Consumer and Market Insights: Bakery and Cereals Market in Philippines. CS1901MF March 2015

Transcription

1 Consumer and Market Insights: Bakery and Cereals Market in Philippines CS1901MF March

2 Report scope This report brings together multiple data sources to provide a comprehensive overview of the Bakery and Cereals sector in Philippines as part of our global coverage of the sector. This report draws on market data, analyzing value and volume data and category and channel distribution breakdown, also highlighting which categories are witnessing the biggest growth. Brand and Private Label analysis is also provided. It also contains top line foodservice transaction figures highlighting where the most opportunistic channels are for industry players in the country. Detailed packaging analysis is also provided, analyzing category trends and also packaging material and type. The report also contains qualitative analysis of the most influential consumer trends driving consumption occasions in the category, analyzing how these trends will evolve and highlighting best practice product examples to show how manufacturers are targeting the trend. Market data coverage: The overall market value and volume data included in the report is for the period Category coverage: This report provides information on 11 categories including Bread & Rolls, Cakes, Pastries & Sweet Pies, Cookies (Sweet Biscuits), Morning Goods and Breakfast Cereals. More extensive brand coverage: The report provides more extensive brand share coverage. Brand share data is also validated by inputs from industry experts. Distribution channel: The Distribution data included in the report covers 11 distribution channels including Cash & Carries & Warehouse Clubs, Dollar Stores, Variety Stores & General Merchandise Retailers, Hypermarkets & Supermarkets, Convenience Stores Time period: The report provides overall market value and volume data, including category level data for the period Distribution channel and brand share data is included for the year /15/ /04/2015 4/15/2015 2

3 Table of Contents Country Context Market Overview Retail Landscape and Key Distribution Channels Packaging Brand Share Consumer trends Examples of new product development Appendix 3

4 Large base of young consumers and rising GDP per capita levels makes Philippines an attractive Bakery and Cereals market GDP Per Capita (PHP) Consumer Price Index Annual growth (%) Population (Million) Annual Growth (%) An increase in the size of the middle class population coupled with a growing disposable income and a large proportion of young consumers will drive the demand for consumer packaged goods. GDP Per Capita 140, , ,000 80,000 60,000 40,000 20, % 12% 10% 8% 6% 4% 2% 0% Population % 2.0% 1.5% 1.0% 0.5% 0.0% GDP per capita in the Philippines has been increasing in absolute value terms since 2009, however there was a decline in the growth rate during Consumer Price Index The CPI increased by 20.4% during , to reach basis points in The population in the Philippines has been increasing year on year, reaching 99.0 million in Age Profile The Philippines has a large young population base with approximately 61.1% of the population aged below the age of

5 The Retail and Foodservice markets in Philippines: an overview This slide provides an overview of the retail and foodservice markets in Philippines, in which industry players in the Bakery and Cereals sector operate: Retail Foodservice Country indicator Units Value Total value of Food market, 2014 US$ millions 27,572.7 Profit Sector Total number of transactions in the Profit Sector, 2014: 4,670.1 million Total volume of Food market, 2014 Millions of Kg 7,351.1 Largest channel in the Profit Sector and transactions, 2014: Restaurants, 3,825.6 million Total Food volume growth Proportion of Bakery and Cereals as part of overall food volume, 2014 Biggest category within the Bakery and Cereals market as part of overall volume CAGR 3.8% % 4.8% % Bread & Rolls, 38.1% Cost Sector Total number of transactions in the Cost Sector, 2014: million Largest channel in the Cost Sector and transactions, 2014: Education, million Figures for overall food 2014 are forecasts. 5

6 Table of Contents Country Context Market Overview Retail Landscape and Key Distribution Channels Packaging Brand Share Consumer trends Examples of new product development Appendix 6

7 The Filipino Bakery and Cereals market will register higher growth both in value and volume terms during compared to The Bakery and Cereals market in Philippines witnessed strong growth both in value and volume terms during While it grew at a of CAGR 4.4% in terms of value, volume growth during was recorded at CAGR 3.8%. It is forecast to register a CAGR of 4.8% in value terms and volume growth will be registered at a CAGR of 4.2% during The volume consumption of Bakery and Cereals is forecast to grow from Kg million in 2014 to Kg million in Market value of Philippines's Bakery and Cereals market, Market volume of Philippines's Bakery and Cereals market, (Millions of Kg), PHP million US$ million , , , , , ,875.4 CAGR % 5.9% CAGR % 4.1% CAGR % CAGR % 7

8 The Bakery and Cereals market will register more than 4% growth both in value and volume terms during the forecast period Growth Rate (%) The Bakery and Cereals market in Philippines was worth PHP67,954.1 million (US$1,530.5 million) in 2014 and is forecast to reach PHP85,710.9 million (US$1,875.4 million) by 2019, growing at a CAGR of 4.8% in local currency terms during Volume consumption will grow at a CAGR of 4.2% during the same period. In US$ terms, the market registered volatile growth during due to fluctuations in exchange rates. However the market is forecast to register stable growth during , due to stabilization of exchange rates post Market value (PHP million and US$ million) and volume growth of Bakery and Cereals market, % 10% 8% 6% 4% Value (PHP) Value (US$ m) Volume kg m 2% 0% -2% % 8

9 Filipino consumers are trading down to value for money products in the Bakery and Cereals market 2014 Annual Change % In 2014, the value of the Bakery and Cereals market grew by 4.5% and volume grew by 4.0%. The Bakery and Cereals market prices saw a rise of 0.5% whereas food inflation stood at 5.8%. Increasing food inflation in Philippines has resulted in consumers trading down to value for money products in the market. Filipino consumers are price sensitive and are increasingly preferring such Bakery and Cereals products that are of low cost. Extent to which consumers are trading up or down in Philippines s Bakery and Cereals market 12% 10% 8% 6% 4% 0.5% 5.8% -5.3% 2% 4.5% 4.0% 0% Change in Sales Value Change in Sales Volume Change in Average Price Food Price Inflation Trading Up or Down 9

10 Bread & Rolls is the leading category in terms of volume consumption of Bakery and Cereals products in Philippines 66.9 Market volume of Philippines's Bakery and Cereals market, (Millions of Kg), 2014, by category Bread & Rolls Cookies (Sweet Biscuits) Cakes, Pastries & Sweet Pies Savory Biscuits Dough Products Breakfast Cereals Baking Mixes Morning Goods Energy Bars Baking Ingredients Cereal Bars The Bread & Rolls category leads the volume consumption of Bakery and Cereals products in Philippines accounting for 38.1% of the market in terms of volume in The Cookies (Sweet Biscuits) category is forecast to register fastest growth in the Bakery and Cereals market, registering a CAGR of 4.6% during Market Volume, forecasted Compound Annual Growth Rate, Market Volume (Kg m) 2014 CAGR Bread & Rolls % Cookies (Sweet Biscuits) % Cakes, Pastries & Sweet Pies % Savory Biscuits % Dough Products % Breakfast Cereals % Baking Mixes % Morning Goods % Energy Bars % Baking Ingredients % Cereal Bars % 10

11 The Breakfast Cereals category is forecast to witness fastest growth during the period Category Value in PHP CAGR (%) Cookies (Sweet Biscuits) is the largest category by value and is forecast to register fastest growth at a CAGR of 5.2% during in the Filipino Bakery and Cereals market. It was valued at PHP24,375.4 million (US$549.0 million) in 2014, accounting for 35.9% of the market share. This will be followed by Cakes, Pastries & Sweet Pies and Bread & Rolls categories with 25.7% and 25.5% share respectively. Market value of categories in Philippines's Bakery and Cereals market 7% 6% 5% 4% 3% 2% 1% Cookies (Sweet Biscuits) Cakes, Pastries & Sweet Pies Bread & Rolls Dough Products Savory Biscuits Breakfast Cereals Energy Bars Baking Mixes Morning Goods Cereal Bars Baking Ingredients 0% 0% 1% 2% 3% 4% 5% 6% 7% Category Value in PHP CAGR (%) *Bubble Size = 2014 Category value 11

12 Cookies (Sweet Biscuits) is the largest category in terms of value in the Filipino Bakery and Cereals market Value (US$ Million) Value (US$ Million) Annual Growth (%) Annual Growth (%) Value (PHP Million) Value (PHP Million) Annual Growth (%) Annual Growth (%) Cookies (Sweet Biscuits) US$ Market value of categories in the Bakery and Cereals market Value (US$) Annual Growth (%) Cookies (Sweet Biscuits) PHP The Cookies (Sweet Biscuits) category is forecast to grow at a CAGR of 5.0% during from PHP19,274.9 million (US$404.3 million) in 2009 to PHP31,394.6 million (US$686.9 million) in 2019 with Chocolate Cookies being the largest segment, accounting 24.9% of the share. Cakes, Pastries & Sweet Pies US$ Value (US$) Annual Growth (%) Cakes, Pastries & Sweet Pies PHP The Cakes, Pastries & Sweet Pies category is forecast to grow at a CAGR of 4.0% during from PHP14,455.9 million (US$303.2 million) in 2009 to PHP21,397.7 million (US$468.2 million) in 2019 with Frozen Cakes & Pastries being the largest segment, accounting 32.7% of the share.. 4/15/ % 10% 5% 0% -5% 15% 10% 5% 0% -5% 15/04/2015 4/15/ ,000 30,000 20,000 10, ,000 20,000 15,000 10,000 5, Value (PHP) Annual Growth (%) Value (PHP) Annual Growth (%) 6% 5% 4% 3% 2% 1% 0% 5% 4% 3% 2% 1% 0%

13 Sandwich Slices is the largest segment in the Bread & Rolls category Value (US$ Million) Value (US$ Million) Annual Growth (%) Annual Growth (%) Value (PHP Million) Value (PHP Million) Annual Growth (%) Annual Growth (%) Bread & Rolls US$ Market value of categories in the Bakery and Cereals market Value (US$) Annual Growth (%) 15% 10% 5% 0% -5% Bread & Rolls PHP The Bread & Rolls category is forecast to grow at a CAGR of 4.7% during from PHP13,966.8 million (US$292.9 million) in 2009 to PHP22,029.2 million (US$482.0 million) in 2019 with Sandwich Slices being the largest segment, accounting for 20.5% of the market share. 25,000 20,000 15,000 10,000 5, Value (PHP) Annual Growth (%) 6% 5% 4% 3% 2% 1% 0% Dough Products US$ Dough Products PHP % 4,000 5% % 5% 0% 3,000 2,000 1,000 4% 3% 2% 1% Value (US$) Annual Growth (%) The Dough Products category is forecast to grow at a CAGR of 4.2% during from PHP2,472.6 million (US$51.9 million) in 2009 to PHP3,728.7 million (US$81.6 million) in 2019 with Frozen Dough Products being the largest segment, accounting 27.9% of the share. 4/15/ % 15/04/2015 4/15/ Value (PHP) Annual Growth (%) 0%

14 Savory Biscuits is one of the fastest growing categories in the Filipino Bakery and Cereals market Value (US$ Million) Value (US$ Million) Annual Growth (%) Annual Growth (%) Value (PHP Million) Value (PHP Million) Annual Growth (%) Annual Growth (%) Savory Biscuits US$ Market value of categories in the Bakery and Cereals market Value (US$) Annual Growth (%) Savory Biscuits PHP The Savory Biscuits category is forecast to grow at a CAGR of 4.9% during from PHP2,084.2 million (US$43.7 million) in 2009 to PHP3,366.6 million (US$73.7 million) in 2019 with Cheese-Flavoured Crackers being the largest segment, accounting 37.0% of the share. Breakfast Cereals US$ Value (US$) Annual Growth (%) 15% 10% 5% 0% -5% 15% 10% 5% 0% -5% Breakfast Cereals PHP The Breakfast Cereals category is forecast to grow at a CAGR of 4.1% during from PHP1,901.7 million (US$39.9 million) in 2009 to PHP2,830.0 million (US$61.9 million) in 2019 with Ready-to-Eat Cereals being the largest segment, accounting 62.5% of the share. 4,000 3,000 2,000 1, ,000 2,500 2,000 1,500 1, Value (PHP) Annual Growth (%) Value (PHP) Annual Growth (%) 6% 5% 4% 3% 2% 1% 0% 5% 4% 3% 2% 1% 0%. 4/15/ /04/2015 4/15/

15 The Energy Bars category is forecast to witness strong growth during Value (US$ Million) Value (US$ Million) Annual Growth (%) Annual Growth (%) Value (PHP Million) Value (PHP Million) Annual Growth (%) Annual Growth (%) Energy Bars US$ Market value of categories in the Bakery and Cereals market Value (US$) Annual Growth (%) 15% 10% 5% 0% -5% Energy Bars PHP The Energy Bars category is forecast to grow at a CAGR of 4.8% during from PHP164.8 million (US$3.5 million) in 2009 to PHP263.1 million (US$5.8 million) in Value (PHP) Annual Growth (%) 6% 5% 4% 3% 2% 1% 0% Baking Mixes US$ Baking Mixes PHP 5 10% 250 2% % 0% -5% % Value (US$) Annual Growth (%) -10% Value (PHP) Annual Growth (%) 0% The Baking Mixes category is forecast to grow at a CAGR of 2.8% during from PHP153.8 million (US$3.2 million) in 2009 to PHP203.4 million (US$4.4 million) in 2019 with Pancake Mixes being the largest segment, accounting 18.4% of the share. 4/15/ /04/2015 4/15/

16 Toaster Pastries is the largest segment in the Morning Goods category Value (US$ Million) Value (US$ Million) Annual Growth (%) Annual Growth (%) Value (PHP Million) Value (PHP Million) Annual Growth (%) Annual Growth (%) Morning Goods US$ 5 Market value of categories in the Bakery and Cereals market Morning Goods PHP 15% 250 5% % 5% 0% % 3% 2% 1% Value (US$) Annual Growth (%) The Morning Goods category is forecast to grow at a CAGR of 4.2% during from PHP141.8 million (US$3.0 million) in 2009 to PHP214.3 million (US$4.7 million) in 2019 with Toaster Pastries being the largest segment, accounting 9.9% of the share. Cereal Bars US$ 4-5% 10% Value (PHP) Annual Growth (%) Cereal Bars PHP 200 3% 0% 3 2 5% 0% % 1-5% 50 1% Value (US$) Annual Growth (%) The Cereal Bars category is forecast to grow at a CAGR of 2.5% during from PHP115.4 million (US$52.4 million) in 2009 to PHP147.0 million (US$3.2 million) in 2019 with Granola/Muesli/Yogurt Bars being the largest segment, accounting 68.4% of the share. 4/15/ % 15/04/2015 4/15/ Annual Growth (%) 0%

17 Baking Ingredients is the smallest category by value in the Filipino Bakery and Cereals market Value (US$ Million) Annual Growth (%) Value (PHP Million) Annual Growth (%) Market value of categories in the Bakery and Cereals market Baking Ingredients US$ Baking Ingredients PHP 4 10% 150 4% 3 5% 100 3% 2 0% 2% 1-5% 50 1% Value (US$) Annual Growth (%) -10% Value (PHP) Annual Growth (%) 0% The Baking Ingredients category is forecast to grow at a CAGR of 2.7% during from PHP104.4 million (US$2.2 million) in 2009 to PHP136.4 million (US$3.0 million) in 2019 with Dessicated Coconut being one of the leading segment, accounting 13.6% of the share. 4/15/ /04/2015 4/15/

18 Cookies (Sweet Biscuits), Bread & Rolls, and Savory Biscuits will gain market share during Winners Change in market share (in value terms) in the Bakery and Cereals market Losers Category Change in market share, Category Change in market share, % 1 Cookies (Sweet Biscuits) 0.8% 1 Cakes, Pastries & Sweet Pies -0.8% The Cookies (Sweet Biscuits) category is forecast to gain market share, growing from 35.9% in 2014 to 36.7% in % The Cakes, Pastries & Sweet Pies category will lose market share, declining from 25.7% in 2014 to 24.9% in Bread & Rolls 0.2% 2 Breakfast Cereals -0.1% The Bread & Rolls category is forecast to gain market share, growing from 25.5% in 2014 to 25.7% in The Breakfast Cereals category will lose market share, declining from 3.4% in 2014 to 3.3% in Savory Biscuits 0.1% 3 Dough Products -0.1% The Savory Biscuits category is forecast to gain market share, growing from 3.8% in 2014 to 3.9% in The Dough Products category will lose market share, declining from 4.4% in 2014 to 4.3% in

19 Category level pricing Average category level prices (PHP) in the Filipino Bakery and Cereals market, 2014 Category Average Price/ Kg (PHP) 2014 Average Price/Kg (USD) 2014 Cookies (Sweet Biscuits) Cakes, Pastries & Sweet Pies Bread & Rolls Dough Products Savory Biscuits Breakfast Cereals Energy Bars Baking Mixes Morning Goods Cereal Bars Baking Ingredients /15/ /04/2015 4/15/

20 Chocolate Cookies segment will gain maximum share in the Cookies (Sweet Biscuits) category during Segment s share of the overall category by value and change in market share in Philippines s Bakery and Cereals market, 2014 Category Segment Segment s Share, 2014 Change 2014/2019 Cookies (Sweet Biscuits) Cakes, Pastries & Sweet Pies Chocolate Cookies 24.9% 1.0% Assortments 15.1% -0.2% Plain Cookies 14.2% -0.3% Other Cookies 12.2% -0.6% American Cookies 10.8% 0.0% Butter-Based Cookies 7.4% 0.0% Wafer Biscuits 7.0% 0.0% Cream Filled 5.4% -0.1% Artisanal Cookies 2.9% 0.0% Egg-Based 0.0% 0.0% Frozen Cakes & Pastries 32.7% 0.7% Cakes 26.4% -0.6% Pastries 21.2% -0.8% Sweet Pies 19.7% 0.8% 4/15/ /04/2015 4/15/

21 Sandwich Slices will register fastest growth in the Bread & Rolls category during Segment s share of the overall category by value and change in market share in Philippines s Bakery and Cereals market, 2014 Segment s Share, Change Category Segment /2019 Sandwich Slices 20.5% 0.7% Rolls 20.5% 0.3% Loaves 20.2% 0.2% Bread & Rolls Ciabatta 10.1% 0.1% Baguettes 9.7% -0.3% Burger Buns 8.9% -1.0% Other Breads 8.1% 0.1% Frozen Bread & Rolls 2.0% 0.0% Frozen Dough Products 27.9% -0.9% Dough Products Pie & Pastry Shells 26.4% 0.3% Prepared Pastry (other) 24.3% 0.3% Pizza Bases 21.4% 0.3% 4/15/ /04/2015 4/15/

22 The Cheese-Flavored Crackers segment is forecast to register fastest growth in the Savory Biscuits category Segment s share of the overall category by value and change in market share in Philippines s Bakery and Cereals market, 2014 Segment s Share, Change Category Segment /2019 Savory Biscuits Breakfast Cereals Cheese-Flavoured Crackers 37.0% 1.6% Bread Substitutes 27.8% -1.2% Plain Crackers 25.1% -0.3% Other Crackers 10.1% -0.1% Ready-to-Eat Cereals 62.5% -0.9% Hot Cereals 37.5% 0.9% Energy Bars Energy Bars 100.0% 0.0% Baking Mixes Pancake Mixes 18.4% 0.7% Other Baking Mixes 17.5% -0.4% Bread Mixes 16.3% 1.7% Dessert Mixes 16.0% -1.6% Muffin Mixes 11.3% -0.5% Brownie Mixes 9.0% 0.2% Cake Mixes 8.9% 0.0% Rolls/Biscuit Mixes 2.6% 0.0% 4/15/ /04/2015 4/15/

23 The Pain Au Raisan segment will gain maximum share in the Morning Goods category Segment s share of the overall category by value and change in market share in Philippines s Bakery and Cereals market, 2014 Segment s Share, Change Category Segment /2019 Morning Goods Toaster Pastries 9.9% 0.0% Dohnuts 9.2% 0.2% Buns & Teacakes 8.9% -0.1% Scones 8.5% -0.5% Pain Au Chocolate 8.5% -0.5% Waffles 8.2% 0.2% Pain Au Raisan 7.3% 0.4% Madeleines 7.3% 0.3% Pancakes 7.2% 0.2% Muffins 6.3% 0.2% Breakfast Cakes 5.2% 0.2% Croissants 4.4% -0.6% Other (Morning Goods) 4.0% 0.0% Crumpets 3.0% 0.0% Frozen Morning Goods 2.0% 0.0% 4/15/ /04/2015 4/15/

24 The Granola/Muesli/Yogurt Bars segment will gain market share in the Cereal Bars category Segment s share of the overall category by value and change in market share in Philippines s Bakery and Cereals market, 2014 Category Segment Segment s Share, 2014 Change 2014/2019 Cereal Bars Granola/Muesli/Yogurt Bars 68.4% 1.0% Other Cereal Bars 31.6% -1.0% Other Baking Ingredients 15.4% 0.2% Dessicated Coconut 13.6% -0.2% Baking Chocolate Chips & Morsels 12.3% 0.2% Fruit Pectins and Glazed Fruit 11.6% 0.5% Baking Ingredients Cake Decorations & Icing 10.2% -0.1% Dry Yeast 10.2% -0.1% Non-Chocolate Baking Chips 10.0% -0.2% Baking Powder/Soda 8.2% -0.3% Cocoa-Baking 5.3% 0.1% Corn & Potato Starch 3.3% -0.1% 4/15/ /04/2015 4/15/

25 Table of Contents Country Context Market overview Retail Landscape and Key Distribution Channels Packaging Brand Share Consumer trends Examples of new product development Appendix 25

26 Profiles of selected Grocery Retailers Leading retailers in the Filipino Food retail market, 2014 Leading retailers, Philippines Company Name The Robinsons Retail Group Overview The Robinsons Retail Group is the largest multi-channel retailer in the Philippines. Robinsons operates through 11 formats, 21 retail brands, and runs approximately 950 stores in the country. SM Supermarket SM Supermarket is the second largest supermarket in the Filipino food retail industry, operating around 145 stores, including Hypermarkets & Supermarkets, and Convenience Stores. Rustan Metro Rustan is one of the largest diversified retailers in the Philippines. Rustan Supercenters, Inc. is the operator of Rustan s Supermarkets, Shop wise, and the Wellcome chain of hypermarkets. Metro is a private family corporation primarily engaged in the retail business. It owns and operates a chain of 17 stores in department store and supermarket formats. 26

27 Hypermarkets & Supermarkets is the leading distribution channel in the Filipino Food market Value (US$ billion) Leading distribution channels in Filipino Bakery and Cereals market, 2014 Leading distribution channels Overall Food Leading distribution channels Bakery and Cereals % 9% 44% Hypermarkets & Supermarkets Food & Drinks Specialists 6 4 Convenience Stores 2 0 Hypermarkets & Supermarkets Food & Drinks Specialists Convenience Stores Others 33% Others Bakery and Cereals as a percentage of overall Food: Bakery and Cereals accounted for 5.6% of total food retail consumption in Philippines in Hypermarkets & Supermarkets is the leading retailer for food sales in the Philippines, accounting for 53.3% of the market share in 2013, followed by Food & Drinks Specialists with a 24.3% share. Convenience Stores registered fastest growth at a CAGR of 6.2% during in comparison to the other retail formats. The Bakery and Cereals market in Philippines followed a similar trend with Hypermarkets & Supermarkets accounting for 44.0% of the market share in This was followed by Food & Drinks Specialists and Convenience Stores with a market share of 33.2% and 14.0% respectively during the same year. 27

28 Food & Drinks Specialists is the leading distribution channel for Cakes, Pastries & Sweet Pies and Bread & Rolls categories Leading distribution channels by category in the Bakery and Cereals market, 2014 Key distribution channels Cookies (Sweet Biscuits) Key distribution channels Cakes, Pastries & Sweet Pies 12% 4% Hypermarkets & Supermarkets 17% 3% Food & Drinks Specialists 22% 62% Food & Drinks Specialists Convenience Stores Others 37% 43% Hypermarkets & Supermarkets Convenience Stores Others Key distribution channels Bread & Rolls Key distribution channels Dough Products 23% Food & Drinks Specialists 6% 3% Hypermarkets & Supermarkets Hypermarkets & Supermarkets Convenience Stores 8% 50% Convenience Stores 33% 58% Food & Drinks Specialists 19% Others Others 28

29 Convenience Stores is the second largest distribution channel for Breakfast Cereals, Energy Bars, and Baking Mixes categories Leading distribution channels by category in the Bakery and Cereals market, 2014 Key distribution channels Savory Biscuits Key distribution channels Breakfast Cereals 18% 20% 5% 56% Hypermarkets & Supermarkets Food & Drinks Specialists Convenience Stores Others 24% 11% 3% 62% Hypermarkets & Supermarkets Convenience Stores Food & Drinks Specialists Others Key distribution channels Energy Bars Key distribution channels Baking Mixes 10% 3% Hypermarkets & Supermarkets 5% 3% Hypermarkets & Supermarkets 24% 63% Convenience Stores Food & Drinks Specialists Others 27% 65% Convenience Stores Food & Drinks Specialists Others 29

30 Hypermarkets & Supermarkets is the leading distribution channel for Morning Goods, Cereal Bars, and Baking Ingredients categories Leading distribution channels by category in the Bakery and Cereals market, 2014 Key distribution channels Morning Goods Key distribution channels Cereal Bars 20% 2% Hypermarkets & Supermarkets 23% 3% Hypermarkets & Supermarkets 54% Food & Drinks Specialists Convenience Stores 50% Convenience Stores Food & Drinks Specialists 24% Others 24% Others Key distribution channels Baking Ingredients 3% 3% Hypermarkets & Supermarkets 29% Convenience Stores Food & Drinks Specialists 65% Others 30

31 Table of Contents Country Context Market Overview Retail Landscape and Key Distribution Channels Packaging Brand Share Consumer trends Examples of new product development Appendix 31

32 Flexible Packaging is the most used packaging material while Film is the most commonly used container type in the Bakery and Cereals market Key Packaging Materials Overview of Philippines s Bakery and Cereals market by type of packaging in 2014 Key Packaging Materials by category Flexible Packaging Rigid Plastics 14.4% 82.1% Flexible Packaging Rigid Plastics Others 13% 7% 1% 2% 4% 3% 6% 6% 2% 17% 0% 14% 13% 6% 34% 81% 93% 98% 100% 100% 84% 96% 100% 83% 88% 49% Paper & Board 2.4% Baking Ingredients Baking Mixes Bread & Rolls Breakfast Cereals Cakes, Pastries & Sweet Pies Cereal Bars Cookies (Sweet Biscuits) Dough Products Energy Bars Morning Goods Savory Biscuits Flexible Packaging is the most commonly used packaging material in the Bakery and Cereals market in Philippines followed by Rigid Plastics. Key Container Types 10% 16% 3% 2%6% Film Bag/Sachet 62% Tray Clamshell Film is the most commonly used container type in the Bakery and Cereals market and accounted for 62.1% of containers used in Foil Others Breakfast Cereals and Cereal Bars used Flexible Packaging materials while Rigid Plastics is mainly used for the packaging of Cakes, Pastries & Sweet Pies. Key Container Types by category 21% 11% 79% 89% 59% 94% 39% 48% Baking Ingredients 2% 6% Baking Mixes Bread & Rolls Breakfast Cereals Film Bag/Sachet Others 52% Cakes, Pastries & Sweet Pies 100% Cereal Bars 22% 8% 37% 4% 17% 13% 70% 59% 100% Cookies (Sweet Biscuits) Dough Products 54% 54% 29% 34% Energy Bars Morning Goods Savory Biscuits Cereal Bars and Energy Bars mainly used Film containers while Bag/Sachet is most commonly used for the packaging of Break Cereals and Baking Mixes. 32

33 Box is the most commonly used outer type while Plastic Tie is the most used closure type Overview of Philippines s Bakery and Cereals market by packaging closure/outers used in 2014 Key Packaging Closures 1 Plastic Tie 2 Film 3 Prize Off 6.3% 3.3% 2.2% Key Packaging Closures by category 19% 7% Plastic Tie Film Others 2% 55% 4% 20% Baking Ingredients Baking Mixes Bread & Rolls Cakes, Pastries & Sweet Pies 5% 1% Cookies (Sweet Biscuits) 5% 5% Morning Goods Savory Biscuits Plastic Tie closures are the most commonly used closures and accounted for 6.3% of the market share in 2014, followed by Film closures with 3.3%. Key Packaging Outers Plastic Tie closures are most commonly used for the packaging of Bread & Rolls category while Film closures are used for Cakes, Pastries & Sweet Pies. * Data for Bakery and Cereals using Closures. Key Packaging Outers by category 1 Box 8.7% Box Shrink Wrap Others 2 Shrink Wrap 2.5% 8% 73% 49% 6% 2% 4% 5% 2% 1% 11% 8% 9% Baking Ingredients Baking Mixes Breakfast Cereals Cakes, Pastries & Sweet Pies Cereal Bars Cookies (Sweet Biscuits) Dough Products Morning Goods Savory Biscuits Box are the most commonly used outers for Bakery and Cereals in Philippines and accounted for 8.7% of the total outers used in Box outers are mainly used for the packaging of Baking Mixes while Shrink Wrap outers are used for packaging of Cakes, Pastries & Sweet Pies * Data for Bakery and Cereals using outers. 33

34 Plastic Tie will continue to be the most commonly used closure type and is forecast to register fastest growth during Millions Units Million Units Millions Units Million Units Overview of Philippines s Bakery and Cereals market by type of packaging in 2019 Key Packaging Materials Key Container Types 3, ,500 2,000 1,500 1, Flexible Packaging Rigid Plastics Paper & Board ,000 1,500 1, Film Bag/Sachet Tray Clamshell Flexible Packaging will continue to be the most commonly used packaging material and will register fastest growth at a CAGR of 4.9% during Key Packaging Closures Plastic Tie Film Prize Off Plastic Tie closures is forecast to grow at a CAGR of 4.3% during , to reach million units by The use of Film containers is forecast to grow at a CAGR of 4.8% during , to reach 1,835.0 million units in Key Packaging Outers Box Shrink Wrap Box will continue to be the most commonly used packaging outers while Bag is forecast to register fastest growth at a CAGR of 4.0% during

35 Table of Contents Country Context Market Overview Retail Landscape and Key Distribution Channels Packaging Brand Share Consumer trends Examples of new product development Appendix 35

36 Artisanal Producers hold the dominant share in the Cakes, Pastries & Sweet Pies and Bread & Rolls categories Cookies (Sweet Biscuits) Brand share Cakes, Pastries & Sweet Pies Brand share Leading brands market share Leading brands market share 13.9% 12.5% Peanut Butter Sandwich Magic Creams Rebisco - Choco 41.0% Artisanal Producers Marby Gardenia 10.4% 12.2% Voice Others 6.1% 6.6% 9.3% Lemon Square- Others Others Bread & Rolls Brand share Savory Biscuits Brand share Leading brands market share Leading brands market share 25.8% Magic Flakes 44.7% 47.3% Artisanal Producers Gardenia Others 20.3% Breadstix Hansel Fita Others 8.0% 4.2% 9.9% 36

37 Quaker is the leading brand in the Breakfast Cereals category Breakfast Cereals Brand share Leading brands market share Energy Bars Brand share Leading brands market share Quaker 20.7% 31.6% Koco Krunch Duo Koco Krunch Quaker-Chewy Others 8.1% 7.4% 7.5% Baking Mixes Brand share Leading brands market share 18.8% Corn Flakes (Nestlé) Others 79.3% Morning Goods Brand share Leading brands market share 0.6% 12.0% White King Ferna Others Dowee Others 69.2% 99.4% 37

38 Nature Valley is the leading brand in the Cereal Bars category Cereal Bars Brand share Leading brands market share 18.7% Baking Ingredients - Brand share Leading brands market share 26.0% Nature Valley Others Ferna Others 81.3% 74.0% 38

39 Peanut Butter Sandwich and Magic Creams are the leading brands in the Cookies (Sweet Biscuits) category Brand shares in the Bakery and Cereals market, 2014 Cookies (Sweet Biscuits) Brand Share of category, 2014 Peanut Butter Sandwich 13.9% Magic Creams 12.5% Rebisco - Choco 12.2% Voice 10.4% Arnott's 4.2% Chips Ahoy! 3.2% Fibisco 2.5% Chips Delight 2.5% Oreo 2.3% Hansel Premium 1.7% Rebisco - Others 1.6% Loacker - Others 0.9% Eggnog 0.9% Frootees 0.8% Bingo 0.8% Hello Panda 0.7% Nissin Cubee 0.6% Others 28.3% Cakes, Pastries & Sweet Pies Brand Share of category, 2014 Artisanal Producers 41.0% Marby 9.3% Gardenia 6.6% Lemon Square- Others 6.1% Regent 0.8% Mini Keyk 0.8% Cupp Keyk 0.8% Jam Bites 0.8% Others 33.8% Breads & Rolls Brand Share of category, 2014 Artisanal Producers 47.3% Gardenia 8.0% Others 44.7% Dough Products Brand Share of category, 2014 Others 100.0% 39

40 Magic Flakes is the leading brand in the Savory Biscuits category Brand shares in the Bakery and Cereals market, 2014 Breakfast Cereals Brand Share of category, 2014 Quaker 31.6% Koco Krunch Duo 8.1% Koco Krunch 7.5% Corn Flakes (Nestlé) 7.4% Cookie Crisp 5.0% Golden Oats 2.1% Milo 1.7% Kellogg's - Others 1.3% Honey Stars 1.0% Oishi-Others 0.9% Nestlé Corn Flakes 0.8% Koko Krunch 0.8% Australia Harvest 0.5% Others 31.4% Savory Biscuits Brand Share of category, 2014 Magic Flakes 25.8% Breadstix 20.3% Hansel 9.9% Fita 4.2% Sky Flakes 3.1% Sunflower 0.9% Prima Toast 0.8% Others 35.1% Energy Bars Brand Share of category, 2014 Quaker-Chewy 20.7% Others 79.3% 40

41 White King is the leading brand in the Baking Mixes category Brand shares in the Bakery and Cereals market, 2014 Baking Mixes Brand Share of category, 2014 White King 18.8% Ferna 12.0% Others 69.2% Morning Goods Brand Share of category, 2014 Dowee 0.6% Others 99.4% Cereal Bars Brand Share of category, 2014 Nature Valley 18.7% Others 81.3% Baking Ingredients Brand Share of category, 2014 Ferna 26.0% Others 74.0% 41

42 Table of Contents Country Context Market Overview Retail Landscape and Key Distribution Channels Packaging Company and Private Label Share Consumer Trends Examples of New Product Development Appendix 42

43 Canadean has identified nine mega-trends that drive consumers and these can be broken down into 20 sub-trends Trust Better Value Changing Age Structures Changing Lifestages MEGA-TRENDS: CHANGING LIFESTAGES Personal Space & Time New Gender Behaviours CONNECTIVITY Individualism Urbanization & Migration CONVENIENCE Health ETHICS Beauty Aspiration EXPERIENCE & ENJOYMENT Quality Seeking Media Connection HEALTH & WELLNESS INDIVIDUALITY Indulgence Technology TRUST Fun & Enjoyment Busy Lives VALUE Experience Seeking Ethics 43

44 An explanation of the sub-trends Sub-trend Aspirations Beauty Better Value for Money Busy Lives Changing Age Structures Changing Life Structures Explanation The trend towards consumers having more aspirational desires and wanting this reflected in the products that they consume. The trend towards consumers being increasingly interested in their beauty and grooming and, as a result, seeking to achieve more of their beauty aims and ambitions. Particularly important in the current economic environment, this trend reflects growing consumer desire, particularly in Western economies, for Better Value for Money from their purchases. This can cover not only trading down to lower priced items, but also trading up to higher priced ones when a consumer feels there is value in doing so. The trend for consumers increasingly fitting more activities into the same amount of time in a day. Working hours are increasing for certain groups, but many consumers similarly have increasingly Busy Lives as they attempt to juggle work, home life, personal ambitions, and the desire to be close to friends and family. As highlighted below, for this trend we also identify specific consumer groups. A socio-demographic trend, the age structures of many countries are evolving, having a significant impact on the marketing landscape. It s not just the aging of populations in Western, developed countries either, the rapid increase in younger generations in developing countries also challenges pre-conceptions about who the main consumers for products are. Another socio-demographic trend, and one related to Changing Age Structures. Combined with altering age group dynamics, the marketing landscape is altered in many countries as people increasingly delay settling down, marriage, and childbirth. The traditional pattern of life-stages is evolving and, as a result, so are the sizes of these groups and their needs from CPG purchases. As highlighted below, for this trend we also identify specific consumer groups. 4/15/ /04/2015 4/15/

45 An explanation of the sub-trends Sub-trend Connection Ethics, Responsibility & Spirituality Experience Seeking Fun & Enjoyment Health Individualism Indulgence Explanation Flexible labor markets, increased work and pleasure travel, Busy Lives and the breakup of traditional family structures in many countries leaves many people with a growing desire to rectify the downturn in the types of personal connections those in previous generations had. The desire to be close to friends, family, or those with similar interests combines with evolving technologies to create an explosion in the desire for people to feel somehow connected to what s important to them. Social networking, growth in the desire to spend more time with family and friends, and the desire to improve the quality of that time, are all manifestations of this trend. Increasingly, a growing number of consumers are concerned (even if they don t always act upon these concerns) about their own ethics and spirituality. In turn, many consumers are increasingly critical of the ethical and related credentials of the products or services they buy, and the providers of them. Many consumers are seeking to go beyond the simple act of owning and consuming products and instead are seeking to attain greater value by seeking products and services that somehow offer rewarding experiences. This can take many forms and can be related to other trends. For example, consuming a very high quality food or drink may not only satisfy a need for quality, but the act of consumption itself may also have value as an experience that will not soon be forgotten. Many consumers, young and old, and not least in these challenging economic times, are seeking additional fun and enjoyment and some will often choose CPG products as a result of these needs. In almost every country, consumers are increasingly worried about their overall wellbeing and specifically their health. The wider social effects of growing obesity rates and sedentary lifestyles have led to growth in consumer concern about their own health and impacted their willingness to choose products and services that might result in health benefits. In an age of mass consumerism, global brands, and rules and regulations, many people often seek to express their individual identities, personalities, needs, and wants when the opportunity arises. As a result, products and services can tap into this trend by offering people ways of achieving these desires. From little rewards to big ones, consumers are increasingly seeking ways in which they can indulge their desires and achieve the feel good this can create, even if only temporary. 4/15/ /04/2015 4/15/

46 An explanation of the sub-trends Sub-trend Media New Gender Behaviors Personal Space & Time Quality Seeking Technology Uptake Trust Urbanization & Migration Explanation Fragmentation of the Media may mean that any one Media outlet s or outlets influence may be declining, but the growth of 24/7 Media access from almost any location means that Media influence continues to extend and increasingly shape consumers habits even if they are seeking to react against Media trends. This trend refers to the blurring of traditional gender roles and behaviors, and is related to the changing nature of modern life for many people. From stay-at-home dads to career women, the old ways of doing things is changing and with it so are people s views of themselves, and therefore the products and services that meet their needs. It s not all new age though as within this trend is also the counter-perspective of people seeking more traditionally masculine and feminine products. The pace of modern life and all the demands it brings means that many people are seeking to create their own bubble of space and time where they are in control, are able to relax and unwind, and are free from the constant flow of things to do, even if it is just for five minutes. This is the trend towards trading up to higher quality products and services, even if in challenging economic times this is a less of the best approach. The pace of technological change (not just in communication, but in other areas too) means many are keen to try out the latest that s on offer and are willing to experiment in order to gain the benefits, and, for some, be among the first to experience them. Or often, a growing lack of it, is increasingly important and is also a very broad trend. From the breakdown in trust in institutions, governments, and companies, to concerns over specific ingredients in consumer goods, trust is increasingly a major concern for consumers, and therefore marketers as well. Shifting patterns of urbanization as major economies develop and people move to where the work is plays a role in fundamentally shaping people s needs especially when it comes to CPG purchases. The packaged food and drinks needs of the average urban dweller can differ remarkably to those of the rural dweller, shifting the balance between which types of products are best placed in the market. As highlighted below, for this trend we also identify specific consumer groups. 4/15/ /04/2015 4/15/

47 Trend 1: Busy Lives: On-the-go consumption will remain major motivational factors in the Philippines Bakery and Cereals market Busy Lives How the Busy Lives trend will influence Bakery and Cereals consumption in The Philippines Consumers are trying to fit more activities into the same amount of time and look for products that help to manage their hectic lifestyles Older Young Adults and Pre-mid-lifers, particularly office workers, are one of the most time-pressed groups and seek quick, convenient, and nutritious meals As the Filipino economy is upbeat and the outsourcing sector is poised to grow at a brisk pace, the working population is expected to grow. These busy consumers look for Bakery and Cereals products that are convenient, save time, and are suitable for a quick meal fix Increasingly busy lives have consequently led to sitdown, home-made meals being replaced by instant meals. For instance, Quaker s range of instant oatmeal that takes minimal preparation time and is wholesome and nutritious can help to achieve this aim. Key demographics to target Both Men and Women Aged Urban & Rural Key categories to target Breakfast Cereals Bread & Rolls Energy Bars Cereal Bars Morning Goods Savoury Biscuits Rate at which the trend will evolve Fast 4/15/ /04/2015 4/15/

48 Trend 2: Health: Whole wheat Breads with nutritive ingredients are in demand by the health conscious Filipino consumers Health How the Health trend will influence Bakery and Cereals consumption in The Philippines The wider social effects of growing obesity rates and sedentary lifestyles have led to growing consumer concerns about health Filipino consumers are increasingly evaluating their diet, which is creating opportunities for low fat, low calorie, and wholegrain products. These products are considered to offer health benefits such as high fiber, protein or rich with minerals and vitamins Marketers are also exploring gluten free and functional product lines to meet the individual dietary requirements of adult and ageing population For example, Companies such as Gardenia has offered a whole product line of healthy Breads - Slim n Fit Wheaten Bread, High Fiber Wheat Raisin Loaf, High Fiber Whole Wheat Bread. These appeal to health conscious consumers and provide with fiber, proteins, and essential nutrients Key demographics to target Both Men and Women Aged Urban & Rural Key categories to target All categories Rate at which the trend will evolve Fast 4/15/ /04/2015 4/15/

49 Trend 3: Indulgence: Indulgence remains as a key motivation for Bakery products such as Cakes, Pastries & Sweet Pies, Cookies, and Morning Goods Indulgence How the Indulgence trend will influence Bakery and Cereals consumption in The Philippines Indulgence is the key motivator driving consumption in the Bakery and Cereals market. Taste is important for consumers in Philippines and they are looking for snacks that provide an indulgent hunger fix The desire to seek out new flavors and taste experiences among Filipino consumers is driving the launch of indulgent Bakery products Therefore, manufacturers have introduced Bakery & Cereal products with better taste, flavor and filling using exclusive and quality ingredients with premium packaging, that offer a rewarding experience to consumers Jack n Jill introduced Magic Junior Condensada in the year The product is a Cream filled Cracker sandwich that contains sweet condensed milk pressed between crisp Crackers and appeals to consumers seeking newer tastes with creamy filling Key demographics to target Both Men and Women Aged Urban Key categories to target Cakes, Pastries & Sweet Pies Cookies (sweet biscuits) Bread & Rolls Cereal Bars Morning Goods Savoury Biscuits Rate at which the trend will evolve Fast 4/15/ /04/2015 4/15/

50 Trend 4: Personal Space & Time: Filipinos reward themselves with products such as Cakes, Muffins and Rolls during a busy day Personal Space & Time How the Personal Space & Time trend will influence Bakery and Cereals consumption in The Philippines Consumers will continue to seek Bakery & Cereal products that help them relax and enjoy personal space. Cookies (Sweet Biscuits), Morning Goods, Cakes and Savory Biscuits provide tasty snacking options that can be enjoyed during the work day or accompany moments of fun, such as parties In addition, small portion snacks allows consumers with quick special moments of me-time. Marketers are introducing packs of Cakes, Biscuits, and Cookies to target these snacking occasions that help relax and unwind For example, Gardenia has introduced Cream Rolls and Muffins in small pack sizes in a variety of flavors. The Muffin range has three flavors - Banana Choco, Blueberry and Chocolate and appeal to those consumers who seek a quick moment of relaxation in a busy day Key demographics to target Both Men and Women Aged Urban Key categories to target Breakfast Cereals Bread & Rolls Energy Bars Cereal Bars Morning Goods Savoury Biscuits Rate at which the trend will evolve Fast 4/15/ /04/2015 4/15/

51 Convenient and breakfast based Bakery and Cereal products aimed at the young population will drive growth Canadean predicts that the following drivers will rise in importance over the next five years to become increasingly influential motivators of consumption within the market. Greater demand for Bakery and Cereals products for Breakfast Due to friendly government policies and manpower supply, the service sector is expected to grow rapidly in the coming years. With a rising employment rate and growing per capita income, lifestyle changes will be the prime motivating factor for driving growth in the Philippines Bakery and Cereals market. Busy lives and staying away from family will drive on-the-go eating and consumption of instant breakfast products among the working Filipinos. Major bakery manufacturers and marketers in the Philippines have noticed this trend and have focused on products such as Oats, muesli, other Cereals, Buns and Muffins as Breakfast products. Increased competition between Artisanal Bakery and brands Artisanal producers currently hold the largest market share in major Bakery and Cereals categories such as Bread & Rolls and Cakes, Pastries & Sweet Pies. While the popularity of Artisanal products can be attributed to their wide variety, freshness, and unique taste, the added advantage is greater market penetration through local bakeshops and sari-sari stores (convenience stores). In response, the major bakery companies such as JBC Food and QAF Ltd have launched campaigns highlighting better hygienic packaging that also preserves the natural freshness of the product. This competition will provide added advantage to the consumers. Demand for convenient products to grow Of Filipino consumers, 61.6% are below 30 years of age. This age group has specific snacking needs due to their busy lifestyles and prefer snacks that offer on-the-go consumption and are available in exciting new flavors and varieties. Manufacturers are targeting this consumer segment with products specifically designed to provide a convenient hunger fix. For example, Bread maker Gardenia has introduced a dates and walnut Bread loaf that not only has the nutrition, but also is wholesome while satisfying the sweet cravings of consumers. It is aimed at young consumers seeking convenient and filling snacking options on-the-go with tasty flavors. 4/15/ /04/2015 4/15/

52 Table of Contents Country Context Market Overview Retail Landscape and Key Distribution Channels Packaging Company and Private Label Share Consumer Trends Examples of New Product Development Appendix 52

53 Examples of new product development in The Philippines Bakery and Cereals market Brand: Quaker Manufacturer: Quaker Oats Quaker offers its instant range of oatmeal in a variety of flavors and ingredients such as fruit & nuts, banana bites, tropical fruits. These appeal to busy consumers who do not have time for a complete sit-in meal. Trend alignment: Busy Lives Brand: Gardenia Manufacturer: Gardenia Gardenia recently introduced its Muffin range in three flavors - Banana Choco, Blueberry, and Chocolate. These appeal to those consumers who wish to unwind for a few moments. Trend alignment: : Personal Space & Time Brand: Jack n Jill Manufacturer: Universal Robina In 2015, Jack n Jill Magic Junior Condensada. The product is a Cream filled Cracker sandwich that contains sweet condensed milk pressed between crisp Crackers. Trend alignment: Indulgence Brand: Slim n Fit Manufacturer: Gardenia Gardenia has offered its range of healthy Breads that contains L-Carnitine. This nutrient helps the body turn fat into energy. The Bread may also reduce the risk of heart diseases and is a source of fiber. Trend alignment: Health 4/15/ /04/2015 4/15/