packaged food in the philippines

PACKAGED FOOD IN THE PHILIPPINES

Euromonitor International

April 2013

P A C K A G E D F O O D I N T H E P H I L I P P I N E S P a s s p o r t I

© E u r o m o n i t o r I n t e r n a t i o n a l

LIST OF CONTENTS AND TABLES

Executive Summary ..................................................................................................................... 1

Modest Value Growth in 2012 .................................................................................................. 1 Higher Demand for Healthier Packaged Food Products ........................................................... 1 Domestic Manufacturers Dominate Packaged Food................................................................. 1 Supermarkets Remains the Most Important Distribution Channel ............................................ 1 Higher Value Growth Expected Over the Forecast Period ........................................................ 1

Key Trends and Developments .................................................................................................... 2

Economic Growth Sustains Packaged Food Consumption ....................................................... 2 Higher Demand for Healthier Goods......................................................................................... 3 Consumers Prefer Value-for-money Products .......................................................................... 3 Stable Packaged Food Commodity Prices ............................................................................... 4 Domestic Companies Dominate Philippines Packaged Food ................................................... 5

Foodservice – Key Trends and Developments ............................................................................. 6

Headlines .................................................................................................................................. 6 Trends ...................................................................................................................................... 7 Competitive Landscape ............................................................................................................ 7 Prospects .................................................................................................................................. 8 Category Data .......................................................................................................................... 8

Table 1 Foodservice Sales of Packaged Food by Category: Volume 2007-

2012 ............................................................................................................. 8 Table 2 Foodservice Sales of Packaged Food by Category: % Volume Growth

2007-2012 .................................................................................................... 9 Table 3 Forecast Foodservice Sales of Packaged Food by Category: Volume

2012-2017 .................................................................................................. 10 Table 4 Forecast Foodservice Sales of Packaged Food by Category: %

Volume Growth 2012-2017 ........................................................................ 10

Impulse and Indulgence Products – Key Trends and Developments ......................................... 11

Headlines ................................................................................................................................ 11 Trends .................................................................................................................................... 11 Competitive Landscape .......................................................................................................... 12 Prospects ................................................................................................................................ 13 Category Data ........................................................................................................................ 14

Table 5 Sales of Impulse and Indulgence Products by Category: Volume

2007-2012 .................................................................................................. 14 Table 6 Sales of Impulse and Indulgence Products by Category: Value 2007-

2012 ........................................................................................................... 14 Table 7 Sales of Impulse and Indulgence Products by Category: % Volume

Growth 2007-2012 ..................................................................................... 14 Table 8 Sales of Impulse and Indulgence Products by Category: % Value

Growth 2007-2012 ..................................................................................... 15 Table 9 Company Shares of Impulse and Indulgence Products 2008-2012 ........... 15 Table 10 Brand Shares of Impulse and Indulgence Products 2009-2012 ................. 16 Table 11 Forecast Sales of Impulse and Indulgence Products by Category:

Volume 2012-2017 ..................................................................................... 17 Table 12 Forecast Sales of Impulse and Indulgence Products by Category:

Value 2012-2017 ........................................................................................ 17

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Table 13 Forecast Sales of Impulse and Indulgence Products by Category: %

Volume Growth 2012-2017 ........................................................................ 17 Table 14 Forecast Sales of Impulse and Indulgence Products by Category: %

Value Growth 2012-2017 ........................................................................... 18

Meal Solutions – Key Trends and Developments ....................................................................... 18


Table 15 Sales of Meal Solutions by Category: Volume 2007-2012 ......................... 20 Table 16 Sales of Meal Solutions by Category: Value 2007-2012 ............................ 21 Table 17 Sales of Meal Solutions by Category: % Volume Growth 2007-2012 ......... 21 Table 18 Sales of Meal Solutions by Category: % Value Growth 2007-2012 ............ 21 Table 19 Company Shares of Meal Solutions 2008-2012 ......................................... 22 Table 20 Brand Shares of Meal Solutions 2009-2012 ............................................... 23 Table 21 Forecast Sales of Meal Solutions by Category: Volume 2012-2017 .......... 23 Table 22 Forecast Sales of Meal Solutions by Category: Value 2012-2017 ............. 24 Table 23 Forecast Sales of Meal Solutions by Category: % Volume Growth

2012-2017 .................................................................................................. 24 Table 24 Forecast Sales of Meal Solutions by Category: % Value Growth 2012-

2017 ........................................................................................................... 24

Nutrition/staples – Key Trends and Developments ..................................................................... 25


Table 25 Sales of Nutrition/Staples by Category: Volume 2007-2012 ....................... 28 Table 26 Sales of Nutrition/Staples by Category: Value 2007-2012 .......................... 28 Table 27 Sales of Nutrition/Staples by Category: % Volume Growth 2007-2012 ...... 28 Table 28 Sales of Nutrition/Staples by Category: % Value Growth 2007-2012 ......... 29 Table 29 Company Shares of Nutrition/Staples 2008-2012 ...................................... 29 Table 30 Brand Shares of Nutrition/Staples 2009-2012 ............................................ 30 Table 31 Forecast Sales of Nutrition/Staples by Category: Volume 2012-2017 ........ 31 Table 32 Forecast Sales of Nutrition/Staples by Category: Value 2012-2017 ........... 31 Table 33 Forecast Sales of Nutrition/Staples by Category: % Volume Growth

2012-2017 .................................................................................................. 31 Table 34 Forecast Sales of Nutrition/Staples by Category: % Value Growth

2012-2017 .................................................................................................. 32

Market Data ................................................................................................................................ 32

Table 35 Sales of Packaged Food by Category: Volume 2007-2012 ........................ 32 Table 36 Sales of Packaged Food by Category: Value 2007-2012 ........................... 33 Table 37 Sales of Packaged Food by Category: % Volume Growth 2007-2012 ....... 33 Table 38 Sales of Packaged Food by Category: % Value Growth 2007-2012 .......... 34 Table 39 GBO Shares of Packaged Food 2008-2012 ............................................... 34 Table 40 NBO Shares of Packaged Food 2008-2012 ............................................... 35 Table 41 NBO Brand Shares of Packaged Food 2009-2012 .................................... 36 Table 42 Penetration of Private Label by Category 2007-2012 ................................. 37

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Table 43 Sales of Packaged Food by Distribution Format: % Analysis 2007-

2012 ........................................................................................................... 37 Table 44 Sales of Packaged Food by Category and Distribution Format: %

Analysis 2012 ............................................................................................. 38 Table 45 Forecast Sales of Packaged Food by Category: Volume 2012-2017 ......... 40 Table 46 Forecast Sales of Packaged Food by Category: Value 2012-2017 ............ 40 Table 47 Forecast Sales of Packaged Food by Category: % Volume Growth

2012-2017 .................................................................................................. 41 Table 48 Forecast Sales of Packaged Food by Category: % Value Growth

2012-2017 .................................................................................................. 41

Sources ...................................................................................................................................... 42

Summary 1 Research Sources ...................................................................................... 42

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PACKAGED FOOD IN THE PHILIPPINES

EXECUTIVE SUMMARY

Modest Value Growth in 2012

Philippines packaged food value sales are expected to grow modestly in 2012 thanks to

stronger economic growth, improved disposable income and the trends of convenience and

health and wellness. The value performance will be an improvement on the previous year but is

among the lowest of the review period. This was due to slowing volume consumption as a result

of slower population growth, low average unit price growth and higher spending on non-food

consumer goods.

Higher Demand for Healthier Packaged Food Products

Many of the new product developments in 2012 highlighted the health benefits that served the

needs of the increasing number of health-conscious consumers. These health benefits mainly

help consumers with weight management, maintenance of cardiovascular health and

supplementation of vitamins and minerals. Similarly, brand manufacturers continuously develop

products not only to be healthier but also better-tasting. Among the companies that introduced

new products were Nestlé Philippines Inc, Universal Robina Corp, Gardenia Philippines Inc and

San Miguel Pure Foods Co Inc.

Domestic Manufacturers Dominate Packaged Food

Domestic manufacturers accounted for the majority share of packaged food sales in 2012 due

to the large number of local players and the large shares of key domestic manufacturers such

as Monde Nissin Corp, Universal Robina Corp, The Purefoods-Hormel Co Inc and San Pablo

Manufacturing Corp among others. The local brand manufacturers benefit from having popular

and established brands and focusing on providing consumers with value-for-money products.

Multinationals, however, are trying to increase presence and share in the local market through

partnership with and acquisition of domestic manufacturers.

Supermarkets Remains the Most Important Distribution Channel

The majority of packaged food sales were generated through supermarkets. The expansion of

the major supermarket chains such as SM, Robinsons and Puregold continued to increase the

number of supermarkets outlets across the country and improve its accessibility in both

residential and rural areas. Hypermarkets is a fast-growing channel in packaged food as its

presence is increasing in the key cities. Convenience stores continues to be an important

channel for a niche of consumers, especially for those who work night shifts in the business

process outsourcing industry.

Higher Value Growth Expected Over the Forecast Period

The annual value growth from 2013 to 2017 is expected to be higher than that of the review

period due to the potential improvement in volume consumption fuelled by the expected

stronger economic performance. Consumer spending on packaged food will continue to account



for a large portion of household expenditure although its share may experience a decline as a

result of the apparent increased spending on non-food products.

KEY TRENDS AND DEVELOPMENTS

Economic Growth Sustains Packaged Food Consumption

In 2012, the Philippine economy continued to grow with a GDP of 5%. The country‟s positive

economic performance helped maintain the consumption levels of packaged food in the

Philippines. Consumer spending was buoyed by the continuous influx of remittances from

overseas Filipino workers and the growing number of foreign investments in tourism, property

development and business process outsourcing companies. More investments came into the

Philippines due to the weaker economic performance in other countries.

Current impact

Packaged food retail value is expected to increase by 5% in 2012 to Ps439 billion. These

growths will be similar to the retail value increase experienced in the 2011. Packaged food total

retail value was Ps416.3 billion in 2011.

All packaged food categories experienced positive value and volume growth in 2012. Majority

of the packaged food industry experienced growth rates stronger than that of the industry

average. Meal replacement, dairy, baby food and confectionery had slower growth rates due to

its already high penetration rate for its intended target markets. Confectionery‟s slower growth is

due in part to many of the products being perceived as too sweet and hence less healthy. Snack

bars also experienced slow positive growth due to the development of cheaper locally produced

brands.

Outlook

The Philippines GDP is expected to continue to grow faster than the global economic growth

in the forecast period due to the government‟s economic stimulus, policies that promote efficient

and corruption-free governance, programmes that encourage investment, potential strong gains

from services and agricultural sectors, and the prospective development of natural resources

such as natural gas. The country is expected to maintain a GDP of 5% while the global output

performance is expected to be at 3-4% over the forecast period. Consumer spending and

overseas Filipino workers remittances are likely to continue to increase over the forecast period.

Future impact

The optimistic economic forecast for 2013-2017 may encourage investment and entry of new

and smaller packaged food manufacturers. As a result, stiffer price competition is expected to

occur which will result in lower value growth of packaged food despite projected higher annual

volume growth. Packaged food is expected to have a 3% CAGR in the forecast period and four

of the packaged food categories may maintain modest to healthy value growth including

spreads, bakery, oils and fats, and ready meals.

To continue to gain share in the expected competitive business environment in the forecast

period, brand manufacturers should strengthen quality product offerings, apply creative

packaging and broaden and serve market niches. This can be done through continuous

awareness of emerging niches, consumer lifestyle and constant access and constructive

acceptance of consumer feedback on packaged food brands.



Higher Demand for Healthier Goods

The health and wellness trend continued to be a main contributing factor in the performance

of packaged food in 2011 and 2012. Consumers are increasingly becoming conscious of the

food they eat to avoid being overweight and to improve overall well-being. However, a large

segment of the market still seeks indulgence products but is likely to try healthier variants when

available. Consumers are beginning to look for comfort food that they can consume without

feeling guilty about consuming unhealthy food.

Current impact

Taste remained a key consideration in the packaged food purchase decision in 2012 despite

the on-going health and wellness trend for many consumers. In response, manufacturers

developed healthier variants that include benefits such as low calorie, reduced fat and less

sugar. Many manufacturers were able to develop these products without sacrificing the quality

or taste of the products.

Many of these new healthier variants were for foods that were typically perceived as fattening

and unhealthy. In ice cream, for example, Nestlé Philippines Inc unveiled its zero sugar ice

cream products while Unilever RFM Ice Cream Inc launched dark chocolate flavoured Magnum

single portion ice cream. In dairy, Nestlé Philippines Inc introduced Nido Lite. This was the first

low calorie and low fat powder milk product in the Philippines. In pasta sauces, Del Monte

Spaghetti Sauce launched a variant fortified with vegetable ingredients such as mung beans,

moringa and squash.

Outlook

Health and wellness is expected to be a stronger trend over the forecast period and this may

become a key consideration in purchasing food products for consumers. As a result, brand

manufacturers are expected to launch more new products that are healthy but innovative to beat

competition. Manufacturers are likely to stress health benefits along with improving the products‟

taste.

Future impact

Healthy new product developments are expected to become more prevalent in more

packaged food. Brand manufacturers are expected to support these new products with strong

marketing campaigns and the products are likely to be accepted by consumers who are

increasingly becoming aware of the importance of having a healthy lifestyle.

Brand manufacturers are likely to start capitalising on organic food products and organic

farming to benefit from the long-term trend of health and wellness. Additionally, corporate social

responsibility showing concerns about consumer health and participation and cooperation with

government nutrition programmes are likely to give consumers a lasting impression of

companies‟ commitment to wellness.

Consumers Prefer Value-for-money Products

The Philippines has a significant portion of its population coming from low-income households

with over 40% of the population earning less than US $1,500 and about 20% earning between

US$1,500 – US$2,000 according to Euromonitor International‟s Countries and Consumers data.

Those in the lower income segment tend to spend a larger portion of their money on food as

compared to those in the higher income segments. Low income households tend to prioritise

expenditure on food.



Current impact

Standard and economy brands were the most widely-consumed in packaged food as a result

of the large low-income and middle-income market base. The brand manufacturers which sell

standard price brands such as Universal Robina Corp and Monde Nissin Corp experienced

overall value share growth in packaged food.

Consequently, the brand manufacturers carrying products that are positioned as premium

suffered the most as a result of low number of households earning high incomes. For example,

ice cream producer Haagen-Dazs discontinued distribution in 2012 while Nestlé Philippines

Inc‟s overall packaged food value share declined.

Outlook

Standard and economy brands will continue to generate the bulk of the packaged food sales.

However, there will be a noticeable improvement in the premium brands, particularly those with

healthy positioning despite having higher unit prices. Optimistic development in industries such

as tourism, business process outsourcing and agriculture in addition to the expected increase in

dollar reserves may improve the disposable income of middle-income consumers. Hence,

consumption of premium brands could grow in middle-income households.

Future impact

Premium brand providers may recover from the recent value share decrease in packaged

food. They are likely to have faster sales growth over the forecast period as a result of the

potential increased consumption of premium brands driven by the improvement in disposable

incomes and higher employment rate over the forecast period. Premium brand-owners may

consider entering the Philippines market. Premium brands may have better value growth over

the forecast period although they are unlikely to outperform standard brands.

Premium brand manufacturers are expected to create new and creative ways of encouraging

customer purchases by highlighting the brands‟ competitive value over standard and economy

brands so consumers will increasingly become more aware of premium products and use them.

Moreover, premium brands will have better product quality than the standard brands to justify

their cost as consumers will continue to use standard brands if they do not see a difference in

quality between the two price bands.

Stable Packaged Food Commodity Prices

In 2012, the commodity prices of flour and the raw materials for oils and fats and others were

stable due the less frequent oil price increases. In previous years, the political crisis in the

Middle East in 2011 caused successive oil price increases in the country which significantly

increased the prices of raw materials and packaged food ingredients. In 2012, as the political

crisis eased, oil prices and commodity prices became less volatile. This resulted in more

competitive packaged food selling prices which consequently helped brand manufacturers thrive

and increase volume sales.

Current impact

The stable commodity prices helped key packaged food brand manufacturers such as San

Miguel Purefoods Co Inc sustain growth with 9% company growth and 4% value growth in

packaged food as many of its food products remained price competitive. Similarly, RFM Corp

maintained double digit sales growth in 2012 and the easing of prices of commodities such as

sugar was one of the contributing factors to its strong sales.

The trend also helped companies achieve more efficient operational costs which contributed

to an acceptable unit price movement of most packaged food types. Average unit price

increases were kept low and directly affected the country‟s inflation rate of 3% in 2012. Aside



from the stable commodity prices, the other main factors for low unit price growth are

competition and high usage of the standard brands.

Outlook

More stable oil prices in the country and hence commodity prices are expected over the

forecast period as the country battles for oil sufficiency through the potential development of the

oil-rich provinces. Manufacturers are likely to invest in more cost-effective manufacturing

techniques to reduce their dependency on fossil fuels. This may include streamlining production

methods or purchasing more efficient machines.

The administration‟s new agricultural programme, Agri-Pinoy, which aims to achieve

sustainable agriculture, can help ensure the sufficient supply of commodities, packaged food

ingredients and raw materials over the forecast period. This may warrant long-term price

stability of major food sources. Such a trend will be beneficial to brand manufacturers who

locally source and manufacture packaged food products.

Future impact

The projected long-term stability of commodity prices will contribute to slightly lower unit

prices of most packaged food over the forecast period. This is expected to consequently

decrease the average annual value growth of most categories. The stable commodity prices will

also help minimise companies‟ production costs and allot more budgets on other operations

such as research and development and marketing.

Other reasons that may help stabilise average unit prices include the predicted stiffer

competition due to the potential increase in the number of players in packaged food as a result

of a better economic environment. New players may adopt value-for-money strategies to win

share against established players.

With such conditions, established brand manufacturers could acquire promising new players

to maintain or increase value share in packaged food. They could therefore continuously enjoy

significant revenue growth due to cost savings generated from stable commodity prices and

more efficient operational costs.

Domestic Companies Dominate Philippines Packaged Food

Domestic companies accounted for the bulk of packaged food value share in 2012 due to the

high number of local brand manufacturers with high value sales. Their combined shares

surpassed multinationals‟ brand share despite the strong sales of some premium brand

manufacturers. Multinationals‟ value share also declined against that of local brand

manufacturers due to the latter‟s aggressive marketing campaigns, price positioning and good

product quality. Domestic brands continued to enjoy a comfortable lead against multinationals

throughout packaged food.

Current impact

Due to the growing share of domestic manufacturers, multinational manufacturers such as

Nestlé Philippines Inc, Unilever Philippines Inc, Kraft Foods Asia Inc, Mead Johnsons Inc and

Abbot Philippines Inc made strong marketing efforts to keep sales and market share growing.

The most visible was Nestlé Philippines Inc which used the strategy of common shared

values with Filipino consumers to allow consumers to be able to relate to its brands. Such efforts

include employment building through Nestlé products, health and nutrition promotion through its

improved dairy and breakfast cereals products and frequent television commercials. The

company also launched healthier new product variants such as the Nido Lite and Zero Fat and

No Sugar Added Nestlé Mango Ice Cream.



Unilever Philippines Inc had frequent multimedia advertisements and was active in sponsoring

top-rated television programmes. These activities, however, were insufficient to completely

dominate the market as they too have a limited product portfolio and were not able to lower

prices that could compete and discourage purchases of local brands.

Outlook

Domestic manufacturers are expected to continue to dominate. However, the better economic

outlook may improve the value growth of multinationals as more consumers will be able to afford

their brands over the forecast period. However, value growth may not be sufficient to win share

against the domestic companies who offer quality products at more affordable prices. The

leadership of Nestlé Philippines Inc in packaged food is also at risk due to the aggressiveness

and increasing product portfolio of Universal Robina Corp.

Future impact

Multinational companies‟ marketing activities are likely to remain the same over the forecast

period as there is an expected confidence in sales due to the higher disposable of consumers.

They are unlikely to use low price positioning as they would prefer to keep their higher quality

brand image. Nevertheless, they may engage in occasional price discounts, product giveaways,

television game show sponsorship and contests for product purchase to help win share among

the middle-income and low-income consumers.

Local brand manufacturers, on the other hand, may continue being aggressive in their

marketing campaigns through creative and celebrity-led multimedia advertisements and in-store

promotions. Universal Robina Corp as a packaged food manufacturer has a competitive edge in

terms of distribution as it is under the same umbrella company as Robinsons (a key retailer in

the Philippines), and hence has an affiliate supermarket and hypermarket with numerous

branches across the country. The continuous product expansion of Universal Robina Corp,

distribution advantages, value-for-money strategy, increasing involvement in health and

wellness products and other marketing strategies will make it possible for the company to grow

ahead of Nestlé Philippines Inc and lead in Philippines packaged food.

To advance value share against competitors, multinational companies are expected to adopt

a price competitiveness strategy and continue expanding their product portfolios in order to have

presence in more packaged food categories.

FOODSERVICE – KEY TRENDS AND DEVELOPMENTS

Headlines

Foodservice packaged food volume is expected to grow by 4% in 2012

Foodservice outlet expansion drives growth

Frozen processed poultry is expected to have the highest foodservice volume growth in 2012

at 8%

Other RTE cereals is expected to have the strongest volume decline at -9%

San Miguel Purefoods - Great Foods Solutions Inc is expected to be the leading player in

2012

Foodservice volume is expected to have 3% CAGR over the forecast period



Trends

The increasing number of outlets of restaurant chains continued to drive growth of foodservice

in 2012. Restaurant chains continued to expand outside Metro Manila to attract more sales

from those in less-developed parts of the Philippines. Disposable incomes in less-developed

parts of the Philippines increased as more business process outsourcing companies

expanded in these areas. In addition, tourism to other parts of the Philippines continues to

grow. All these factors contribute to the growth of packaged food foodservice.

Volume sales growth of foodservice in 2012 is expected to be 4% which is the lowest since

the review period. Over the years, volume sales of packaged food are slowing since

packaged food continues to be more popularly purchased for consumption at home. The

growing interest in cooking was influenced by cooking shows and family bonding while eating

breakfast, dinner or lunch at home. This was also supported by packaged food manufacturers‟

multimedia advertisements which encouraged consumption of these foods at home rather

than in foodservice establishments.

The availability of easy-to-prepare and ready-to-eat packaged food in the retail channels

served the needs of busy consumers. These types of food also enabled consumers to save

money as they cooked at home rather than going out to foodservice establishments. There

are no major changes in the consumer lifestyle that significantly impact the consumption of

packaged food in the foodservice sector. The retail volume share of packaged food remained

the same. Only a slightly slower growth of foodservice volume is expected in 2012.

Frozen processed poultry is expected to have the highest value growth of 8% which is due to

consumer preference for chicken as it is perceived as a healthier meat. Numerous new

flavour variants in frozen processed poultry increased the interest of consumers; innovations

include chicken tocino flavour which was inspired by a popular local dish. Chicken nuggets

and chicken hotdogs are commonly served in foodservice establishments and continue to

gain popularity due to its low price position and heavy advertising.

Other RTE cereals is expected to have the strongest decline in foodservice volume sales at -

9%. This decline was due to the limited number of establishments that use other RTE cereals

in their menu offerings. Consumers also tend to prefer rice meals over cereal products in the

Philippines. Cereals tend to be consumed at home more often than at foodservice

establishments.

Competitive Landscape

San Miguel Purefoods - Great Foods Solutions Inc is expected to maintain a strong presence

in foodservice since it is a distributor of frozen processed food, chilled processed food and

dried processed food which account for a large percentage of foodservice packaged food

volume. The company benefits from being part of a food manufacturer with large capital

funding which enables it to have a diversified portfolio, produce meaningful and competitive

new products, execute effective marketing campaigns and capitalise on its wide distribution

network. Its strong alliances with other foodservice establishments further strengthen its

position in this area. For similar reasons, the company continues to experience growth

benefiting from being a leader in the distribution of packaged food in the country.

Effective company strategies of foodservice companies include alliances with other

foodservice establishments on marketing activities such as conventions and price promotions.

This was carried out by San Miguel Purefoods - Great Foods Solutions Inc Bakeshops such

as the Goldilocks Bakeshop and the Red Ribbon Bakeshop which had multimedia

advertisements and price promotions and incentives during important days such as Father‟s

Day, Mother‟s Day, etc.



New product launches in foodservice in 2012 were mainly in baked goods including cakes

and bread produced by Red Ribbon Bakeshop and Goldilocks Bakeshop Inc. These products

are new to the market and still have a small contribution to the companies‟ growth in

foodservice. A new cake by Goldilocks Bakeshop Inc is targeted at male consumers while the

rest of the new products are aimed at families.

Domestic companies continued to contribute to most of foodservice sales in the Philippines.

Exclusive domestically-based distributors such as Flyace Corp, ScanAsia Overseas Inc and

PTC Commercial Corp performed better than their multinational counterparts due to their

better understanding of local requirements and the ability to quickly adapt to the changing

preferences of clients. There are only a few multinational distributors in the market such as

Nestlé Professional Philippines and Unilever Food Solutions. Most players find it more

practical to use local distributors instead of developing a distribution division.

Prospects

The busier lifestyles of consumers are expected to help sustain packaged food consumption

in foodservice over the forecast period. However, the higher cost of packaged food products

in foodservice may prevent it from having stagnant volume growth. Foodservice is expected to

prepare and create product offerings with more health benefits to increase sales and benefit

from the increasing number of health-conscious consumers. Some of the potential offerings

will be frozen meat goods with fruits and vegetables, pasta with vegetable soup, high-fibre

breakfast goods with fruits etc.

The expected higher disposable incomes with the development of the business process

outsourcing industry are also likely to encourage more consumers to eat out.

Despite the positive economic outlook for the country which is likely to improve consumers‟

disposable income, foodservice volume is expected to have 3% CAGR over the forecast

period which is slightly lower compared to the average volume growth over the review period.

The slower volume growth could be attributed to increasing production costs. In addition, it is

likely that due to increasing disposable incomes, consumers may begin to prefer more

expensive foodservice outlets compared to those that provide value-for-money.

The fragmented nature of the industry is one of the threats to growth of foodservice

establishments having numerous smaller players that makes competition stiffer. The higher

cost of commodities, labour and management issues and infrastructure problems in rural

areas are among the other factors that may prevent key foodservice companies from

achieving higher growth and expansion.

Efforts will be made to increase foodservice consumption and these will include new product

developments, healthier menu offerings, partnerships with banks/credit card companies for

food promotions, expansion to underserved areas, food trade fairs and exhibitions, discounts

for special occasions and customer loyalty schemes. The performance of foodservice

distributors will rely on the performance of foodservice outlets.

Category Data

Table 1 Foodservice Sales of Packaged Food by Category: Volume 2007-2012

tonnes 2007 2008 2009 2010 2011 2012 Baby Food - - - - - - Bakery 99,169.0 102,594.2 103,188.6 104,770.1 106,493.7 108,332.6



Canned/Preserved Food 29,032.9 31,440.6 33,324.3 35,304.8 37,245.0 39,120.8 Chilled Processed Food 14,398.4 15,622.2 16,559.6 17,470.4 18,396.3 19,316.1 Confectionery 2,762.7 2,829.6 2,880.0 2,938.8 2,999.5 3,062.0 Dairy 47,059.0 47,991.3 48,676.8 49,490.1 50,330.1 51,160.6 Dried Processed Food 63,256.2 66,606.6 68,918.1 71,832.3 74,398.5 76,795.9 Frozen Processed Food 53,056.7 57,841.8 66,349.2 74,528.8 78,882.2 83,226.9 Ice Cream 4,103.3 4,168.4 4,214.5 4,280.6 4,335.0 4,394.0 Meal Replacement - - - - - - Noodles 13,106.1 13,715.9 14,285.0 14,848.9 15,390.8 15,924.3 Oils and Fats 108,258.0 114,537.2 120,118.1 126,599.9 132,181.1 137,992.6 Pasta 32,241.8 34,176.4 35,543.4 37,320.6 38,813.4 40,171.9 Ready Meals 245.2 253.7 260.7 270.2 278.9 286.7 Sauces, Dressings and 45,369.0 47,812.1 49,855.5 51,797.6 53,658.2 55,443.4 Condiments Snack Bars - - - - - - Soup 333.2 348.2 360.5 374.2 389.1 405.4 Spreads 3,540.7 3,593.3 3,607.8 3,642.5 3,683.4 3,729.0 Sweet and Savoury Snacks 16,813.2 17,764.6 18,424.1 19,017.0 19,535.0 20,005.1 Impulse and Indulgence 58,136.0 60,216.1 61,210.5 62,554.1 63,923.5 65,295.1 Products Nutrition/Staples 286,754.0 299,793.5 308,739.3 319,936.1 329,949.2 340,090.3 Meal Solutions 142,460.2 153,344.7 166,736.9 179,774.5 188,879.5 197,830.4 Packaged Food 486,819.2 512,801.9 536,116.5 561,672.7 582,138.1 602,578.9

Source: Euromonitor International from official statistics, trade associations, trade press, company research, store checks, trade interviews, trade sources

Table 2 Foodservice Sales of Packaged Food by Category: % Volume Growth 2007-2012

% volume growth 2011/12 2007-12 CAGR 2007/12 Total Baby Food - - - Bakery 1.7 1.8 9.2 Canned/Preserved Food 5.0 6.1 34.7 Chilled Processed Food 5.0 6.1 34.2 Confectionery 2.1 2.1 10.8 Dairy 1.7 1.7 8.7 Dried Processed Food 3.2 4.0 21.4 Frozen Processed Food 5.5 9.4 56.9 Ice Cream 1.4 1.4 7.1 Meal Replacement - - - Noodles 3.5 4.0 21.5 Oils and Fats 4.4 5.0 27.5 Pasta 3.5 4.5 24.6 Ready Meals 2.8 3.2 16.9 Sauces, Dressings and Condiments 3.3 4.1 22.2 Snack Bars - - - Soup 4.2 4.0 21.7 Spreads 1.2 1.0 5.3 Sweet and Savoury Snacks 2.4 3.5 19.0 Impulse and Indulgence Products 2.1 2.3 12.3 Nutrition/Staples 3.1 3.5 18.6 Meal Solutions 4.7 6.8 38.9 Packaged Food 3.5 4.4 23.8




Table 3 Forecast Foodservice Sales of Packaged Food by Category: Volume 2012-2017

tonnes 2012 2013 2014 2015 2016 2017 Baby Food - - - - - - Bakery 108,332.6 110,291.1 112,397.6 114,659.1 117,083.7 119,712.2 Canned/Preserved Food 39,120.8 40,964.4 42,819.6 44,684.8 46,549.7 48,423.8 Chilled Processed Food 19,316.1 20,243.3 21,154.2 22,063.9 22,946.4 23,818.4 Confectionery 3,062.0 3,122.6 3,187.8 3,256.2 3,327.8 3,404.0 Dairy 51,160.6 51,994.0 52,834.1 53,709.2 54,607.6 55,535.3 Dried Processed Food 76,795.9 78,926.1 80,955.8 82,813.0 84,564.0 86,121.8 Frozen Processed Food 83,226.9 87,587.5 91,875.2 95,730.4 99,584.6 103,357.7 Ice Cream 4,394.0 4,457.8 4,530.7 4,613.1 4,705.5 4,808.4 Meal Replacement - - - - - - Noodles 15,924.3 16,434.4 16,924.5 17,394.7 17,858.0 18,301.4 Oils and Fats 137,992.6 144,136.5 150,710.6 157,836.8 165,646.0 174,192.8 Pasta 40,171.9 41,377.1 42,535.6 43,599.0 44,601.8 45,493.8 Ready Meals 286.7 294.3 301.2 307.8 313.9 319.9 Sauces, Dressings and 55,443.4 57,127.3 58,736.8 60,296.4 61,812.2 60,702.6 Condiments Snack Bars - - - - - - Soup 405.4 423.1 442.7 463.9 488.3 516.2 Spreads 3,729.0 3,778.5 3,833.3 3,893.2 3,958.4 4,029.3 Sweet and Savoury Snacks 20,005.1 20,435.6 20,817.6 21,156.8 21,456.8 21,721.6 Impulse and Indulgence 65,295.1 66,675.4 68,069.9 69,486.1 70,931.2 72,414.9 Products Nutrition/Staples 340,090.3 350,377.8 361,105.9 372,357.2 384,322.0 397,011.5 Meal Solutions 197,830.4 206,672.2 215,363.4 223,582.1 231,731.2 237,175.8 Packaged Food 602,578.9 623,064.7 643,853.3 664,713.0 686,242.7 705,828.0

Source: Euromonitor International from trade associations, trade press, company research, trade interviews, trade sources

Table 4 Forecast Foodservice Sales of Packaged Food by Category: % Volume Growth 2012-2017

% volume growth 2016/17 2012-17 CAGR 2012/17 Total Baby Food - - - Bakery 2.2 2.0 10.5 Canned/Preserved Food 4.0 4.4 23.8 Chilled Processed Food 3.8 4.3 23.3 Confectionery 2.3 2.1 11.2 Dairy 1.7 1.7 8.6 Dried Processed Food 1.8 2.3 12.1 Frozen Processed Food 3.8 4.4 24.2 Ice Cream 2.2 1.8 9.4 Meal Replacement - - - Noodles 2.5 2.8 14.9 Oils and Fats 5.2 4.8 26.2 Pasta 2.0 2.5 13.2 Ready Meals 1.9 2.2 11.6 Sauces, Dressings and Condiments -1.8 1.8 9.5 Snack Bars - - - Soup 5.7 5.0 27.3



Spreads 1.8 1.6 8.1 Sweet and Savoury Snacks 1.2 1.7 8.6 Impulse and Indulgence Products 2.1 2.1 10.9 Nutrition/Staples 3.3 3.1 16.7 Meal Solutions 2.3 3.7 19.9 Packaged Food 2.9 3.2 17.1


IMPULSE AND INDULGENCE PRODUCTS – KEY TRENDS AND DEVELOPMENTS

Headlines

Impulse and indulgence products is expected to have value growth of 5% in 2012

Smaller pack sizes continues to be a key strategy for manufacturers

Savoury biscuits and crackers is expected to have the highest value growth in 2012 of 9%

Impulse and indulgence products is expected to have moderate average unit price growth in

2012

Universal Robina Corp is expected to lead in 2012 with 20% value share

Impulse and indulgence products is expected to have a constant value CAGR of 2% over the

forecast period

Trends

Smaller pack sizes continued to be a key driver of growth in impulse and indulgence products.

For example, miniature and fun size bars continued to be key sellers in chocolate

confectionery. Sweet biscuits also used this strategy by creating miniature sizes. This strategy

allows manufacturers to target the lower-income segment who were able to purchase the

products with smaller cash layout. Manufacturers are also able to distribute their products

more effectively through sari-sari stores (traditional street stores in the Philippines) using this

strategy.

Impulse and indulgence products had modest value growth in 2012 which is an improvement

since the economic recession in 2009 due to better economic performance and stable

remittances. Higher disposable income among all consumer segment due to higher wages

and employment supported the snacking habits and consumption of impulse and indulgence

products despite increased unit prices. The category also benefited from the presence of

affordable brands and small pack size impulse and indulgence products which are attractive

to low- and middle-income consumers.

Savoury biscuits and crackers is expected to have the largest value growth in 2012 of 9% due

to its low average unit price compared to other impulse and indulgence products. Its low price

positioning allowed all income segments to be able to afford savoury biscuits and crackers.

Savoury biscuits and crackers brands tend to cater to a wide target market including children,

students, parents/families and fitness enthusiasts. Its strong nationwide distribution along with

celebrity-led advertisements assisted growth.

Gum is expected to have the slowest value growth with a decline of less than -1% in 2012.

Gum was affected by the health and wellness trend which reduced consumption of high-sugar

foods, stiffer competition due to more presence of imported confectionery and higher tobacco



tax which decreased cigarette smoking and hence gum consumption. Cheaper sugar

confectionery brands were also used as a substitute by consumers.

Impulse and indulgence products continue to have strong sales through other grocery

retailers. This was attributed to the strong sales in sari-sari stores (traditional street stores

typically found in residential areas). Sari-sari stores tend to sell impulse and indulgence

products on a per piece basis, making it more affordable for consumers. For example, sari-

sari store owners purchase sugar confectionery in a bulk pack of 50 pieces then resell this

same product in individual pieces.

The average unit price is expected to increase by 3% in 2012 due to higher operating costs

and the increase in commodity/ingredients prices and electricity costs. The increase,

however, is lower than the inflation rate of food products as brand manufacturers limited price

adjustments to encourage sales amidst stiffer competition among existing, local and imported

brands.


Universal Robina Corp is expected to lead impulse and indulgence products in 2012 with a

20% value share mainly due to the high production and value shares of its Jack „n‟ Jill brands.

Universal Robina Corp‟s brands are present in several impulse and indulgence categories in

the Philippines including sugar confectionery, chocolate confectionery and biscuits. Many of

its brands are leaders in their respective categories.

Monde Nissin Corp is expected to have strong value growth in 2012 due to its leadership and

rapid development in biscuits which accounted for 25% of impulse and indulgence volume

sales and 21% of value. Monde Nissin Corp has a wide biscuits product portfolio and ran the

most number of television commercials. Its brands are widely-known and have strong brand

equity among consumers.

Laura's Food Product Corp experienced the fastest growth in 2012. Its value sales grew by

nearly 17%. Its strong growth can be attributed mainly by its small value share in the market,

allowing its brands to have large growth potentials. In addition, its low price positioning and

improved distribution throughout the Philippines boosted its sales performance in 2012.

Due to the better economic situation compared to 2008 and 2009, impulse and indulgence

brand manufacturers had a better sales performance in 2012. The availability of small pack

size was a trend since 2008 during the difficult economic period but continued to be an

effective strategy in 2012 as it served the low-income consumers and hence helped increase

sales. The better economic conditions also enabled brand manufacturers to implement more

marketing activities that helped improve consumption.

New product developments in 2012 were mainly in biscuits, baked goods, confectionery and

ice cream. Products introduced were from Gardenia Bakeries Philippines Inc, Goldilocks

Bakeshop, Red Ribbon Bakeshop, Suncrest Foods Incorporated, Universal Robina Corp,

Monde Nissin Corp, San Miguel Purefoods Co Inc, Unilever RFM Ice Cream Inc and Nestlé

Philippines Inc.

Key new products were Cadbury Zip which placed competitive pressure on Kit Kat chocolate

confectionery; the Gardenia Hotdog Cheezey Pocket Pies, Gardenia‟s Chunky Chicken

Pandesal, GrossiniRolls with Bavarian filling, For Him Greeting Cake, Triple Chocolate Roll,

Butter Mamon and Chocolate cake which added significant volume and value sales to baked

goods; Snitch chocolate bar, Jack „n‟ Jill Filled Stix Nutty Choco Delight and the Ace Cracker

Chocolate Chip Cookies which added more choices in biscuits and contributed to the fast

growth of chocolate-coated biscuits and biscuits in general.



The impulse and indulgence ad campaigns in 2012 appealed to taste, celebrations, and

needs of particular target markets such as children, students and families. Many

advertisements were also celebrity-led and communication of products‟ health benefits

became a common tactic to induce consumption. Some examples include “Overflowing Pure

Chocolate Taste”; “Go Bananas over the newest and craziest treat from Kimy” and “Mas

Masaya Talaga Pag May Selecta” (Life is happier with Selecta). Advertisements promoting

contests and product raffles were also visible in 2012.

Impulse and indulgence products in standard and economy price bands were the best-

performing brands in 2012 due to their affordability and good quality. This was due to the

income profile of Filipino consumers where around 70% of the population belongs to low-

income and middle-income consumers. Private label made minimal impact on impulse and

indulgence products in 2012.

Domestic brand manufacturers dominate impulse and indulgence due to the leadership of

Universal Robina Corp, Monde Nissin Corp and Liwayway Marketing Corp. The fragmented

nature of the industry led to the presence of numerous domestic brand manufacturers which

contributed to the higher value share of the local companies.

Prospects

Health and wellness will be a stronger trend in impulse and indulgence products over the

forecast period as reflected in the launch in 2012 of healthier variants in ice cream, cakes,

biscuits and snack bars. Child-friendly shapes and mini-size impulse and indulgence products

are also likely to increase in volume and value as a result of the companies‟ targeting their

marketing at schoolchildren and students. The government will continue to impact the

category through its encouragement to fortify products.

Impulse and indulgence is expected to have a constant value 2% CAGR over the forecast

period which is faster compared to that of the review period. This is due to the expected

sustainable level of impulse and indulgence products consumption as a result of stable

economic growth over the forecast period. Healthier variants of impulse and indulgence

products are likely to be a key driver for growth over the forecast period.

A potential threat is the growing trend of weight management which may reduce the snacking

habits of Filipinos. However, this trend also opens opportunities to target this growing niche

market. More manufacturers are likely to develop healthier brand variants such as low fat,

reduced sugar or those fortified with vitamins.

Marketing activities are unlikely to change over the forecast period. Traditional marketing

activities tend to be the most effective for impulse and indulgence products. These include

point of sales advertising, print ads and multimedia advertisements. These strategies tend to

draw attention and encourage customers to recall brand names. Players also tend to compete

by keeping unit prices low and by shrinking package sizes. Smaller pack sizes encourage

purchases among the lower-income segment because less money is required to purchase the

product.

The unit price of impulse and indulgence products is likely decline slightly in constant terms

due to the expected price competition among the brands which will lead to greater discounts.

Lower-cost brands or variants may also be developed over the forecast period. Consumers

are likely to buy lower-cost brands in order to make their budgets go further.

New product developments are likely to only produce short-term growth. Impulse and

indulgence tends to be volatile and consumers tend to experiment when new brands are

launched. It is inevitable that newer and more interesting brands will be launched over the

forecast period which is likely to take shares from existing brands.



Category Data

Table 5 Sales of Impulse and Indulgence Products by Category: Volume 2007-2012

tonnes 2007 2008 2009 2010 2011 2012 Confectionery 85,134.0 87,033.6 88,018.8 89,274.7 88,958.4 89,161.6 Pastries 43,018.6 43,649.3 43,624.1 44,203.1 44,919.6 45,692.6 Cakes 29,731.4 30,177.4 30,085.5 30,358.2 30,629.4 30,901.1 Biscuits 107,816.0 114,047.0 119,204.4 124,693.4 130,516.6 136,773.6 Ice Cream 41,289.0 42,061.2 42,755.1 43,851.7 45,770.9 47,903.3 Sweet and Savoury Snacks 109,933.1 116,604.8 121,230.0 125,971.5 131,247.7 136,541.3 Snack Bars 17.9 19.6 16.8 16.1 15.9 16.1 Impulse and Indulgence 416,939.8 433,592.8 444,934.7 458,368.7 472,058.6 486,989.8 Products


Table 6 Sales of Impulse and Indulgence Products by Category: Value 2007-2012

Ps million 2007 2008 2009 2010 2011 2012 Confectionery 26,543.1 28,018.1 28,808.9 29,676.7 29,892.5 30,428.3 Pastries 5,398.4 5,827.8 6,093.4 6,382.2 6,720.2 7,103.6 Cakes 7,625.5 8,067.5 8,302.0 8,578.2 8,896.0 9,202.5 Biscuits 17,444.1 18,891.4 20,038.5 21,355.2 22,906.4 24,686.1 Ice Cream 7,410.4 7,889.8 8,176.7 8,547.8 8,914.2 9,420.3 Sweet and Savoury Snacks 27,047.2 29,601.8 31,896.2 33,340.0 35,394.4 37,682.2 Snack Bars 12.9 14.8 12.6 12.2 12.3 12.4 Impulse and Indulgence 91,481.5 98,311.1 103,328.2 107,892.4 112,736.0 118,535.3 Products


Table 7 Sales of Impulse and Indulgence Products by Category: % Volume Growth 2007-2012

% volume growth 2011/12 2007-12 CAGR 2007/12 Total Confectionery 0.2 0.9 4.7 Pastries 1.7 1.2 6.2 Cakes 0.9 0.8 3.9 Biscuits 4.8 4.9 26.9 Ice Cream 4.7 3.0 16.0 Sweet and Savoury Snacks 4.0 4.4 24.2 Snack Bars 0.7 -2.1 -10.1 Impulse and Indulgence Products 3.2 3.2 16.8




Table 8 Sales of Impulse and Indulgence Products by Category: % Value Growth 2007-2012

% current value growth 2011/12 2007-12 CAGR 2007/12 Total Confectionery 1.8 2.8 14.6 Pastries 5.7 5.6 31.6 Cakes 3.4 3.8 20.7 Biscuits 7.8 7.2 41.5 Ice Cream 5.7 4.9 27.1 Sweet and Savoury Snacks 6.5 6.9 39.3 Snack Bars 0.9 -0.8 -4.0 Impulse and Indulgence Products 5.1 5.3 29.6


Table 9 Company Shares of Impulse and Indulgence Products 2008-2012

% retail value rsp Company 2008 2009 2010 2011 2012 Universal Robina Corp 19.3 19.6 19.8 20.2 20.4 Monde Nissin Corp 5.7 6.3 6.6 6.8 7.0 Nestlé Philippines Inc 5.3 5.2 4.7 4.5 4.4 Liwayway Marketing Corp 3.8 4.0 4.0 4.1 4.2 Unilever RFM Ice Cream 3.5 3.5 3.7 3.7 3.8 Inc Kraft Foods 1.5 1.5 3.8 3.6 3.6 (Philippines) Inc Food Industries Inc 2.7 2.7 2.7 2.7 2.7 Republic Biscuit Corp 2.3 2.4 2.4 2.5 2.5 Tobi Marketing Inc 2.4 2.4 2.4 2.4 2.4 Columbia International 2.2 2.1 2.1 2.1 2.1 Food Products Inc JBC Corp 1.6 1.6 1.6 1.7 1.7 Perfetti Van Melle 1.6 1.7 1.7 1.6 1.6 Philippines Inc Delfi Foods Philippines 1.4 1.5 1.5 1.6 1.5 Inc GFI Enterprises Inc 1.4 1.4 1.4 1.5 1.5 Wrigley Philippines Inc 1.6 1.6 1.6 1.5 1.5 SPI Corp 1.8 1.8 1.8 1.6 1.5 Regent Foods Corp 1.4 1.4 1.4 1.4 1.5 Mars Philippines Inc 1.4 1.4 1.4 1.4 1.4 Goldilocks Bake Shop Inc 0.9 0.9 1.0 1.0 1.1 Leslie Corp 0.9 0.9 1.0 1.0 1.0 Hershey Philippines Inc 1.3 1.2 1.1 1.0 1.0 Procter & Gamble 0.8 0.8 0.8 0.9 0.9 Philippines Inc Big E Food Products 0.8 0.8 0.8 0.8 0.8 Suncrest Foods Inc 0.7 0.7 0.7 0.7 0.7 Red Ribbon Bake Shop Inc 0.6 0.6 0.7 0.7 0.7 San Miguel Pure Foods 0.7 0.7 0.7 0.7 0.7 Co Inc Frito-Lay Co 0.6 0.6 0.6 0.7 0.7 Grand Alphatech 0.6 0.6 0.6 0.6 0.6 International Corp Martinez & Co Inc, 0.7 0.6 0.6 0.6 0.6



Felicisimo Ferrero Group 0.6 0.5 0.5 0.5 0.5 Cadbury Adams 2.1 2.1 - - - Philippines Inc First Choice Food Corp 1.2 0.5 - - - Artisanal 7.0 6.8 6.7 6.6 6.4 Others 19.5 19.3 19.4 19.3 18.9 Total 100.0 100.0 100.0 100.0 100.0


Table 10 Brand Shares of Impulse and Indulgence Products 2009-2012

% retail value rsp Brand Company 2009 2010 2011 2012 Jack 'n' Jill Universal Robina Corp 15.3 15.6 15.9 16.2 Sky Flakes Monde Nissin Corp 3.2 3.4 3.5 3.7 Selecta Unilever RFM Ice Cream Inc 3.1 3.3 3.3 3.4 Oishi Liwayway Marketing Corp 3.0 3.0 3.0 3.1 Nagaraya Food Industries Inc 2.7 2.7 2.7 2.7 Tobi Tobi Marketing Inc 2.3 2.3 2.3 2.3 Maxx Universal Robina Corp 2.4 2.4 2.3 2.2 Rebisco Republic Biscuit Corp 1.7 1.7 1.8 1.8 Happy JBC Corp 1.6 1.6 1.7 1.7 Nestlé Nestlé Philippines Inc 1.6 1.5 1.5 1.6 Growers GFI Enterprises Inc 1.4 1.4 1.5 1.5 Kit Kat Nestlé Philippines Inc 1.3 1.4 1.3 1.3 Goldilocks Goldilocks Bake Shop Inc 0.9 1.0 1.0 1.1 Leslie's Leslie Corp 0.9 1.0 1.0 1.0 Mentos Perfetti Van Melle 1.0 1.1 1.0 1.0 Philippines Inc Eggnog Monde Nissin Corp 0.9 0.9 0.9 0.9 Goya Delfi Foods Philippines 0.8 0.9 0.9 0.9 Inc Pringles Procter & Gamble 0.8 0.8 0.9 0.9 Philippines Inc Regent Regent Foods Corp 0.9 0.9 0.9 0.9 Bingo Monde Nissin Corp 0.7 0.7 0.8 0.8 Lemon Square Big E Food Products 0.8 0.8 0.8 0.8 Fita Monde Nissin Corp 0.7 0.7 0.7 0.8 Granny Goose Universal Robina Corp 0.7 0.7 0.7 0.7 Red Ribbon Red Ribbon Bake Shop Inc 0.6 0.7 0.7 0.7 Doublemint Wrigley Philippines Inc 0.7 0.7 0.7 0.7 Magnolia San Miguel Pure Foods 0.7 0.7 0.7 0.7 Co Inc Oreo Kraft Foods 0.6 0.6 0.6 0.6 (Philippines) Inc Chips Delight Grand Alphatech 0.6 0.6 0.6 0.6 International Corp La Pacita Martinez & Co Inc, 0.6 0.6 0.6 0.6 Felicisimo Starr SPI Corp 0.6 0.6 0.6 0.6 Artisanal 6.8 6.7 6.6 6.4 Others 39.8 39.0 38.4 37.9 Total 100.0 100.0 100.0 100.0




Table 11 Forecast Sales of Impulse and Indulgence Products by Category: Volume 2012-2017

tonnes 2012 2013 2014 2015 2016 2017 Confectionery 89,161.6 90,833.4 92,632.4 94,581.1 96,676.8 98,921.6 Pastries 45,692.6 46,525.9 47,423.6 48,390.5 49,432.1 50,554.7 Cakes 30,901.1 31,173.4 31,446.5 31,720.6 31,996.4 32,274.2 Biscuits 136,773.6 143,178.9 149,921.7 156,978.7 164,291.7 171,883.3 Ice Cream 47,903.3 48,864.8 49,766.1 50,604.0 51,376.6 52,080.2 Sweet and Savoury Snacks 136,541.3 141,908.0 147,074.1 152,344.3 157,642.3 163,222.1 Snack Bars 16.1 16.1 16.1 16.1 16.2 16.3 Impulse and Indulgence 486,989.8 502,500.4 518,280.5 534,635.3 551,432.1 568,952.4 Products


Table 12 Forecast Sales of Impulse and Indulgence Products by Category: Value 2012-2017

Ps million 2012 2013 2014 2015 2016 2017 Confectionery 30,428.3 30,418.7 30,518.5 30,735.1 31,052.0 31,443.0 Pastries 7,103.6 7,129.3 7,174.9 7,235.8 7,312.4 7,415.5 Cakes 9,202.5 9,168.8 9,163.6 9,182.9 9,226.6 9,297.1 Biscuits 24,686.1 25,595.0 26,581.3 27,651.8 28,788.3 30,030.7 Ice Cream 9,420.3 9,583.8 9,738.9 9,887.3 10,023.7 10,158.5 Sweet and Savoury Snacks 37,682.2 38,994.1 40,340.8 41,684.8 43,060.9 44,430.3 Snack Bars 12.4 12.0 11.7 11.4 11.2 11.1 Impulse and Indulgence 118,535.3 120,901.8 123,529.7 126,389.1 129,475.3 132,786.3 Products


Table 13 Forecast Sales of Impulse and Indulgence Products by Category: % Volume Growth 2012-2017

% volume growth 2016/17 2012-17 CAGR 2012/17 Total Confectionery 2.3 2.1 10.9 Pastries 2.3 2.0 10.6 Cakes 0.9 0.9 4.4 Biscuits 4.6 4.7 25.7 Ice Cream 1.4 1.7 8.7 Sweet and Savoury Snacks 3.5 3.6 19.5 Snack Bars 0.5 0.3 1.3 Impulse and Indulgence Products 3.2 3.2 16.8




Table 14 Forecast Sales of Impulse and Indulgence Products by Category: % Value Growth 2012-2017

% constant value growth 2012-17 CAGR 2012/17 TOTAL Confectionery 0.7 3.3 Pastries 0.9 4.4 Cakes 0.2 1.0 Biscuits 4.0 21.7 Ice Cream 1.5 7.8 Sweet and Savoury Snacks 3.3 17.9 Snack Bars -2.1 -10.1 Impulse and Indulgence Products 2.3 12.0


MEAL SOLUTIONS – KEY TRENDS AND DEVELOPMENTS

Headlines

Meal solutions is expected to have value growth of 7% in 2012

Convenience continues to drive growth

Canned/preserved meat and meat products is expected to have the fastest volume growth at

5%

Average unit price is expected to increase by 3%

The Purefoods-Hormel Co Inc is expected to lead in 2012 with 22% value share

Meal solutions is expected to grow at a constant value 3% CAGR over the forecast period

Trends

The busier lifestyles of consumers continued to drive growth in 2012. The growing business

process outsourcing industry forces its work force to turn to more convenient meal formats

due its demanding work schedules. As a result, many consumers have less time to cook at

home. The growing number of single person households also encouraged a lifestyle of using

meal solutions as meal alternatives as opposed to purchasing fresh food.

Meal solutions in the Philippines was stable in 2012 with expected value growth of 7%.

Growth was moderate in all categories as demand for these goods continued to be fuelled by

the expansion of hypermarkets and supermarkets throughout the country. Household

disposable incomes continued to rise due to more job creation and higher wages in 2012

together with the increasing number of dual income households.

Canned/preserved meat and meat products is expected to have the fastest volume growth in

2012 at 5%. Demand for canned/preserved meat and meat products in the Philippines grew

due to the stronger economic performance in 2012. More households in the lower-income

segment were able to afford these products on a more regular basis. In addition, new product

developments such as Highlands Corned Beef assisted in driving growth.

Dessert mixes is expected to have the slowest volume growth in 2012 at 3%. The slow growth

of dessert mixes can be attributed to its limited target market of middle- and upper-income

households. The high price of dessert mixes tends to limit growth. Many consumers also



prefer to purchase ready-made desserts in foodservice outlets instead of having to prepare

them at home.

The average unit price is expected to increase by 3% in 2012. The growth was limited by the

preference for cheaper brands. Consumers continued to buy cheaper local brands such as

Purefoods, CDO and Argentina. Competition among these local brands limited unit price

growth even further as many players used price promotions to increase sales.

Smaller packaging sizes continued to grow in volume in meal solutions and remained an

important tool to capture sales. Many consumers in the lower-income segment prefer to

purchase these smaller pack sizes to maximise their budgets. Smaller pack sizes also allow

for less money to purchase products. In addition, pouch packaging continued to become a

more important packaging type for meal solutions manufacturers in the Philippines. These are

normally cheaper packaging alternatives and allow companies to sell at lower prices and

increase profitability.


The Purefoods-Hormel Co Inc is expected to continue to lead meal solutions in 2012 with a

22% value share. This is due to the company‟s strong performance in frozen processed food,

the largest value contributor in meal solutions. The Purefoods-Hormel Co Inc also dominated

chilled processed food. Its strong position in the market can be attributed to its persistent

multimedia marketing campaigns which created strong brand equity among consumers over

the years. The strong sales performance was harnessed through its widespread distribution

throughout the country. The company also leveraged on its brand equity as it considered as

one of the pioneer companies‟ in the Philippines.

Successful strategies used by manufacturers include diversifying company brand portfolios.

Companies such as San Miguel Pure Foods Co Inc, Century Canning Corp and Pacific Meat

Co Inc offered a wide range of pack sizes and pack types in order to sell at various price

points and capture a larger market base. These companies offer smaller pack sizes, marketed

as budget packs, to capture the lower-income segment. At the same time, they provided

consumers with larger pack sizes for those who prefer to get value-for-money. They also sell

premium varieties typically made of higher-quality ingredients to target those with larger

disposable incomes.

Some of the notable launches in 2012 include Knorr Rice Mate and Highlands Corned Beef.

Knorr Rice Mate was developed by Unilever Foods Philippines and was launched in the first

quarter of 2012. The product is used as an additive to rice and claims to make rice softer,

whiter and of better quality. The brand was priced at Ps2.50 for 5g sachet size, making it

affordable for low-income households. Highlands Corned Beef was developed by CDO

Foodsphere Inc and was launched in the last quarter of 2011. The brand is made from Angus

beef and claims to be of better quality compared to competitors. The brand has different pack

sizes available ranging from 100 to 260g food cans. The brand targets mid-level income

households.

Many of the meal solutions brand manufacturers used celebrities to endorse their products

through multimedia advertisements. The majority used this strategy to support new product

launches. Noticeable themes are those that target children and families. Many emphasised

the health benefits of their products. Online marketing was also extensively used to announce

new product launches and communicate promotions. These were made through social

networking sites and online blogging.

Standard brands were the best-performing as they are mostly affordable and of good quality

and therefore attracted mass consumers. Economy brands also performed well but not as fast

as standard brands as they sometimes are of lower quality. Premium brands had slower



growth due to their high price which makes them less affordable to the middle- and lower-

income groups. Private label continued to account for a small percentage of the market.

Private label continued to have difficulty in competing with established brand names in the

market.

Domestic manufacturers continued to contribute the bulk of value sales in meal solutions.

Domestic companies such as The Purefoods-Hormel Co Inc, CDO Foodsphere Inc, and

Century Canning Corp have a clearer understanding of the Philippines market and react

faster to consumer demands. Nonetheless, international brands remain competitive in other

categories such as sauces, dressing and condiments as a result of their early entry. Some

international companies were able to establish an early lead.

Prospects

Health and wellness is expected to be a stronger trend over the forecast period which may

negatively affect meal solutions despite the convenience it brings as it is dominated by foods

known to contain preservatives. As a result, the category‟s forecasted volume CAGR is

expected to be 3%. This is lower than the review period volume CAGR of 5%. Manufacturers

are likely to develop healthier variants to renew growth.

Despite the expected slowdown in volume growth, demand for meal solutions is expected to

continue growing. This will be buoyed by the continued demand for more convenient

products. The busier lifestyles in the Philippines and the growing number of working parents

are likely to keep demand stable. The shifting consumer lifestyles are likely to support growth

of meal solutions products.

The main potential threat to growth of meal solutions is consumer preference for purchasing

fresh food and cook meals at home. Many households perceive home-cooked meals as

healthier and cheaper. Affordable labour cost for house help allows many middle-income

households to continue cooking at home. Another possible threat to growth is that many

young working adults are beginning to prefer to eat out at foodservice establishments.

Unit prices are expected to decline slightly in constant terms over the forecast period. Due to

the high number of low-income households in the Philippines the demand for value-for-money

products is likely to remain strong. Major players are also likely to keep unit prices stable in

order to stay competitive. Price promotions are likely to be the most common promotional

activity over the forecast period.

Knorr Rice Mate and Highlands Corned Beef are expected to have moderate growth over the

forecast period. The high consumption of rice in the Philippines indicates that there is likely to

be demand for products such as Knorr Rice Mate. Knorr Rice Mate is also a unique product

and offers new benefits that other seasonings do not provide. Highlands Corned Beef is likely

to find demand among middle-income consumers who demand higher-quality products. Its

price is also cheaper compared to imported brands and is likely to take some market share

from imported brands.

Category Data

Table 15 Sales of Meal Solutions by Category: Volume 2007-2012

'000 tonnes 2007 2008 2009 2010 2011 2012 Ready Meals 10.7 11.2 11.6 12.0 12.6 13.1 Canned/Preserved Food 200.0 212.9 223.0 234.5 245.6 256.6



Frozen Processed Food 140.4 148.0 153.9 160.4 169.3 176.2 Dessert Mixes 0.3 0.3 0.4 0.4 0.4 0.4 Dinner Mixes - - - - - - Chilled Processed Food 75.4 80.0 82.8 86.5 89.8 92.9 Sauces, Dressings and 168.9 178.9 187.7 195.8 203.7 211.1 Condiments Soup 3.6 3.8 3.9 4.0 4.2 4.3 Meal Solutions 599.3 635.1 663.3 693.6 725.5 754.7


Table 16 Sales of Meal Solutions by Category: Value 2007-2012

Ps million 2007 2008 2009 2010 2011 2012 Ready Meals 2,237.2 2,438.2 2,570.0 2,752.9 2,960.6 3,204.4 Canned/Preserved Food 22,689.1 25,078.2 26,874.1 28,807.3 30,976.9 33,251.3 Frozen Processed Food 20,950.0 22,943.7 24,450.9 25,920.4 28,148.2 30,208.5 Dessert Mixes 111.1 117.2 122.4 128.6 135.6 142.4 Dinner Mixes - - - - - - Chilled Processed Food 13,005.1 13,785.4 14,336.8 15,053.6 15,881.6 16,834.5 Sauces, Dressings and 17,590.8 19,062.9 20,158.6 21,239.5 22,425.2 23,721.8 Condiments Soup 1,035.5 1,123.0 1,220.3 1,317.1 1,423.7 1,540.4 Meal Solutions 77,618.8 84,548.4 89,733.1 95,219.4 101,951.8 108,903.3


Table 17 Sales of Meal Solutions by Category: % Volume Growth 2007-2012

% volume growth 2011/12 2007-12 CAGR 2007/12 Total Ready Meals 4.5 4.2 22.7 Canned/Preserved Food 4.5 5.1 28.3 Frozen Processed Food 4.1 4.7 25.5 Dessert Mixes 3.2 3.0 15.7 Dinner Mixes - - - Chilled Processed Food 3.5 4.3 23.2 Sauces, Dressings and Condiments 3.7 4.6 25.0 Soup 3.4 3.7 19.7 Meal Solutions 4.0 4.7 25.9


Table 18 Sales of Meal Solutions by Category: % Value Growth 2007-2012

% current value growth 2011/12 2007-12 CAGR 2007/12 Total Ready Meals 8.2 7.5 43.2 Canned/Preserved Food 7.3 7.9 46.6 Frozen Processed Food 7.3 7.6 44.2 Dessert Mixes 5.0 5.1 28.2



Dinner Mixes - - - Chilled Processed Food 6.0 5.3 29.4 Sauces, Dressings and Condiments 5.8 6.2 34.9 Soup 8.2 8.3 48.8 Meal Solutions 6.8 7.0 40.3


Table 19 Company Shares of Meal Solutions 2008-2012

% retail value rsp Company 2008 2009 2010 2011 2012 Purefoods-Hormel Co 23.8 22.3 21.7 22.2 22.0 Inc, The CDO Foodsphere Inc 5.4 6.3 6.8 7.1 7.3 Century Canning Corp 6.6 6.8 7.0 7.0 7.0 Unilever Foods 4.3 4.5 4.5 4.5 4.5 Philippines (CMC) Pacific Meat Co Inc 3.6 3.7 3.8 3.9 3.9 Ajinomoto Philippines 4.5 4.3 4.2 4.0 3.9 Corp Del Monte Philippines Inc 3.5 3.6 3.7 3.8 3.8 A Tung Chingco Trading 2.3 2.4 2.4 2.4 2.4 RFM Corp 1.9 1.9 1.9 1.9 2.0 New Señorito Frozen 1.5 1.6 1.6 1.7 1.7 Food Co SM Retail Inc 1.6 1.6 1.6 1.6 1.6 Maunlad Canning Corp 1.7 1.7 1.7 1.6 1.6 Dole Philippines Inc 1.6 1.6 1.6 1.6 1.6 Campbell Soup Co 1.4 1.5 1.5 1.6 1.6 Nestlé Philippines Inc 1.5 1.3 1.4 1.3 1.3 Kraft Foods 1.3 1.3 1.2 1.2 1.2 (Philippines) Inc King Sue Ham & Sausage 1.4 1.4 1.2 1.2 1.1 Co Inc Superb Catch Inc 1.0 1.0 1.1 1.1 1.1 Southeast Asia Food Inc 0.9 1.0 1.0 1.0 1.0 Silver Swan 0.9 0.9 0.9 0.9 0.9 Manufacturing Corp Inc Sara Lee Corp 1.0 1.0 1.0 1.0 0.9 UFC Philippines Inc 0.9 0.9 0.9 0.9 0.9 Bambi Foods Mfg Corp 0.7 0.8 0.9 0.9 0.9 Del Monte Foods Co 0.7 0.7 0.8 0.8 0.8 Alson's Aqua 0.6 0.7 0.7 0.7 0.8 Technologies Inc Bagumbuhay Industrial 0.6 0.6 0.7 0.7 0.7 Corp Supervalue Inc 0.6 0.6 0.6 0.7 0.7 HDR Foods Corp 0.7 0.7 0.7 0.7 0.7 B2 Maling Foods Corp 0.7 0.7 0.6 0.6 0.6 Marigold Commodities Corp 0.5 0.5 0.6 0.6 0.6 Others 22.3 22.0 21.7 20.9 20.9 Total 100.0 100.0 100.0 100.0 100.0




Table 20 Brand Shares of Meal Solutions 2009-2012

% retail value rsp Brand Company 2009 2010 2011 2012 Purefoods Purefoods-Hormel Co 22.1 21.5 22.0 21.8 Inc, The CDO CDO Foodsphere Inc 6.3 6.8 7.1 7.3 Argentina Pacific Meat Co Inc 3.7 3.8 3.9 3.9 555 Century Canning Corp 3.7 3.8 3.8 3.8 Ajinomoto Ajinomoto Philippines Corp 4.1 3.9 3.8 3.6 Del Monte Del Monte Philippines Inc 3.1 3.2 3.2 3.2 Century Century Canning Corp 3.1 3.2 3.2 3.2 Ligo A Tung Chingco Trading 2.4 2.4 2.4 2.4 Knorr Unilever Foods 2.1 2.1 2.1 2.1 Philippines (CMC) Swift RFM Corp 1.9 1.8 1.8 1.9 New Señorito New Señorito Frozen 1.6 1.6 1.7 1.7 Food Co SM Bonus SM Retail Inc 1.6 1.6 1.6 1.6 Youngstown Maunlad Canning Corp 1.7 1.7 1.6 1.6 Lady's Choice Unilever Foods 1.6 1.6 1.6 1.6 Philippines (CMC) Campbell's Campbell Soup Co 1.4 1.4 1.4 1.4 Maggi Nestlé Philippines Inc 1.3 1.4 1.3 1.3 King Sue King Sue Ham & Sausage 1.4 1.2 1.2 1.1 Co Inc Dole Dole Philippines Inc 1.1 1.2 1.1 1.1 Seaking Superb Catch Inc 1.0 1.1 1.1 1.1 Sara Lee Sara Lee Corp 1.0 1.0 1.0 0.9 Silver Swan Silver Swan 0.9 0.9 0.9 0.9 Manufacturing Corp Inc Datu Puti Southeast Asia Food Inc 0.8 0.9 0.9 0.9 Bambi Bambi Foods Mfg Corp 0.8 0.9 0.9 0.9 Kraft Kraft Foods 0.9 0.8 0.8 0.8 (Philippines) Inc Del Monte Del Monte Foods Co 0.7 0.8 0.8 0.8 Sarangani Bay Alson's Aqua 0.7 0.7 0.7 0.8 Technologies Inc Master Bagumbuhay Industrial Corp 0.6 0.7 0.7 0.7 Bestfoods Unilever Foods 0.7 0.7 0.7 0.7 Philippines (CMC) SM Bonus Supervalue Inc 0.6 0.6 0.7 0.7 Mother's Best HDR Foods Corp 0.7 0.7 0.7 0.7 Others 26.4 26.1 25.4 25.3 Total 100.0 100.0 100.0 100.0


Table 21 Forecast Sales of Meal Solutions by Category: Volume 2012-2017

'000 tonnes 2012 2013 2014 2015 2016 2017 Ready Meals 13.1 13.8 14.4 15.1 15.9 16.7 Canned/Preserved Food 256.6 267.4 278.1 288.7 299.2 309.7 Frozen Processed Food 176.2 182.8 189.0 194.8 200.2 205.3 Dessert Mixes 0.4 0.4 0.4 0.4 0.4 0.5 Dinner Mixes - - - - - -



Chilled Processed Food 92.9 96.0 99.0 102.1 105.2 108.2 Sauces, Dressings and 211.1 218.2 224.7 230.7 236.4 241.7 Condiments Soup 4.3 4.5 4.6 4.8 5.0 5.2 Meal Solutions 754.7 783.0 810.2 836.6 862.3 887.3


Table 22 Forecast Sales of Meal Solutions by Category: Value 2012-2017

Ps million 2012 2013 2014 2015 2016 2017 Ready Meals 3,204.4 3,341.9 3,489.8 3,649.1 3,821.0 4,007.0 Canned/Preserved Food 33,251.3 34,462.8 35,678.3 36,880.8 38,084.2 39,268.9 Frozen Processed Food 30,208.5 31,084.6 31,928.9 32,749.7 33,531.9 34,245.7 Dessert Mixes 142.4 145.3 148.3 151.6 155.1 158.8 Dinner Mixes - - - - - - Chilled Processed Food 16,834.5 17,339.5 17,842.3 18,341.9 18,837.2 19,326.9 Sauces, Dressings and 23,721.8 24,335.5 24,906.9 25,434.7 25,919.5 26,360.9 Condiments Soup 1,540.4 1,588.5 1,639.0 1,691.8 1,747.4 1,805.6 Meal Solutions 108,903.3 112,298.1 115,633.6 118,899.6 122,096.1 125,173.8


Table 23 Forecast Sales of Meal Solutions by Category: % Volume Growth 2012-2017

% volume growth 2016/17 2012-17 CAGR 2012/17 Total Ready Meals 5.1 4.9 26.8 Canned/Preserved Food 3.5 3.8 20.7 Frozen Processed Food 2.6 3.1 16.5 Dessert Mixes 3.8 3.6 19.3 Dinner Mixes - - - Chilled Processed Food 2.9 3.1 16.5 Sauces, Dressings and Condiments 2.3 2.7 14.5 Soup 3.9 3.7 20.0 Meal Solutions 2.9 3.3 17.6


Table 24 Forecast Sales of Meal Solutions by Category: % Value Growth 2012-2017

% constant value growth 2012-17 CAGR 2012/17 TOTAL Ready Meals 4.6 25.0 Canned/Preserved Food 3.4 18.1 Frozen Processed Food 2.5 13.4 Dessert Mixes 2.2 11.5 Dinner Mixes - - Chilled Processed Food 2.8 14.8 Sauces, Dressings and Condiments 2.1 11.1



Soup 3.2 17.2 Meal Solutions 2.8 14.9


NUTRITION/STAPLES – KEY TRENDS AND DEVELOPMENTS

Headlines

Nutrition/staples is expected to have value growth of 5% in 2012

New product developments continue to emphasise health benefits

Pasta is expected to have the highest value growth in 2012 of 12%

Nutrition/staples is expected to have moderate average unit price increase in 2012

Nestlé Philippines Inc is expected to lead with an 18% value share

Nutrition/staples is expected to have constant value 2% CAGR over the forecast period

Trends

In 2012, there were numerous nutrition/staples products which were marketed as healthier.

Low calorie and low fat products such as Nido Lite were introduced. In yoghurt and sour milk

drinks, Nestlé Acti-V was launched and claimed to regulate bowel movement. The use of

fortifications was also seen in products such as rice and bread.

The expected 5% value growth in 2012 was one of the slowest growth rates compared to the

review period. This is because many of the categories in nutrition/staples are reaching

maturity. Bread, rice and noodles have high penetration in the Philippines significantly

reducing their opportunities for growth. Industries with lower penetration such as those in

dairy face the challenge of increasing awareness among lower-income households. Its higher

average unit prices also create another barrier as consumers are unable to afford these

products on a regular basis.

Pasta is expected to have the highest value growth in 2012 of 12% due to the increasing

interest in it as part of a daily meal rather than a product consumed only occasionally. Pasta is

typically used to substitute rice in the Philippines and is therefore becoming a regular or

weekly meal for middle- and high-income households. Multimedia advertisements featuring

home-cooked pasta encouraged families to cook pasta at home rather than consume it in

foodservice outlets.

Yoghurt and sour milk drinks is expected to have the slowest performance in nutrition/staples

as it is not considered a necessity food product but is regarded as a supplement. Some

yoghurt products performed well such as fruited spoonable yoghurt due it its health benefits

and advertisements. However, the slower sales of pro/prebiotic drinking yoghurt negated its

value growth. Pro/prebiotic manufacturers reduced their marketing campaigns due to the high

awareness of such products in the Philippines.

Nutrition/staples products are mainly distributed in the grocery channels including

supermarkets and hypermarkets, convenience stores and Other grocery retailers.

Supermarkets continued to be a strong channel for distribution while hypermarkets continued

to grow. Other grocery retailers such as sari-sari stores are important to reach the mass

markets as these are a key distribution channel that reaches less-developed areas in the

Philippines.



The products were mostly packed in the usual packaging types that have been used for

years. There is, however, a noticeable increase in the usage of sachet packs particularly in

cheese. Pouches are also gaining share against the metal food can in pasta while small pack

sizes are increasing in volume in spreads, cheese and oils and fats.

There were no major changes to packaging formats for nutrition/staples products in the

Philippines. However, there was one notable development over the review period. Cheez

Whiz and Magnolia began using sachet type packages in order to make its brands more

affordable and to expand its reach further to lower-income households. Magnolia went to the

extent of using a screw cap closure on its sachets to provide consumers with more

convenience.

Average unit prices of nutrition/staples products are expected to increase overall. Pasta and

unpackaged/artisanal bread is expected to have the fastest unit price growths at 7% and 4%

respectively. Consumers of these products continued to switch to higher quality brands. Pasta

saw an increase due to the shift from rice to pasta as more middle-income consumers

became influenced by cooking shows. Unpackaged/artisanal bread saw its unit price growth

due to the growing number of premium unpackaged/artisanal bread manufacturers. Cheese,

on the other hand, saw negligible unit price growth due to the development of cheaper

packaging formats such as the sachet formats of Cheez Whiz and Magnolia. These cheaper

brands captured a stronger following over the review period.


Nestlé Philippines Inc is expected to lead brand manufacturers in 2012 with an 18% value

share. This is due to its large penetration in baby food and dairy products which together

accounts for 50% of all nutrition/staples. The company benefits from having a wide product

portfolio in dairy serving the middle- to high-income households. The company also used

smaller packaging formats to reach lower-income segments. Nestlé Philippines Inc also had

numerous multimedia campaigns which helped promote its products.

RFM Corp is expected to have the fastest growth in 2012 at 16%. Its pasta brand, White King

Fiesta, benefited from the increasing consumer demand for pasta. More consumers became

experimental with culinary arts, influenced by cooking shows. Being one of the lower-priced

brands, many middle-income consumers chose White King in order to extend their budgets.

RFM Corp also benefited from the positive growth of its dairy brand, Selecta.

Distribution remained a key factor to sales of nutrition/staples products in the Philippines. Due

to numerous competitors in the market it was important that manufacturers maximised the

number of distribution channels it used. Many nutrition/staples brands are perceived as

homogeneous, resulting in minimal brand loyalty among consumers. In order to have greater

market reach and increase their chances to sell, manufacturers needed to ensure strong

distribution and acquire prime shelf space in retail outlets.

Notable launches in 2012 included Nido Lite and Cheez Whiz Easy Squeeze. Nido Lite was

launched in the last quarter in 2011 and was the first low fat and low calorie powder milk drink

in the Philippines market. Cheez Whiz Easy Squeeze was launched in the first quarter of

2012. The brand was mainly a packaging innovation for its flagship brand, Cheez Whiz. The

new brand variant used flexible packaging to target the lower-income segments. Its main rival,

Magnolia, launched a similar brand variant at the same time but added a screw closure to the

flexible packaging for differentiation.

Marketing campaigns were used to highlight new product launches in 2012. The bulk of new

product launches such as Nido Lite, Magnolia Cheezee Squeeze and Nestlé Acti-V used TV

commercials to introduce their brands. The use of point of sale advertising was also common



in order to attract impulse purchases. Blog reviews were also used to target the growing

number of internet users in the Philippines.

Standard brands perform better than premium and economy brands in most of

nutrition/staples. Standard brands compete for share in terms of price and product quality.

Private label does well in rice due to the high demand for lower cost rice in the Philippines.

Premium brands that performed well were usually dairy products due to the high number of

imported brands that compete in this segment.

Both multinationals and domestic companies had a strong presence in nutrition/staples in

2012. Nestlé Philippines Inc is expected to lead the multinationals in 2012, contributing to a

large portion of sales for multinational brands. Its early entry in the market resulted in strong

brand equity among consumers giving it a significant advantage. The individual shares of

domestic manufacturers were more fragmented. Domestic manufacturers tend to compete

through price and target similar market segments. However, domestic manufacturers were

able to adapt faster to consumer trends compared to brands that belong to multinational

brands.

Prospects

Nutrition/staples constant value is expected to grow at a 3% CAGR over the forecast period.

The higher growth is expected to be driven by the stronger economic performance in the

Philippines. The better economic outlook is likely to allow consumers to purchase these

products on a more regular basis. In addition, the demand for higher-quality products in

unpackaged/artisanal bread and dairy is expected to continue which is expected to push

stronger value growth.

A potential threat to growth over the forecast period is competition with sales in wet markets.

Wet markets typically sell unpackaged rice at a lower cost and are able to capture a large

portion of the lower-income segment. Similarly, unpackaged noodles are also found in wet

markets in the Philippines. Dairy is faced with the potential problem of not being able to keep

up with demand. A large portion of Philippine dairy is dependent on imported goods.

Company activities are unlikely to change over the forecast period. However, manufacturers

are likely to increase the emphasis of the health benefits of their products in order to leverage

the growing health and wellness trend. Companies are also likely to continue shifting to

smaller package sizes in order to cater to lower-income segments. This would also allow for

ease of distribution to sari-sari stores, a key distribution channel in the Philippines.

Unit prices of nutrition/staples products are expected to remain stable over the forecast

period. Cheese and unpackaged/artisanal bread are anticipated to have the fastest unit price

growth. The demand for higher quality bread as a result of the increasing number of

independent unpackaged/artisanal bread shops is expected to drive average unit prices.

Cheese prices are expected to increase due to the high dependence on imported products

and raw materials. Other products in nutrition/staples are expected to have negligible or

negative average unit price growths due to price competition among the top brands.

Nido Lite is expected to have moderate growth over the forecast period. It is expected to

capture a niche market of health-conscious consumers. Cheez Whiz Easy Squeeze and

Magnolia Cheezee Squeeze are expected to have stronger growth over the forecast period.

Its lower price positioning and more convenient packaging is likely to find stronger demand

among lower-income households. Its new packaging is also likely to make distribution easier

to sari-sari stores and ultimately increase its reach.



Category Data

Table 25 Sales of Nutrition/Staples by Category: Volume 2007-2012

'000 tonnes 2007 2008 2009 2010 2011 2012 Bread 127.3 131.0 130.6 132.0 135.6 139.5 Breakfast Cereals 12.3 12.8 13.2 13.6 14.1 14.6 Dairy 327.1 324.0 325.7 335.8 341.6 344.2 Meal Replacement 1.0 1.1 1.2 1.3 1.3 1.3 Oils and Fats 428.6 449.1 467.3 486.5 506.3 525.0 Baby Food 53.4 53.6 53.3 53.5 53.6 54.0 Spreads 14.2 14.5 14.3 14.4 14.7 15.1 Pasta 66.2 67.4 68.6 70.4 72.5 75.4 Noodles 162.8 164.9 168.7 178.4 189.4 200.1 Rice 86.3 89.3 90.2 91.5 93.4 95.7 Nutrition/Staples 1,279.0 1,307.7 1,333.1 1,377.3 1,422.4 1,464.9


Table 26 Sales of Nutrition/Staples by Category: Value 2007-2012

Ps million 2007 2008 2009 2010 2011 2012 Bread 12,189.6 13,272.7 13,908.3 14,649.2 15,566.6 16,618.8 Breakfast Cereals 2,841.7 3,072.7 3,237.1 3,393.3 3,585.3 3,810.6 Dairy 54,095.0 57,308.7 60,467.0 67,056.1 69,483.4 71,741.9 Meal Replacement 1,242.5 1,431.6 1,535.0 1,667.0 1,753.0 1,831.4 Oils and Fats 33,643.1 36,987.2 39,536.2 41,952.2 44,996.4 48,032.6 Baby Food 26,492.9 29,564.2 30,459.7 31,648.5 32,287.4 32,988.1 Spreads 3,415.9 3,628.4 3,667.1 3,727.3 3,949.7 4,194.4 Pasta 4,229.5 4,969.6 5,764.8 6,514.2 7,295.9 8,134.9 Noodles 17,375.4 18,488.2 19,299.8 20,567.6 22,061.6 23,603.1 Rice 3,587.9 3,910.8 4,047.7 4,169.2 4,398.5 4,662.4 Nutrition/Staples 159,113.4 172,634.2 181,922.7 195,344.5 205,377.8 215,618.2


Table 27 Sales of Nutrition/Staples by Category: % Volume Growth 2007-2012

% volume growth 2011/12 2007-12 CAGR 2007/12 Total Bread 2.9 1.8 9.6 Breakfast Cereals 3.7 3.5 18.9 Dairy 0.8 1.0 5.2 Meal Replacement 2.9 7.1 40.9 Oils and Fats 3.7 4.1 22.5 Baby Food 0.7 0.2 1.0 Spreads 2.5 1.2 6.0 Pasta 4.0 2.7 14.0 Noodles 5.7 4.2 23.0 Rice 2.5 2.1 10.9 Nutrition/Staples 3.0 2.8 14.5




Table 28 Sales of Nutrition/Staples by Category: % Value Growth 2007-2012

% current value growth 2011/12 2007-12 CAGR 2007/12 Total Bread 6.8 6.4 36.3 Breakfast Cereals 6.3 6.0 34.1 Dairy 3.3 5.8 32.6 Meal Replacement 4.5 8.1 47.4 Oils and Fats 6.7 7.4 42.8 Baby Food 2.2 4.5 24.5 Spreads 6.2 4.2 22.8 Pasta 11.5 14.0 92.3 Noodles 7.0 6.3 35.8 Rice 6.0 5.4 29.9 Nutrition/Staples 5.0 6.3 35.5


Table 29 Company Shares of Nutrition/Staples 2008-2012

% retail value rsp Company 2008 2009 2010 2011 2012 Nestlé Philippines Inc 18.4 18.2 18.4 18.3 18.1 Alaska Milk Corp 6.7 7.0 7.9 7.6 7.5 Mead Johnson 7.6 7.5 7.3 7.1 6.9 Philippines Inc San Pablo Manufacturing 6.4 6.6 6.5 6.7 6.9 Corp Monde Nissin Corp 6.0 6.1 6.2 6.4 6.5 International Oil Factory 5.8 5.9 5.7 5.7 5.7 San Miguel Pure Foods 4.4 4.5 4.4 4.5 4.5 Co Inc Wyeth Philippines Inc 3.8 3.6 3.5 3.5 3.4 Kraft Foods 2.9 2.9 2.9 2.9 2.8 (Philippines) Inc Fonterra Brands (Phils) 2.6 2.5 2.6 2.6 2.6 Inc Universal Robina Corp 1.9 1.9 1.9 1.9 2.0 Yakult Philippines Inc 1.8 1.9 1.8 1.8 1.8 Gardenia Philippines Inc 1.5 1.4 1.4 1.6 1.6 RFM Corp 0.7 1.2 1.2 1.5 1.6 Unilever Foods 1.7 1.5 1.5 1.5 1.5 Philippines (CMC) Supervalue Inc 1.3 1.3 1.4 1.4 1.5 Abbott Laboratories 1.2 1.3 1.3 1.3 1.3 (Phils) Inc UFC Philippines Inc 1.1 1.1 1.1 1.1 1.1 Goldilocks Bake Shop Inc 0.7 0.8 0.8 0.8 0.9 SM Retail Inc 0.6 0.6 0.6 0.6 0.6 Agana Circle Enterprises 0.6 0.6 0.6 0.6 0.6 Nissin-Universal Robina 0.8 0.6 0.6 0.6 0.6 Corp



Quaker Oats Asia Inc 0.6 0.6 0.5 0.5 0.6 MLM Foods Inc 0.6 0.6 0.6 0.5 0.6 Ideal Macaroni & 0.4 0.4 0.5 0.5 0.5 Spaghetti Inc Malabon Soap & Oil 0.5 0.5 0.5 0.5 0.5 Industrial Co Inc Zest-O Corp 0.5 0.5 0.5 0.4 0.4 Del Monte Philippines Inc 0.4 0.3 0.4 0.4 0.4 Poms Venture Corp 0.3 0.3 0.3 0.3 0.4 New Zealand Creamery Inc 0.4 0.4 0.4 0.4 0.3 Artisanal 4.2 4.2 4.0 3.9 3.9 Others 13.6 13.2 12.9 12.6 12.5 Total 100.0 100.0 100.0 100.0 100.0


Table 30 Brand Shares of Nutrition/Staples 2009-2012

% retail value rsp Brand Company 2009 2010 2011 2012 Minola San Pablo Manufacturing 6.6 6.5 6.7 6.9 Corp Lucky Me Monde Nissin Corp 6.1 6.2 6.4 6.5 Alaska Alaska Milk Corp 6.3 7.0 6.6 6.5 Baguio International Oil Factory 5.9 5.7 5.7 5.7 Bear Brand Nestlé Philippines Inc 4.9 5.5 5.6 5.6 Milo Nestlé Philippines Inc 4.0 3.8 3.8 3.8 Lactum Mead Johnson 3.6 3.5 3.5 3.4 Philippines Inc Nido Nestlé Philippines Inc 2.3 2.3 2.3 2.3 Magnolia San Miguel Pure Foods 2.2 2.2 2.3 2.2 Co Inc Yakult Yakult Philippines Inc 1.9 1.8 1.8 1.8 Payless Universal Robina Corp 1.8 1.8 1.8 1.8 Anchor Fonterra Brands (Phils) 1.7 1.8 1.8 1.8 Inc Kraft Kraft Foods 1.7 1.7 1.7 1.7 (Philippines) Inc Star San Miguel Pure Foods 1.6 1.6 1.6 1.7 Co Inc Gardenia Gardenia Philippines Inc 1.4 1.4 1.6 1.6 SM Bonus Supervalue Inc 1.3 1.4 1.4 1.5 White King RFM Corp 0.9 1.0 1.2 1.4 Nestlé Nestlé Philippines Inc 1.4 1.3 1.3 1.3 Enfalac Mead Johnson 1.5 1.4 1.4 1.3 Philippines Inc UFC UFC Philippines Inc 1.1 1.1 1.1 1.1 Nan Nestlé Philippines Inc 1.1 1.1 1.1 1.0 Promil Wyeth Philippines Inc 1.1 1.0 1.0 1.0 Nestogen Nestlé Philippines Inc 1.0 0.9 0.9 1.0 Royal Unilever Foods 0.9 0.9 0.9 0.9 Philippines (CMC) Goldilocks Goldilocks Bake Shop Inc 0.8 0.8 0.8 0.9 Anlene Fonterra Brands (Phils) 0.8 0.9 0.9 0.9 Inc Alacta Mead Johnson 0.9 0.8 0.8 0.8 Philippines Inc S-26 Wyeth Philippines Inc 0.9 0.8 0.8 0.8



Carnation Alaska Milk Corp 0.7 0.8 0.8 0.7 Chuckie Nestlé Philippines Inc 0.7 0.7 0.7 0.7 Artisanal 4.2 4.0 3.9 3.9 Others 28.8 28.3 27.8 27.4 Total 100.0 100.0 100.0 100.0


Table 31 Forecast Sales of Nutrition/Staples by Category: Volume 2012-2017

'000 tonnes 2012 2013 2014 2015 2016 2017 Bread 139.5 141.4 143.6 146.1 148.9 152.0 Breakfast Cereals 14.6 15.2 15.8 16.4 17.1 17.8 Dairy 344.2 352.9 361.3 369.3 376.4 382.9 Meal Replacement 1.3 1.4 1.5 1.5 1.6 1.7 Oils and Fats 525.0 544.8 566.4 590.1 616.3 645.1 Baby Food 54.0 54.8 55.8 57.0 58.3 59.7 Spreads 15.1 15.2 15.5 15.7 16.0 16.3 Pasta 75.4 78.7 82.2 86.1 90.4 95.2 Noodles 200.1 210.6 220.7 230.4 240.1 249.6 Rice 95.7 98.4 101.3 104.7 108.3 112.4 Nutrition/Staples 1,464.9 1,513.4 1,564.0 1,617.3 1,673.5 1,732.8


Table 32 Forecast Sales of Nutrition/Staples by Category: Value 2012-2017

Ps million 2012 2013 2014 2015 2016 2017 Bread 16,618.8 16,866.1 17,151.9 17,486.6 17,863.9 18,295.5 Breakfast Cereals 3,810.6 3,916.1 4,039.9 4,178.7 4,338.4 4,520.9 Dairy 71,741.9 73,642.9 75,520.2 77,404.5 79,252.1 80,948.2 Meal Replacement 1,831.4 1,915.6 2,003.7 2,095.7 2,191.6 2,286.1 Oils and Fats 48,032.6 49,372.4 50,832.5 52,423.0 54,162.9 56,064.4 Baby Food 32,988.1 33,266.7 33,709.9 34,315.1 35,034.8 35,826.5 Spreads 4,194.4 4,188.0 4,198.8 4,220.4 4,255.2 4,304.2 Pasta 8,134.9 8,582.3 9,011.5 9,417.0 9,793.7 10,136.4 Noodles 23,603.1 24,467.5 25,320.2 26,175.9 27,015.2 27,855.1 Rice 4,662.4 4,778.9 4,912.7 5,060.1 5,227.1 5,410.1 Nutrition/Staples 215,618.2 220,996.8 226,701.4 232,777.0 239,134.9 245,647.4


Table 33 Forecast Sales of Nutrition/Staples by Category: % Volume Growth 2012-2017

% volume growth 2016/17 2012-17 CAGR 2012/17 Total Bread 2.1 1.7 9.0 Breakfast Cereals 4.2 4.0 21.7 Dairy 1.7 2.2 11.3



Meal Replacement 3.9 4.4 24.0 Oils and Fats 4.7 4.2 22.9 Baby Food 2.5 2.0 10.7 Spreads 2.1 1.6 8.5 Pasta 5.3 4.8 26.3 Noodles 4.0 4.5 24.7 Rice 3.8 3.3 17.5 Nutrition/Staples 3.5 3.4 18.3


Table 34 Forecast Sales of Nutrition/Staples by Category: % Value Growth 2012-2017

% constant value growth 2012-17 CAGR 2012/17 TOTAL Bread 1.9 10.1 Breakfast Cereals 3.5 18.6 Dairy 2.4 12.8 Meal Replacement 4.5 24.8 Oils and Fats 3.1 16.7 Baby Food 1.7 8.6 Spreads 0.5 2.6 Pasta 4.5 24.6 Noodles 3.4 18.0 Rice 3.0 16.0 Nutrition/Staples 2.6 13.9


MARKET DATA

Table 35 Sales of Packaged Food by Category: Volume 2007-2012

'000 tonnes 2007 2008 2009 2010 2011 2012 Baby Food 53.4 53.6 53.3 53.5 53.6 54.0 Bakery 320.2 331.7 336.7 344.9 355.8 367.5 Canned/Preserved Food 200.0 212.9 223.0 234.5 245.6 256.6 Chilled Processed Food 75.4 80.0 82.8 86.5 89.8 92.9 Confectionery 85.1 87.0 88.0 89.3 89.0 89.2 Dairy 327.1 324.0 325.7 335.8 341.6 344.2 Dried Processed Food 316.7 323.2 329.1 341.9 356.8 372.9 Frozen Processed Food 140.4 148.0 153.9 160.4 169.3 176.2 Ice Cream 41.3 42.1 42.8 43.9 45.8 47.9 Meal Replacement 1.0 1.1 1.2 1.3 1.3 1.3 Noodles 162.8 164.9 168.7 178.4 189.4 200.1 Oils and Fats 428.6 449.1 467.3 486.5 506.3 525.0 Pasta 66.2 67.4 68.6 70.4 72.5 75.4 Ready Meals 10.7 11.2 11.6 12.0 12.6 13.1 Sauces, Dressings and 168.9 178.9 187.7 195.8 203.7 211.1 Condiments Snack Bars 0.0 0.0 0.0 0.0 0.0 0.0 Soup 3.6 3.8 3.9 4.0 4.2 4.3



Spreads 14.2 14.5 14.3 14.4 14.7 15.1 Sweet and Savoury Snacks 109.9 116.6 121.2 126.0 131.2 136.5 Impulse and Indulgence 416.9 433.6 444.9 458.4 472.1 487.0 Products Nutrition/Staples 1,279.0 1,307.7 1,333.1 1,377.3 1,422.4 1,464.9 Meal Solutions 599.3 635.1 663.3 693.6 725.5 754.7 Packaged Food 2,282.3 2,362.7 2,427.1 2,514.5 2,604.6 2,690.6


Note: Sum of sectors does not equal total packaged food because of double counting (eg canned soup is included in soups and canned foods)

Table 36 Sales of Packaged Food by Category: Value 2007-2012

Ps million 2007 2008 2009 2010 2011 2012 Baby Food 26,492.9 29,564.2 30,459.7 31,648.5 32,287.4 32,988.1 Bakery 45,499.2 49,132.0 51,579.1 54,358.1 57,674.6 61,421.6 Canned/Preserved Food 22,689.1 25,078.2 26,874.1 28,807.3 30,976.9 33,251.3 Chilled Processed Food 13,005.1 13,785.4 14,336.8 15,053.6 15,881.6 16,834.5 Confectionery 26,543.1 28,018.1 28,808.9 29,676.7 29,892.5 30,428.3 Dairy 54,095.0 57,308.7 60,467.0 67,056.1 69,483.4 71,741.9 Dried Processed Food 25,801.7 27,998.2 29,767.2 31,949.5 34,499.3 37,189.1 Frozen Processed Food 20,950.0 22,943.7 24,450.9 25,920.4 28,148.2 30,208.5 Ice Cream 7,410.4 7,889.8 8,176.7 8,547.8 8,914.2 9,420.3 Meal Replacement 1,242.5 1,431.6 1,535.0 1,667.0 1,753.0 1,831.4 Noodles 17,375.4 18,488.2 19,299.8 20,567.6 22,061.6 23,603.1 Oils and Fats 33,643.1 36,987.2 39,536.2 41,952.2 44,996.4 48,032.6 Pasta 4,229.5 4,969.6 5,764.8 6,514.2 7,295.9 8,134.9 Ready Meals 2,237.2 2,438.2 2,570.0 2,752.9 2,960.6 3,204.4 Sauces, Dressings and 17,590.8 19,062.9 20,158.6 21,239.5 22,425.2 23,721.8 Condiments Snack Bars 12.9 14.8 12.6 12.2 12.3 12.4 Soup 1,035.5 1,123.0 1,220.3 1,317.1 1,423.7 1,540.4 Spreads 3,415.9 3,628.4 3,667.1 3,727.3 3,949.7 4,194.4 Sweet and Savoury Snacks 27,047.2 29,601.8 31,896.2 33,340.0 35,394.4 37,682.2 Impulse and Indulgence 91,481.5 98,311.1 103,328.2 107,892.4 112,736.0 118,535.3 Products Nutrition/Staples 159,113.4 172,634.2 181,922.7 195,344.5 205,377.8 215,618.2 Meal Solutions 77,618.8 84,548.4 89,733.1 95,219.4 101,951.8 108,903.3 Packaged Food 325,449.8 352,457.3 371,739.7 394,971.6 416,307.0 438,979.0



Table 37 Sales of Packaged Food by Category: % Volume Growth 2007-2012

% volume growth 2011/12 2007-12 CAGR 2007/12 Total Baby Food 0.7 0.2 1.0 Bakery 3.3 2.8 14.8 Canned/Preserved Food 4.5 5.1 28.3 Chilled Processed Food 3.5 4.3 23.2 Confectionery 0.2 0.9 4.7 Dairy 0.8 1.0 5.2



Dried Processed Food 4.5 3.3 17.7 Frozen Processed Food 4.1 4.7 25.5 Ice Cream 4.7 3.0 16.0 Meal Replacement 2.9 7.1 40.9 Noodles 5.7 4.2 23.0 Oils and Fats 3.7 4.1 22.5 Pasta 4.0 2.7 14.0 Ready Meals 4.5 4.2 22.7 Sauces, Dressings and Condiments 3.7 4.6 25.0 Snack Bars 0.7 -2.1 -10.1 Soup 3.4 3.7 19.7 Spreads 2.5 1.2 6.0 Sweet and Savoury Snacks 4.0 4.4 24.2 Impulse and Indulgence Products 3.2 3.2 16.8 Nutrition/Staples 3.0 2.8 14.5 Meal Solutions 4.0 4.7 25.9 Packaged Food 3.3 3.3 17.9



Table 38 Sales of Packaged Food by Category: % Value Growth 2007-2012

% current value growth 2011/12 2007-12 CAGR 2007/12 Total Baby Food 2.2 4.5 24.5 Bakery 6.5 6.2 35.0 Canned/Preserved Food 7.3 7.9 46.6 Chilled Processed Food 6.0 5.3 29.4 Confectionery 1.8 2.8 14.6 Dairy 3.3 5.8 32.6 Dried Processed Food 7.8 7.6 44.1 Frozen Processed Food 7.3 7.6 44.2 Ice Cream 5.7 4.9 27.1 Meal Replacement 4.5 8.1 47.4 Noodles 7.0 6.3 35.8 Oils and Fats 6.7 7.4 42.8 Pasta 11.5 14.0 92.3 Ready Meals 8.2 7.5 43.2 Sauces, Dressings and Condiments 5.8 6.2 34.9 Snack Bars 0.9 -0.8 -4.0 Soup 8.2 8.3 48.8 Spreads 6.2 4.2 22.8 Sweet and Savoury Snacks 6.5 6.9 39.3 Impulse and Indulgence Products 5.1 5.3 29.6 Nutrition/Staples 5.0 6.3 35.5 Meal Solutions 6.8 7.0 40.3 Packaged Food 5.4 6.2 34.9



Table 39 GBO Shares of Packaged Food 2008-2012

% retail value rsp



Company 2008 2009 2010 2011 2012 Nestlé SA 11.1 10.9 10.9 10.8 10.6 San Miguel Corp 7.6 7.3 7.1 7.4 7.4 JG Summit Holdings Inc 6.3 6.4 6.4 6.4 6.5 Monde Nissin Corp 4.5 4.7 4.9 5.0 5.1 Mead Johnson Nutrition Co - 3.7 3.6 3.5 3.4 San Pablo Manufacturing 3.1 3.2 3.2 3.3 3.4 Corp Royal FrieslandCampina NV 0.3 0.3 0.3 0.3 3.4 Unilever Group 2.9 2.8 2.9 2.9 3.0 International Oil Factory 2.9 2.9 2.8 2.8 2.8 CDO Foodsphere Inc 1.3 1.5 1.6 1.7 1.8 Century Canning Corp 1.6 1.7 1.7 1.7 1.7 Kraft Foods Group, Inc - - - - 1.7 Pfizer Inc - 1.8 1.7 1.7 1.7 Republic Biscuit Corp 1.4 1.4 1.4 1.4 1.4 Fonterra Co-operative 1.3 1.2 1.3 1.3 1.3 Group RFM Corp 0.8 1.0 1.1 1.2 1.3 Liwayway Marketing Corp 1.1 1.2 1.2 1.2 1.2 Del Monte Pacific Ltd 1.0 1.0 1.0 1.0 1.1 Mondelez International, - - - - 1.0 Inc Nutri-Asia Inc 1.0 1.0 1.0 1.0 1.0 Ajinomoto Co Inc 1.1 1.0 1.0 1.0 1.0 Pacific Meat Co Inc 0.8 0.9 0.9 0.9 0.9 Yakult Honsha Co Ltd 0.9 0.9 0.9 0.9 0.9 Mars Inc 0.9 0.9 0.9 0.8 0.8 QAF Ltd 0.7 0.7 0.7 0.8 0.8 Food Industries Inc 0.7 0.8 0.7 0.7 0.7 Goldilocks Bake Shop Inc 0.6 0.7 0.7 0.7 0.7 Tobi Marketing Inc 0.7 0.7 0.7 0.6 0.7 Abbott Laboratories Inc 0.6 0.6 0.6 0.6 0.6 Liberty Gold Fruit Co Inc 0.6 0.6 0.6 0.6 0.6 Artisanal 4.0 3.9 3.8 3.7 3.7 Private Label 1.7 1.7 1.8 1.8 1.8 Others 38.7 32.9 32.9 32.3 26.2 Total 100.0 100.0 100.0 100.0 100.0


Table 40 NBO Shares of Packaged Food 2008-2012

% retail value rsp Company 2008 2009 2010 2011 2012 Nestlé Philippines Inc 10.9 10.7 10.7 10.6 10.4 Universal Robina Corp 6.3 6.4 6.4 6.4 6.5 Monde Nissin Corp 4.5 4.7 4.9 5.0 5.1 Purefoods-Hormel Co 5.3 4.9 4.8 5.0 5.0 Inc, The Alaska Milk Corp 3.3 3.4 3.9 3.8 3.7 Mead Johnson 3.7 3.7 3.6 3.5 3.4 Philippines Inc San Pablo Manufacturing 3.1 3.2 3.2 3.3 3.4 Corp International Oil Factory 2.9 2.9 2.8 2.8 2.8 Kraft Foods 2.1 2.2 2.8 2.7 2.7



(Philippines) Inc San Miguel Pure Foods 2.3 2.4 2.4 2.4 2.4 Co Inc Unilever Foods 1.9 1.8 1.8 1.8 1.9 Philippines (CMC) CDO Foodsphere Inc 1.3 1.5 1.6 1.7 1.8 Century Canning Corp 1.6 1.7 1.7 1.7 1.7 Wyeth Philippines Inc 1.9 1.8 1.7 1.7 1.7 Fonterra Brands (Phils) 1.3 1.2 1.3 1.3 1.3 Inc RFM Corp 0.8 1.0 1.1 1.2 1.3 Liwayway Marketing Corp 1.1 1.2 1.2 1.2 1.2 Del Monte Philippines Inc 1.0 1.0 1.1 1.1 1.1 Unilever RFM Ice Cream 1.0 1.0 1.0 1.0 1.0 Inc Ajinomoto Philippines 1.1 1.0 1.0 1.0 1.0 Corp Pacific Meat Co Inc 0.8 0.9 0.9 0.9 0.9 Supervalue Inc 0.8 0.8 0.8 0.9 0.9 Yakult Philippines Inc 0.9 0.9 0.9 0.9 0.9 Gardenia Philippines Inc 0.7 0.7 0.7 0.8 0.8 UFC Philippines Inc 0.7 0.7 0.7 0.7 0.8 Food Industries Inc 0.7 0.8 0.7 0.7 0.7 Goldilocks Bake Shop Inc 0.6 0.7 0.7 0.7 0.7 SM Retail Inc 0.7 0.7 0.7 0.7 0.7 Republic Biscuit Corp 0.6 0.7 0.7 0.7 0.7 Tobi Marketing Inc 0.7 0.7 0.7 0.6 0.7 Artisanal 4.0 3.9 3.8 3.7 3.7 Others 31.5 31.0 30.0 29.5 29.4 Total 100.0 100.0 100.0 100.0 100.0


Table 41 NBO Brand Shares of Packaged Food 2009-2012

% retail value rsp Brand Company 2009 2010 2011 2012 Purefoods Purefoods-Hormel Co 4.9 4.7 4.9 4.9 Inc, The Jack 'n' Jill Universal Robina Corp 4.2 4.3 4.3 4.4 Minola San Pablo Manufacturing 3.2 3.2 3.3 3.4 Corp Lucky Me Monde Nissin Corp 3.0 3.1 3.1 3.2 Alaska Alaska Milk Corp 3.1 3.5 3.3 3.2 Baguio International Oil Factory 2.9 2.8 2.8 2.8 Bear Brand Nestlé Philippines Inc 2.4 2.7 2.8 2.7 Milo Nestlé Philippines Inc 2.0 1.9 1.9 1.9 CDO CDO Foodsphere Inc 1.5 1.6 1.7 1.8 Lactum Mead Johnson 1.8 1.7 1.7 1.7 Philippines Inc Magnolia San Miguel Pure Foods 1.3 1.3 1.3 1.3 Co Inc Nido Nestlé Philippines Inc 1.1 1.2 1.2 1.1 Nestlé Nestlé Philippines Inc 1.2 1.1 1.1 1.1 Kraft Kraft Foods 1.0 1.1 1.0 1.0 (Philippines) Inc Del Monte Del Monte Philippines Inc 0.9 0.9 1.0 1.0 Sky Flakes Monde Nissin Corp 0.9 0.9 1.0 1.0



555 Century Canning Corp 0.9 0.9 0.9 0.9 Argentina Pacific Meat Co Inc 0.9 0.9 0.9 0.9 Selecta Unilever RFM Ice Cream Inc 0.9 0.9 0.9 0.9 Oishi Liwayway Marketing Corp 0.9 0.9 0.9 0.9 SM Bonus Supervalue Inc 0.8 0.8 0.9 0.9 Yakult Yakult Philippines Inc 0.9 0.9 0.9 0.9 Ajinomoto Ajinomoto Philippines Corp 1.0 1.0 0.9 0.9 Payless Universal Robina Corp 0.9 0.9 0.9 0.9 Anchor Fonterra Brands (Phils) 0.8 0.9 0.9 0.9 Inc Star San Miguel Pure Foods 0.8 0.8 0.8 0.8 Co Inc Gardenia Gardenia Philippines Inc 0.7 0.7 0.8 0.8 Century Century Canning Corp 0.8 0.8 0.8 0.8 Nagaraya Food Industries Inc 0.8 0.7 0.7 0.7 Goldilocks Goldilocks Bake Shop Inc 0.7 0.7 0.7 0.7 Artisanal 3.9 3.8 3.7 3.7 Others 49.3 48.6 48.2 47.9 Total 100.0 100.0 100.0 100.0


Table 42 Penetration of Private Label by Category 2007-2012

% retail value rsp 2007 2008 2009 2010 2011 2012 Bakery 0.4 0.4 0.5 0.6 0.5 0.5 Chilled Processed Food 2.0 2.0 2.0 2.0 2.1 2.2 Dried Processed Food 4.3 4.4 4.4 4.3 4.2 4.3 Frozen Processed Food 7.5 7.7 8.0 8.3 8.1 8.0 Meal Solutions 2.5 2.6 2.7 2.7 2.7 2.7 Noodles 0.4 0.4 0.4 0.4 0.4 0.4 Nutrition/Staples 2.1 2.1 2.2 2.2 2.3 2.4 Oils and Fats 5.9 5.9 6.2 6.3 6.5 6.7 Packaged Food 1.6 1.7 1.7 1.8 1.8 1.8 Sauces, Dressings and 0.7 0.7 0.7 0.7 0.7 0.7 Condiments


Table 43 Sales of Packaged Food by Distribution Format: % Analysis 2007-2012

% retail value rsp 2007 2008 2009 2010 2011 2012 Store-Based Retailing 99.8 99.8 99.9 99.9 99.9 99.9 - Grocery Retailers 95.6 95.5 95.5 95.6 95.7 95.9 -- Supermarkets 42.6 42.6 42.9 42.7 42.6 42.7 -- Hypermarkets 3.9 4.5 4.8 5.4 5.8 6.0 -- Discounters - - - - - - -- Small Grocery 15.0 14.3 13.4 12.7 12.2 12.1 Retailers --- Convenience Stores 1.3 1.4 1.3 1.3 1.3 1.4 --- Independent Small 13.5 12.7 11.8 11.1 10.6 10.4 Grocers --- Forecourt Retailers 0.2 0.2 0.2 0.2 0.3 0.3



-- Other Grocery 34.1 34.1 34.5 34.8 35.1 35.1 Retailers - Non-Grocery Retailers 4.2 4.4 4.4 4.3 4.2 4.0 -- Health and Beauty 4.2 4.4 4.4 4.3 4.2 4.0 Retailers -- Other Non-Grocery 0.0 0.0 0.0 0.0 0.0 0.0 Retailers Non-Store Retailing 0.2 0.2 0.1 0.1 0.1 0.1 - Vending 0.0 0.0 0.0 0.0 0.0 0.0 - Homeshopping - - - - - - - Internet Retailing 0.0 0.0 0.0 0.0 0.0 0.0 - Direct Selling 0.1 0.1 0.1 0.1 0.1 0.1 Total 100.0 100.0 100.0 100.0 100.0 100.0


Table 44 Sales of Packaged Food by Category and Distribution Format: % Analysis 2012

% retail value rsp BF B CPF CHP C D Store-Based Retailing 100.0 100.0 100.0 100.0 99.8 99.7 Grocery Retailers 57.7 98.6 100.0 100.0 93.9 99.7 Supermarkets 39.9 26.2 51.7 49.5 35.1 44.6 Hypermarkets 5.9 3.6 7.1 6.9 4.9 6.4 Discounters 0.0 0.0 0.0 0.0 0.0 0.0 Small Grocery Retailers 11.9 5.9 18.0 7.6 13.7 13.4 Convenience Stores 1.1 0.4 1.3 1.6 4.3 1.7 Independent Small Grocers 10.8 5.1 16.4 6.0 8.3 11.5 Forecourt Retailers 0.0 0.4 0.3 0.0 1.1 0.1 Confectionery specialists - - - - 4.2 - Other Grocery Retailers 0.0 62.9 23.2 36.0 36.0 35.4 Non-Grocery Retailers 42.3 1.4 0.0 0.0 5.9 0.0 Health and Beauty 42.3 1.4 0.0 0.0 5.9 0.0 Retailers Other Non-Grocery 0.0 0.1 0.0 0.0 0.0 0.0 Retailers Non-Store Retailing 0.0 0.0 0.0 0.0 0.2 0.3 Vending 0.0 0.0 0.0 0.0 0.0 0.0 Homeshopping 0.0 0.0 0.0 0.0 0.0 0.0 Internet Retailing 0.0 0.0 0.0 0.0 0.2 0.0 Direct Selling 0.0 0.0 0.0 0.0 0.0 0.3 Total 100.0 100.0 100.0 100.0 100.0 100.0 DPF FPF IC MR NOO OF Store-Based Retailing 100.0 99.9 100.0 84.4 100.0 100.0 Grocery Retailers 100.0 99.9 100.0 40.9 100.0 99.9 Supermarkets 44.1 63.0 67.8 21.7 38.5 50.9 Hypermarkets 6.3 9.0 10.0 3.0 5.5 7.0 Discounters 0.0 0.0 0.0 0.0 0.0 0.0 Small Grocery Retailers 15.6 13.5 18.3 16.2 13.3 7.2 Convenience Stores 2.4 1.0 2.0 0.0 2.2 0.1 Independent Small Grocers 13.1 12.5 15.6 16.2 11.0 7.2 Forecourt Retailers 0.2 0.0 0.8 0.0 0.2 0.0 Confectionery specialists - - 0.0 - - - Other Grocery Retailers 34.0 14.4 3.9 0.0 42.7 34.8 Non-Grocery Retailers 0.0 0.0 0.0 43.5 0.0 0.1



Health and Beauty 0.0 0.0 0.0 43.5 0.0 0.0 Retailers Other Non-Grocery 0.0 0.0 0.0 0.0 0.0 0.1 Retailers Non-Store Retailing 0.0 0.1 0.0 15.6 0.0 0.0 Vending 0.0 0.0 0.0 0.0 0.0 0.0 Homeshopping 0.0 0.0 0.0 0.0 0.0 0.0 Internet Retailing 0.0 0.1 0.0 0.0 0.0 0.0 Direct Selling 0.0 0.0 0.0 15.6 0.0 0.0 Total 100.0 100.0 100.0 100.0 100.0 100.0 P RM SDC SB SOU SPR Store-Based Retailing 100.0 100.0 100.0 100.0 100.0 100.0 Grocery Retailers 100.0 100.0 100.0 95.8 100.0 100.0 Supermarkets 49.0 62.5 38.6 80.0 51.3 50.4 Hypermarkets 6.8 8.3 5.3 11.6 7.2 7.1 Discounters 0.0 0.0 0.0 0.0 0.0 0.0 Small Grocery Retailers 17.0 23.8 7.2 4.2 23.3 18.5 Convenience Stores 2.5 5.2 1.1 3.0 6.0 1.0 Independent Small Grocers 14.5 16.0 5.8 0.0 15.3 16.6 Forecourt Retailers 0.0 2.6 0.3 1.2 2.0 0.9 Confectionery specialists - - - - - - Other Grocery Retailers 27.3 5.4 48.9 0.0 18.2 24.0 Non-Grocery Retailers 0.0 0.0 0.0 4.2 0.0 0.0 Health and Beauty 0.0 0.0 0.0 4.2 0.0 0.0 Retailers Other Non-Grocery 0.0 0.0 0.0 0.0 0.0 0.0 Retailers Non-Store Retailing 0.0 0.0 0.0 0.0 0.0 0.0 Vending 0.0 0.0 0.0 0.0 0.0 0.0 Homeshopping 0.0 0.0 0.0 0.0 0.0 0.0 Internet Retailing 0.0 0.0 0.0 0.0 0.0 0.0 Direct Selling 0.0 0.0 0.0 0.0 0.0 0.0 Total 100.0 100.0 100.0 100.0 100.0 100.0 SSS Store-Based Retailing 100.0 Grocery Retailers 100.0 Supermarkets 31.5 Hypermarkets 4.5 Discounters 0.0 Small Grocery Retailers 17.4 Convenience Stores 1.4 Independent Small Grocers 15.5 Forecourt Retailers 0.5 Confectionery specialists - Other Grocery Retailers 46.6 Non-Grocery Retailers 0.0 Health and Beauty 0.0 Retailers Other Non-Grocery 0.0 Retailers Non-Store Retailing 0.0 Vending 0.0 Homeshopping 0.0 Internet Retailing 0.0 Direct Selling 0.0 Total 100.0




Key: BF = baby food; B = bakery; CPF = canned/preserved food; CHP = chilled processed food; C = confectionery; D = dairy; DPF = dried processed food; FPF = frozen processed food; IC = ice cream; MR = meal replacement; NOO = noodles; OF = oils and fats; P = pasta; RM = ready meals; SDC = sauces, dressings and condiments; SB = snack bars; SOU = soup; SPR = spreads; SSS = sweet and savoury snacks

Table 45 Forecast Sales of Packaged Food by Category: Volume 2012-2017

'000 tonnes 2012 2013 2014 2015 2016 2017 Baby Food 54.0 54.8 55.8 57.0 58.3 59.7 Bakery 367.5 377.5 388.2 399.6 411.7 424.5 Canned/Preserved Food 256.6 267.4 278.1 288.7 299.2 309.7 Chilled Processed Food 92.9 96.0 99.0 102.1 105.2 108.2 Confectionery 89.2 90.8 92.6 94.6 96.7 98.9 Dairy 344.2 352.9 361.3 369.3 376.4 382.9 Dried Processed Food 372.9 389.3 405.9 422.9 440.6 459.0 Frozen Processed Food 176.2 182.8 189.0 194.8 200.2 205.3 Ice Cream 47.9 48.9 49.8 50.6 51.4 52.1 Meal Replacement 1.3 1.4 1.5 1.5 1.6 1.7 Noodles 200.1 210.6 220.7 230.4 240.1 249.6 Oils and Fats 525.0 544.8 566.4 590.1 616.3 645.1 Pasta 75.4 78.7 82.2 86.1 90.4 95.2 Ready Meals 13.1 13.8 14.4 15.1 15.9 16.7 Sauces, Dressings and 211.1 218.2 224.7 230.7 236.4 241.7 Condiments Snack Bars 0.0 0.0 0.0 0.0 0.0 0.0 Soup 4.3 4.5 4.6 4.8 5.0 5.2 Spreads 15.1 15.2 15.5 15.7 16.0 16.3 Sweet and Savoury Snacks 136.5 141.9 147.1 152.3 157.6 163.2 Impulse and Indulgence 487.0 502.5 518.3 534.6 551.4 569.0 Products Nutrition/Staples 1,464.9 1,513.4 1,564.0 1,617.3 1,673.5 1,732.8 Meal Solutions 754.7 783.0 810.2 836.6 862.3 887.3 Packaged Food 2,690.6 2,782.1 2,875.0 2,970.1 3,067.9 3,168.8



Table 46 Forecast Sales of Packaged Food by Category: Value 2012-2017

Ps million 2012 2013 2014 2015 2016 2017 Baby Food 32,988.1 33,266.7 33,709.9 34,315.1 35,034.8 35,826.5 Bakery 61,421.6 62,675.4 64,111.7 65,735.8 67,529.6 69,559.7 Canned/Preserved Food 33,251.3 34,462.8 35,678.3 36,880.8 38,084.2 39,268.9 Chilled Processed Food 16,834.5 17,339.5 17,842.3 18,341.9 18,837.2 19,326.9 Confectionery 30,428.3 30,418.7 30,518.5 30,735.1 31,052.0 31,443.0 Dairy 71,741.9 73,642.9 75,520.2 77,404.5 79,252.1 80,948.2 Dried Processed Food 37,189.1 38,638.6 40,074.2 41,501.9 42,902.4 44,284.4 Frozen Processed Food 30,208.5 31,084.6 31,928.9 32,749.7 33,531.9 34,245.7 Ice Cream 9,420.3 9,583.8 9,738.9 9,887.3 10,023.7 10,158.5 Meal Replacement 1,831.4 1,915.6 2,003.7 2,095.7 2,191.6 2,286.1 Noodles 23,603.1 24,467.5 25,320.2 26,175.9 27,015.2 27,855.1



Oils and Fats 48,032.6 49,372.4 50,832.5 52,423.0 54,162.9 56,064.4 Pasta 8,134.9 8,582.3 9,011.5 9,417.0 9,793.7 10,136.4 Ready Meals 3,204.4 3,341.9 3,489.8 3,649.1 3,821.0 4,007.0 Sauces, Dressings and 23,721.8 24,335.5 24,906.9 25,434.7 25,919.5 26,360.9 Condiments Snack Bars 12.4 12.0 11.7 11.4 11.2 11.1 Soup 1,540.4 1,588.5 1,639.0 1,691.8 1,747.4 1,805.6 Spreads 4,194.4 4,188.0 4,198.8 4,220.4 4,255.2 4,304.2 Sweet and Savoury Snacks 37,682.2 38,994.1 40,340.8 41,684.8 43,060.9 44,430.3 Impulse and Indulgence 118,535.3 120,901.8 123,529.7 126,389.1 129,475.3 132,786.3 Products Nutrition/Staples 215,618.2 220,996.8 226,701.4 232,777.0 239,134.9 245,647.4 Meal Solutions 108,903.3 112,298.1 115,633.6 118,899.6 122,096.1 125,173.8 Packaged Food 438,979.0 449,953.7 461,442.6 473,450.4 485,881.0 498,554.5



Table 47 Forecast Sales of Packaged Food by Category: % Volume Growth 2012-2017

% volume growth 2016/17 2012-17 CAGR 2012/17 Total Baby Food 2.5 2.0 10.7 Bakery 3.1 2.9 15.5 Canned/Preserved Food 3.5 3.8 20.7 Chilled Processed Food 2.9 3.1 16.5 Confectionery 2.3 2.1 10.9 Dairy 1.7 2.2 11.3 Dried Processed Food 4.2 4.2 23.1 Frozen Processed Food 2.6 3.1 16.5 Ice Cream 1.4 1.7 8.7 Meal Replacement 3.9 4.4 24.0 Noodles 4.0 4.5 24.7 Oils and Fats 4.7 4.2 22.9 Pasta 5.3 4.8 26.3 Ready Meals 5.1 4.9 26.8 Sauces, Dressings and Condiments 2.3 2.7 14.5 Snack Bars 0.5 0.3 1.3 Soup 3.9 3.7 20.0 Spreads 2.1 1.6 8.5 Sweet and Savoury Snacks 3.5 3.6 19.5 Impulse and Indulgence Products 3.2 3.2 16.8 Nutrition/Staples 3.5 3.4 18.3 Meal Solutions 2.9 3.3 17.6 Packaged Food 3.3 3.3 17.8



Table 48 Forecast Sales of Packaged Food by Category: % Value Growth 2012-2017

% constant value growth 2012-17 CAGR 2012/17 TOTAL Baby Food 1.7 8.6



Bakery 2.5 13.2 Canned/Preserved Food 3.4 18.1 Chilled Processed Food 2.8 14.8 Confectionery 0.7 3.3 Dairy 2.4 12.8 Dried Processed Food 3.6 19.1 Frozen Processed Food 2.5 13.4 Ice Cream 1.5 7.8 Meal Replacement 4.5 24.8 Noodles 3.4 18.0 Oils and Fats 3.1 16.7 Pasta 4.5 24.6 Ready Meals 4.6 25.0 Sauces, Dressings and Condiments 2.1 11.1 Snack Bars -2.1 -10.1 Soup 3.2 17.2 Spreads 0.5 2.6 Sweet and Savoury Snacks 3.3 17.9 Impulse and Indulgence Products 2.3 12.0 Nutrition/Staples 2.6 13.9 Meal Solutions 2.8 14.9 Packaged Food 2.6 13.6



SOURCES Sources used during research include the following:

Summary 1 Research Sources

Official Sources Camara Oficial Española de Comercio Industria y Navegacion en Filipinas, Inc

Department of Agriculture

Department of Health

Industrial Technology Development Institute- Department of Science & Technology

National Dairy Authority

National Food Authority

National Statistical Coordination Board

National Statistics Office

Philippine Stock Exchange

Trade Associations Association of Filipino Franchisers Inc

Philippine Association of Meat Processors Inc

Philippine Coconut Oil Producers Association

Philippine Federation of Bakers Association Inc

Rice Association

Trade Press Business World Online



Food & Agribusiness Monitor

Source: Euromonitor International

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