Packaged Food in the Philippines

PACKAGED FOOD IN THE PHILIPPINES

Euromonitor International

April 2015

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

Economy Continues To Benefit Packaged Food in the Philippines in 2014 .............................. 1 Increasingly Busy and Faster-paced Lifestyles Influence Packaged Food Consumers ............ 1 Multinationals Continue To Dominate Competition in Packaged Food ..................................... 1 Distribution of Packaged Food Continues To Be Dominated by Modern Grocery Retailers ..... 1 Packaged Food Expected To Continue on Positive Growth Trend for the Forecast Period ...... 1

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

Modern Grocery Channels Continue To Grow in Number ........................................................ 2 Improving Economic Condition Encourages Foreign Brands To Enter Packaged Food ........... 3 Increasingly Busy Lifestyles Continues To Benefit Packaged Food in 2014 ............................. 4 Growingly Sophisticated Consumers Lead To Opportunities for New Product Developments . 5

Foodservice – Key Trends and Developments ............................................................................. 5

Headlines .................................................................................................................................. 5 Trends – Sales To Foodservice ................................................................................................ 5 Trends –foodservice ................................................................................................................. 6 Prospects .................................................................................................................................. 6 Category Data .......................................................................................................................... 7

Table 1 Foodservice Sales of Packaged Food by Category: Volume 2009-

2014 ............................................................................................................. 7 Table 2 Foodservice Sales of Packaged Food by Category: % Volume Growth

2009-2014 .................................................................................................... 7 Table 3 Forecast Foodservice Sales of Packaged Food by Category: Volume

2014-2019 .................................................................................................... 8 Table 4 Forecast Foodservice Sales of Packaged Food by Category: %

Volume Growth 2014-2019 .......................................................................... 8

Impulse and Ingulgence Products – Key Trends and Developments ........................................... 9

Headlines .................................................................................................................................. 9 Trends ...................................................................................................................................... 9 Competitive Landscape .......................................................................................................... 10 Prospects ................................................................................................................................ 11 Category Data ........................................................................................................................ 12

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

2009-2014 .................................................................................................. 12 Table 6 Sales of Impulse and Indulgence Products by Category: Value 2009-

2014 ........................................................................................................... 13 Table 7 Sales of Impulse and Indulgence Products by Category: % Volume

Growth 2009-2014 ..................................................................................... 13 Table 8 Sales of Impulse and Indulgence Products by Category: % Value

Growth 2009-2014 ..................................................................................... 13 Table 9 NBO Company Shares of Impulse and Indulgence Products: % Value

2010-2014 .................................................................................................. 14 Table 10 LBN Brand Shares of Impulse and Indulgence Products: % Value

2011-2014 .................................................................................................. 15 Table 11 Forecast Sales of Impulse and Indulgence Products by Category:

Volume 2014-2019 ..................................................................................... 15

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Table 12 Forecast Sales of Impulse and Indulgence Products by Category:

Value 2014-2019 ........................................................................................ 16 Table 13 Forecast Sales of Impulse and Indulgence Products by Category: %

Volume Growth 2014-2019 ........................................................................ 16 Table 14 Forecast Sales of Impulse and Indulgence Products by Category: %

Value Growth 2014-2019 ........................................................................... 16

Meal Solutions – Key Trends and Developments ....................................................................... 17

Headlines ................................................................................................................................ 17 Trends .................................................................................................................................... 17 Competitive Landscape .......................................................................................................... 18 Prospects ................................................................................................................................ 18 Category Data ........................................................................................................................ 19

Table 15 Sales of Meal Solutions by Category: Volume 2009-2014 ......................... 19 Table 16 Sales of Meal Solutions by Category: Value 2009-2014 ............................ 19 Table 17 Sales of Meal Solutions by Category: % Volume Growth 2009-2014 ......... 19 Table 18 Sales of Meal Solutions by Category: % Value Growth 2009-2014 ............ 20 Table 19 NBO Company Shares of Meal Solutions: % Value 2010-2014 ................. 20 Table 20 LBN Brand Shares of Meal Solutions: % Value 2011-2014 ........................ 21 Table 21 Forecast Sales of Meal Solutions by Category: Volume 2014-2019 .......... 22 Table 22 Forecast Sales of Meal Solutions by Category: Value 2014-2019 ............. 22 Table 23 Forecast Sales of Meal Solutions by Category: % Volume Growth

2014-2019 .................................................................................................. 22 Table 24 Forecast Sales of Meal Solutions by Category: % Value Growth 2014-

2019 ........................................................................................................... 23

Nutrition/staples – Key Trends and Developments ..................................................................... 23

Headlines ................................................................................................................................ 23 Trends .................................................................................................................................... 23 Competitive Landscape .......................................................................................................... 24 Prospects ................................................................................................................................ 25 Category Data ........................................................................................................................ 26

Table 25 Sales of Nutrition/Staples by Category: Volume 2009-2014 ....................... 26 Table 26 Sales of Nutrition/Staples by Category: Value 2009-2014 .......................... 27 Table 27 Sales of Nutrition/Staples by Category: % Volume Growth 2009-2014 ...... 27 Table 28 Sales of Nutrition/Staples by Category: % Value Growth 2009-2014 ......... 27 Table 29 NBO Company Shares of Nutrition/Staples: % Value 2010-2014 .............. 28 Table 30 LBN Brand Shares of Nutrition/Staples: % Value 2011-2014 ..................... 29 Table 31 Forecast Sales of Nutrition/Staples by Category: Volume 2014-2019 ........ 29 Table 32 Forecast Sales of Nutrition/Staples by Category: Value 2014-2019 ........... 30 Table 33 Forecast Sales of Nutrition/Staples by Category: % Volume Growth

2014-2019 .................................................................................................. 30 Table 34 Forecast Sales of Nutrition/Staples by Category: % Value Growth

2014-2019 .................................................................................................. 31

Market Data ................................................................................................................................ 31

Table 35 Sales of Packaged Food by Category: Volume 2009-2014 ........................ 31 Table 36 Sales of Packaged Food by Category: Value 2009-2014 ........................... 32 Table 37 Sales of Packaged Food by Category: % Volume Growth 2009-2014 ....... 32 Table 38 Sales of Packaged Food by Category: % Value Growth 2009-2014 .......... 33 Table 39 GBO Company Shares of Packaged Food: % Value 2010-2014 ............... 33 Table 40 NBO Company Shares of Packaged Food: % Value 2010-2014 ............... 34

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Table 41 LBN Brand Shares of Packaged Food: % Value 2011-2014 ...................... 35 Table 42 Penetration of Private Label by Category: % Value 2009-2014 ................. 36 Table 43 Distribution of Packaged Food by Format: % Value 2009-2014 ................. 36 Table 44 Distribution of Packaged Food by Format and Category: % Value

2014 ........................................................................................................... 37 Table 45 Forecast Sales of Packaged Food by Category: Volume 2014-2019 ......... 39 Table 46 Forecast Sales of Packaged Food by Category: Value 2014-2019 ............ 40 Table 47 Forecast Sales of Packaged Food by Category: % Volume Growth

2014-2019 .................................................................................................. 40 Table 48 Forecast Sales of Packaged Food by Category: % Value Growth

2014-2019 .................................................................................................. 41

Definitions ................................................................................................................................... 41 Sources ...................................................................................................................................... 41

Summary 1 Research Sources ...................................................................................... 41

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 1


PACKAGED FOOD IN THE PHILIPPINES

EXECUTIVE SUMMARY

Economy Continues To Benefit Packaged Food in the Philippines in 2014

Philippine packaged food continued to benefit from improving economic conditions over the

review period. The positive economic environment not only helped consumer confidence, but

also generally widened purchasing options for consumers. With more and more consumers able

to afford and purchase products across various price segments, purchasing options generally

widened not just in terms of price but also as manufacturers strived to increase their

competitiveness through increased flavour offerings.

Increasingly Busy and Faster-paced Lifestyles Influence Packaged Food Consumers

The positive economic environment led to increasingly busy lifestyles for Filipinos. While this

may have brought in increased purchasing power for these consumers, the faster-paced

lifestyles also greatly influenced purchasing decisions. Not only was it increasingly important to

be able to source products through more accessible and convenient retail outlets, the response

to increasingly busy lifestyles was also seen in product innovations not just in terms of

packaging, but also the products themselves.

Multinationals Continue To Dominate Competition in Packaged Food

The competitive environment of packaged food in the Philippines continued to be dominated

by multinationals. While local competitors do take the lead in certain sectors and product

categories, the leading players in packaged food were generally able to maintain their positions

towards the end of the review period. Nestlé Philippines Inc, the local arm of Nestlé SA, retained

its lead in packaged food overall, owed highly to their strong lead in dairy and baby food.

Alongside strengthening their product portfolio through effective marketing campaigns, their

focus on wellness also benefits from the growing health consciousness trend.

Distribution of Packaged Food Continues To Be Dominated by Modern Grocery Retailers

The strength of modern grocery retailers as a retail channel for packaged food continued to

grow towards the end of the review period, as well as contributing to the loss of share for

traditional channels. Large retailers such as SM Retail and Puregold Price Club have

supermarkets alone grow even further in strength as the leading retail outlet. These players

expanded not only in terms of geographical reach across the country, but also made efforts to

address changing consumer spending habits.

Packaged Food Expected To Continue on Positive Growth Trend for the Forecast Period

Packaged food is expected to continue growing positively over the forecast period. With many

of its main products such as dairy, oils and fats and bakery reaching maturity, this may be at a



slower pace especially the medium-term. Improving economic conditions will continue to

increase purchasing power and overall spending, but manufacturers are then faced with the

challenge to be able to continuously adapt to changing consumer needs, as well.

KEY TRENDS AND DEVELOPMENTS

Modern Grocery Channels Continue To Grow in Number

Major supermarket chains remain aggressive in their expansion of outlets with a particular

focus on areas in the country which lack modern grocery channels. As their network of outlets

grows, consumers increasingly prefer these channels which offer better convenience being a

one-stop shop for all their packaged food needs. Consumers are also becoming more

discerning as their buying capacity improves brought about by better employment opportunities

that developments in the country’s economy provides. As such, the value sales contribution of

modern grocery retailers in 2014 marginally improved to hold 51% share, while traditional

grocery retailers declined to rest at 45%.

To facilitate their growth, established companies either enter into joint a venture, franchising

agreement or acquire independent/small players. For instance, Varejo Corp, a subsidiary of

Ayala Land Inc entered into a joint venture with Estenso Equities Inc, a subsidiary of Puregold

Price Club Inc, to build a new brand of supermarkets to cater to the ABC income brackets.

Robinsons Supermarket Corp, meanwhile, acquired Eurogrocer in 2013 giving it full ownership

to its six supermarkets in Tarlac. Puregold Price Club Inc, on the other hand, bought a total of

40 stores since 2012 and is on the second year of its 5-year plan to set up at least 25 new

stores annually. SM Retail Inc is also expanding aggressively and plans to erect a minimum of

20 Savemore Markets and SM Hypermarkets outside of Metro Manila in 2014. SM Investments

Corp, meanwhile, acquired a 34% stake in CityMall Commercial Centers Inc, a subsidiary of

DoubleDragon Properties Corp. This will give SM an access to CityMalls’ network of outlets to

be located mostly in Visayas and Mindanao.

Aside from supermarkets and hypermarkets, convenience store brands also increased. After

Ayala Land Inc introduced the Japanese brand, Family Mart in 2013, Puregold Price Club Inc

entered into an agreement with the Japanese retailer, Lawson Inc, in 2014 to put up a chain of

convenience stores in the country. Lawson which owns the brands, Lawson, Lawson Store 100

and Natural Lawson will take 30% of the joint venture while the remainder will be owned by

Puregold. These modern grocery channels pose more of a threat to other grocery retailers such

as sari-sari stores since some of the outlets are situated near residential neighbourhoods. Also,

the availability of hot meals or snacks through convenience stores and its 24-hour operation

gives the channel an edge over sari-sari stores which do not provide such a service.

Improvements, meanwhile, are also carried out by upscale retailers. Rustan’s Supermarket, for

instance, opened the Marketplace in its outlet in Rockwell, Makati which carries imported

brands, artisanal and gourmet products. Other new high-end stores include Epicurious, Vom

Fass and Lartizan which all raised the bar in the retail of packaged food.

Outlook

The establishment of modern grocery channels is likely to be more aggressive in suburban

areas or in fast-developing provinces over the forecast period. Companies are likely to focus on

areas outside of Metro Manila which have a flourishing business process outsourcing industry,

thriving real estate development or lively tourism-related activities. Retailers in urban areas,

meanwhile, are likely to improve their customer service and focus on providing consumers with

a better over-all shopping experience. Aside from bricks-and-mortar stores, non-store retailing,

particularly online channels, is also likely to witness improvements over the forecast period. In



2014, SM Investments Corp made known its plan to launch a full-scale e-commerce website by

2016 to complement its retail operations. This has the potential to attract other companies to

venture as well into online retailing and encourage more consumers to try out making purchases

through the internet.

As outlets of supermarkets, hypermarkets and convenience stores grow, more consumers are

expected to shop through these modern grocery channels. Since Filipinos prefer to make

frequent small quantity purchases rather than buy less often in bulk, there are more chances for

companies to interact with their customers. Companies can take advantage of the regular trips

of shoppers at short intervals to build their brands or sustain recall through in-store promotions.

They can also encourage impulse purchases through creative merchandising. Sari-sari stores,

meanwhile, are likely to decrease in number especially since competition among convenience

store brands is expected to intensify. These traditional grocery channels, however, are not

predicted to be totally wiped out. Being situated within residential neighbourhoods, sari-sari

stores will remain a convenient channel for small quantity purchases for instances when one

unexpectedly runs out of cooking ingredients or other basic necessities for which a trip to the

nearest supermarket or convenience store would be impractical.

Improving Economic Condition Encourages Foreign Brands To Enter Packaged Food

The improvements in the country’s economic performance are predicted to be sustained in

2014 with predicted GDP growth of 6%. Although this is marginally slower than in 2013 which

stood at 7%, the projected GDP growth for 2014 remained promising. This will come as the

government remains steadfast in its efforts to make economic reforms to attract more investors

to the country. Growth will also be driven by the thriving business process outsourcing industry

which provides better employment for Filipinos and assists in the expansion of the middle class.

OFW remittances will also help sustain spending among families. As the purchasing power of

consumers improve, they become more discriminating in their product choices. They make

upgrades in purchases and become more open to patronising foreign brands. Familiarity with

products of international companies is also facilitated by social media and online sources.

Cheap airfares and travel packages also made holidays outside the country accessible to more

Filipinos allowing them to become acquainted with foreign brands. This facilitated greater

openness for high-tier brands which made the country attractive for foreign companies to

venture into.

Among the new foreign brands is Cold Stone Creamery which set up shop at Serendra in

Bonifacio Global City through a franchise agreement with Arizon Ice Cream Corp. Baskin-

Robbins, meanwhile, made a comeback in 2014 through a franchise deal with IceDream Inc.

Baskin-Robbins re-entered with a wider range of product offerings to include ice cream cakes,

sundaes and beverages, among others, as the market is seemingly more open to pricier brands.

American ice cream brand, Blue Bell is another new entrant which was brought to the country by

Visfood Corp. Upscale artisanal bakeries, Eric Kayser and Paul Maison De Qualité, also opened

stores at Rockwell and SM Aura, respectively. Japanese snack food company, Calbee Inc,

meanwhile, entered into a 50:50 joint venture with Universal Robina Corp for the distribution of

its products in the market. French company, Groupe Casino, on the other hand, entered into an

agreement with Rustan’s Supercenters Inc for the exclusive distribution of its brand, Casino,

through Rustan’s and Shopwise outlets. Consumer and industrial products of Malaysian

company, Delima Oil Products Sdn Bhd, meanwhile, are made available through its local

partner, Intisari Mulia International Inc.



Outlook

Local companies are likely to pave the way for more foreign brands to enter packaged food

over the forecast period through franchise deals or distribution agreement with international

companies. This will be a favoured strategy by domestic companies who want to take

advantage of the vibrant prospects offered by established well-known brands. This will also be a

more efficient method of expanding a company’s product portfolio rather than investing in

research and development. A greater likelihood of success, meanwhile, is expected to be

achieved by international brands which adapt their product offerings to the purchasing habits or

preferences of the locals. The decision of Delima Oil Products Sdn Bhd to offer small packaging

sizes, thus, will work well for the company given the popularity of sachets among low-income

consumers. Cold Stone Creamery’s inclusion of dried mango and Hany milk chocolate for their

mix-ins is also an illustration of efforts by foreign brands to localise their offerings which is

expected to facilitate in its acceptance among consumers.

The greater availability of foreign brands will not only improve the product choices of

consumers but will also raise their standards and expectations. Domestic companies, thus, will

be challenged to improve their product offerings as consumers become more discriminating.

Local brands which target the middle to upper income groups are expected to be most affected

by the influx of foreign brands compared to those which serve the low income segment. Foreign

brands are also predicted to have the most impact for impulse and indulgence products since

consumers are more open to making upgrades in purchases for these goods which are viewed

as affordable luxuries. Local companies, thus, can focus instead on nutrition/staples or meal

solutions where price tends to play a more significant role in the purchase decision of

consumers. To enhance the appeal of their products to consumers, domestic companies can

also make improvements in their packaging with the aim of making dispensing and storage

more convenient.

Increasingly Busy Lifestyles Continues To Benefit Packaged Food in 2014

Alongside improving economic conditions, increasingly busy lifestyles also influenced

consumer purchasing decisions in 2014. With more people joining the general workforce,

packaged food in general is just one of the many things that consumers are increasingly able to

afford. With less time for preparing, cooking, and even eating food, the convenience offered by

packaged food is appealing especially to the growing workforce.

Increasingly busy lifestyles have also greatly aided the growth of various food products,

especially those that are able to offer increased convenience to consumers. These include

canned/preserved food and instant noodles, among many others. Further aiding the growth of

these products is their availability in the growing retail channel format, convenience stores,

making them available not just in a growing number of locations nationwide, but at any hour of

the day due to their 24-hour operations.

Outlook

With the expected continued performance of the economy in the following years, lifestyles are

expected to continue to be busy, even increasingly so. Improving economic conditions are

expected to aid the continued growth of packaged food. This is helped as well by the specific

business sectors where growth is significant such as business process outsourcing, where

convenience is a key factor.

Manufacturers may then react accordingly and come up with further innovations in their

products to attract increasingly busy consumers. Be it innovations in packaging or new product

formats that are easy to prepare or consume, manufacturers may try to tap these growingly

busy consumers.



Growingly Sophisticated Consumers Lead To Opportunities for New Product Developments

An increasing demand for variety was aided by not just the exposure of Filipino consumers to

more and more products but also their being increasingly able to afford them. With increased

income in Filipino households comes not just greater exposure to products from leisurely

activities such as travelling, but general interest has also risen for premium-priced products,

especially among affluent households. Middle- and lower-income households also continued to

show increased willingness to try new products and variants.

New product developments came in the form of not just new products, but new flavours. In

sauces, dressings and condiments for example, more and more flavours especially from

neighbouring Asian countries, with mixes and sauces increasingly available to add and

incorporate into household meals. Innovations included addressing the growing health and

wellness trend, which at times placed products at a premium but consumers are growingly able

to afford. Consumers now faced with more options have a greater ability to afford and choose

products even beyond price.

Outlook

With the economic prospects in the upcoming years, it could only be expected that consumers

will grow increasingly sophisticated. Not only does growing household income lead to greater

freedom in purchasing decisions, consumers will likely be continuously exposed as well to more

and more products and product variants.

Positive economic prospects could be attractive to many players, both local and international,

to growing their reach and market in the Philippines. Not only could players increasingly try to

gain a bigger share of the market, this is increasingly attractive as well to foreign brands in

growing their reach by exposing more and more Filipino consumers to their products. Factors

such as flavour and variety will continue to gain significance, leaving not just price as the only

driver for purchasing decisions.

FOODSERVICE – KEY TRENDS AND DEVELOPMENTS

Headlines

Foodservice continues with a positive performance in 2014

Frozen processed poultry continues to record the highest growth in 2014 of 6%

The slowest growth in 2014 was by other RTE cereals, which contracted by 6%

The number of foodservice outlets increases by 1% in 2014

Foodservice is expected to continue on an upward growth trend over the forecast period

Trends – Sales To Foodservice

Improving economic conditions continued to benefit consumer foodservice in the Philippines

over the review period. Fast food and full-service restaurants also benefited from increasingly

busy lifestyles, with Filipinos being able to eat out more, especially among working

professionals. The convenience of eating out also positively contributed to foodservice, with

increasingly busy lifestyles along with improving economic conditions.

Frozen processed food continued to perform well in 2014, with a 5% increase in foodservice

volume sales. This is generally attributable to the popularity of breakfast meals in various

chains. One display of the popularity of breakfast food items in foodservice chains was seen



in KFC. For a limited time period and in certain branches only, KFC offered a breakfast buffet

with Filipino breakfast favourites such as frozen processed meat products, usually paired with

rice.

Frozen processed poultry recorded the highest volume growth of 6%, a popular breakfast

food item. Meanwhile, RTE cereals showed the slowest growth, contracting in 2014. This may

be linked to the growing popularity of frozen processed meat products, instead.

Universal Robina Corp and San Miguel Pure Foods Co Inc, both local companies, continued

to be the most prominent companies over the review period. As long established names

across industries, their networks allow them to serve everything from the smallest bakeries

and makeshift foodservice stalls or carinderias, to their established partnerships with chained

consumer foodservice brands. In terms of sauces, dressings and condiments on the other

hand, Unilever Foods Philippines (CMC) and Del Monte Pacific Ltd and Southeast Asia Food

also continued to be some of the largest suppliers to foodservice players of sauces, dressings

and condiments.

Trends –foodservice

Foodservice continued to experience growth in 2014. Aided mostly by increasingly busy

lifestyles and even more so, generally improving economic conditions, the frequency of

eating-out also increased. The expansion of restaurants as well in key cities nationwide also

benefited this growth. The number of consumer foodservice outlets continued on its positive

growth in 2014, increasing by 1%.

In 2014, foodservice volume sales increased by 3%. Improving economic conditions as well

as spending power aided eating-out as it continued to be a favourite pastime, be it for bonding

between family members, friends or co-workers. While this volume growth slowed compared

to the previous year, the difference is marginal and foodservice volume sales continued to be

positive.

Filipinos continued to generally eat at home, most of the time. There was not much interplay

between the retail and foodservice segments, as while eating-out at foodservice

establishments continued to be increasingly popular, the frequency remained limited not just

among families but also working professionals. The two however managed to adapt to similar

flavour trends with for example, Korean and Japanese cuisines seen not just growing in

popularity in terms of the foreign foodservice chains opening in the country, but also these

flavours influencing popular packaged food items.

Prospects

With economic conditions expected to continue on an upward trend, consumer foodservice

can expect to benefit over the forecast period. There remains potential for growth in consumer

foodservice, to the benefit of packaged food in the Philippines. These untapped provincial

areas could be explored by foodservice players, as eating-out is expected to continue growing

in popularity for Filipinos.

It is expected that trends witnessed the review period will continue for consume foodservice,

with various foreign foodservice chains opening, especially closer to the capital of Metro

Manila. These chains, if proven successful over the following years, may also opt to

eventually further expand to other key locations nationwide.

Positive growth is expected to continue for foodservice volumes over the forecast period,

driven mostly by the growing need for convenience, partnered with growing spending power

due to improving economic conditions. At the same time, with the presence of chains both

foreign and local continuing to grow across the country, foodservice volume sales are



expected to be marginally lower alongside the maturity of this market. While growth is still

positive, increasing competition may be affecting these outlets, lowering transactions per

outlet as consumers are continuously offered more options.

The challenge is for foodservice companies to remain competitive through these conditions, in

order to possibly benefit from the positive climate for growth. Companies may look unique

product offerings to cater to niche markets as just one possible way of differentiating

themselves. Price will continue to be an important factor for foodservice players, and

strengthened partnerships between customers and suppliers will remain key.

Category Data

Table 1 Foodservice Sales of Packaged Food by Category: Volume 2009-2014

'000 tonnes 2009 2010 2011 2012 2013 2014 Baby Food - - - - - - Bakery 103.2 104.8 106.5 108.3 110.3 112.4 Canned/Preserved Food 33.3 35.3 37.2 39.1 41.0 42.9 Chilled Processed Food 16.6 17.5 18.4 19.3 20.2 21.2 Confectionery 2.9 2.9 3.0 3.1 3.1 3.2 Dairy 49.8 50.6 51.4 52.3 53.1 54.0 Dried Processed Food 49.8 52.8 54.7 56.7 58.4 59.9 Frozen Processed Food 66.3 74.5 78.9 83.2 87.6 91.9 Ice Cream 4.2 4.3 4.3 4.4 4.5 4.5 Meal Replacement - - - - - - Noodles 14.3 14.8 15.4 15.9 16.4 16.9 Oils and Fats 120.1 126.6 132.2 138.0 144.2 150.9 Pasta 16.4 18.3 19.1 20.1 20.8 21.4 Ready Meals 0.3 0.3 0.3 0.3 0.3 0.3 Sauces, Dressings and 49.9 51.8 53.7 55.4 57.1 58.8 Condiments Snack Bars - - - - - - Soup 0.4 0.4 0.4 0.4 0.4 0.4 Spreads 3.6 3.6 3.7 3.7 3.8 3.9 Sweet and Savoury Snacks 18.4 19.0 19.6 20.0 20.5 20.9 Impulse and Indulgence 61.2 62.6 63.9 65.3 66.7 68.2 Products Nutrition/Staples 290.7 302.1 311.3 321.2 331.1 341.4 Meal Solutions 166.7 179.8 188.9 197.8 206.7 215.4 Packaged Food 518.1 543.8 563.5 583.7 603.9 624.4

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 2009-2014

% volume growth 2013/14 2009-14 CAGR 2009/14 Total Baby Food - - - Bakery 1.9 1.7 8.9 Canned/Preserved Food 4.6 5.2 28.6 Chilled Processed Food 4.6 5.0 27.9 Confectionery 2.1 2.1 10.9



Dairy 1.7 1.7 8.6 Dried Processed Food 2.6 3.8 20.3 Frozen Processed Food 4.9 6.7 38.5 Ice Cream 1.6 1.5 7.6 Meal Replacement - - - Noodles 3.0 3.5 18.6 Oils and Fats 4.6 4.7 25.6 Pasta 3.0 5.5 30.6 Ready Meals 2.4 3.0 15.7 Sauces, Dressings and Condiments 2.9 3.3 17.9 Snack Bars - - - Soup 4.5 4.2 22.7 Spreads 1.6 1.3 6.9 Sweet and Savoury Snacks 2.0 2.6 13.5 Impulse and Indulgence Products 2.1 2.2 11.4 Nutrition/Staples 3.1 3.3 17.4 Meal Solutions 4.2 5.3 29.2 Packaged Food 3.4 3.8 20.5


Table 3 Forecast Foodservice Sales of Packaged Food by Category: Volume 2014-2019

'000 tonnes 2014 2015 2016 2017 2018 2019 Baby Food - - - - - - Bakery 112.4 114.7 117.1 119.7 122.5 125.5 Canned/Preserved Food 42.9 44.7 46.6 48.5 50.3 52.1 Chilled Processed Food 21.2 22.1 23.0 23.8 24.7 25.5 Confectionery 3.2 3.3 3.3 3.4 3.5 3.6 Dairy 54.0 55.0 55.9 56.9 58.0 59.0 Dried Processed Food 59.9 61.2 62.5 63.6 64.6 65.5 Frozen Processed Food 91.9 95.7 99.6 103.3 107.0 110.7 Ice Cream 4.5 4.6 4.7 4.8 4.9 5.1 Meal Replacement - - - - - - Noodles 16.9 17.4 17.9 18.3 18.7 19.1 Oils and Fats 150.9 158.0 165.6 173.8 182.6 192.0 Pasta 21.4 22.0 22.5 22.9 23.3 23.7 Ready Meals 0.3 0.3 0.3 0.3 0.3 0.3 Sauces, Dressings and 58.8 60.3 61.8 63.3 64.7 66.1 Condiments Snack Bars - - - - - - Soup 0.4 0.5 0.5 0.5 0.5 0.6 Spreads 3.9 3.9 4.0 4.0 4.1 4.1 Sweet and Savoury Snacks 20.9 21.3 21.6 21.8 22.0 22.3 Impulse and Indulgence 68.2 69.6 71.1 72.5 74.1 75.7 Products Nutrition/Staples 341.4 352.2 363.6 375.4 388.0 401.2 Meal Solutions 215.4 223.7 231.8 239.9 247.6 255.4 Packaged Food 624.4 644.8 665.7 687.1 708.9 731.4

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 2014-2019



% volume growth 2014/15 2014-19 CAGR 2014/19 Total Baby Food - - - Bakery 2.4 2.2 11.6 Canned/Preserved Food 3.7 4.0 21.7 Chilled Processed Food 3.3 3.8 20.4 Confectionery 2.5 2.4 12.4 Dairy 1.8 1.8 9.2 Dried Processed Food 1.4 1.8 9.4 Frozen Processed Food 3.4 3.8 20.5 Ice Cream 2.6 2.2 11.4 Meal Replacement - - - Noodles 2.0 2.4 12.8 Oils and Fats 5.2 4.9 27.2 Pasta 1.6 2.0 10.6 Ready Meals 1.7 1.9 9.9 Sauces, Dressings and Condiments 2.1 2.4 12.5 Snack Bars - - - Soup 6.6 5.7 32.0 Spreads 1.4 1.5 7.5 Sweet and Savoury Snacks 0.9 1.3 6.4 Impulse and Indulgence Products 2.2 2.1 11.0 Nutrition/Staples 3.4 3.3 17.5 Meal Solutions 3.1 3.5 18.6 Packaged Food 3.2 3.2 17.2


IMPULSE AND INGULGENCE PRODUCTS – KEY TRENDS AND DEVELOPMENTS

Headlines

Impulse and indulgence products grows by 6% to reach PHP132 billion in 2014

Habitual eating of impulse and indulgence products during snack time drives demand

Packaged/industrial pastries records the highest retail value growth in 2014 at 9%

Unit price of all categories increases in 2014 except for snack bars

Universal Robina Corp takes the lead with 23% value share in 2014

Impulse and indulgence products is expected to post a value CAGR of 3% at constant 2014

prices over the forecast period

Trends

Demand for impulse and indulgence products was sustained in 2014 with value growth of 6%

which was marginally faster compared to 2013 at 5%. Despite being a discretionary food item,

consumers continued to allot a proportion of their budget to impulse and indulgence products

since it is customary for them to eat snack foods such as pastries, biscuits or sweet and

savoury snacks during their break time. Impulse and indulgence products make relaxation

time more pleasing as one nibbles on food that one enjoys or is rich in flavour. Whether it is at

home, office or school, individuals of varying demographic profiles strongly associate snack



time or break time with eating impulse and indulgence products which also helps one get by

between main meals.

Packaged/industrial pastries recorded the most vibrant performance in 2014 with value growth

of 9%. This was attributable to the innovations and differentiated product offerings which led

to renewed consumer interest for packaged/industrial pastries as a snack food. Among the

new product offerings for 2013 was the ‘cronut’ which caught the attention of consumers as a

healthier version of the deep fried doughnut. International brands, Krispy Kreme and J Co

Donut, however, were still able to drive demand with their differentiated products to assist the

growth of packaged/industrial pastries in 2014. While these are mainly patronised by well-off

consumers, the expansion in outlets of leading bake shops, Goldilocks and Red Ribbon, were

instrumental for improving the accessibility of packaged/industrial pastries among mass

market consumers.

Snack bars recorded a dismal performance in 2014 with a value sales decline of 8%. The

poor performance of snack bars is due to the limited product distribution and few brand

choices available to consumers. Local companies are not keen on introducing snack bars due

to its unpopularity. Bread or rice with viand is commonly taken for breakfast while biscuits,

pastries and sweet and savoury snacks are more preferred as snacks. As such, dominant

companies in snack bars are multinational players which cater to athletes or fitness fanatics

with their energy and nutrition bars distributed mainly through sports specialty stores or health

food shops.

Supermarkets and other grocery retailers such as sari-sari stores are the key distribution

channels for impulse and indulgence products. The continuous expansion in outlets of

supermarkets encourages preference for these modern grocery channels as they are

increasingly accessible to households. Other grocery retailers such as sari-sari stores,

however, remain significant especially for spur of the moment purchases and small quantity

requirements given their proximity being usually situated within residential neighbourhoods.

No packaging innovations were introduced for impulse and indulgence products in 2013.

Companies, however, continued to gravitate towards small packaging sizes to improve the

affordability of their products. Consumers generally prefer to purchase small volume

quantities so their limited budget can accommodate their various needs.

The unit price of various categories is projected to increase by 1-5% in 2014. An exception is

snack bars which is likely to record a decline in unit price by 2% in 2014. The moderate

increase in unit price will be driven by the upgrades in purchases undertaken by the growing

middle class as their buying capacity improves. Companies, on their part, are expected to

respond through improved choices of premium-priced products or introduction of imported

brands. The unit price of snack bars, meanwhile, will decrease as products widely distributed

through supermarkets are economy brands. Companies price their products affordably to

stimulate trial of snack bars given the numerous alternative options available to consumers.

Competitive Landscape

Universal Robina Corp led other players offering impulse and indulgence products in 2014

with value share of 23%. This is due to the lead attained by its brands in confectionery and

sweet and savoury snacks. Its Jack ‘n’ Jill brand, for one, is strong both in confectionery and

sweet and savoury snacks. Maxx, meanwhile, is another strong brand for confectionery while

Granny Goose contributes to its prominence in sweet and savoury snacks. The company’s

products are able to gain the patronage of mass market consumers due to their competitive

prices and flavours suited to the taste preference of locals.

KSK Food Products earned the biggest increase in value sales in 2014 at 24%. The company

continuously outpaced other players in 2014 to record value sales growth of 15%. KSK’s



robust growth is driven by the lead of its brand, Boy Bawang, in other sweet and savoury

snacks. Aside from being affordably priced, Boy Bawang is able to drive demand as it

provides consumers with more flavour choices of the popular snack food, toasted corn bits,

which is typically seasoned only with salt and garlic. Through popular local flavours such as

adobo, lechon manok and barbecue, among others, Boy Bawang is able to provide a new

twist to an all-time favourite snack food.

Universal Robina Corp and Monde Nissin Corp are the two leading players for impulse and

indulgence products. While Universal Robina Corp dominates confectionery and sweet and

savoury snacks, Monde Nissin leads in biscuits. A common factor shared by these two

companies is their wide product portfolios allowing them to cater to consumers of varying

taste preferences. They also make their products accessible to consumers with their wide

distribution and affordable prices.

Magnum Gold is the latest addition to the Magnum brand and the first one to have a golden

coloured white chocolate coating. It is marginally more expensive than other Magnum

products which are sold at PHP50 while Magnum Gold retails for PHP55. Although the

product was adequately promoted, its high price positioning will limit patronage among well-off

consumers while cheaper alternatives will be a preferred option among price conscious

individuals.

Krispy Liyempo ni Mang Juan was added to the Jack ‘n’ Jill line of products for sweet and

savoury snacks in 2014. It is available in two variants, sarsa (sauce) and toyo, suka at sili (soy

sauce, vinegar and chili). The product is able to achieve differentiation having a flavour taken

from a popular local dish, liempo (pork belly). This is expected to support the lead of Jack ‘n’

Jill in sweet and savoury snacks as it widens its product offerings to include locally popular

flavours.

Promotional events, tri-media and online advertisements are predominantly use by companies

to build awareness for their brands. Unilever RFM Ice Cream Inc, meanwhile, stood out with

the opening of Magnum Manila café in April 2014 at SM Aura Taguig. The café was erected in

order to promote the Magnum brand and is set to operate for only one year. Aside from

entrées and ice cream desserts, the café also features a Magnum bar where diners can

customise their own Magnum ice cream with a selection of 18 different toppings.

Economy brands are able to drive sales through their low prices, wide distribution and

significant presence through traditional grocery retailers such as sari-sari stores. Availability

through channels frequented by low- income consumers is essential for them to reach their

target market. Standard brands, meanwhile, are able to justify their marginally higher prices

mainly through their differentiated offerings and reputation for quality. Premium brands, on the

other hand, are preferred by affluent consumers for their perceived superiority in taste and

quality. Private label, on the other hand, is available although very limited in product choices

resulting in its negligible market share despite competitive prices.

With price remaining a significant consideration in the purchasing decision of consumers,

local companies are able to dominate multinational players through their competitively-priced

products. Foreign companies, meanwhile, improve the accessibility of their products through

the use of small packaging sizes which helps lower the selling price. Foreign companies, in

general, are able to serve the needs of middle to upper income consumers while local players

create affordable counterparts to cater to mass market consumers aspiring for imported

brands which are beyond their budget.

Prospects

The consumption of impulse and indulgence products during snack time is expected to be

sustained over the forecast period. While rice will be continuously preferred for main meals,



biscuits, pastries and sweet and savoury snacks will be staple snack food items. However,

there will be greater preference for biscuits which will outpace other impulse and indulgence

products with a value CAGR of 4% at constant 2014 prices and volume CAGR of 5% over the

forecast period. The wide product choices, affordability and perception of biscuits as healthy

snack options will assist purchases over alternatives which are loaded either with sugar or

salt.

Impulse and indulgence products is expected to register improvements over the forecast

period with a value CAGR of 3% at constant 2014 prices which will be marginally faster that

its review period performance which recorded a value CAGR of 1%. The presence of

economy brands will allow even those with a limited budget to include impulse and indulgence

products on their grocery list even if it is a discretionary food item. The growing middle class

and affluent shoppers, meanwhile, will drive the faster value growth through their purchase of

imported or premium brands.

The growing awareness on the harms of too much salt or sugar in food can pose threats to

the growth of impulse and indulgence products. Although consumption is not likely to

discontinue altogether, consumers are expected to limit their intake or prefer healthier

variants. Opportunities, thus, exist for companies to introduce more healthy alternatives to

meet the growing interest among consumers to achieve wellness through their food choices.

Companies are likely to improve the formulation of their products especially since the

Department of Education seeks to regulate the selling of junk food in schools. Though

implementation is predicted to be weak, companies are expected to balance off any

unfavourable impact of this regulation by creating fortified or healthy biscuits which could

offset any potential decline in volume sales of sweet and savoury snacks. The introduction of

new flavour variants or product formats, meanwhile, will remain prevalent for pastries, cakes

and ice cream. Small packaging or low volume sizes, on the other hand, will continually be

used to improve the affordability especially of standard brands. Promotion through social

networking sites, meanwhile, will improve while tri-media advertisements will slowly give way

as tablets and smartphones are becoming more accessible with the improved availability of

low-priced gadgets.

Unit price is expected to remain stable over the forecast period. Although some categories are

expected to post declines in unit price while others will witness an increase, the movement is

minimal and would remain between -2% and 1%. This is indicative of the sustained

preference for economy and standard brands. Unit price increases, however, will be recorded

for ice cream and cakes which are regarded as an affordable luxury. Consumers are more

open to purchasing pricier options for ice cream and cakes especially for social gatherings or

special occasions. Snack bars will also witness growth in unit price amidst the dominance of

foreign brands especially for energy and nutrition bars which cater to active individuals.

Magnum Gold and Jack ‘n’ Jill Krispy Liyempo ni Mang Juan are both likely to attain limited

success over the forecast period. Magnum Gold’s high price will be the main hindrance

towards wide patronage. Jack ‘n’ Jill’s new variant, meanwhile, will remain as one of the

options consumers will occasionally purchase to put variety to their snack food choices. Other

companies are not expected to create similar offerings. Instead, they will likely focus on

creating new flavours that will contribute to improved product choices of consumers.

Category Data

Table 5 Sales of Impulse and Indulgence Products by Category: Volume 2009-2014

tonnes



2009 2010 2011 2012 2013 2014 Confectionery 88,018.8 89,284.9 87,703.4 87,925.7 90,658.0 93,441.6 Pastries 43,624.1 44,203.1 44,919.6 45,692.6 46,525.9 47,578.5 Cakes 30,085.5 30,358.2 30,629.4 30,901.1 31,206.2 31,560.3 Biscuits 119,204.4 124,693.4 130,516.6 136,996.4 144,032.3 151,327.0 Ice Cream 42,755.1 43,851.7 45,770.9 47,877.2 48,804.8 49,730.6 Sweet and Savoury Snacks 118,875.6 123,558.3 128,779.0 137,466.3 150,273.7 159,837.5 Snack Bars 16.8 16.1 8.4 0.7 0.7 0.6 Impulse and Indulgence 442,580.4 455,965.7 468,327.4 486,860.2 511,501.6 533,476.1 Products


Table 6 Sales of Impulse and Indulgence Products by Category: Value 2009-2014

PHP million 2009 2010 2011 2012 2013 2014 Confectionery 28,808.9 29,690.3 29,743.4 30,404.7 31,903.5 33,479.5 Pastries 6,093.4 6,382.2 6,720.2 7,103.6 7,536.0 8,031.0 Cakes 8,302.0 8,578.2 8,896.0 9,202.5 9,490.9 9,809.6 Biscuits 20,038.5 21,355.2 22,906.4 24,735.0 26,758.8 28,924.8 Ice Cream 8,176.7 8,547.8 8,911.0 9,405.4 9,821.0 10,246.1 Sweet and Savoury Snacks 30,367.0 31,765.0 33,881.2 37,177.9 41,589.9 45,222.4 Snack Bars 12.6 12.2 6.6 0.9 0.8 0.7 Impulse and Indulgence 101,799.0 106,331.0 111,064.8 118,029.9 127,101.0 135,714.1 Products


Table 7 Sales of Impulse and Indulgence Products by Category: % Volume Growth 2009-2014

% volume growth 2013/14 2009-14 CAGR 2009/14 Total Confectionery 3.1 1.2 6.2 Pastries 2.3 1.8 9.1 Cakes 1.1 1.0 4.9 Biscuits 5.1 4.9 26.9 Ice Cream 1.9 3.1 16.3 Sweet and Savoury Snacks 6.4 6.1 34.5 Snack Bars -6.3 -48.0 -96.2 Impulse and Indulgence Products 4.3 3.8 20.5


Table 8 Sales of Impulse and Indulgence Products by Category: % Value Growth 2009-2014

% current value growth 2013/14 2009-14 CAGR 2009/14 Total Confectionery 4.9 3.1 16.2



Pastries 6.6 5.7 31.8 Cakes 3.4 3.4 18.2 Biscuits 8.1 7.6 44.3 Ice Cream 4.3 4.6 25.3 Sweet and Savoury Snacks 8.7 8.3 48.9 Snack Bars -8.0 -43.4 -94.2 Impulse and Indulgence Products 6.8 5.9 33.3


Table 9 NBO Company Shares of Impulse and Indulgence Products: % Value 2010-2014

% retail value rsp Company 2010 2011 2012 2013 2014 Universal Robina Corp 21.3 21.8 22.7 23.8 24.4 Monde Nissin Corp 6.7 6.9 7.0 7.1 7.1 Liwayway Marketing Corp 4.1 4.2 4.3 4.5 4.6 Unilever RFM Ice Cream 3.7 3.7 3.8 3.8 3.7 Inc Mondelez Philippines Inc - - - 3.4 3.4 Nestlé Philippines Inc 3.6 3.5 3.5 3.4 3.4 Food Industries Inc 2.7 2.7 2.7 2.7 2.7 Tobi Marketing Inc 2.4 2.4 2.5 2.4 2.5 Republic Biscuit Corp 2.2 2.2 2.3 2.3 2.3 Columbia International 2.2 2.2 2.1 2.0 2.0 Food Products Inc JBC Corp 1.6 1.7 1.7 1.7 1.7 Delfi Foods Philippines 1.6 1.5 1.6 1.6 1.6 Inc Perfetti Van Melle 1.7 1.6 1.6 1.6 1.5 Philippines Inc GFI Enterprises Inc 1.5 1.5 1.5 1.5 1.5 Regent Foods Corp 1.5 1.5 1.5 1.5 1.5 SPI Corp 1.7 1.6 1.5 1.4 1.4 Leslie Corp 1.0 1.0 1.1 1.2 1.2 Wrigley Philippines Inc 1.7 1.4 1.2 1.2 1.2 Goldilocks Bake Shop Inc 1.0 1.0 1.1 1.1 1.1 Procter & Gamble 0.8 0.9 0.9 1.0 1.0 Philippines Inc Hershey Philippines Inc 1.1 1.0 1.0 0.9 0.9 Mars Philippines Inc 0.9 0.9 0.9 0.9 0.8 Big E Food Products 0.8 0.8 0.8 0.8 0.8 Frito-Lay Co 0.6 0.7 0.7 0.7 0.8 Red Ribbon Bake Shop Inc 0.7 0.7 0.7 0.7 0.7 Suncrest Foods Inc 0.7 0.7 0.7 0.7 0.7 San Miguel Pure Foods 0.7 0.7 0.7 0.7 0.7 Co Inc Grand Alphatech 0.6 0.6 0.6 0.6 0.6 International Corp Martinez & Co Inc, 0.6 0.6 0.6 0.6 0.5 Felicisimo Ferrero Group 0.5 0.5 0.5 0.5 0.5 Artisanal 6.8 6.7 6.5 6.1 5.8 Others 22.8 22.5 21.7 17.7 17.4 Total 100.0 100.0 100.0 100.0 100.0




Table 10 LBN Brand Shares of Impulse and Indulgence Products: % Value 2011-2014

% retail value rsp Brand Company 2011 2012 2013 2014 Jack 'n' Jill Universal Robina Corp 18.1 19.0 20.1 20.8 Sky Flakes Monde Nissin Corp 3.6 3.7 3.7 3.8 Oishi Liwayway Marketing Corp 3.3 3.5 3.6 3.7 Selecta Unilever RFM Ice Cream Inc 3.4 3.4 3.3 3.3 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 2.3 2.2 2.1 2.1 Rebisco Republic Biscuit Corp 1.8 1.8 1.8 1.8 Happy JBC Corp 1.7 1.7 1.7 1.7 Growers GFI Enterprises Inc 1.5 1.5 1.5 1.5 Nestlé Nestlé Philippines Inc 1.6 1.6 1.5 1.5 Leslie's Leslie Corp 1.0 1.1 1.2 1.2 Goldilocks Goldilocks Bake Shop Inc 1.0 1.1 1.1 1.1 Pringles Procter & Gamble 0.9 0.9 1.0 1.0 Philippines Inc Mentos Perfetti Van Melle 1.0 1.0 1.0 0.9 Philippines Inc Eggnog Monde Nissin Corp 0.9 0.9 0.9 0.9 Goya Delfi Foods Philippines 0.9 1.0 0.9 0.9 Inc Bingo Monde Nissin Corp 0.8 0.8 0.8 0.9 Granny Goose Universal Robina Corp 0.7 0.8 0.8 0.9 Regent Regent Foods Corp 0.9 0.9 0.8 0.8 Fita Monde Nissin Corp 0.7 0.8 0.8 0.8 Lemon Square Big E Food Products 0.8 0.8 0.8 0.8 Red Ribbon Red Ribbon Bake Shop Inc 0.7 0.7 0.7 0.7 Oreo Mondelez Philippines Inc - - 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 Tempura Regent Foods Corp 0.6 0.6 0.6 0.6 Knick Knacks Delfi Foods Philippines 0.5 0.6 0.6 0.6 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 0.5 Felicisimo Oreo Kraft Foods 0.6 0.6 - - (Philippines) Inc Artisanal 6.7 6.5 6.1 5.8 Others 36.2 35.0 34.2 33.6 Total 100.0 100.0 100.0 100.0


Table 11 Forecast Sales of Impulse and Indulgence Products by Category: Volume 2014-2019

tonnes 2014 2015 2016 2017 2018 2019



Confectionery 93,441.6 96,347.5 99,197.5 102,158.5 105,269.7 108,504.7 Pastries 47,578.5 48,826.8 50,044.0 51,403.6 52,858.5 54,394.4 Cakes 31,560.3 32,014.3 32,444.8 32,967.2 33,557.6 34,213.0 Biscuits 151,327.0 158,280.3 165,165.2 172,650.4 180,767.2 189,383.8 Ice Cream 49,730.6 50,724.4 51,655.2 52,885.9 54,392.1 56,099.3 Sweet and Savoury Snacks 159,837.5 169,495.0 179,370.1 189,441.1 199,648.2 209,948.8 Snack Bars 0.6 0.6 0.6 0.5 0.5 0.5 Impulse and Indulgence 533,476.1 555,689.0 577,877.4 601,507.2 626,493.9 652,544.4 Products


Table 12 Forecast Sales of Impulse and Indulgence Products by Category: Value 2014-2019

PHP million 2014 2015 2016 2017 2018 2019 Confectionery 33,479.5 34,187.0 34,870.0 35,611.7 36,403.5 37,226.9 Pastries 8,031.0 8,171.1 8,305.2 8,458.5 8,617.2 8,784.8 Cakes 9,809.6 9,941.7 10,072.5 10,243.7 10,441.6 10,655.2 Biscuits 28,924.8 30,076.0 31,219.3 32,463.5 33,834.3 35,303.0 Ice Cream 10,246.1 10,501.0 10,749.6 11,064.1 11,439.0 11,858.9 Sweet and Savoury Snacks 45,222.4 47,818.2 50,448.5 53,046.8 55,615.5 58,118.4 Snack Bars 0.7 0.7 0.7 0.6 0.6 0.6 Impulse and Indulgence 135,714.1 140,695.8 145,665.7 150,888.9 156,351.7 161,947.7 Products


Table 13 Forecast Sales of Impulse and Indulgence Products by Category: % Volume Growth 2014-2019

% volume growth 2014/15 2014-19 CAGR 2014/19 Total Confectionery 3.1 3.0 16.1 Pastries 2.9 2.7 14.3 Cakes 2.0 1.6 8.4 Biscuits 4.8 4.6 25.1 Ice Cream 3.1 2.4 12.8 Sweet and Savoury Snacks 5.2 5.6 31.4 Snack Bars -3.3 -4.4 -20.0 Impulse and Indulgence Products 4.2 4.1 22.3


Table 14 Forecast Sales of Impulse and Indulgence Products by Category: % Value Growth 2014-2019

% constant value growth 2014/2015 2014-19 CAGR 2014/19 TOTAL Confectionery 2.3 2.1 11.2 Pastries 1.9 1.8 9.4



Cakes 2.0 1.7 8.6 Biscuits 4.3 4.1 22.1 Ice Cream 3.7 3.0 15.7 Sweet and Savoury Snacks 4.5 5.1 28.5 Snack Bars -2.5 -3.6 -16.8 Impulse and Indulgence Products 3.6 3.6 19.3


MEAL SOLUTIONS – KEY TRENDS AND DEVELOPMENTS

Headlines

Meal solutions grows by 3% in retail volume terms

Growth of meal solutions continues to be driven by the demand for convenience in 2014

Ready meals exhibits the highest value growth at 9% for 2014

Unit price increases for all categories in 2014

Value share is led by The Purefoods-Hormel Co Inc at 22%

Meal solutions is predicted to record a value CAGR of 3% at constant 2014 prices for meal

solutions over the review period

Trends

Alongside improving economic conditions in the country, Filipinos are increasingly

experiencing faster-paced lifestyles. Busier lifestyles call for greater convenience, which meal

solutions benefit from, benefiting categories such as canned/preserved food, frozen

processed food, chilled processed food, and more. The positive impact of these factors on

this category was evident in the marginal increase in value sales growth for meal solutions in

2014, at 7%.

With 5% volume growth and 9% value growth for 2014, ready meals continued to record the

fastest growth under meal solutions. A dynamic area, ready meals continue to show much

room for growth not just in terms of competition but also flavours and overall product variety.

Meanwhile, sauces, dressings and condiments recorded the slowest volume growth in 2014,

and was marginally slower compared to the previous year. A developed area with not much

room for growth and much competition already present, sauces, dressings and condiments as

the biggest category continued to show moderate growth.

While traditional channels such as mom-and-pop sari-sari stores continued to be a highly

popular distribution channel for meal solutions, growing in popularity as well were modern

grocery retailers such as supermarkets and even more significantly, convenience stores. With

these modern grocery retailers continuously expanding in outlet count and nationwide reach,

their ability to bring these products even closer to the consumers helps them gain even more

significance as distribution channels for meal solutions.

With unit price increasing for all categories in 2014, the challenge for manufacturers is then to

find ways to keep costs low and maintain the affordability of their products. One method was

evident in the growing popularity of stand-up pouches as packaging for meal solutions.

Brands such as Hunts Pork ‘n Beans, Mega Sardines and Fresca Tuna offered their products

in smaller sizes using these stand-up pouches.




Throughout the years, The Purefoods-Hormel Co Inc was able to maintain its position, leading

sales of meal solutions in 2013 and 2014. With 22% value share for meal solutions, its strong

lead was maintained by the highly positive performance of its products. Its flagship brand,

Purefoods, continued in strength in products such as canned/preserved meat and meat

products, chilled processed meat, frozen processed red meat and frozen processed poultry.

With consumers remaining loyal to this trusted brand, these are also sectors that witnessed

continued growth due to the convenience provided and increasingly busy lifestyles given

improving economic conditions.

Ranked second in terms of meal solutions, CDO Foodsphere Inc was not left behind, either.

Showing the greatest increase in value share for meal solutions overall, it continued to grow in

strength. This domestic player had the advantage as well of its long presence in the business,

with its strength in canned/preserved food, chilled processed food, and frozen processed food

among many others. Its increase in value share showed the ability CDO Foodsphere Inc has

to increasingly gain favour amongst Filipino consumers, even against the top leading brands

of The Purefoods-Hormel Co.

Considering the products under meal solutions, a key strategy continued to be effective

advertising, as witnessed in leading players for meal solutions. Especially for new brands

entering the market, effective endorsement is a key factor, usually through partnerships with

local celebrities. The continued demand for variety may have called for innovation in terms of

flavours and product offerings, but gaining the trust and loyalty of consumers.

In 2014, some new product developments included the new Del Monte Spaghetti Sauce with

Purefoods Tender Juicy Hotdog. Incorporating the very common practice of adding hotdogs

into Filipino-style spaghetti, this new sauce by Del Monte Philippines Inc removes the extra

step and already adds in the hotdogs to the spaghetti sauce for the consumer. The

Purefoods-Hormel Co Inc on the other hand released Purefoods Fun Stuff Nuggets Medley, a

mix of its various flavours and varieties of chicken nuggets such as Pepperoni & Cheese,

Bacon & Cheese and Cheese Overload in one bag.

While imported premium brands continued to be available, meal solutions continued to be

dominated by standard products, with consumers generally loyal to their trusted brands.

Economy brands also continued to grow in presence, especially with the growing strength of

private label such as SM Bonus, but consumers showed a tendency to remain loyal to their

preferred brands.

Prospects

Improving economic conditions as well as the growing need for convenience will continue to

benefit meal solutions over the forecast period. With an expected value CAGR of 3% at

constant 2014 prices over the forecast period, meal solutions is expected to continue onwards

a stable positive growth trend.

A potential forecast threat to growth continues to be the growing health consciousness trend

among Filipino consumers. While meal solutions provide convenience among many other

advantages, its nature as processed food may also hinder its attractiveness to increasingly

health-conscious consumers.

Companies will likely continue expansion efforts through flavours, especially from Asian

cuisines such as Korean and Japanese, which continued to be increasingly popular in the

Philippines.

The conveniently packed Del Monte Spaghetti Sauce with Purefoods Tender Juicy Hotdog is

expected to succeed over the review period, indicated also by how competing spaghetti sauce



player UFC also rushed to make its own version of sauce incorporating hotdogs. Purefoods

Fun Stuff Nuggets Medley on the other hand is also expected to see success, following the

overall growth of frozen processed poultry products, especially as a popular breakfast item for

Filipinos.

Within meal solutions, ready meals with a value CAGR of 5% at constant 2014 prices is

expected to record the best growth over the forecast period. Unit price movement on the other

hand may witness a slow decline in the medium-term if companies continued to innovate in

terms of packaging, such as smaller pack sizes.

Category Data

Table 15 Sales of Meal Solutions by Category: Volume 2009-2014

'000 tonnes 2009 2010 2011 2012 2013 2014 Ready Meals 11.6 12.0 12.6 13.1 13.8 14.4 Canned/Preserved Food 223.0 234.5 245.6 256.6 267.5 277.8 Frozen Processed Food 102.1 105.7 111.9 116.1 119.8 123.2 Dessert Mixes 0.4 0.4 0.4 0.4 0.4 0.4 Dinner Mixes - - - - - - Chilled Processed Food 82.8 86.5 89.8 92.9 96.0 99.0 Sauces, Dressings and 187.7 195.8 203.7 210.7 217.2 223.0 Condiments Soup 3.9 4.0 4.2 4.3 4.5 4.6 Meal Solutions 611.5 639.0 668.1 694.2 719.1 742.5


Table 16 Sales of Meal Solutions by Category: Value 2009-2014

PHP million 2009 2010 2011 2012 2013 2014 Ready Meals 2,570.0 2,752.9 2,960.6 3,204.4 3,442.4 3,758.1 Canned/Preserved Food 26,874.1 28,807.3 30,976.9 33,251.3 35,514.8 38,300.0 Frozen Processed Food 24,450.9 25,920.4 28,148.2 30,208.5 32,022.6 34,320.2 Dessert Mixes 122.4 128.6 135.6 142.4 149.7 159.4 Dinner Mixes - - - - - - Chilled Processed Food 14,336.8 15,053.6 15,881.6 16,834.5 17,878.2 19,183.3 Sauces, Dressings and 20,158.6 21,239.5 22,425.2 23,702.5 25,016.5 26,599.3 Condiments Soup 1,220.3 1,317.1 1,423.7 1,540.4 1,637.8 1,767.2 Meal Solutions 89,733.1 95,219.4 101,951.8 108,884.0 115,661.9 124,087.5


Table 17 Sales of Meal Solutions by Category: % Volume Growth 2009-2014

% volume growth 2013/14 2009-14 CAGR 2009/14 Total Ready Meals 5.0 4.6 25.0 Canned/Preserved Food 3.9 4.5 24.6



Frozen Processed Food 2.8 3.8 20.6 Dessert Mixes 3.5 3.2 16.8 Dinner Mixes - - - Chilled Processed Food 3.1 3.6 19.6 Sauces, Dressings and Condiments 2.7 3.5 18.8 Soup 3.9 3.4 18.0 Meal Solutions 3.2 4.0 21.4


Table 18 Sales of Meal Solutions by Category: % Value Growth 2009-2014

% current value growth 2013/14 2009-14 CAGR 2009/14 Total Ready Meals 9.2 7.9 46.2 Canned/Preserved Food 7.8 7.3 42.5 Frozen Processed Food 7.2 7.0 40.4 Dessert Mixes 6.5 5.4 30.2 Dinner Mixes - - - Chilled Processed Food 7.3 6.0 33.8 Sauces, Dressings and Condiments 6.3 5.7 32.0 Soup 7.9 7.7 44.8 Meal Solutions 7.3 6.7 38.3


Table 19 NBO Company Shares of Meal Solutions: % Value 2010-2014

% retail value rsp Company 2010 2011 2012 2013 2014 Purefoods-Hormel Co 21.7 21.9 22.2 22.3 22.5 Inc, The CDO Foodsphere Inc 6.8 7.1 7.3 7.4 7.6 Century Canning Corp 7.0 7.0 7.0 7.0 7.0 Pacific Meat Co Inc 3.8 3.9 5.6 5.5 5.5 Unilever Foods 5.2 5.2 5.2 5.2 5.2 Philippines (CMC) Del Monte Philippines Inc 3.7 3.8 3.8 3.8 3.8 Ajinomoto Philippines 4.2 4.0 3.9 3.8 3.7 Corp A Tung Chingco Trading 2.4 2.4 2.4 2.5 2.5 SM Retail Inc 2.3 2.3 2.3 2.3 2.4 New Señorito Frozen 1.6 1.7 1.7 1.8 1.8 Food Co Maunlad Canning Corp 1.7 1.6 1.6 1.6 1.6 Dole Philippines Inc 1.6 1.6 1.6 1.6 1.6 Campbell Soup Co 1.5 1.5 1.5 1.5 1.5 Kraft Foods 1.3 1.3 1.3 1.2 1.2 (Philippines) Inc Superb Catch Inc 1.1 1.1 1.1 1.2 1.2 King Sue Ham & Sausage 1.2 1.2 1.2 1.1 1.1 Co Inc Southeast Asia Food Inc 1.0 1.0 1.0 1.0 1.1 Silver Swan Mfg Corp Inc 0.9 0.9 0.9 1.0 1.0 UFC Philippines Inc 0.9 1.0 1.0 1.0 1.0



Sara Lee Corp 1.0 1.0 0.9 0.9 0.9 Alson's Aqua 0.7 0.7 0.8 0.8 0.8 Technologies Inc Del Monte Foods Inc - - - - 0.8 Bambi Foods Mfg Corp 0.9 0.9 0.9 0.8 0.8 Bagumbuhay Industrial 0.7 0.7 0.7 0.7 0.7 Corp HDR Foods Corp 0.7 0.7 0.7 0.7 0.7 Marigold Commodities Corp 0.6 0.6 0.6 0.6 0.6 B2 Maling Foods Corp 0.6 0.6 0.6 0.6 0.6 Nestlé Philippines Inc 0.7 0.6 0.5 0.5 0.5 Ram Food Products Inc 0.4 0.5 0.5 0.5 0.5 Maple Leaf Food Royal 0.5 0.5 0.5 0.5 0.5 Greenland International Del Monte Foods Co 0.8 0.8 0.8 0.8 - Others 22.6 22.2 20.1 19.8 19.5 Total 100.0 100.0 100.0 100.0 100.0


Table 20 LBN Brand Shares of Meal Solutions: % Value 2011-2014

% retail value rsp Brand Company 2011 2012 2013 2014 Purefoods Purefoods-Hormel Co 21.7 22.0 22.2 22.4 Inc, The CDO CDO Foodsphere Inc 7.1 7.3 7.4 7.6 555 Century Canning Corp 3.8 3.8 3.8 3.8 Argentina Pacific Meat Co Inc 3.9 3.7 3.6 3.6 Ajinomoto Ajinomoto Philippines Corp 3.8 3.6 3.5 3.5 Century Century Canning Corp 3.2 3.2 3.2 3.3 Del Monte Del Monte Philippines Inc 3.2 3.2 3.2 3.2 Knorr Unilever Foods 2.8 2.8 2.8 2.9 Philippines (CMC) Ligo A Tung Chingco Trading 2.4 2.4 2.5 2.5 SM Bonus SM Retail Inc 2.3 2.3 2.3 2.4 Swift Pacific Meat Co Inc - 1.9 1.9 1.9 New Señorito New Señorito Frozen 1.7 1.7 1.8 1.8 Food Co Youngstown Maunlad Canning Corp 1.6 1.6 1.6 1.6 Lady's Choice Unilever Foods 1.6 1.6 1.6 1.5 Philippines (CMC) Campbell's Campbell Soup Co 1.4 1.4 1.3 1.3 Seaking Superb Catch Inc 1.1 1.1 1.2 1.2 King Sue King Sue Ham & Sausage 1.2 1.2 1.1 1.1 Co Inc Dole Dole Philippines Inc 1.1 1.1 1.1 1.1 Datu Puti Southeast Asia Food Inc 1.0 1.0 1.0 1.0 Silver Swan Silver Swan Mfg Corp Inc 0.9 0.9 0.9 0.9 Sara Lee Sara Lee Corp 1.0 0.9 0.9 0.9 Kraft Kraft Foods 0.8 0.8 0.9 0.9 (Philippines) Inc Sarangani Bay Alson's Aqua 0.7 0.8 0.8 0.8 Technologies Inc Bambi Bambi Foods Mfg Corp 0.9 0.9 0.8 0.8 Del Monte Del Monte Foods Inc - - - 0.8 Master Bagumbuhay Industrial Corp 0.7 0.7 0.7 0.7 Mother's Best HDR Foods Corp 0.7 0.7 0.7 0.7



Best Foods Unilever Foods 0.7 0.7 0.7 0.7 Philippines (CMC) Mama Sita Marigold Commodities Corp 0.6 0.6 0.6 0.6 Maling B2 Maling Foods Corp 0.6 0.6 0.6 0.6 Del Monte Del Monte Foods Co 0.8 0.8 0.8 - Swift RFM Corp 1.8 - - - Others 25.1 24.7 24.3 24.0 Total 100.0 100.0 100.0 100.0


Table 21 Forecast Sales of Meal Solutions by Category: Volume 2014-2019

'000 tonnes 2014 2015 2016 2017 2018 2019 Ready Meals 14.4 15.2 16.0 16.8 17.6 18.6 Canned/Preserved Food 277.8 287.9 297.6 307.8 318.6 330.2 Frozen Processed Food 123.2 126.3 129.1 132.1 135.5 139.1 Dessert Mixes 0.4 0.4 0.5 0.5 0.5 0.5 Dinner Mixes - - - - - - Chilled Processed Food 99.0 101.9 104.6 107.7 111.2 115.1 Sauces, Dressings and 223.0 228.2 232.6 237.5 242.9 248.7 Condiments Soup 4.6 4.8 5.0 5.2 5.4 5.6 Meal Solutions 742.5 764.9 785.2 807.6 831.8 857.8


Table 22 Forecast Sales of Meal Solutions by Category: Value 2014-2019

PHP million 2014 2015 2016 2017 2018 2019 Ready Meals 3,758.1 3,940.3 4,128.0 4,335.6 4,556.4 4,793.3 Canned/Preserved Food 38,300.0 39,517.5 40,714.3 41,982.1 43,335.0 44,778.3 Frozen Processed Food 34,320.2 35,214.3 36,016.9 36,931.5 37,927.1 38,980.7 Dessert Mixes 159.4 162.9 166.6 170.6 174.6 178.6 Dinner Mixes - - - - - - Chilled Processed Food 19,183.3 19,701.3 20,159.9 20,702.8 21,312.2 21,981.5 Sauces, Dressings and 26,599.3 27,056.5 27,424.8 27,841.2 28,304.6 28,812.2 Condiments Soup 1,767.2 1,826.4 1,882.2 1,941.4 2,003.4 2,071.7 Meal Solutions 124,087.5 127,419.3 130,492.6 133,905.1 137,613.3 141,596.4


Table 23 Forecast Sales of Meal Solutions by Category: % Volume Growth 2014-2019

% volume growth 2014/15 2014-19 CAGR 2014/19 Total Ready Meals 5.3 5.2 28.6 Canned/Preserved Food 3.6 3.5 18.8 Frozen Processed Food 2.7 2.5 12.9



Dessert Mixes 3.8 3.8 20.7 Dinner Mixes - - - Chilled Processed Food 3.4 3.1 16.3 Sauces, Dressings and Condiments 2.4 2.2 11.5 Soup 3.7 3.8 20.3 Meal Solutions 3.1 2.9 15.5


Table 24 Forecast Sales of Meal Solutions by Category: % Value Growth 2014-2019

% constant value growth 2014/2015 2014-19 CAGR 2014/19 TOTAL Ready Meals 5.2 5.0 27.5 Canned/Preserved Food 3.3 3.2 16.9 Frozen Processed Food 2.8 2.6 13.6 Dessert Mixes 2.3 2.3 12.0 Dinner Mixes - - - Chilled Processed Food 3.1 2.8 14.6 Sauces, Dressings and Condiments 1.8 1.6 8.3 Soup 3.4 3.2 17.2 Meal Solutions 2.9 2.7 14.1


NUTRITION/STAPLES – KEY TRENDS AND DEVELOPMENTS

Headlines

Nutrition/staples posts 5% value growth to reach PHP234 billion in 2014

Nutrition/staples remains an essential food item despite increasing frequency of dining out

Pasta records the highest value growth in 2014 at 10%

Unit price increases moderately in 2014

Nestlé Philippines Inc dominates nutrition/staples with value share of 18% in 2014

Nutrition/staples is expected to record a value CAGR of 3% at constant 2014 prices over the

forecast period

Trends

The continued expansion of shopping centres is helping to assist the growth of restaurants.

With the wide range of choices from budget restaurants to more extravagant ones, consumers

can afford to eat out more often without significantly straining their budget. Nutrition/staples,

however, remained an essential food item which most households cannot do without, despite

the rising tendency to dine out. For 2014, nutrition/staples grew by 5% in value terms which

was marginally faster than the recorded growth in 2013. This was due to the price increases

in vegetable and seed oil which is troubled by supply issues and the growing number of

upscale artisanal bakeries, amongst others. The faster value growth will also be spurred by

the willingness of parents to purchase fortified brands of baby food to ensure their children are

receiving the right nutrients



Pasta outpaced other area of nutrition/staples in 2014 with value sales increase of 10%. While

rice is a staple for regular everyday meals, pasta is a must-have for celebrations. During

social gatherings, it is typical for a pasta dish to be included, especially for birthday parties of

children. Thus, while consumers might not have a need for pasta for their everyday meal, a

constant demand for it arises whenever there are special occasions.

Cheese underperformed in 2014 as it recorded the most sluggish value growth at 2%. This is

due to the popularity of affordable processed cheese among consumers and low appreciation

for pricier gourmet variants. Cheese is commonly used as a bread spread, an ingredient for

cooking dishes such as stews or a garnish for pasta dishes such that spreadable processed

cheese and quick melt cheeses are most preferred by consumers. Thus, affordable variants

are more widely distributed being patronised by a greater number of consumers than artisanal

cheese. More expensive variants such as Camembert, Brie and Emmental are unknown to

regular households who are unfamiliar with its use in food preparation.

Supermarkets was the key distribution channel for breakfast cereals, dairy products, oils and

fats, spreads, pasta and rice. The growing number of outlets of supermarket chains makes

this modern grocery channel more accessible to households for the purchase of essential

food items. Other grocery retailers such as sari-sari stores, meanwhile, are prominent for the

distribution of noodles. Being located in neighbourhoods, sari-sari stores are convenient

channels for the purchase of noodles by low-income consumers who usually buy per piece as

the need arises or whenever their budget will permit. The purchase of baby food and meal

replacement products, on the other hand, is more prevalent through health and beauty

specialist retailers which carry a more comprehensive range of brands with some

drugstores/parapharmacies offering a valuable 24-hour service. Food specialist retailers,

meanwhile, is preferred for the purchase of warm and freshly baked bread.

There were no significant packaging innovations for nutrition/staples in 2014. It is common,

however, for companies to use sachets or pouches to improve the affordability of their

products. This is evident for categories such as spreadable processed cheese and vegetable

and seed oil. Other companies, meanwhile, offer small packaging sizes in response to the

greater preference among consumers to purchase often in small quantities rather than buy

less frequently in bulk.

Unit price of nutrition/staples is expected to rise moderately in 2014 with 4% being the highest

increase to be recorded for some categories. This is because consumers are expected to

prefer low-end or standard brands for everyday food items. The openness for pricier

alternatives would usually be more prevalent for occasionally purchased goods such as

impulse/indulgence products. Companies, on their part, control their price increases or offer

small-sized packaging to maintain consumer preference for their brands.


Nestlé Philippines Inc led nutrition/staples in 2014 with value share of 18%. This is due to the

leadership of its brands in baby food excl milk formula and drinking milk products. Its brands

are also strong contenders in milk formula, yoghurt and sour milk products, breakfast cereals,

other dairy and convalescence. The company’s established reputation for quality drives

consumer preference for its brands. Nestlé also holds numerous promotional activities which

improve the positioning of its brands as beneficial for achieving overall wellness.

Molino Nicoli SpA exited the market following the cessation in distribution of its breakfast

cereal locally. Its brand, Nicoli Flakes, struggled against those offered by prominent

companies such as Kellogg Co and Nestlé Philippines Inc. Unilever Foods Philippines (CMC),

meanwhile, lagged behind other players in 2014 declining by 50% following the acquisition of

RFM Corp of its pasta brand, Royal.



Successful companies for nutrition/staples are those who are able to provide quality products

at reasonable prices. With nutrition/staples being a regularly purchased item, consumers often

prefer standard or economy brands. Companies are able to respond to this by utilizing small

packaging size which improves the affordability of their products without sacrificing on quality.

Fortification or the use of naturally healthy ingredients also helps increase the value of a

product and improves its appeal among consumers.

Liwayway Marketing Corp expanded its product portfolio with the introduction of Oishi Choco

Chug and Oishi Oaties Milk in 2013. These two new brands are the first drinking milk products

to contain finely ground oats. Available in 250ml and 1litre brick liquid carton, the product is

likely to be received well by youngsters, especially those in need of a healthy breakfast or

snack food in a convenient format.

The UFC Birthday Pack was launched in 2013 which bundles together dried pasta and pasta

sauce, available in 1kg and 500g options. The product’s main benefit is the savings in cost

being sold at a lower price than if the two products were purchased separately. As such, the

product is likely to be patronised mainly by price- conscious consumers, while the greater

majority would opt to have the freedom to choose the pasta sauce to be paired with their dried

pasta.

Events are widely used for the promotion of various nutrition/staples. Nestlé Philippines Inc,

however, is most active in holding events which are centred on promoting wellness. The

company, for instance, annually holds the Choose Wellness Expo which ran on its sixth year

in 2013. Nestlé also engages consumers through various fitness activities such as Zumba,

muay thai, yoga and aqua training, amongst others. Nutritional counselling is also utilised by

Nestlé to educate consumers on how to make better food choices.

Private label has minimal presence in nutrition/staples and is limited to vegetable and seed

oil, hot cereals and packaged/industrial bread. As such, economy brands are the best option

for consumers with a limited budget. Affordable brands however are just as active as standard

brands are in investing in tri-media advertisements, marketing events and social media

campaigns. Premium products, meanwhile, often bank on the high equity of their brand to

attract affluent shoppers who are more focused on quality, taste or nutritional content rather

than price.

Multinationals have a marginally bigger value share against local companies in

nutrition/staples. Foreign companies have the greater capability to create more innovative

products than local companies since several of them have a centralised research and

development department. Domestic players, meanwhile, are able to outperform their foreign

counterparts in oils and fats where affordability is significant for an item such as vegetable

and cooking oil which is essential for cooking and can take up a significant proportion of a

household’s budget.

Prospects

Demand for nutrition/staples is expected to be sustained over the forecast period despite the

growing number of restaurants in urban areas. Consumers will continue to purchase

nutrition/staples to ensure a steady supply of food in a household for instances when eating

out is inconvenient such as when there is a heavy downpour of rain. Furthermore, regular

eating out is only likely among affluent consumers while regular households are expected to

balance this out with the preparing of home cooked food to ensure that their expenses do not

exceed their budget.

Nutrition/staples is projected to record a value CAGR of 3% at constant 2014 prices over the

forecast period which will be marginally better than its review period performance where it

posted a value CAGR of 2% at constant 2014 prices. The marginally faster value growth will



arise as consumers will continually purchase nutrition/staples such as rice, vegetable and

seed oil, bread and baby food despite fluctuations in price. Pasta is expected to contribute

most to growth which is predicted to record a value CAGR of 6% at constant 2014 prices over

the forecast period. The robust value growth of pasta will be driven by the preference to

prepare pasta dishes during social gatherings. Pasta will also have the most vibrant increase

in volume sales with a CAGR of 5% over the forecast period. The fast volume growth will

arise as economy brands, bundle packs and pasta sauces with hotdogs are likely to

encourage more frequent cooking of pasta dishes for regular meals as it becomes more

affordable and easy to prepare.

No factors are predicted to significantly threaten the growth of nutrition/staples over the

forecast period. Consumers will continuously patronise nutrition/staples, especially rice and

vegetable and seed oil which are essentials for everyday food preparation. With no available

substitutes, consumers are likely to downgrade to economy brands in the event of price

increases or opt for smaller size packaging while they find ways to minimise their usage.

More healthy variants are likely to be introduced over the forecast period. The increasingly

hectic lifestyles of consumers, meanwhile, could encourage the development of more 2-in-1

products or bundle packs which provide convenience and cost savings. Packaging will

continue to lean towards small sizes. This will be particularly relevant for new product

launches in order to facilitate trial. While advertisements can build brand awareness,

incentives through added volume or price discounts are likely to be more effective in driving

sales. Consumers are predicted to remain practical rather than patronise brands based on

endorsements alone by popular celebrities.

Changes in unit price for nutrition/staples will be minimal over the forecast period. The

increase will be 1% at most while decreases will not be lower than 2%. This is indicative of the

sustained preference for affordable products among consumers. Companies, thus, are likely

to keep their prices stable and offer incentives in the form of price discounts, added volume,

bundling and buy-1-take-1 promotions which will remain prominent for bread.

Oishi Choco Chug and Oishi Oaties Milk both have the potential to perform well. Prospective

consumers are not limited to younger age groups but can include adults as well. The addition

of finely ground oats makes it more nutritious as it contains fibre not found in competing

drinking milk products. These new launches can encourage other companies to create similar

offerings or to find alternative means to achieve differentiation beyond the usual fortification

with vitamins and minerals.

The UFC Birthday Pack is expected to witness limited success over the forecast period. Aside

from price- conscious consumers, only those loyal to the UFC brand will find value to the

bundled product. Also, consumers’ desire for variety will limit its purchase since the bundle

restricts one’s choice of pasta sauce. Even if other players create similar offerings, demand

for dried pasta and pasta sauces sold separately are unlikely to be significantly affected by

such bundles.

Category Data

Table 25 Sales of Nutrition/Staples by Category: Volume 2009-2014

'000 tonnes 2009 2010 2011 2012 2013 2014 Bread 130.6 132.0 135.6 139.5 142.2 145.0 Breakfast Cereals 13.2 13.6 14.1 14.6 15.2 15.8 Dairy 340.6 351.2 362.7 376.4 388.9 399.3



Meal Replacement 1.2 1.3 1.2 1.2 1.3 1.3 Oils and Fats 467.3 486.5 506.3 525.0 545.2 564.7 Baby Food 53.3 53.5 53.6 54.0 54.5 55.5 Spreads 14.3 14.4 13.6 12.7 12.7 13.0 Pasta 31.7 34.6 35.6 37.8 39.8 41.9 Noodles 168.7 178.4 189.4 200.1 210.8 220.6 Rice 90.2 91.5 93.4 95.7 98.5 101.7 Nutrition/Staples 1,311.1 1,356.9 1,405.4 1,456.9 1,509.1 1,558.8


Table 26 Sales of Nutrition/Staples by Category: Value 2009-2014

PHP million 2009 2010 2011 2012 2013 2014 Bread 13,908.3 14,649.2 15,566.6 16,618.8 17,529.2 18,493.2 Breakfast Cereals 3,237.1 3,393.3 3,585.3 3,810.6 4,056.4 4,332.9 Dairy 60,569.3 67,203.1 70,020.9 72,977.6 76,137.1 79,096.2 Meal Replacement 1,535.0 1,800.4 1,937.8 2,202.2 2,417.6 2,630.0 Oils and Fats 39,536.2 41,952.2 44,996.4 48,032.6 50,854.6 54,299.0 Baby Food 30,459.7 31,648.5 32,287.4 32,988.1 34,143.8 35,546.4 Spreads 3,667.1 3,727.3 3,671.0 3,598.2 3,710.3 3,825.2 Pasta 2,408.5 2,805.9 2,946.2 3,285.0 3,580.6 3,928.0 Noodles 19,299.8 20,567.6 22,061.6 23,602.4 25,204.1 27,211.2 Rice 4,047.7 4,169.2 4,398.5 4,662.4 4,928.1 5,302.7 Nutrition/Staples 178,668.7 191,916.6 201,471.7 211,777.9 222,561.9 234,664.8


Table 27 Sales of Nutrition/Staples by Category: % Volume Growth 2009-2014

% volume growth 2013/14 2009-14 CAGR 2009/14 Total Bread 2.0 2.1 11.0 Breakfast Cereals 3.9 3.7 19.7 Dairy 2.7 3.2 17.2 Meal Replacement 2.9 2.2 11.4 Oils and Fats 3.6 3.9 20.8 Baby Food 1.8 0.8 4.2 Spreads 1.8 -1.9 -9.3 Pasta 5.1 5.7 32.1 Noodles 4.7 5.5 30.8 Rice 3.3 2.4 12.8 Nutrition/Staples 3.3 3.5 18.9


Table 28 Sales of Nutrition/Staples by Category: % Value Growth 2009-2014

% current value growth 2013/14 2009-14 CAGR 2009/14 Total Bread 5.5 5.9 33.0



Breakfast Cereals 6.8 6.0 33.9 Dairy 3.9 5.5 30.6 Meal Replacement 8.8 11.4 71.3 Oils and Fats 6.8 6.6 37.3 Baby Food 4.1 3.1 16.7 Spreads 3.1 0.8 4.3 Pasta 9.7 10.3 63.1 Noodles 8.0 7.1 41.0 Rice 7.6 5.5 31.0 Nutrition/Staples 5.4 5.6 31.3


Table 29 NBO Company Shares of Nutrition/Staples: % Value 2010-2014

% retail value rsp Company 2010 2011 2012 2013 2014 Nestlé Philippines Inc 18.7 18.6 18.4 18.3 18.1 Alaska Milk Corp 8.0 7.8 7.6 7.5 7.4 San Pablo Mfg Corp 6.7 6.8 7.0 7.1 7.3 Mead Johnson 7.4 7.2 7.0 7.1 7.2 Philippines Inc Monde Nissin Corp 6.3 6.5 6.7 6.8 6.9 International Oil Factory 5.8 5.8 5.9 5.9 6.0 San Miguel Pure Foods 4.5 4.6 4.5 4.5 4.5 Co Inc Wyeth Philippines Inc 3.5 3.5 3.5 3.4 3.4 Kraft Foods 3.0 2.9 2.9 2.8 2.7 (Philippines) Inc Fonterra Brands (Phils) 2.7 2.7 2.7 2.6 2.4 Inc SM Retail Inc 2.0 2.1 2.2 2.2 2.3 Universal Robina Corp 1.9 1.9 2.1 2.1 2.2 Yakult Philippines Inc 1.9 1.9 2.1 2.1 2.1 Gardenia Philippines Inc 1.4 1.6 1.7 1.7 1.7 Abbott Laboratories 1.3 1.3 1.3 1.3 1.2 (Phils) Inc RFM Corp 0.6 0.6 0.6 0.7 1.1 UFC Philippines Inc 1.1 1.1 1.1 1.1 1.1 Goldilocks Bake Shop Inc 0.8 0.8 0.9 0.9 0.9 Agana Circle Enterprises 0.6 0.6 0.6 0.6 0.7 Nissin-Universal Robina 0.6 0.6 0.6 0.6 0.6 Corp Quaker Oats Asia Inc 0.6 0.6 0.6 0.6 0.6 MLM Foods Inc 0.6 0.6 0.6 0.6 0.6 Green Spot Co Ltd - 0.2 0.3 0.5 0.5 Malabon Soap & Oil 0.5 0.5 0.5 0.5 0.5 Industrial Co Inc Poms Venture Corp 0.3 0.4 0.4 0.4 0.4 Unilever Foods 1.0 0.8 0.7 0.7 0.4 Philippines (CMC) New Zealand Creamery Inc 0.4 0.4 0.3 0.3 0.3 AB Food & Beverages 0.3 0.3 0.3 0.3 0.3 Philippines Inc AD Gothong Mfg Corp 0.3 0.3 0.3 0.3 0.3 Bongrain SA 0.2 0.2 0.2 0.2 0.2 Royal FrieslandCampina NV 0.5 0.3 0.1 - - Artisanal 4.1 4.0 4.0 3.9 3.9



Others 12.5 12.5 12.2 12.2 12.1 Total 100.0 100.0 100.0 100.0 100.0


Table 30 LBN Brand Shares of Nutrition/Staples: % Value 2011-2014

% retail value rsp Brand Company 2011 2012 2013 2014 Minola San Pablo Mfg Corp 6.8 7.0 7.1 7.3 Lucky Me Monde Nissin Corp 6.5 6.7 6.8 6.9 Alaska Alaska Milk Corp 7.0 6.6 6.5 6.4 Baguio International Oil Factory 5.8 5.9 5.9 6.0 Bear Brand Nestlé Philippines Inc 5.7 5.7 5.6 5.5 Milo Nestlé Philippines Inc 3.8 3.8 3.8 3.8 Lactum Mead Johnson 3.5 3.4 3.5 3.7 Philippines Inc Nido Nestlé Philippines Inc 2.4 2.4 2.5 2.6 SM Bonus SM Retail Inc 2.1 2.2 2.2 2.3 Payless Universal Robina Corp 1.8 2.0 2.1 2.2 Yakult Yakult Philippines Inc 1.9 2.1 2.1 2.1 Magnolia San Miguel Pure Foods 2.1 2.1 2.1 2.0 Co Inc Gardenia Gardenia Philippines Inc 1.6 1.7 1.7 1.7 Star San Miguel Pure Foods 1.7 1.7 1.7 1.7 Co Inc Kraft Kraft Foods 1.7 1.7 1.7 1.6 (Philippines) Inc Anchor Fonterra Brands (Phils) 1.8 1.8 1.7 1.6 Inc Enfalac Mead Johnson 1.4 1.4 1.4 1.3 Philippines Inc Nestlé Nestlé Philippines Inc 1.1 1.2 1.2 1.1 Nan Nestlé Philippines Inc 1.1 1.1 1.1 1.1 UFC UFC Philippines Inc 1.1 1.1 1.1 1.1 Promil Wyeth Philippines Inc 1.0 1.0 1.0 0.9 Nestogen Nestlé Philippines Inc 1.0 1.0 1.0 0.9 Goldilocks Goldilocks Bake Shop Inc 0.8 0.9 0.9 0.9 Anlene Fonterra Brands (Phils) 0.9 0.9 0.9 0.9 Inc Alacta Mead Johnson 0.9 0.9 0.8 0.8 Philippines Inc S-26 Wyeth Philippines Inc 0.8 0.8 0.8 0.8 Enfagrow Mead Johnson 0.4 0.4 0.7 0.7 Philippines Inc Chuckie Nestlé Philippines Inc 0.7 0.7 0.7 0.7 Carnation Alaska Milk Corp 0.8 0.8 0.7 0.7 Ensure Abbott Laboratories 0.5 0.6 0.6 0.7 (Phils) Inc Artisanal 4.0 4.0 3.9 3.9 Others 27.2 26.8 26.1 26.1 Total 100.0 100.0 100.0 100.0


Table 31 Forecast Sales of Nutrition/Staples by Category: Volume 2014-2019



'000 tonnes 2014 2015 2016 2017 2018 2019 Bread 145.0 147.7 150.2 152.8 155.6 158.5 Breakfast Cereals 15.8 16.4 17.1 17.8 18.6 19.4 Dairy 399.3 409.3 418.4 427.3 435.5 443.1 Meal Replacement 1.3 1.4 1.4 1.5 1.5 1.6 Oils and Fats 564.7 583.7 601.4 619.6 638.0 656.5 Baby Food 55.5 56.6 57.6 58.9 60.2 61.7 Spreads 13.0 13.2 13.5 13.8 14.1 14.5 Pasta 41.9 44.1 46.5 49.0 51.5 54.0 Noodles 220.6 230.1 239.2 248.5 258.3 268.5 Rice 101.7 105.4 109.4 113.4 117.4 121.5 Nutrition/Staples 1,558.8 1,608.0 1,654.7 1,702.6 1,750.7 1,799.2


Table 32 Forecast Sales of Nutrition/Staples by Category: Value 2014-2019

PHP million 2014 2015 2016 2017 2018 2019 Bread 18,493.2 18,990.8 19,499.4 20,054.9 20,658.1 21,310.9 Breakfast Cereals 4,332.9 4,482.7 4,642.5 4,824.0 5,023.4 5,239.8 Dairy 79,096.2 80,714.0 82,395.3 84,299.1 86,379.0 88,609.9 Meal Replacement 2,630.0 2,742.5 2,868.4 3,009.3 3,165.3 3,335.7 Oils and Fats 54,299.0 55,668.0 57,039.4 58,529.5 60,132.7 61,848.1 Baby Food 35,546.4 36,419.6 37,272.2 38,231.2 39,264.4 40,397.4 Spreads 3,825.2 3,825.2 3,834.0 3,865.3 3,916.6 3,984.9 Pasta 3,928.0 4,153.7 4,399.3 4,648.3 4,905.4 5,163.0 Noodles 27,211.2 28,142.0 29,019.7 29,914.8 30,810.6 31,739.7 Rice 5,302.7 5,477.2 5,675.1 5,866.9 6,063.9 6,267.5 Nutrition/Staples 234,664.8 240,615.6 246,645.4 253,243.3 260,319.5 267,896.9


Table 33 Forecast Sales of Nutrition/Staples by Category: % Volume Growth 2014-2019

% volume growth 2014/15 2014-19 CAGR 2014/19 Total Bread 1.9 1.8 9.3 Breakfast Cereals 4.3 4.2 23.1 Dairy 1.7 2.1 11.0 Meal Replacement 4.2 4.0 21.8 Oils and Fats 2.9 3.1 16.3 Baby Food 2.4 2.1 11.0 Spreads 2.6 2.2 11.7 Pasta 4.9 5.2 28.8 Noodles 4.0 4.0 21.7 Rice 3.5 3.6 19.5 Nutrition/Staples 2.8 2.9 15.4




Table 34 Forecast Sales of Nutrition/Staples by Category: % Value Growth 2014-2019

% constant value growth 2014/2015 2014-19 CAGR 2014/19 TOTAL Bread 3.2 2.9 15.2 Breakfast Cereals 4.3 3.9 20.9 Dairy 2.6 2.3 12.0 Meal Replacement 5.4 4.9 26.8 Oils and Fats 2.9 2.6 13.9 Baby Food 2.9 2.6 13.6 Spreads 1.7 0.8 4.2 Pasta 5.3 5.6 31.4 Noodles 3.0 3.1 16.6 Rice 3.4 3.4 18.2 Nutrition/Staples 2.9 2.7 14.2


MARKET DATA

Table 35 Sales of Packaged Food by Category: Volume 2009-2014

'000 tonnes 2009 2010 2011 2012 2013 2014 Baby Food 53.3 53.5 53.6 54.0 54.5 55.5 Bakery 336.7 344.9 355.8 367.7 379.2 391.2 Canned/Preserved Food 223.0 234.5 245.6 256.6 267.5 277.8 Chilled Processed Food 82.8 86.5 89.8 92.9 96.0 99.0 Confectionery 88.0 89.3 87.7 87.9 90.7 93.4 Dairy 340.6 351.2 362.7 376.4 388.9 399.3 Dried Processed Food 292.1 306.1 319.9 335.2 350.8 365.9 Frozen Processed Food 102.1 105.7 111.9 116.1 119.8 123.2 Ice Cream 42.8 43.9 45.8 47.9 48.8 49.7 Meal Replacement 1.2 1.3 1.2 1.2 1.3 1.3 Noodles 168.7 178.4 189.4 200.1 210.8 220.6 Oils and Fats 467.3 486.5 506.3 525.0 545.2 564.7 Pasta 31.7 34.6 35.6 37.8 39.8 41.9 Ready Meals 11.6 12.0 12.6 13.1 13.8 14.4 Sauces, Dressings and 187.7 195.8 203.7 210.7 217.2 223.0 Condiments Snack Bars 0.0 0.0 0.0 0.0 0.0 0.0 Soup 3.9 4.0 4.2 4.3 4.5 4.6 Spreads 14.3 14.4 13.6 12.7 12.7 13.0 Sweet and Savoury Snacks 118.9 123.6 128.8 137.5 150.3 159.8 Impulse and Indulgence 442.6 456.0 468.3 486.9 511.5 533.5 Products Nutrition/Staples 1,311.1 1,356.9 1,405.4 1,456.9 1,509.1 1,558.8 Meal Solutions 611.5 639.0 668.1 694.2 719.1 742.5 Packaged Food 2,350.9 2,437.0 2,526.5 2,621.9 2,722.9 2,817.1


Note: Sum of categories 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 2009-2014

PHP bn 2009 2010 2011 2012 2013 2014 Baby Food 30.5 31.6 32.3 33.0 34.1 35.5 Bakery 51.6 54.4 57.7 61.5 65.4 69.6 Canned/Preserved Food 26.9 28.8 31.0 33.3 35.5 38.3 Chilled Processed Food 14.3 15.1 15.9 16.8 17.9 19.2 Confectionery 28.8 29.7 29.7 30.4 31.9 33.5 Dairy 60.6 67.2 70.0 73.0 76.1 79.1 Dried Processed Food 26.4 28.2 30.1 32.3 34.5 37.3 Frozen Processed Food 24.5 25.9 28.1 30.2 32.0 34.3 Ice Cream 8.2 8.5 8.9 9.4 9.8 10.2 Meal Replacement 1.5 1.8 1.9 2.2 2.4 2.6 Noodles 19.3 20.6 22.1 23.6 25.2 27.2 Oils and Fats 39.5 42.0 45.0 48.0 50.9 54.3 Pasta 2.4 2.8 2.9 3.3 3.6 3.9 Ready Meals 2.6 2.8 3.0 3.2 3.4 3.8 Sauces, Dressings and 20.2 21.2 22.4 23.7 25.0 26.6 Condiments Snack Bars 0.0 0.0 0.0 0.0 0.0 0.0 Soup 1.2 1.3 1.4 1.5 1.6 1.8 Spreads 3.7 3.7 3.7 3.6 3.7 3.8 Sweet and Savoury Snacks 30.4 31.8 33.9 37.2 41.6 45.2 Impulse and Indulgence 101.8 106.3 111.1 118.0 127.1 135.7 Products Nutrition/Staples 178.7 191.9 201.5 211.8 222.6 234.7 Meal Solutions 89.7 95.2 102.0 108.9 115.7 124.1 Packaged Food 367.0 390.0 410.7 434.6 461.0 489.7



Table 37 Sales of Packaged Food by Category: % Volume Growth 2009-2014

% volume growth 2013/14 2009-14 CAGR 2009/14 Total Baby Food 1.8 0.8 4.2 Bakery 3.2 3.0 16.2 Canned/Preserved Food 3.9 4.5 24.6 Chilled Processed Food 3.1 3.6 19.6 Confectionery 3.1 1.2 6.2 Dairy 2.7 3.2 17.2 Dried Processed Food 4.3 4.6 25.3 Frozen Processed Food 2.8 3.8 20.6 Ice Cream 1.9 3.1 16.3 Meal Replacement 2.9 2.2 11.4 Noodles 4.7 5.5 30.8 Oils and Fats 3.6 3.9 20.8 Pasta 5.1 5.7 32.1 Ready Meals 5.0 4.6 25.0 Sauces, Dressings and Condiments 2.7 3.5 18.8 Snack Bars -6.3 -48.0 -96.2



Soup 3.9 3.4 18.0 Spreads 1.8 -1.9 -9.3 Sweet and Savoury Snacks 6.4 6.1 34.5 Impulse and Indulgence Products 4.3 3.8 20.5 Nutrition/Staples 3.3 3.5 18.9 Meal Solutions 3.2 4.0 21.4 Packaged Food 3.5 3.7 19.8



Table 38 Sales of Packaged Food by Category: % Value Growth 2009-2014

% current value growth 2013/14 2009-14 CAGR 2009/14 Total Baby Food 4.1 3.1 16.7 Bakery 6.5 6.2 34.9 Canned/Preserved Food 7.8 7.3 42.5 Chilled Processed Food 7.3 6.0 33.8 Confectionery 4.9 3.1 16.2 Dairy 3.9 5.5 30.6 Dried Processed Food 8.1 7.2 41.4 Frozen Processed Food 7.2 7.0 40.4 Ice Cream 4.3 4.6 25.3 Meal Replacement 8.8 11.4 71.3 Noodles 8.0 7.1 41.0 Oils and Fats 6.8 6.6 37.3 Pasta 9.7 10.3 63.1 Ready Meals 9.2 7.9 46.2 Sauces, Dressings and Condiments 6.3 5.7 32.0 Snack Bars -8.0 -43.4 -94.2 Soup 7.9 7.7 44.8 Spreads 3.1 0.8 4.3 Sweet and Savoury Snacks 8.7 8.3 48.9 Impulse and Indulgence Products 6.8 5.9 33.3 Nutrition/Staples 5.4 5.6 31.3 Meal Solutions 7.3 6.7 38.3 Packaged Food 6.2 5.9 33.4



Table 39 GBO Company Shares of Packaged Food: % Value 2010-2014

% retail value rsp Company 2010 2011 2012 2013 2014 Nestlé SA 10.6 10.4 11.9 11.7 11.5 JG Summit Holdings Inc 6.7 6.8 7.2 7.6 7.8 San Miguel Corp 7.2 7.4 7.5 7.5 7.5 Monde Nissin Corp 4.9 5.1 5.2 5.2 5.3 San Pablo Mfg Corp 3.3 3.4 3.4 3.4 3.5 Mead Johnson Nutrition Co 3.6 3.5 3.4 3.4 3.4 Royal FrieslandCampina NV 0.3 0.1 3.4 3.3 3.2 International Oil Factory 2.9 2.9 2.9 2.9 2.9



Unilever Group 2.8 2.8 2.8 2.7 2.5 CDO Foodsphere Inc 1.6 1.7 1.8 1.8 1.9 Century Canning Corp 1.7 1.7 1.7 1.8 1.8 Republic Biscuit Corp 1.7 1.7 1.7 1.7 1.7 Kraft Foods Group, Inc - - 1.7 1.7 1.6 Liwayway Marketing Corp 1.2 1.2 1.3 1.3 1.4 Pacific Meat Co Inc 0.9 0.9 1.4 1.3 1.3 Del Monte Pacific Ltd 0.9 0.9 1.0 1.0 1.3 Fonterra Co-operative 1.3 1.3 1.3 1.2 1.2 Group Ltd Nutri-Asia Inc 1.0 1.0 1.0 1.0 1.0 Yakult Honsha Co Ltd 0.9 0.9 1.0 1.0 1.0 Mondelez International - - 1.0 1.0 1.0 Inc Ajinomoto Co Inc 1.0 1.0 1.0 0.9 0.9 QAF Ltd 0.7 0.8 0.8 0.8 0.8 Food Industries Inc 0.7 0.7 0.7 0.7 0.8 Goldilocks Bake Shop Inc 0.7 0.7 0.7 0.7 0.8 Tobi Marketing Inc 0.7 0.7 0.7 0.7 0.7 Liberty Gold Fruit Co Inc 0.6 0.6 0.6 0.6 0.6 Mars Inc 0.8 0.7 0.6 0.6 0.6 Abbott Laboratories Inc 0.6 0.6 0.7 0.6 0.6 RFM Corp 0.7 0.8 0.3 0.3 0.6 Columbia International 0.6 0.6 0.6 0.6 0.6 Food Products Inc Artisanal 3.9 3.8 3.7 3.6 3.5 Private Label 1.8 1.8 1.9 1.9 1.9 Others 33.6 33.4 25.2 25.2 24.9 Total 100.0 100.0 100.0 100.0 100.0


Table 40 NBO Company Shares of Packaged Food: % Value 2010-2014

% retail value rsp Company 2010 2011 2012 2013 2014 Nestlé Philippines Inc 10.4 10.2 10.0 9.9 9.8 Universal Robina Corp 6.7 6.8 7.2 7.6 7.8 Monde Nissin Corp 4.9 5.1 5.2 5.2 5.3 Purefoods-Hormel Co 4.8 5.0 5.1 5.1 5.2 Inc, The Alaska Milk Corp 3.9 3.8 3.7 3.6 3.5 San Pablo Mfg Corp 3.3 3.4 3.4 3.4 3.5 Mead Johnson 3.6 3.5 3.4 3.4 3.4 Philippines Inc International Oil Factory 2.9 2.9 2.9 2.9 2.9 San Miguel Pure Foods 2.4 2.4 2.4 2.4 2.3 Co Inc CDO Foodsphere Inc 1.6 1.7 1.8 1.8 1.9 Century Canning Corp 1.7 1.7 1.7 1.8 1.8 SM Retail Inc 1.5 1.6 1.6 1.7 1.7 Kraft Foods 2.9 2.8 2.7 1.7 1.7 (Philippines) Inc Wyeth Philippines Inc 1.7 1.7 1.7 1.6 1.6 Unilever Foods 1.7 1.7 1.7 1.7 1.5 Philippines (CMC) Liwayway Marketing Corp 1.2 1.2 1.3 1.3 1.4 Pacific Meat Co Inc 0.9 0.9 1.4 1.3 1.3



Fonterra Brands (Phils) 1.3 1.3 1.3 1.2 1.2 Inc Del Monte Philippines Inc 1.0 1.0 1.0 1.0 1.1 Unilever RFM Ice Cream 1.0 1.0 1.0 1.0 1.0 Inc Yakult Philippines Inc 0.9 0.9 1.0 1.0 1.0 Mondelez Philippines Inc - - - 0.9 0.9 Ajinomoto Philippines 1.0 1.0 1.0 0.9 0.9 Corp Gardenia Philippines Inc 0.7 0.8 0.8 0.8 0.8 Food Industries Inc 0.7 0.7 0.7 0.7 0.8 UFC Philippines Inc 0.7 0.8 0.8 0.8 0.8 Goldilocks Bake Shop Inc 0.7 0.7 0.7 0.7 0.8 Tobi Marketing Inc 0.7 0.7 0.7 0.7 0.7 Republic Biscuit Corp 0.6 0.6 0.6 0.6 0.6 A Tung Chingco Trading 0.6 0.6 0.6 0.6 0.6 Artisanal 3.9 3.8 3.7 3.6 3.5 Others 29.9 29.7 28.9 28.7 28.8 Total 100.0 100.0 100.0 100.0 100.0


Table 41 LBN Brand Shares of Packaged Food: % Value 2011-2014

% retail value rsp Brand Company 2011 2012 2013 2014 Jack 'n' Jill Universal Robina Corp 4.9 5.2 5.5 5.8 Purefoods Purefoods-Hormel Co 4.9 5.0 5.1 5.2 Inc, The Minola San Pablo Mfg Corp 3.4 3.4 3.4 3.5 Lucky Me Monde Nissin Corp 3.2 3.2 3.3 3.3 Alaska Alaska Milk Corp 3.4 3.2 3.2 3.1 Baguio International Oil Factory 2.9 2.9 2.9 2.9 Bear Brand Nestlé Philippines Inc 2.8 2.8 2.7 2.6 CDO CDO Foodsphere Inc 1.7 1.8 1.8 1.9 Milo Nestlé Philippines Inc 1.9 1.9 1.8 1.8 Lactum Mead Johnson 1.7 1.7 1.7 1.8 Philippines Inc SM Bonus SM Retail Inc 1.6 1.6 1.7 1.7 Nido Nestlé Philippines Inc 1.2 1.2 1.2 1.2 Magnolia San Miguel Pure Foods 1.2 1.2 1.2 1.1 Co Inc Oishi Liwayway Marketing Corp 1.0 1.0 1.1 1.1 Sky Flakes Monde Nissin Corp 1.0 1.0 1.0 1.0 Payless Universal Robina Corp 0.9 1.0 1.0 1.0 Yakult Yakult Philippines Inc 0.9 1.0 1.0 1.0 Kraft Kraft Foods 1.1 1.0 1.0 1.0 (Philippines) Inc Nestlé Nestlé Philippines Inc 1.0 1.0 1.0 1.0 555 Century Canning Corp 0.9 0.9 0.9 1.0 Selecta Unilever RFM Ice Cream Inc 0.9 0.9 0.9 0.9 Del Monte Del Monte Philippines Inc 0.9 0.9 0.9 0.9 Ajinomoto Ajinomoto Philippines Corp 0.9 0.9 0.9 0.9 Argentina Pacific Meat Co Inc 0.9 0.9 0.9 0.9 Gardenia Gardenia Philippines Inc 0.8 0.8 0.8 0.8 Century Century Canning Corp 0.8 0.8 0.8 0.8 Star San Miguel Pure Foods 0.8 0.8 0.8 0.8 Co Inc



Nagaraya Food Industries Inc 0.7 0.7 0.7 0.8 Anchor Fonterra Brands (Phils) 0.9 0.9 0.8 0.8 Inc Goldilocks Goldilocks Bake Shop Inc 0.7 0.7 0.7 0.8 Artisanal 3.8 3.7 3.6 3.5 Others 46.4 45.9 45.5 45.3 Total 100.0 100.0 100.0 100.0


Table 42 Penetration of Private Label by Category: % Value 2009-2014

% retail value rsp 2009 2010 2011 2012 2013 2014 Bakery 0.5 0.6 0.5 0.5 0.5 0.5 Chilled Processed Food 2.0 2.0 2.1 2.2 2.3 2.4 Dried Processed Food 4.9 4.8 4.8 4.9 4.9 5.0 Frozen Processed Food 8.0 8.3 8.1 8.0 8.1 8.2 Meal Solutions 2.7 2.7 2.7 2.7 2.8 2.8 Noodles 0.4 0.4 0.4 0.4 0.4 0.4 Nutrition/Staples 2.3 2.3 2.3 2.4 2.5 2.6 Oils and Fats 6.2 6.3 6.5 6.7 6.8 7.0 Packaged Food 1.7 1.8 1.8 1.9 1.9 1.9 Sauces, Dressings and 0.7 0.7 0.7 0.7 0.8 0.8 Condiments


Table 43 Distribution of Packaged Food by Format: % Value 2009-2014

% retail value rsp 2009 2010 2011 2012 2013 2014 Store-Based Retailing 99.9 99.8 99.8 99.8 99.8 99.8 - Grocery Retailers 95.4 95.5 95.6 95.7 95.8 95.8 -- Modern Grocery 49.2 49.6 49.9 50.3 50.6 51.0 Retailers --- Convenience Stores 1.3 1.3 1.3 1.4 1.4 1.4 --- Discounters - - - - - - --- Forecourt Retailers 0.1 0.2 0.2 0.2 0.2 0.2 --- Hypermarkets 4.9 5.5 5.9 6.1 6.3 6.4 --- Supermarkets 42.8 42.6 42.5 42.6 42.7 43.0 -- Traditional Grocery 46.2 45.9 45.7 45.4 45.1 44.8 Retailers --- Food/drink/tobacco 4.2 4.1 4.1 4.1 4.0 4.0 specialists --- Independent Small 11.7 11.0 10.5 10.3 10.1 9.9 Grocers --- Other Grocery 30.3 30.7 31.1 31.0 31.0 30.9 Retailers - Non-Grocery Retailers 4.4 4.4 4.2 4.1 4.1 4.0 -- Health and Beauty 4.4 4.3 4.2 4.1 4.0 4.0 Retailers -- Mixed Retailers 0.0 0.0 0.0 0.0 0.0 0.0 -- Other Non-Grocery 0.0 0.0 0.0 0.0 0.0 0.0 Retailers



Non-Store Retailing 0.1 0.2 0.2 0.2 0.2 0.2 - 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 0.2 0.2 0.2 0.2 0.2 Total 100.0 100.0 100.0 100.0 100.0 100.0


Table 44 Distribution of Packaged Food by Format and Category: % Value 2014

% 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 58.0 98.5 100.0 100.0 94.1 99.7 -- Modern Grocery 47.3 31.0 61.3 59.3 46.2 53.4 Retailers --- Convenience Stores 1.1 0.5 1.4 1.6 4.3 1.6 --- Discounters 0.0 0.0 0.0 0.0 0.0 0.0 --- Forecourt Retailers 0.0 0.2 0.3 0.0 0.6 0.1 --- Hypermarkets 6.2 4.0 7.3 7.2 5.9 6.8 --- Supermarkets 40.0 26.3 52.4 50.5 35.4 44.9 -- Traditional Grocery 10.6 67.6 38.7 40.7 47.9 46.4 Retailers --- Food/drink/tobacco 0.0 26.1 0.0 0.0 4.0 0.0 specialists --- Independent Small 10.6 5.0 15.4 5.5 7.9 10.8 Grocers --- Other Grocery 0.0 36.5 23.2 35.2 36.0 35.5 Retailers - Non-Grocery Retailers 42.0 1.5 0.0 0.0 5.8 0.0 -- Health and Beauty 42.0 1.5 0.0 0.0 5.7 0.0 Retailers -- Mixed Retailers 0.0 0.0 0.0 0.0 0.0 0.0 -- 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 0.2 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 78.9 100.0 100.0 - Grocery Retailers 100.0 99.9 100.0 38.4 100.0 99.9 -- Modern Grocery 53.2 75.2 81.7 23.5 47.3 59.4 Retailers --- Convenience Stores 2.4 1.2 2.0 0.0 2.3 0.1 --- Discounters 0.0 0.0 0.0 0.0 0.0 0.0 --- Forecourt Retailers 0.2 0.0 0.3 0.0 0.2 0.0 --- Hypermarkets 6.7 10.0 10.8 3.0 5.9 7.3 --- Supermarkets 44.0 64.0 68.6 20.5 38.9 52.0 -- Traditional Grocery 46.8 24.7 18.3 14.9 52.7 40.6 Retailers --- Food/drink/tobacco 0.0 0.0 0.1 0.0 0.0 0.0 specialists



--- Independent Small 11.9 11.5 14.7 14.9 10.2 7.0 Grocers --- Other Grocery 34.9 13.2 3.6 0.0 42.5 33.6 Retailers - Non-Grocery Retailers 0.0 0.0 0.0 40.6 0.0 0.1 -- Health and Beauty 0.0 0.0 0.0 40.6 0.0 0.0 Retailers -- Mixed Retailers 0.0 0.0 0.0 0.0 0.0 0.0 -- 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 21.1 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 21.1 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 95.6 100.0 100.0 -- Modern Grocery 58.6 81.4 45.7 95.6 67.0 60.2 Retailers --- Convenience Stores 2.3 5.4 1.0 3.0 5.9 1.0 --- Discounters 0.0 0.0 0.0 0.0 0.0 0.0 --- Forecourt Retailers 0.0 2.8 0.2 1.0 2.0 0.9 --- Hypermarkets 7.0 8.7 5.5 12.0 7.4 7.5 --- Supermarkets 49.3 64.5 39.0 79.6 51.7 50.8 -- Traditional Grocery 41.4 18.6 54.2 0.0 33.1 39.8 Retailers --- Food/drink/tobacco 0.0 0.0 0.0 0.0 0.0 0.0 specialists --- Independent Small 13.8 14.0 5.4 0.0 15.5 16.2 Grocers --- Other Grocery 27.6 4.6 48.8 0.0 17.5 23.6 Retailers - Non-Grocery Retailers 0.0 0.0 0.0 4.4 0.0 0.0 -- Health and Beauty 0.0 0.0 0.0 0.5 0.0 0.0 Retailers -- Mixed Retailers 0.0 0.0 0.0 0.0 0.0 0.0 -- Other Non-Grocery 0.0 0.0 0.0 3.9 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 98.7 -- Modern Grocery 38.4 Retailers --- Convenience Stores 1.5 --- Discounters 0.0 --- Forecourt Retailers 0.2 --- Hypermarkets 5.0 --- Supermarkets 31.7 -- Traditional Grocery 60.3



Retailers --- Food/drink/tobacco 0.0 specialists --- Independent Small 15.2 Grocers --- Other Grocery 45.2 Retailers - Non-Grocery Retailers 1.2 -- Health and Beauty 1.2 Retailers -- Mixed Retailers 0.0 -- 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 2014-2019

'000 tonnes 2014 2015 2016 2017 2018 2019 Baby Food 55.5 56.6 57.6 58.9 60.2 61.7 Bakery 391.2 403.3 414.9 427.7 441.4 455.9 Canned/Preserved Food 277.8 287.9 297.6 307.8 318.6 330.2 Chilled Processed Food 99.0 101.9 104.6 107.7 111.2 115.1 Confectionery 93.4 96.3 99.2 102.2 105.3 108.5 Dairy 399.3 409.3 418.4 427.3 435.5 443.1 Dried Processed Food 365.9 381.4 396.9 412.7 429.0 445.9 Frozen Processed Food 123.2 126.3 129.1 132.1 135.5 139.1 Ice Cream 49.7 50.7 51.7 52.9 54.4 56.1 Meal Replacement 1.3 1.4 1.4 1.5 1.5 1.6 Noodles 220.6 230.1 239.2 248.5 258.3 268.5 Oils and Fats 564.7 583.7 601.4 619.6 638.0 656.5 Pasta 41.9 44.1 46.5 49.0 51.5 54.0 Ready Meals 14.4 15.2 16.0 16.8 17.6 18.6 Sauces, Dressings and 223.0 228.2 232.6 237.5 242.9 248.7 Condiments Snack Bars 0.0 0.0 0.0 0.0 0.0 0.0 Soup 4.6 4.8 5.0 5.2 5.4 5.6 Spreads 13.0 13.2 13.5 13.8 14.1 14.5 Sweet and Savoury Snacks 159.8 169.5 179.4 189.4 199.6 209.9 Impulse and Indulgence 533.5 555.7 577.9 601.5 626.5 652.5 Products Nutrition/Staples 1,558.8 1,608.0 1,654.7 1,702.6 1,750.7 1,799.2 Meal Solutions 742.5 764.9 785.2 807.6 831.8 857.8 Packaged Food 2,817.1 2,910.0 2,998.3 3,091.3 3,187.5 3,287.0





Table 46 Forecast Sales of Packaged Food by Category: Value 2014-2019

PHP bn 2014 2015 2016 2017 2018 2019 Baby Food 35.5 36.4 37.3 38.2 39.3 40.4 Bakery 69.6 71.7 73.7 76.0 78.6 81.3 Canned/Preserved Food 38.3 39.5 40.7 42.0 43.3 44.8 Chilled Processed Food 19.2 19.7 20.2 20.7 21.3 22.0 Confectionery 33.5 34.2 34.9 35.6 36.4 37.2 Dairy 79.1 80.7 82.4 84.3 86.4 88.6 Dried Processed Food 37.3 38.7 40.0 41.4 42.8 44.2 Frozen Processed Food 34.3 35.2 36.0 36.9 37.9 39.0 Ice Cream 10.2 10.5 10.7 11.1 11.4 11.9 Meal Replacement 2.6 2.7 2.9 3.0 3.2 3.3 Noodles 27.2 28.1 29.0 29.9 30.8 31.7 Oils and Fats 54.3 55.7 57.0 58.5 60.1 61.8 Pasta 3.9 4.2 4.4 4.6 4.9 5.2 Ready Meals 3.8 3.9 4.1 4.3 4.6 4.8 Sauces, Dressings and 26.6 27.1 27.4 27.8 28.3 28.8 Condiments Snack Bars 0.0 0.0 0.0 0.0 0.0 0.0 Soup 1.8 1.8 1.9 1.9 2.0 2.1 Spreads 3.8 3.8 3.8 3.9 3.9 4.0 Sweet and Savoury Snacks 45.2 47.8 50.4 53.0 55.6 58.1 Impulse and Indulgence 135.7 140.7 145.7 150.9 156.4 161.9 Products Nutrition/Staples 234.7 240.6 246.6 253.2 260.3 267.9 Meal Solutions 124.1 127.4 130.5 133.9 137.6 141.6 Packaged Food 489.7 503.7 517.6 532.6 548.6 565.4



Table 47 Forecast Sales of Packaged Food by Category: % Volume Growth 2014-2019

% volume growth 2014/15 2014-19 CAGR 2014/19 Total Baby Food 2.4 2.1 11.0 Bakery 3.3 3.1 16.5 Canned/Preserved Food 3.6 3.5 18.8 Chilled Processed Food 3.4 3.1 16.3 Confectionery 3.1 3.0 16.1 Dairy 1.7 2.1 11.0 Dried Processed Food 3.9 4.0 21.8 Frozen Processed Food 2.7 2.5 12.9 Ice Cream 3.1 2.4 12.8 Meal Replacement 4.2 4.0 21.8 Noodles 4.0 4.0 21.7 Oils and Fats 2.9 3.1 16.3 Pasta 4.9 5.2 28.8 Ready Meals 5.3 5.2 28.6 Sauces, Dressings and Condiments 2.4 2.2 11.5



Snack Bars -3.3 -4.4 -20.0 Soup 3.7 3.8 20.3 Spreads 2.6 2.2 11.7 Sweet and Savoury Snacks 5.2 5.6 31.4 Impulse and Indulgence Products 4.2 4.1 22.3 Nutrition/Staples 2.8 2.9 15.4 Meal Solutions 3.1 2.9 15.5 Packaged Food 3.1 3.1 16.7



Table 48 Forecast Sales of Packaged Food by Category: % Value Growth 2014-2019

% constant value growth 2014/2015 2014-19 CAGR 2014/19 TOTAL Baby Food 2.9 2.6 13.6 Bakery 3.5 3.2 16.8 Canned/Preserved Food 3.3 3.2 16.9 Chilled Processed Food 3.1 2.8 14.6 Confectionery 2.3 2.1 11.2 Dairy 2.6 2.3 12.0 Dried Processed Food 3.3 3.4 18.3 Frozen Processed Food 2.8 2.6 13.6 Ice Cream 3.7 3.0 15.7 Meal Replacement 5.4 4.9 26.8 Noodles 3.0 3.1 16.6 Oils and Fats 2.9 2.6 13.9 Pasta 5.3 5.6 31.4 Ready Meals 5.2 5.0 27.5 Sauces, Dressings and Condiments 1.8 1.6 8.3 Snack Bars -2.5 -3.6 -16.8 Soup 3.4 3.2 17.2 Spreads 1.7 0.8 4.2 Sweet and Savoury Snacks 4.5 5.1 28.5 Impulse and Indulgence Products 3.6 3.6 19.3 Nutrition/Staples 2.9 2.7 14.2 Meal Solutions 2.9 2.7 14.1 Packaged Food 3.1 2.9 15.5



DEFINITIONS Explanations of words and/or terminology used in this report are as follows:

Sari-sari stores - local traditional independent ‘mom and pop’ shops

SOURCES Sources used during the research included 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

Cocoa Foundation of the Philippines

Filipino-Chinese Bakery Association Inc (FCBAI)

Philippine Amalgamated Supermarkets Association

Philippine Association of Flour Millers

Philippine Association of Meat Processors Inc

Philippine Chamber of Food Manufacturers Inc

Philippine Coconut Oil Producers Association

Philippine Federation of Bakers Association Inc

Philippine Food Processors & Exporters Organization Inc

Rice Association

Trade Press Business World Online

Food & Agribusiness Monitor

Source: Euromonitor International

Documents

Packaged Food in the Philippines