Calbee said it was selling its 50% stake in the joint venture to its Filipino partner for around 170 million pesos ($3.13 million).
The chips, which arrived in Manila stores in 2015, were 40% more expensive than potato chips already offered by Universal Robina. The venture has registered lackluster sales growth and a total net loss of around 280 million pesos between 2015 and 2017.
A Calbee official told Nikkei the products were too expensive for Filipinos, a group that market research group Nielsen once described as "spontaneous snackers" who like to share food with relatives and friends.
Calbee's pullout is a blow to Universal Robina's strategy of boosting its premium product portfolio to serve the growing number of consumers with more sophisticated tastes. Universal Robina, one of the largest food and beverage purveyors in Southeast Asia, has partnered with French group Danone in beverages and acquired Griffin's Foods of New Zealand to add premium biscuits to its higher-end portfolio.
"We have high expectations because we are partnering with the best in Japan [to create] premium categories for the growing Filipino middle class," Universal Robina Chairman Lance Gokongwei said at a Calbee product launch back in March 2015. "As they [the middle class] get more exposed to the world, they aspire to better products."
However, in a sign of its determination to push ahead with the strategy, Universal Robina plans to continue producing and selling the products under a licensing agreement with Calbee.
Calbee is the latest Japanese consumer company to retreat from the highly competitive Philippine market. Japanese convenience store chain operator FamilyMart, which positions itself as a premium brand in Manila, and its partners sold their stake to Davao-based tycoon Dennis Uy last year.
Nikkei staff writer Jun Endo contributed to this report.