
falls under a median of 24.3 years old, which is the segment wherein dining out is prevalent
comes with an insatiable demand for food. According to Marketresearch the range of
international desserts is vast, including sweet baked goods and chilled and frozen desserts
of all types. Sweet baked goods include cookies, biscotti, cakes (ranging from pound cakes
to liqueur-flavored cakes), fruit breads, and various pastries, including seasonal pastries
(such as Italian panettone or German stolen) and tiny pastries such as petits fours and
rugulach. Chilled desserts include puddings, mousses, flans, and cheesecakes. Frozen
desserts come in many forms, including ice cream, frozen custard, sherbet, sorbet, water
ice, gelato, frozen yogurt, and frozen novelties. Desserts cater to consumer’s impulse for
indulgence, such that even nutrition- and weight-conscious consumers often find
themselves craving rich, fattening desserts. The power of indulgence as a consumer
impulse. For some consumers desserts may be considered as a luxury and not a priority
making it ambivalent that they hesitate purchasing desserts. In some, if not, many
occasions, desserts are “a must” have especially in particular situations and celebrations
such as birthdays.

Extent to which Business and Environment Trends are Moving in Favor of the Industry
The Extent to which business and environmental trends are moving in favor of the
industry is high (It is equally important to understand the trends in the market. Being
cognizant of trends and leveraging on them is like swimming along with the tide, not
against it. In many cases, it could spell the difference between success and failure. Cuisine
curiosity and authenticity. A recent market study done by De La Salle University revealed
that Filipinos are only willing to patronize a restaurant offering non-mainstream cuisine
(e.g. Latin American, European, or Caribbean) if the chef, proprietor, or face of the brand
hails from that country. Skepticism is high toward Filipino restaurateurs offering exotic
menus.)

Number of Exciting New Products and Services Emerging from the Industry
Number of exciting new product and service emerging from the industry is medium
given that the industry is generally extremely competitive. According to Guine,
Ramalhosa, Valente (2016) New foods, new consumer in their research Today, new
lifestyles, higher incomes and consumer awareness are creating consumer demand for a
year-round supply of high-quality, diverse and innovative food products. “The growing
divide in flavor preferences between millennials and boomers heightens the need for a
product mix that appropriately balances familiarity and innovation,” said Kelly Weikel,
director of consumer insights at Technomic. Creating a small twist on classic recipes with
flavors that particularly appeal to boomers can provide an element of uniqueness without
going too far out of their comfort zone. Firms in the industry continually improve, innovate
and develop dessert products to stay relevant in the industry and to not drown in its
competitive landscape. Consumers in this market are more demanding and have great
expectations. The consumer purchasing patterns of consumers is also a big factor that
affects and motivates firms to introduce new products. Forgoing the familiar, Gen Xers and
millennials are more adventurous when it comes to trying new desserts. Unexpected flavors
can draw in these consumers who are accustomed to eating a wide variety of cuisines.
 Existing firms and new entrants are no exception in introducing new product offerings to
attract and satisfy consumers. In addition, the emergence of many new entrants introduces
new products to the market. But despite this, According to Guine, et al. (2016), when it
comes to innovation, the food sector is less changeable when compared to other sectors,
such as high technology. Still, in the past decades much and important developments have
been achieved in several areas related to food and the food industry. In order for new
entrants to survive, they must have a strong concept, a good value proposal (food quality
in relation to price), a favorable location, an efficient supply chain, tight cash and inventory
controls, and enough competitive advantages to compete with the established players in the
industry.

Long-term Prospects
According to Andrew Masigan, the industry is more complicated as rates of closure
is as high as the rate of new openings. Despite this, there are strong long-term prospects in
the industry. The food service industry is seen to expand in tandem with the growing
population and rising incomes. For the year 2020 and 2021, revenues are seen to reach
P637.3 billion and P656.5, respectively. The food service industry will continue to show
tremendous growth over the next few years on the back with the country’s strong, consumer
lead economy. Long-term prospects in this industry is high as desserts falls under a stable
and continually rising industry as well as the population that seeks the demand for desserts
is also increasing.

B. Target Market Attractiveness

Number of competitors in target market

Tau Ho is a fusion of two different Asian desserts—the Taho from the Philippines
and the Singaporean Tau Huay. Being born through innovation, the company does not have
any direct competitors for the product however; there are numerous indirect competitors as
well as substitute products for the dessert. The closest rival for the company is the House
of Taho while the other indirect competitors and substitute products include that of halo-
halos, ice creams and milk teas.
Growth rate of firms in the target market
The food service industry is seen to expand in tandem with the growing population
and rising economies. For the year 2020 and 2021, revenues are seen to reach Php637.3
billion and Php656.5 billion, respectively. According to 2012 Nationwide Census of the
Philippine Business and Industry (CPBI), the Philippines food service industry amounts to
roughly US$7.2 Billion with estimated 15% to 20% annual growth over the past decades.
The food service industry will continue to show tremendous growth over the next few years
on the back of our strong, consumer lead economy.

Average net income for firms in the target market

The food and beverage sector is among the largest contributors within the
manufacturing industry. The food and beverage sector accounted for 10% of GDP and for
51.2% of the nominal gross value added (GVA) of the Philippine manufacturing industry
in 2017, according to official data from the Philippine Statistics Authority (PSA). The food
service industry in the Philippines is growing at a phenomenal rate and everyone wants a
part of it. For those unaware, the food service industry is composed of all forms of food
retail. This includes fast-food chains, food kiosks, cafes, bars, take-out and delivery stores,
and full-service restaurants. Based on the 2012 nationwide Census of Philippine Business
and Industry (CPBI), the Philippines food service industry amounts to roughly US$7.2
Billion with an estimated 15% to 20% annual growth over past decades. The Philippine
food service industry, in 2016, generated P535.9 billion in revenues on the back of 84,503
food outlets operating in the country. This year, revenues are seen to top P616 billion with
3,126 more food service establishments in operation than there were in 2016. In 2017, the
food and beverage sector accounted for 10% of GDP and for 51.2% of the nominal gross
value added (GVA) of the Philippine manufacturing industry, according to official data
from the Philippine Statistics Authority (PSA).The food service industry is seen to expand
in tandem with the growing population and rising incomes. For the year 2020 and 2021,
revenues are seen to reach P637.3 billion and P656.5, respectively.

Methods for generating revenue in the industry

 Tau Ho belongs to the food industry in which, in 2016 the industry produced
revenues of P535.9 billion on the basis of 84, 503 food outlets in the region. Uncontrollable
demand for food is coming from our massive 106.5 million population whose average age
of 24 years old which is the prime age to eat out. 4,875 new-born Filipinos were added
daily. Together with the growing population and rising incomes, the food service industry
is seen to increase. Income is expected to reach P637.3 billion and P656.5, respectively,
for the year 2020 and 2021. Food accounts for almost half of the country's manufacturing
sector's total output, adding between 23-24% of annual GDP. Averaging 8-10% annual
growth, the Philippine government has identified the food manufacturing industry as a
priority sector to attract foreign investment in special economic zones.

Ability to create “barriers to entry” for potential competitors

Since the company is still new to the market, it may or may not be able to create
barriers to entry in the sense that if the products will be presented and accepted to the
market, tendency is it may or may not open an opportunity to potential competitors that
will try to imitate or improve its own version. The industry also presents moderate to low
entry barriers for new entrants. The overall market is driven by innovations and mergers
and acquisitions of the players.

Degree to which customers feel satisfied by the current offerings in the target market
Today’s firms recognize that customer satisfaction is the key component of the
business ' success and at the same time plays a vital role in increasing the market value.
Customers are usually those people who buy consumer or company goods and services that
meet their needs and wishes. Customers buy products in order to meet their expectations
in terms of money and retains long-term association.

Potential to employ low cost guerrilla and/or buzz market- ing techniques to promote the
firm’s product or services
Since the company Tau Ho is still new to the market, guerrilla marketing may not
be feasible since the company still needs to have intensive and extensive marketing
 activities. This is when consumers will encounter the product virtually everywhere, they
go.

C. Timeliness of entry into the target market:

Buying mood of customers

The Food and Beverage Service Activities sector in the Philippines is booming. In fact, in
a study presented by the Philippine Statistics Authority, the sector profited PHP368.3
billion in 2016. The aforementioned figure simply shows that the customers in this sector
are in an aggressive buying mood perhaps because of the fact that food is a necessity.

Momentum to the market stable

The industry has been fast ranging when it comes to its growth with a gross added value of
more than $2billion and grew by 3.2 percent every year. According to the Philippine
Bureau of Food and drug statistical report is that the number of fast growing industries and
establishment nationwide has always in increase motion. The momentum of the food
industry has always been in neutralize motion given by the statistics and data of our
economic growth rate.

Need for a new firm in the market with your offerings or geographic location

There is a high need for a new firm like Tau Ho in the market with the like of its offerings
or in the geographic location. Over the recent past years, Philippine has emerged as one of
the rapidly growing food and drinks industries in the Asia region. The demand for healthy
food and drinks is surging high because of the following factors: growing affluent
population, rising disposable income, and rising consumer awareness regarding health and
safety concerns. Filipino’s shopping behavior in food category which associate with
healthier food choice has a notable growth (Delayco, 2017). Deocareza (2017) mentioned
in her study that there are already notable shifts in the food and beverage preference of
some filipino consumers towards health and wellness. Glorioso, Gonzales, Avilla, &
Capanzana (2018) also added that healthy eating trend is growing among Filipinos as well
as the popularity of health-conscious food and beverage brands in the country. In addition,
there is recently a rapid growth in the retail dessert industry in the Philippines. Throughout
the year, the hot climate in the Philippines stimulates consumption of cold beverages. “The
change in the lifestyle of Filipinos towards health and wellness is a key insight that brands
can leverage and focus marketing efforts on when introducing their food and beverage
products” (Miraflor, 2017). With summer just around the corner and the fitness trend
booming, brands that can contribute to the health goals and complement the healthy
lifestyles of this emerging market will have a higher chance of penetrating their market.

Extent to which business and environmental trends are moving in favor of the target
market

Compared to 2018, for product food preferences, strong and new foods, snacking, and
health and wellness are still at the center, but in an even higher manner. Consumers want
improved and functional products that promote healthy intestines, fuel their brains, and
help their physical appearance. Generation-Z customers are "fresh eaters" more than
millennials and have a strong interest not only in what the commodity is, but in how and
by whom it is made. Transparency in how and where food is produced. With today's instant
access to information, they will be more inclined to leave it behind if a consumer can’t
understand or find out where and how a product is made and. Throughout 2018, the demand
for Philippine milk tea became even bigger. Through making the use of white pearls and
popping bubbles, CoCo has brought something new to the milk tea lovers. In the meantime,
Serenitea has created a brown sugar line influenced by the popular Philippines: taho. Thai
milk tea, malted milk tea, powdered milk milk tea and packaged milk tea ready-to-drink,
and other developments have also come into play, further reinforcing this trend.

Recent or planned entrance of large firms by entering the market

In 2016, the food service industry in the Philippines produced revenues of P535.9 billion
on the back of 84,503 food outlets in the country. This year, with 3,126 more food service
establishments in operation than in 2016, revenues are seen to top P616 billion. Together
with the growing population and rising incomes, the food service industry is seen to
expand. Income is expected to reach P637.3 billion and P656.5, respectively, for the year
2020 and 2021. With this rising occurrence, it will pave the way for more food related
businesses to open.
D. Industry/ Market Feasibility

The market is feasible for Tau Ho given the information gathered about the industry, the
product idea has positive feedback as well as there are many opportunities for the
enterprise. Despite the market’s feasibility, entering the market have a number of risks and
threats that the enterprise has to prepare and anticipate but overall, with the market’s overall
positive response which is based on the buying intention survey and concept idea test that
was executed and prepared. Results of the buying intention survey and concept idea test is
reflected in the first part of this feasibility study.

E. Suggestions for improving industry/ market feasibility

The suggestion that the researchers can provide to the enterprise is for the enterprise to
look and find for any, if not all possibilities that the enterprise can exploit that would benefit
the enterprise. In addition, the enterprise should also calculate the risks as well as identify
weaknesses and threats that may affect the enterprise negatively and act upon these. In
addition, the researchers recommend the enterprise to focus on continuous market research,
and understand consumer preference and buying behavior as these factors are essential to
product development as well as it in lines with market.

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