BISCUITS IN THE PHILIPPINES

Euromonitor International
March 2013

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LIST OF CONTENTS AND TABLES

Headlines ..................................................................................................................................... 1
Trends .......................................................................................................................................... 1
Competitive Landscape ................................................................................................................ 2
Prospects ..................................................................................................................................... 3
Category Data .............................................................................................................................. 4
Table 1 Sales of Biscuits by Category: Volume 2007-2012 ...................................... 4
Table 2 Sales of Biscuits by Category: Value 2007-2012 ......................................... 4
Table 3 Sales of Biscuits by Category: % Volume Growth 2007-2012 ...................... 4
Table 4 Sales of Biscuits by Category: % Value Growth 2007-2012 ......................... 5
Table 5 Biscuits Company Shares 2008-2012 .......................................................... 5
Table 6 Biscuits Brand Shares 2009-2012 ................................................................ 5
Table 7 Sales of Biscuits by Distribution Format: % Analysis 2007-2012 ................. 6
Table 8 Forecast Sales of Biscuits by Category: Volume 2012-2017 ........................ 7
Table 9 Forecast Sales of Biscuits by Category: Value 2012-2017 ........................... 7
Table 10 Forecast Sales of Biscuits by Category: % Volume Growth 2012-2017 ....... 7
Table 11 Forecast Sales of Biscuits by Category: % Value Growth 2012-2017 .......... 8


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BISCUITS IN THE PHILIPPINES


HEADLINES
Volume and value sales of biscuits set to grow by 5% and 8%, respectively in 2012
Biscuits continues to gain shares from chocolate confectionery
Sandwich biscuits expected to post fastest volume growth of 6% in 2012
Average unit price set to post 3% increase in 2012
Monde Nissin Corp to lead a 34% value share in 2012
Biscuits volume and constant value sales expected to increase at CAGRs of 5% and 4%,
respectively over the forecast period


TRENDS
Biscuits in the Philippines continues to compete with chocolate confectionery. Many
consumers continue to consume biscuits, usually chocolate-coated biscuits, as a cheaper
alternative to chocolate confectionery. Brands such as Choco Knots, Knick Knacks and
Cubee tend to steal shares from brands such as Kit Kat and Gandour. Consumers tend to
perceive biscuits as a cheaper snack alternative and better value for money compared to
chocolate confectionery in the Philippines.
The biscuit category had a healthy value growth in 2012, thanks to the stable economic
growth, increasing children and student population, new product launches, multimedia
advertisements and higher unit prices. This registered value growth, set to be 8% in 2012, is
the highest since the economic recession in 2009 owing to the better fiscal condition and
improved disposable income.
Sandwich biscuits is expected to experience the fastest volume growth of 6% in 2012. The
low price positioning and strong distribution through sari-sari stores of local brands such Jack
n Jill Cream-O and Bingo continue to drive the growth of sandwich biscuits. Sandwich
biscuits also tend to be a snack time favourites amongst both the young and old attributed to
the long heritage of brands such as Bingo and Rebisco.
The average unit price of biscuits is expected to post a 3% current value increase in 2012 due
to general inflation, increased cost of commodities and higher marketing costs. Biscuit
ingredients are mainly locally sourced and hence prices were able to stay competitive. The
average unit price growth was slightly higher than it was in 2011 despite more stable oil prices
in 2012.
In 2012, plain biscuits experienced the slowest volume growth at 2%. The lack of innovation
amongst plain biscuit manufacturers continues to make their brands lose out against
sandwich biscuits and filled biscuit brands, where manufacturers continually innovate
products and introduce new flavours. Cookies also experienced slow volume growth in 2012
at just above 2%. The cookies industry is dominated by Chips Delight and Chips Ahoy!. The
dominance of these two brands makes it difficult for new brands to enter the market and
hence limits the growth of cookies.
The impact of health and wellness continued to have a limited effect on biscuits. Most biscuit
brands face the difficulty of changing their image from something tasty to something healthy.
In addition, consumers who purchase biscuits do not tend to be very health conscious and
price tends to hold greater weight when it comes to consumer purchasing decisions. Savoury
biscuits and cracker brands have made the greatest effort to leverage on the health and
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wellness trend. Starting in 2009, brands such as Sky Flakes and Rebisco have developed
savoury biscuits and crackers out of whole wheat to provide consumers with a healthier
alternative.


COMPETITIVE LANDSCAPE
The Monde Nissin Corp is the leading biscuits brand manufacturer and is set to post a 34%
value share in 2012, thanks to its wide product portfolio, popularity of its brands and
continuous large investment on marketing and product innovation. The company had
numerous multimedia advertisements in 2012 with about seven different television
commercials promoting its various brands. Monde Nissin is one of the oldest manufacturers of
biscuits and is proven to be a producer of quality biscuit products. Its Sky Flakes brand is the
main driver of its growth and the major contributor of its value sales.
Being the leading manufacturer of chocolate-coated biscuits, second ranked Universal Robina
Corp registered the fastest value share growth in 2012 owing to the robust sales of its Jack 'n'
Jill brands. Its brands such as Choco Knots, Magic Flakes and Cream-O are all top
performers their respective markets. Universal Robina is a leader in innovation. Its brands are
also well advertised, enabling it to communicate the unique positioning or advantage of
particular brand. For example, the Jack 'n' Jill Magic competes with Sky Flakes by providing
more value for money, whilst the Jack 'n' Jill Cream-O is available in various flavours and is
significantly cheaper compared to its foreign brand counterpart, Oreo. Jack 'n' Jill Drewberry
is the first local biscuit with tasty and pasty fruity filling.
Biscuit manufacturers continue to focus on improving its distribution and providing consumers
with better value for money. Distribution through sari-sari stores continues to be an extremely
important channel for brands as it assists in penetrating less developed provinces in the
Philippines. Advertising was also heavily used amongst competitors to continuously remind
consumers of brand availability.
The top three biscuit companies in the Philippines are all domestically owned, namely Monde
Nissin, Universal Robina and Republic Biscuit Corp. Together they will comprise a 69% value
share in 2012. International players find it difficult to compete with these companies due to
their extensive distribution networks and low price positions. In addition, domestic companies
tend to have a better understanding of the local market.
Universal Robinas Jack n Jill Filled Stix Nutty Choco Delight was one of the products
launched in 2012. It is a chocolate-coated biscuit, filled with peanut butter. The brand uses a
low price positioning, with a suggested retail price of Ps6 per package. The brands target
market is mainly children. The brand is able to compete both against biscuit brands and
chocolate confectionery brands. In 2012, the brand was mainly distributed through
hypermarkets and supermarkets.
Monde Nissin and Universal Robina were the most aggressive in advertising in 2012. Monde
Nissin launched several campaigns for its different biscuit brands. These included its This is
your break campaign for Sky Flakes. To compete, Universal Robina used famous celebrities
to endorse its brands in TV commercials and print advertisements. Both manufacturers tend
to compete for the same target market and needed to do aggressive marketing campaigns to
gain or retain their market share.
There have been no major trends for packaging innovation in the biscuits industry. The
majority of manufacturers continue to use smaller, single-serve flexible packaging, containing
2-4 biscuits. This tends to be the preferred packaging format as it allows consumers to
purchase products as needed and lesser cash layout is necessary when making a purchase.
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Distribution also becomes easier when using this packaging as it allows manufacturers utilise
sari-sari stores.
Even in biscuits the standard and economy brands are the most saleable in the local market
due to their affordability and also because these brands are able to maintain quality. The
higher priced brands, though tasty, seldom achieve market leadership in various biscuit
categories mainly because they are less affordable, have a limited market niche and are
challenged by competition from cheaper biscuit products. In 2012, there was no private label
brand yet present within biscuits.


PROSPECTS
Competition between chocolate confectionery and biscuits is likely to intensify because both
industries tend to target a similar market niche and use similar strategies to gain market
share. Over the forecast period, both industries will be driven by innovation to keep
consumers interested. Manufacturers are also likely to restrict unit price growth to stay
competitive.
Biscuits volume is expected to grow at a 5% CAGR over the forecast period, similar to what
was experienced over the review period. Growth is likely to continue to come from consumers
who purchase biscuits as a cheaper alternative to chocolate confectionery. Constant value
growth is estimated to reach a 4% CAGR, about twice what was experienced over the review
period. Higher average unit prices are expected to have the greatest effect on value growth
due to the movement to smaller pack sizes. Smaller packages tend to be more expensive
compared to larger packages when the price is compared in equal volumes.
Sandwich biscuits is likely to experience the fastest volume growth at a 7% CAGR over the
forecast period. Sales will be driven mainly by its low price points and an improvement in
distribution to provincial regions in the Philippines. As a result of this, plain biscuits and
cookies are likely to suffer; these are expected to register volume CAGRs of 2% and 3%,
respectively. The lack of innovation and the higher price position of brands in plain biscuits
and cookies are likely to make it difficult for them to compete with sandwich biscuits.
The average unit price of the biscuits is expected to decline at a constant value CAGR of -1%
due to stiffer competition. Leading manufacturers such as Monde Nissin and Universal Robina
are likely to use a lot of sales promotions to encourage purchases. The development of
cheaper local brands is also likely to keep average unit prices low.
The key distribution channels for biscuit products are likely to see negligible change over the
forecast period. Other grocery retailers is likely to contribute to a majority of the sales due to
the high dependence of manufacturers on using sari-sari stores to reach less developed
areas of the Philippines. Hypermarkets and supermarkets are also likely to continue to grow
due to the expansion of key grocery retailers such as SM, Puregold and Robinsons.
Marketing activities are likely to remain unchanged over the forecast period. TV commercials
and print advertisements should remain the main sources of information for consumers.
However, use of social networking site advertising and independent blog reviews is becoming
more prevalent. Manufacturers are also likely to continue using in-store sales promotions to
encourage impulse purchases amongst consumers.
Jack n Jill Filled Stix Nutty Choco Delight is likely to have limited growth over the forecast
period. The new development does not really have any distinct differentiation compared to its
competitors. There are numerous brands that compete for the same market that Jack n Jill
Filled Stix Nutty Choco Delight is targeting. In addition, it is likely that other manufacturers will
develop similar or better products in the future.

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CATEGORY DATA

Table 1 Sales of Biscuits by Category: Volume 2007-2012

'000 tonnes
2007 2008 2009 2010 2011 2012

Savoury Biscuits and 48.2 50.7 53.2 55.7 58.5 61.5
Crackers
Sweet Biscuits 59.7 63.4 66.0 68.9 72.0 75.3
- Chocolate Coated 4.5 4.8 4.9 5.1 5.3 5.5
Biscuits
- Cookies 6.1 6.3 6.3 6.4 6.6 6.7
- Filled Biscuits 8.0 8.5 8.9 9.3 9.7 10.1
- Plain Biscuits 14.3 14.8 14.9 15.2 15.5 15.8
- Sandwich Biscuits 26.8 29.1 31.0 32.9 34.9 37.1
Biscuits 107.8 114.0 119.2 124.7 130.5 136.8
Source: Euromonitor International from official statistics, trade associations, trade press, company research,
store checks, trade interviews, trade sources


Table 2 Sales of Biscuits by Category: Value 2007-2012

Ps million
2007 2008 2009 2010 2011 2012

Savoury Biscuits and 6,628.1 7,125.3 7,517.1 7,968.2 8,605.6 9,337.1
Crackers
Sweet Biscuits 10,815.9 11,766.1 12,521.3 13,387.0 14,300.7 15,349.0
- Chocolate Coated 1,352.2 1,494.1 1,583.8 1,670.9 1,771.2 1,886.3
Biscuits
- Cookies 1,250.7 1,325.7 1,365.5 1,420.1 1,484.0 1,558.2
- Filled Biscuits 2,317.1 2,525.6 2,677.2 2,864.6 3,093.7 3,356.7
- Plain Biscuits 2,478.7 2,627.5 2,798.3 2,966.2 3,129.3 3,324.3
- Sandwich Biscuits 3,417.3 3,793.2 4,096.7 4,465.4 4,822.6 5,223.6
Biscuits 17,444.1 18,891.4 20,038.5 21,355.2 22,906.4 24,686.1
Source: Euromonitor International from official statistics, trade associations, trade press, company research,
store checks, trade interviews, trade sources


Table 3 Sales of Biscuits by Category: % Volume Growth 2007-2012

% volume growth
2011/12 2007-12 CAGR 2007/12 Total

Savoury Biscuits and Crackers 5.1 5.0 27.7
Sweet Biscuits 4.5 4.8 26.1
- Chocolate Coated Biscuits 4.0 4.1 22.4
- Cookies 2.2 2.0 10.4
- Filled Biscuits 4.7 4.9 27.2
- Plain Biscuits 1.9 2.0 10.4
- Sandwich Biscuits 6.2 6.7 38.4
Biscuits 4.8 4.9 26.9
Source: Euromonitor International from official statistics, trade associations, trade press, company research,
store checks, trade interviews, trade sources

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Table 4 Sales of Biscuits by Category: % Value Growth 2007-2012

% current value growth
2011/12 2007-12 CAGR 2007/12 Total

Savoury Biscuits and Crackers 8.5 7.1 40.9
Sweet Biscuits 7.3 7.3 41.9
- Chocolate Coated Biscuits 6.5 6.9 39.5
- Cookies 5.0 4.5 24.6
- Filled Biscuits 8.5 7.7 44.9
- Plain Biscuits 6.2 6.0 34.1
- Sandwich Biscuits 8.3 8.9 52.9
Biscuits 7.8 7.2 41.5
Source: Euromonitor International from official statistics, trade associations, trade press, company research,
store checks, trade interviews, trade sources


Table 5 Biscuits Company Shares 2008-2012

% retail value rsp
Company 2008 2009 2010 2011 2012

Monde Nissin Corp 29.6 32.5 33.3 33.5 33.6
Universal Robina Corp 21.2 22.1 23.2 24.0 24.9
Republic Biscuit Corp 10.3 10.6 10.9 10.8 10.8
Kraft Foods 5.1 5.4 6.1 6.2 6.2
(Philippines) Inc
Grand Alphatech 3.3 3.3 3.2 3.1 3.0
International Corp
Martinez & Co Inc, 3.6 3.2 3.0 2.8 2.8
Felicisimo
Delfi Foods Philippines 2.4 2.5 2.6 2.6 2.6
Inc
Campbell Soup Co 1.8 1.6 1.4 1.4 1.4
Commonwealth Foods Inc 1.1 1.1 1.0 1.0 1.0
Meiji Seika Kaisha Ltd 0.6 0.4 0.3 0.3 0.3
Loacker SpA, A 0.3 0.3 0.3 0.3 0.3
Kraft Foods Inc - 0.4 0.3 0.3 0.3
Croley Foods Mfg Corp 0.3 0.3 0.2 0.2 0.2
Meiji Holdings Co Ltd - 0.1 0.1 0.1 0.1
First Choice Food Corp 6.4 2.6 - - -
Nestl Philippines Inc - - - - -
Metro Biscuit Corp - - - - -
Others 13.9 13.7 13.9 13.3 12.7
Total 100.0 100.0 100.0 100.0 100.0
Source: Euromonitor International from official statistics, trade associations, trade press, company research,
store checks, trade interviews, trade sources


Table 6 Biscuits Brand Shares 2009-2012

% retail value rsp
Brand Company 2009 2010 2011 2012

Jack 'n' Jill Universal Robina Corp 22.1 23.2 24.0 24.9
Sky Flakes Monde Nissin Corp 16.5 17.2 17.5 17.6
Rebisco Republic Biscuit Corp 8.7 8.8 8.8 8.7
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Eggnog Monde Nissin Corp 4.7 4.7 4.6 4.5
Bingo Monde Nissin Corp 3.6 3.8 3.9 4.0
Fita Monde Nissin Corp 3.5 3.5 3.6 3.6
Oreo Kraft Foods 2.8 2.9 3.0 3.0
(Philippines) Inc
Chips Delight Grand Alphatech 3.3 3.2 3.1 3.0
International Corp
La Pacita Martinez & Co Inc, 3.2 3.0 2.8 2.8
Felicisimo
Knick Knacks Delfi Foods Philippines 2.5 2.6 2.6 2.6
Inc
Cubee Monde Nissin Corp 2.4 2.5 2.4 2.4
Frooteez Republic Biscuit Corp 1.9 2.0 2.1 2.1
Tiger Kraft Foods 1.1 1.7 1.8 1.8
(Philippines) Inc
Chips Ahoy! Kraft Foods 1.4 1.4 1.4 1.4
(Philippines) Inc
Arnott's Campbell Soup Co 1.6 1.4 1.4 1.4
Fibisco Commonwealth Foods Inc 1.1 1.0 1.0 1.0
MY San Grahams Monde Nissin Corp 1.0 1.0 1.0 0.9
Hello Panda Meiji Seika Kaisha Ltd 0.4 0.3 0.3 0.3
Loacker Loacker SpA, A 0.3 0.3 0.3 0.3
Ritz Kraft Foods Inc 0.4 0.3 0.3 0.3
Sunflower Croley Foods Mfg Corp 0.3 0.2 0.2 0.2
Yan Yan Meiji Holdings Co Ltd 0.1 0.1 0.1 0.1
BluSkies First Choice Food Corp 2.6 - - -
Nabisco Kraft Foods - - - -
(Philippines) Inc
Ritz Kraft Foods - - - -
(Philippines) Inc
Yan Yan Meiji Seika Kaisha Ltd - - - -
Marie Metro Biscuit Corp - - - -
Nuggets Monde Nissin Corp - - - -
Knick Knacks Nestl Philippines Inc - - - -
Others 14.4 14.7 13.9 13.3
Total 100.0 100.0 100.0 100.0
Source: Euromonitor International from official statistics, trade associations, trade press, company research,
store checks, trade interviews, trade sources


Table 7 Sales of Biscuits by Distribution Format: % Analysis 2007-2012

% retail value rsp
2007 2008 2009 2010 2011 2012

Store-Based Retailing 100.0 100.0 100.0 100.0 100.0 100.0
- Grocery Retailers 97.5 97.5 97.3 97.5 97.3 97.1
-- Supermarkets 19.2 19.5 19.5 20.3 20.5 20.7
-- Hypermarkets 1.8 2.0 2.2 2.6 2.8 3.0
-- Discounters - - - - - -
-- Small Grocery 8.1 7.9 7.6 6.9 6.8 6.7
Retailers
--- Convenience Stores 0.5 0.5 0.5 0.5 0.5 0.5
--- Independent Small 7.0 6.8 6.5 5.8 5.6 5.4
Grocers
--- Forecourt Retailers 0.6 0.6 0.6 0.6 0.7 0.8
-- Other Grocery 68.4 68.1 68.0 67.7 67.2 66.7
Retailers
- Non-Grocery Retailers 2.5 2.5 2.7 2.5 2.7 2.9
-- Health and Beauty 2.5 2.5 2.7 2.5 2.7 2.9
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Retailers
-- Other Non-Grocery - - - - - -
Retailers
Non-Store Retailing - - - - - -
- Vending - - - - - -
- Homeshopping - - - - - -
- Internet Retailing - - - - - -
- Direct Selling - - - - - -
Total 100.0 100.0 100.0 100.0 100.0 100.0
Source: Euromonitor International from official statistics, trade associations, trade press, company research,
store checks, trade interviews, trade sources


Table 8 Forecast Sales of Biscuits by Category: Volume 2012-2017

'000 tonnes
2012 2013 2014 2015 2016 2017

Savoury Biscuits and 61.5 64.4 67.3 70.2 73.0 75.7
Crackers
Sweet Biscuits 75.3 78.8 82.6 86.8 91.3 96.2
- Chocolate Coated 5.5 5.8 6.0 6.3 6.5 6.8
Biscuits
- Cookies 6.7 6.9 7.0 7.2 7.4 7.7
- Filled Biscuits 10.1 10.6 11.2 11.8 12.5 13.3
- Plain Biscuits 15.8 16.1 16.4 16.8 17.2 17.6
- Sandwich Biscuits 37.1 39.4 41.9 44.7 47.6 50.8
Biscuits 136.8 143.2 149.9 157.0 164.3 171.9
Source: Euromonitor International from trade associations, trade press, company research, trade interviews,
trade sources


Table 9 Forecast Sales of Biscuits by Category: Value 2012-2017

Ps million
2012 2013 2014 2015 2016 2017

Savoury Biscuits and 9,337.1 9,710.6 10,069.9 10,422.3 10,735.0 11,024.8
Crackers
Sweet Biscuits 15,349.0 15,884.4 16,511.4 17,229.5 18,053.3 19,005.9
- Chocolate Coated 1,886.3 1,948.5 2,016.7 2,091.3 2,172.9 2,262.0
Biscuits
- Cookies 1,558.2 1,577.7 1,608.0 1,646.7 1,694.2 1,760.0
- Filled Biscuits 3,356.7 3,517.8 3,721.8 3,971.2 4,277.0 4,649.0
- Plain Biscuits 3,324.3 3,397.4 3,482.4 3,576.4 3,680.1 3,794.2
- Sandwich Biscuits 5,223.6 5,443.0 5,682.5 5,943.8 6,229.2 6,540.6
Biscuits 24,686.1 25,595.0 26,581.3 27,651.8 28,788.3 30,030.7
Source: Euromonitor International from trade associations, trade press, company research, trade interviews,
trade sources


Table 10 Forecast Sales of Biscuits by Category: % Volume Growth 2012-2017

% volume growth
2016/17 2012-17 CAGR 2012/17 Total

Savoury Biscuits and Crackers 3.7 4.2 23.1
Sweet Biscuits 5.4 5.0 27.8
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- Chocolate Coated Biscuits 4.5 4.3 23.4
- Cookies 3.1 2.7 14.4
- Filled Biscuits 6.1 5.6 31.1
- Plain Biscuits 2.4 2.2 11.4
- Sandwich Biscuits 6.7 6.5 36.9
Biscuits 4.6 4.7 25.7
Source: Euromonitor International from trade associations, trade press, company research, trade interviews,
trade sources


Table 11 Forecast Sales of Biscuits by Category: % Value Growth 2012-2017

% constant value growth
2012-17 CAGR 2012/17 TOTAL

Savoury Biscuits and Crackers 3.4 18.1
Sweet Biscuits 4.4 23.8
- Chocolate Coated Biscuits 3.7 19.9
- Cookies 2.5 13.0
- Filled Biscuits 6.7 38.5
- Plain Biscuits 2.7 14.1
- Sandwich Biscuits 4.6 25.2
Biscuits 4.0 21.7
Source: Euromonitor International from trade associations, trade press, company research, trade interviews,
trade sources