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COFFEE IN THE PHILIPPINES

Euromonitor International
May 2015
COFFEE IN THE PHILIPPINES Passport I

LIST OF CONTENTS AND TABLES


Headlines ..................................................................................................................................... 1
Trends .......................................................................................................................................... 1
Competitive Landscape ................................................................................................................ 1
Prospects ..................................................................................................................................... 2
Category Data .............................................................................................................................. 3
Table 1 Retail Sales of Coffee by Category: Volume 2009-2014 .............................. 3
Table 2 Retail Sales of Coffee by Category: Value 2009-2014 ................................. 3
Table 3 Retail Sales of Coffee by Category: % Volume Growth 2009-2014 ............. 3
Table 4 Retail Sales of Coffee by Category: % Value Growth 2009-2014 ................ 4
Table 5 Retail Sales of Fresh Ground Coffee by Standard vs Pods: % Value
2009-2014 .................................................................................................... 4
Table 6 Retail Sales of Instant Coffee by Type: % Value Breakdown 2009-
2014 ............................................................................................................. 4
Table 7 NBO Company Shares of Coffee: % Retail Value 2010-2014 ...................... 4
Table 8 LBN Brand Shares of Coffee: % Retail Value 2011-2014 ............................ 5
Table 9 Forecast Retail Sales of Coffee by Category: Volume 2014-2019 ............... 5
Table 10 Forecast Retail Sales of Coffee by Category: Value 2014-2019 .................. 6
Table 11 Forecast Retail Sales of Coffee by Category: % Volume Growth 2014-
2019 ............................................................................................................. 6
Table 12 Forecast Retail Sales of Coffee by Category: % Value Growth 2014-
2019 ............................................................................................................. 6
Table 13 Forecast Retail Sales of Fresh Ground Coffee by Standard vs Pods:
% Value 2014-2019...................................................................................... 7

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COFFEE IN THE PHILIPPINES Passport 1

COFFEE IN THE PHILIPPINES


HEADLINES
Coffee retail value sales grow by 12% in 2014 while retail volume sales increase by 10%
Artisanal coffee creates demand for speciality coffee beans
On-trade coffee volume sales rise by 7% in 2014
Nestlé Philippines Inc dominates coffee with a value share of 43% in 2014
Coffee is predicted to record a total volume CAGR of 4% over the forecast period

TRENDS
Although chained coffee shops such as Starbucks remain popular among consumers, small
speciality coffee shops are ushering in a third wave of coffee. Coffee lovers and upper-income
individuals are being attracted by artisanal coffee brewed using high-quality coffee beans and
made visually appealing by latte art. Some of the third wave coffee shops include Craft Coffee
Revolution, Magnum Opus, Kuppa and Toby’s Estate, among others. Not to be left behind,
Starbucks Reserve coffee was launched in May 2014, which is available in limited quantities
in five of its outlets.
Vietnamese coffee is carving a niche in the market. Made distinct by the use of a Phin brewer,
it is prepared by slowly steeping ground coffee, which gives each cup more flavour and a high
caffeine content. With its gradual brewing process, Vietnamese coffee, however, is not for
those pressed for time. Among the foodservice outlets offering Vietnamese coffee are
Highlands Coffee, which is Vietnam’s biggest coffee chain, Ba Noi’s, La Petit Camille, Pho
Hoa and Pho 24.
The retail unit price of coffee in 2014 rose by only 2%. The popularity of instant standard
coffee, particularly 3-in-1 instant coffee mixes, is keeping unit price increases low. Instant
standard coffee is able to generate demand because of its affordability and the ease with
which it is prepared. Fresh coffee beans, meanwhile, are not as extensively purchased since
they are pricier and require the use of a coffee machine, which has a low penetration among
low-income households.
Coffee is the most popular hot drink among Filipinos. It is bought by consumers from all
income brackets and by a wide age group with the habit of drinking it being formed,
nowadays, as early as during one’s teenage years. The numerous speciality coffee shops
around the country are further encouraging the consumption of coffee rather than tea or other
hot drinks. However, coffee is not to be viewed as stealing share from other hot drinks as it
has long held a dominant position – it is able to sustain its following to the disadvantage of
other hot drinks.

COMPETITIVE LANDSCAPE
Nestlé Philippines Inc continued to dominate coffee with a value share of 43% in 2014. Its
lead is driven by the popularity of its Nescafé brand, which has several instant coffee variants
sold at different price points, allowing it to cater to a wide income group. Adequate
promotional activities, meanwhile, are utilised to support the brand and sustain recall. Nestlé
also continually creates new flavours for its instant coffee mixes, which renews consumer
interest and meets their desire for variety.

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COFFEE IN THE PHILIPPINES Passport 2

Filipinos’ sweet tooth is driving the growing popularity of instant white coffee, which has a mild
and creamy taste. Great Taste White, in particular, has been able to generate a significant
demand among consumers, allowing Universal Robina Corp to outperform other companies in
2014. This is, on the other hand, viewed as stimulating the entry of other players. Aside from
San Miguel Super Coffee Mix Co, other companies that have introduced an instant white
coffee mix are Nestlé Philippines Inc and Mayora Indah Tbk PT.
Multinational companies have a slight edge against local players with the former accounting
for 69% of total value sales in 2014. The strength of multinationals lies in their instant coffee
brands, which have a loyal following among consumers. Brands by local companies,
meanwhile, are strong contenders in the fresh coffee category, which makes popular local
variants such as Barako (Liberica) and Batangas-grown coffee accessible to consumers.
Nescafé Creamy White was launched in 2014 as Nestlé Philippines Inc’s entry into the instant
white coffee category. It uses Nestlé milk as its creamer and each 28g sachet retails for Ps6.
It competes against another new brand, Kopiko Café Blanca, launched in July 2014. Owl
Coffee from Singapore, meanwhile, was brought to the country by Transaxion Unlimited and
is being promoted through product samplings under its “Owl Made Me Do It” campaign. UK-
based coffee chain brand, Costa Coffee, is also set to enter the local market and will have a
premium positioning and targeted at the 18-25-year-old age group.

PROSPECTS
Sales of coffee are expected to slow down over the forecast period, as the category will
record a total volume CAGR of 4%, which is significantly slower than the review period
performance. With instant coffee a mature category, the overall coffee category has less
potential to register robust growth over the forecast period. Fresh coffee beans, meanwhile,
will make the most significant contribution to growth over the forecast period, as it is foreseen
to increase by a total volume CAGR of 6%. Aside from its small consumer base, fresh coffee
beans will be boosted by the expansion of speciality coffee shops. Although artisanal coffee is
likely to remain a niche, third wave coffee shops will remain an important patron of speciality
fresh coffee beans.
Other caffeinated beverages such as tea, energy drinks, RTD coffee and RTD tea are
expected to be the main threats to the growth of coffee in 2014-2019. New product launches
from these categories could result in some people switching from coffee, but coffee is likely to
maintain its lead against these alternatives as a breakfast drink. RTD coffee, meanwhile, has
the biggest potential to steal market share away from coffee, as its ready-to-drink format will
appeal to time-constrained individuals.
The vibrant BPO industry presents opportunities for companies to grow their brands.
Promotions in convenience stores located near BPO centres will be cost-efficient means of
stimulating the consumption of coffee among call centre agents who are in need of a stimulant
during their graveyard shift.
Instant decaffeinated coffee is expected to have the most sluggish performance in the
forecast period, with a total volume CAGR of 3%. The category is likely to continue to offer
limited brand options and few innovations, restricting continued interest among consumers.
Also, it is expected to continue to appeal only to a specific segment of coffee drinkers who
have to limit their caffeine intake due to health concerns.
New instant coffee mixes launched over the forecast period are likely to include creamy
concoctions due to Filipinos’ penchant for sweet flavours. Instant speciality/Italian coffee is
also likely to become more prevalent, allowing consumers to enjoy coffee-house-style brews
in their homes.

© Euromonitor International
COFFEE IN THE PHILIPPINES Passport 3

CATEGORY DATA
Table 1 Retail Sales of Coffee by Category: Volume 2009-2014

Tonnes
2009 2010 2011 2012 2013 2014

Fresh Coffee 172.3 178.1 183.9 189.3 194.9 201.4


- Fresh Coffee Beans 66.4 68.6 70.8 72.6 74.4 75.7
- Fresh Ground Coffee 105.9 109.5 113.1 116.7 120.5 125.7
-- Fresh Ground Coffee - - - - - -
Pods
-- Standard Fresh 105.9 109.5 113.1 116.7 120.5 125.7
Ground Coffee
Instant Coffee 55,941.2 77,895.9 91,423.2 101,245.6 116,429.4 128,070.7
- Instant Standard Coffee 55,921.6 77,876.1 91,404.1 101,225.5 116,409.3 128,050.3
- Instant Decaffeinated 19.6 19.8 19.1 20.1 20.1 20.4
Coffee
Coffee 56,113.5 78,074.0 91,607.1 101,434.9 116,624.3 128,272.1
Source: Euromonitor International from official statistics, trade associations, trade press, company research,
store checks, trade interviews, trade sources

Table 2 Retail Sales of Coffee by Category: Value 2009-2014

PHP million
2009 2010 2011 2012 2013 2014

Fresh Coffee 100.2 110.4 121.8 130.5 136.7 143.5


- Fresh Coffee Beans 39.7 43.9 48.3 50.7 53.0 55.1
- Fresh Ground Coffee 60.5 66.5 73.5 79.8 83.7 88.4
-- Fresh Ground Coffee - - - - - -
Pods
-- Standard Fresh 60.5 66.5 73.5 79.8 83.7 88.4
Ground Coffee
Instant Coffee 24,162.5 27,758.6 30,847.8 35,140.1 41,111.1 46,042.8
- Instant Standard Coffee 24,145.7 27,740.8 30,829.7 35,121.5 41,092.1 46,023.2
- Instant Decaffeinated 16.8 17.8 18.1 18.7 19.0 19.6
Coffee
Coffee 24,262.7 27,869.0 30,969.6 35,270.6 41,247.8 46,186.2
Source: Euromonitor International from official statistics, trade associations, trade press, company research,
store checks, trade interviews, trade sources

Table 3 Retail Sales of Coffee by Category: % Volume Growth 2009-2014

% volume growth
2013/14 2009-14 CAGR 2009/14 Total

Fresh Coffee 3.3 3.2 16.9


- Fresh Coffee Beans 1.8 2.6 13.9
- Fresh Ground Coffee 4.3 3.5 18.8
-- Fresh Ground Coffee Pods - - -
-- Standard Fresh Ground Coffee 4.3 3.5 18.8
Instant Coffee 10.0 18.0 128.9
- Instant Standard Coffee 10.0 18.0 129.0

© Euromonitor International
COFFEE IN THE PHILIPPINES Passport 4

- Instant Decaffeinated Coffee 1.6 0.8 4.1


Coffee 10.0 18.0 128.6
Source: Euromonitor International from official statistics, trade associations, trade press, company research,
store checks, trade interviews, trade sources

Table 4 Retail Sales of Coffee by Category: % Value Growth 2009-2014

% current value growth


2013/14 2009-14 CAGR 2009/14 Total

Fresh Coffee 4.9 7.4 43.2


- Fresh Coffee Beans 4.0 6.8 38.7
- Fresh Ground Coffee 5.5 7.9 46.1
-- Fresh Ground Coffee Pods - - -
-- Standard Fresh Ground Coffee 5.5 7.9 46.1
Instant Coffee 12.0 13.8 90.6
- Instant Standard Coffee 12.0 13.8 90.6
- Instant Decaffeinated Coffee 3.2 3.1 16.3
Coffee 12.0 13.7 90.4
Source: Euromonitor International from official statistics, trade associations, trade press, company research,
store checks, trade interviews, trade sources

Table 5 Retail Sales of Fresh Ground Coffee by Standard vs Pods: % Value 2009-
2014

% retail value rsp


2009 2010 2011 2012 2013 2014

Pods - - - - - -
Standard 100.0 100.0 100.0 100.0 100.0 100.0
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 6 Retail Sales of Instant Coffee by Type: % Value Breakdown 2009-2014

% retail value rsp


2009 2010 2011 2012 2013 2014

2-in-1 Instant Coffee 0.1 0.1 0.1 0.1 0.1 0.1


3-in-1 Instant Coffee 47.4 61.3 66.0 67.6 71.1 73.6
4-in-1 Instant Coffee 0.3 0.3 0.3 0.3 0.2 0.2
Instant Speciality 2.1 1.9 1.9 1.7 1.5 1.5
Italian Coffee
Standard Instant Coffee 49.5 35.6 30.8 29.5 26.3 24.1
Others 0.6 0.8 0.9 0.9 0.8 0.6
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 7 NBO Company Shares of Coffee: % Retail Value 2010-2014

% retail value rsp

© Euromonitor International
COFFEE IN THE PHILIPPINES Passport 5

Company 2010 2011 2012 2013 2014

Nestlé Philippines Inc 65.6 62.8 58.5 49.7 43.4


Universal Robina Corp 8.3 8.1 11.7 19.5 27.3
Mayora Indah Tbk PT 22.3 25.2 26.0 27.2 25.7
San Miguel Super Coffee 1.8 1.9 2.1 2.1 2.2
Mix Co
Kraft Foods 0.2 0.2 0.2 0.2 0.1
(Philippines) Inc
Culinary Exchange, The 0.1 0.1 0.1 0.1 0.1
Century Pacific Food Inc 0.1 0.1 0.0 0.0 0.0
General Milling Corp - - - - -
Others 1.7 1.6 1.5 1.3 1.2
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 8 LBN Brand Shares of Coffee: % Retail Value 2011-2014

% retail value rsp


Brand Company 2011 2012 2013 2014

Kopiko Mayora Indah Tbk PT 25.2 26.0 27.2 25.7


Nescafé 3-in-1 Nestlé Philippines Inc 37.2 33.6 27.8 23.8
Great Taste Universal Robina Corp 3.5 7.7 15.6 23.3
Nescafé Nestlé Philippines Inc 22.7 22.3 19.5 17.5
Blend 45 Universal Robina Corp 4.7 4.0 4.0 4.0
San Mig Coffee San Miguel Super Coffee 1.6 1.8 2.0 2.2
Mix Co
Nescafé Taster's Nestlé Philippines Inc 0.6 0.5 0.5 0.4
Choice
Maxwell House Kraft Foods 0.2 0.2 0.2 0.1
(Philippines) Inc
Culinary Exchange Culinary Exchange, The 0.1 0.1 0.1 0.1
KDO Century Pacific Food Inc 0.1 0.0 0.0 0.0
San Miguel San Miguel Super Coffee 0.2 0.2 0.1 -
Mix Co
KDO General Milling Corp - - - -
Others 3.9 3.5 3.1 2.9
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 9 Forecast Retail Sales of Coffee by Category: Volume 2014-2019

Tonnes
2014 2015 2016 2017 2018 2019

Fresh Coffee 201.4 207.4 212.8 218.6 224.9 231.6


- Fresh Coffee Beans 75.7 77.2 78.8 80.7 82.9 85.5
- Fresh Ground Coffee 125.7 130.2 134.0 137.9 142.0 146.1
-- Fresh Ground Coffee - - - - - -
Pods
-- Standard Fresh 125.7 130.2 134.0 137.9 142.0 146.1
Ground Coffee
Instant Coffee 128,070.7 136,309.7 141,527.4 146,761.6 152,056.8 157,422.3
- Instant Standard Coffee 128,050.3 136,288.9 141,506.3 146,740.0 152,034.5 157,399.2

© Euromonitor International
COFFEE IN THE PHILIPPINES Passport 6

- Instant Decaffeinated 20.4 20.8 21.1 21.6 22.3 23.2


Coffee
Coffee 128,272.1 136,517.1 141,740.1 146,980.2 152,281.7 157,653.9
Source: Euromonitor International from trade associations, trade press, company research, trade interviews,
trade sources

Table 10 Forecast Retail Sales of Coffee by Category: Value 2014-2019

PHP million
2014 2015 2016 2017 2018 2019

Fresh Coffee 143.5 151.7 159.9 169.1 179.2 190.3


- Fresh Coffee Beans 55.1 58.0 60.8 63.8 66.9 70.0
- Fresh Ground Coffee 88.4 93.7 99.1 105.3 112.3 120.2
-- Fresh Ground Coffee - - - - - -
Pods
-- Standard Fresh 88.4 93.7 99.1 105.3 112.3 120.2
Ground Coffee
Instant Coffee 46,042.8 48,910.7 50,685.6 52,459.3 54,247.6 56,053.6
- Instant Standard Coffee 46,023.2 48,890.7 50,665.2 52,438.2 54,225.8 56,030.9
- Instant Decaffeinated 19.6 20.0 20.4 21.0 21.8 22.8
Coffee
Coffee 46,186.2 49,062.4 50,845.5 52,628.4 54,426.8 56,243.9
Source: Euromonitor International from trade associations, trade press, company research, trade interviews,
trade sources

Table 11 Forecast Retail Sales of Coffee by Category: % Volume Growth 2014-2019

% volume growth
2014/15 2014-19 CAGR 2014/19 Total

Fresh Coffee 3.0 2.8 15.0


- Fresh Coffee Beans 3.1 2.5 12.9
- Fresh Ground Coffee 2.9 3.1 16.2
-- Fresh Ground Coffee Pods - - -
-- Standard Fresh Ground Coffee 2.9 3.1 16.2
Instant Coffee 3.5 4.2 22.9
- Instant Standard Coffee 3.5 4.2 22.9
- Instant Decaffeinated Coffee 3.8 2.5 13.4
Coffee 3.5 4.2 22.9
Source: Euromonitor International from trade associations, trade press, company research, trade interviews,
trade sources

Table 12 Forecast Retail Sales of Coffee by Category: % Value Growth 2014-2019

% constant value growth


2014/2015 2014-19 CAGR 2014/19 TOTAL

Fresh Coffee 6.2 5.8 32.6


- Fresh Coffee Beans 4.7 4.9 27.0
- Fresh Ground Coffee 7.1 6.4 36.1
-- Fresh Ground Coffee Pods - - -
-- Standard Fresh Ground Coffee 7.1 6.4 36.1
Instant Coffee 3.3 4.0 21.7
- Instant Standard Coffee 3.3 4.0 21.7

© Euromonitor International
COFFEE IN THE PHILIPPINES Passport 7

- Instant Decaffeinated Coffee 4.3 3.0 16.2


Coffee 3.3 4.0 21.8
Source: Euromonitor International from trade associations, trade press, company research, trade interviews,
trade sources

Table 13 Forecast Retail Sales of Fresh Ground Coffee by Standard vs Pods: % Value
2014-2019

% retail value rsp


2014 2015 2016 2017 2018 2019

Pods - - - - - -
Standard 100.0 100.0 100.0 100.0 100.0 100.0
Total 100.0 100.0 100.0 100.0 100.0 100.0
Source: Euromonitor International from trade associations, trade press, company research, trade interviews,
trade sources

© Euromonitor International

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