Sari-sari stores, or the neighborhood mom-and-pop stores, saw Filipinos feeling the brunt of the increasing prices of cigarettes and alcohol in 2024.
This is the latest finding from tech startup Packworks, through its mobile sari-sari store app and business intelligence tool Sari IQ, which looked at the sales transactions from its network of over 300,000 sari-sari stores nationwide.
Packworks said it observed a downward trend in the sales transactions of cigarette brands Marlboro, Mighty and Winston, as well as alcoholic drinks Tanduay rum and Emperador brandy — all considered staples in sari-sari stores.
The study found that the combined sales of the three cigarette brands fell to 12 percent in 2024 at over P392 million in gross merchandise value (GMV) compared to the previous year at more than P503 million.
Mighty recorded a marked decrease of 25 percent, followed by Marlboro at 24 percent and Winston at 8 percent.
Sari-sari stores saw a decrease in the sales of cigarettes despite the Bureau of Internal Revenue (BIR) lowering the floor price per pack to P78.58 last year from P114.60 in 2023 (Revenue Regulations No. 016-2024).
Despite the cut in floor prices, consumers’ purchasing power was weakened by the high inflation.
According to the Philippine Statistics Authority (PSA), the country’s year-end inflation for 2024 was 3.2 percent compared to 2023.
Meanwhile, sari-sari store sales of Tanduay rum decreased by 17 percent, resulting in a GMV of P102 million in 2024, compared to P124 million in the prior year, while Emperador brandy sales fell by 22 percent, from a GMV of over P63 million in 2023 to P49 million in 2024.
Anabel Desuyo, a sari-store owner and Packworks app user from Negros Occidental, said the high prices of liquor, coupled with the inflationary environment, could be affecting her community’s purchasing power.
“Because the price of rum has increased, and perhaps because of the difficult economic situation,” Desuyo said,
This sentiment was echoed by Anita Lagtapon, a sari-store owner in Sarangani, who no longer sells cigarettes as the prices are too high.
Packworks chief data officer Andoy Montiel noted that the decrease in sales of cigarettes and alcohol may well point to imminent economic and social factors.
“Our tracking data of 12 consecutive months indicate a significant shift in purchasing trends within the sari-sari store sector for cigarettes and alcohol products, which can be due to various external factors such as rising prices and supply issues, but might also be a precursor to changing internal consumer behaviors and preferences. This analysis could be used to inform regulatory governance and demand planning for our market,” Montiel said.
Under Republic Act (RA) No. 11346, or the Tobacco Tax Law of 2018, signed in 2019, the government increased excise taxes on tobacco products, including cigarettes, alongside the yearly indexation of the specific tax rates for cigars rising from 4 percent to 5 percent effective Jan. 1, 2024, while retaining the 20 percent ad valorem rate.
RA No. 11467 mandated that distilled spirits, including rum, are subject to a 22 percent ad valorem tax on the net retail price, excluding excise tax and value-added tax, per proof, plus a specific tax adjusted yearly, effective starting in 2020. These tax increases, in turn, have contributed to higher end-consumer prices.
“With our wide sari-store base, we can take timely pulses of consumer activity at the grassroots level, revealing unique insights into selling and buying patterns of Filipinos. Armed with this comprehensive dataset, we can spot critical trends early, and provide deep analysis for manufacturers and the retail industry to better adapt to ever changing consumer habits,” said Packworks chief executive Bing Tan.