Philippine beverage makers seek direct sugar buying from farmers

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Philippine beverage direct sugar buying

Highlights

Beverage makers including Coca-Cola and Pepsi have asked regulators if they can directly buy sugar from farmers instead of millers, says SRA Administrator Luis Pablo S. Azcona.
Coca-Cola Europacific Aboitiz Philippines, Inc., the largest domestic sugar buyer with over 52,000 metric tons annually, faces scrutiny for importing finished beverages after fire-related local production disruptions in April.
Beverage manufacturers account for about 60% of Philippine sugar consumption, so direct sourcing could significantly impact farmers, millers, and domestic supply chains.

Direct sourcing interest and supply chain limits

As reported by BusinessWorld Online, beverage makers have asked regulators whether they can bypass millers and purchase sugar directly from farmers, according to the Sugar Regulatory Administration.

SRA Administrator Luis Pablo S. Azcona said the companies he has personally spoken with include Coca-Cola and Pepsi, along with nearly all manufacturers that use refined sugar. He said these buyers are interested in finding a way to source directly from farmers.

Mr. Azcona said the current structure keeps beverage makers buying refined sugar from millers because farmers produce raw sugar. He added that Coca-Cola Europacific Aboitiz Philippines, Inc. is the largest domestic buyer of sugar, purchasing more than 52,000 metric tons, or over 1 million bags.

Import scrutiny and industry significance

Coca-Cola is also facing scrutiny over its imports of finished beverage products after the company said a fire at one of its plants in late April disrupted production. Mr. Azcona said regulators checked the claim and confirmed that a fire had affected output of canned drinks and 1.5-liter bottles.

He said the company describes the imports as a temporary response to a production shortfall rather than a replacement for domestic sugar purchases. Mr. Azcona added that the SRA and the Department of Agriculture do not oversee imports of finished beverage products, which fall under the Food and Drug Administration.

The issue carries broader weight for the local sugar sector because beverage makers and other industrial users consume about 60% of the country's sugar supply. Any change in how these companies source sugar could therefore affect farmers, millers and supply flows across the Philippine market.

In our earlier article on the Philippines’ “Godzilla” El Niño risk, we examined the central bank’s warning that a severe weather event could disrupt agricultural output and keep inflation elevated. We also outlined how policymakers were weighing higher oil prices, rising wage costs, and slowing GDP growth as they calibrated interest-rate decisions amid broader supply-side pressures.

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