Baby Food in the Philippines

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Baby Food in the Philippines

Euromonitor International

September 2023

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LIST OF CONTENTS AND TABLES

KEY DATA FINDINGS... 1

2023 DEVELOPMENTS ... 1

Sluggish Performance Amid Decline In National Birth Rate ... 1

Convenient Lifestyles Fuel Growth In Prepared Baby Food ... 1

Abbott Promotes Taps Into School Achievement With New Product Launch ... 1

PROSPECTS AND OPPORTUNITIES... 2

Prospects Remain Positive Despite Falling Birth Rate ... 2

Innovation Will Continue As Key Differentiator ... 2

Other Baby Food May Propel Growth Over The Forecast Period ... 3

CATEGORY DATA ... 3

Table 1 Sales of Baby Food by Category: Volume 2018-2023... 3

Table 2 Sales of Baby Food by Category: Value 2018-2023 ... 4

Table 3 Sales of Baby Food by Category: % Volume Growth 2018-2023 ... 4

Table 4 Sales of Baby Food by Category: % Value Growth 2018-2023 ... 5

Table 5 Sales of Growing-Up Milk Formula by Age: % Value 2018-2023 ... 5

Table 6 NBO Company Shares of Baby Food: % Value 2019-2023 ... 5

Table 7 LBN Brand Shares of Baby Food: % Value 2020-2023 ... 6

Table 8 Distribution of Baby Food by Format: % Value 2018-2023 ... 7

Table 9 Forecast Sales of Baby Food by Category: Volume 2023-2028 ... 7

Table 10 Forecast Sales of Baby Food by Category: Value 2023-2028 ... 8

Table 11 Forecast Sales of Baby Food by Category: % Volume Growth 2023- 2028 ... 9

Table 12 Forecast Sales of Baby Food by Category: % Value Growth 2023- 2028 ... 9

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BABY FOOD IN THE PHILIPPINES

KEY DATA FINDINGS

▪ Retail value sales increase by 6% in current terms in 2023 to PHP52.9 billion

▪ Prepared baby food is the best performing category in 2023, with retail value sales growing by 8% in current terms to PHP110 million

▪ Mead Johnson Philippines Inc is the leading player in 2023, with a retail value share of 46%

▪ Retail sales are set to rise at a current value CAGR of 7% (2023 constant value CAGR of 3%) over the forecast period to PHP72.3 billion

2023 DEVELOPMENTS

Sluggish Performance Amid Decline In National Birth Rate

Baby food failed to display the same degree of dynamism as many other categories within dairy products and alternatives in 2023, due to the falling birth rate. While family is still of utmost importance to Filipinos, women are increasingly pursuing their careers and are choosing to delay having children, have fewer children, or eschew having them altogether. Government efforts to reduce the number of teenage pregnancies in the country, through improved education and greater access to family planning services, also had an impact on baby food across the board. Additionally, the COVID-19 pandemic played a role in the decline in fertility, with many couples hesitant to conceive a child due to the economic uncertainties and anxieties arising from the crisis.

Another factor that should be taken into consideration when assessing the decline the lack of dynamism within baby food in retail volume terms during 2023 is the greater competition that the category faces from breastfeeding. With many mothers choosing to breastfeed their babies and infants, both standard and follow-on milk saw a particularly sluggish growth.

Convenient Lifestyles Fuel Growth In Prepared Baby Food

As more parents returned to their usual working arrangements post-pandemic, there was less time for home cooking, with the result that retail volume sales of commercially prepared baby food saw positive growth for the second consecutive year in 2023, following a significant slump in 2021. The market for prepared baby food is overwhelmingly dominated by Nestlé Philippines’

Gerber brand, which as effectively positioned itself as a trusted name in health and nutrition for children, thanks to its extensive above- and below-the-line marketing activities.

The brand also ramped up its e-commerce presence, although the channel still accounts for a relatively low proportion of overall sales.

Abbott Promotes Taps Into School Achievement With New Product Launch

The competitive landscape for milk formula remained relatively stable in 2023, with Mead Johnson Philippines Inc, Nestlé Philippines Inc and Wyeth Philippines Inc continuing as the top three players in terms of retail value sales. The main reason behind this trend is the official ban that remains in place on the advertising and promotion of milk formula to babies and infants up to the age of two years, under Executive Order 51, also known as The Milk Code. The effect of

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this ban makes it particularly challenging for any new potential entrants to gain the attention of consumers, should they look to build a presence within the category.

Within this challenging operating environment, Abbott Laboratories (Phils) Inc, which was ranked in fourth place in milk formula in 2023, announced the introduction of Similac

GainSchool, which was deemed to be suitable for children aged three years and over. The milk formula contained an exclusive blend of five different human milk oligosaccharides (HMOs), which claimed to support better brain connections, higher IQ, and stronger immunity, thereby implying a better school performance. A number of celebrity-influencers including Bianca Gonzalez Intal, Chynna Ortaleza-Cipriano and Feliz Lucas, as well as medical experts, were involved in the media launch of the brand, which included a series of talks and a panel discussions on children could thrive in a post-pandemic world. Given that these international players are unable to promote their brands as breastfeeding substitutes, forging such relationships is especially relevant.

PROSPECTS AND OPPORTUNITIES

Prospects Remain Positive Despite Falling Birth Rate

The performance of baby food is expected to remain fairly stable in retail volume terms between 2023 and 2008, with the rate of growth increasing slightly as the forecast period progresses, in line with the improving economic situation. However, with the category being heavily dependent upon the birth rate, it is unlikely that it will experience any drastic spikes in demand. Moreover, breastfeeding is set to continue to present competition to milk formula, with the official ban on the promotion and advertising of the latter likely to remain a barrier to the further development of new entrants, in particular. In prepared baby food meanwhile, the fact that many parents prefer to make cost savings by preparing baby food from scratch at home will place some limitations on the future expansion of the subcategory. Nevertheless, the greater mobility of consumers post-pandemic will encourage the purchasing of prepared baby food, which will be increasingly seen as more convenient.

Innovation Will Continue As Key Differentiator

In a market as competitive as baby food, manufacturers will seek to strengthen their

respective positions through continued investment in product innovation. With breastfeeding still being seen as a consistent threat to sales of milk formula, more companies are expected to develop products which resemble breastmilk and/or which contain ingredients that are also present in human breastmilk. This strategy has already been pursued by Nankid Optipro Four (Nestlé Philippines Inc), which offers a milk formula aimed at children from 12 months of age containing HM-O (human milk oligosaccharides), a substance which is said to be the third largest solid component in human breastmilk.

Formulations that that claim to boost children’s IQ and enhance their immunity are also expected to grow in prominence, following on from the aforementioned launch by Abbott of Similac GainSchool. By focusing on the nutritional value of baby food, particularly milk formula, as well as other benefits, existing players will be able to justify their premium pricing. This trend can be expected to remain in effect during the forecast period, especially as the healthy living trend is set to become increasingly significant, further improving the appeal of breastmilk to Philippine mothers.

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Other Baby Food May Propel Growth Over The Forecast Period

With milk formula being characterised by intense competition, new entrants could benefit from eyeing other baby food, which has much potential for growth, given the likely recovery of the domestic economy and a commensurate rise in disposable incomes. In the same way, existing players could also opt to diversify their portfolios by going beyond their current offerings and using other baby food as a new source of expansion.

With concerns over food safety having been heightened in the aftermath of COVID-19, focusing on food safety and hygiene practices in manufacturing plants is one strategy that could offer brands the opportunity to address consumer concerns and drive sales. Furthermore, other baby food is often fortified with immunity-boosting nutrients, something that is increasingly attractive to parents, not least due to the recent pandemic. Indeed, being able to guarantee parents that commercially-prepared products are a safer alternative to home prepared baby food is likely to become an increasingly important factor driving sales in other baby food during the forecast period.

CATEGORY DATA

Table 1 Sales of Baby Food by Category: Volume 2018-2023

2018 2019 2020 2021 2022 2023

Baby Food (Not - - - -

calculable)

Dried Baby Food ('000 2.0 2.1 2.1 2.0 2.0 2.0

tonnes)

Prepared Baby Food 0.2 0.2 0.2 0.1 0.1 0.1

('000 tonnes)

Other Baby Food ('000 0.1 0.1 0.1 0.1 0.1 0.1

tonnes)

Milk Formula (Not - - - -

calculable)

- Standard Milk Formula - - - -

(Not calculable)

-- Liquid Standard Milk - - - -

Formula (million litres)

-- Powder Standard Milk 8.8 8.9 9.0 9.2 9.2 9.3

Formula ('000 tonnes)

- Follow-on Milk - - - -

Formula (Not calculable)

-- Liquid Follow-on - - - -

Milk Formula (million litres)

-- Powder Follow-on 10.6 10.7 10.8 10.8 10.6 10.6

Milk Formula ('000 tonnes)

- Growing-Up Milk - - - -

-- Liquid Growing-Up - - - -

-- Powder Growing-Up 48.2 48.0 46.6 41.0 41.6 42.4

- Special Baby Milk - - - -

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-- Liquid Special Baby - - - - Milk Formula (million

litres)

-- Powder Special Baby 1.5 1.5 1.6 1.6 1.6 1.6

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

Table 2 Sales of Baby Food by Category: Value 2018-2023

PHP million

2018 2019 2020 2021 2022 2023

Baby Food 47,777.8 48,944.5 48,921.3 46,134.0 49,687.1 52,868.6

Dried Baby Food 1,000.7 1,051.9 1,088.7 1,039.8 1,094.8 1,170.2

Other Baby Food 107.6 115.8 125.4 93.0 96.9 103.7

Milk Formula 46,568.5 47,656.3 47,566.0 44,903.1 48,392.8 51,484.2

- Standard Milk Formula 9,454.0 9,748.8 9,942.2 10,114.5 10,861.0 11,500.0

Formula

-- Powder Standard Milk 9,454.0 9,748.8 9,942.2 10,114.5 10,861.0 11,500.0 Formula

- Follow-on Milk Formula 8,011.2 8,212.9 8,367.7 8,504.4 9,121.5 9,630.4

Milk Formula

-- Powder Follow-on 8,011.2 8,212.9 8,367.7 8,504.4 9,121.5 9,630.4

Milk Formula

- Growing-Up Milk Formula 27,783.5 28,329.6 27,850.5 24,840.2 26,856.4 28,678.1

Milk Formula

-- Powder Growing-Up 27,783.5 28,329.6 27,850.5 24,840.2 26,856.4 28,678.1 Milk Formula

- Special Baby Milk 1,319.7 1,365.1 1,405.6 1,443.9 1,554.0 1,675.7

Formula

-- Liquid Special Baby - - - -

Milk Formula

-- Powder Special Baby 1,319.7 1,365.1 1,405.6 1,443.9 1,554.0 1,675.7 Milk Formula

Table 3 Sales of Baby Food by Category: % Volume Growth 2018-2023

2022/23 2018-23 CAGR 2018/23 Total

Baby Food (Not calculable) - - -

Dried Baby Food (% volume growth) 1.5 0.3 1.5

Prepared Baby Food (% volume growth) 2.4 -0.8 -4.0

Other Baby Food (% volume growth) 2.0 -3.0 -14.2

Milk Formula (Not calculable) - - -

- Standard Milk Formula (Not calculable) - - -

-- Liquid Standard Milk Formula (% volume - - -

growth)

-- Powder Standard Milk Formula (% volume 0.9 1.1 5.4

growth)

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- Follow-on Milk Formula (Not calculable) - - -

-- Liquid Follow-on Milk Formula (% volume - - -

growth)

-- Powder Follow-on Milk Formula (% volume 0.5 0.1 0.4

growth)

- Growing-Up Milk Formula (Not calculable) - - -

-- Liquid Growing-Up Milk Formula (% volume - - -

growth)

-- Powder Growing-Up Milk Formula (% volume 1.9 -2.6 -12.1

growth)

- Special Baby Milk Formula (Not calculable) - - -

-- Liquid Special Baby Milk Formula (% - - -

volume growth)

-- Powder Special Baby Milk Formula (% 2.1 1.7 9.0

volume growth)

Table 4 Sales of Baby Food by Category: % Value Growth 2018-2023

% current value growth

2022/23 2018-23 CAGR 2018/23 Total

Baby Food 6.4 2.0 10.7

Dried Baby Food 6.9 3.2 16.9

Prepared Baby Food 7.6 1.8 9.3

Other Baby Food 7.1 -0.7 -3.6

Milk Formula 6.4 2.0 10.6

- Standard Milk Formula 5.9 4.0 21.6

-- Liquid Standard Milk Formula - - -

-- Powder Standard Milk Formula 5.9 4.0 21.6

- Follow-on Milk Formula 5.6 3.8 20.2

-- Liquid Follow-on Milk Formula - - -

-- Powder Follow-on Milk Formula 5.6 3.8 20.2

- Growing-Up Milk Formula 6.8 0.6 3.2

-- Liquid Growing-Up Milk Formula - - -

-- Powder Growing-Up Milk Formula 6.8 0.6 3.2

- Special Baby Milk Formula 7.8 4.9 27.0

-- Liquid Special Baby Milk Formula - - -

-- Powder Special Baby Milk Formula 7.8 4.9 27.0

Table 5 Sales of Growing-Up Milk Formula by Age: % Value 2018-2023

% retail value rsp

2018 2019 2020 2021 2022 2023

3+ years - 39.2 39.5 40.5 40.5 40.5

1-3 years - 60.8 60.5 59.5 59.5 59.5

Total - 100.0 100.0 100.0 100.0 100.0

Table 6 NBO Company Shares of Baby Food: % Value 2019-2023

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% retail value rsp

Company 2019 2020 2021 2022 2023

Mead Johnson Philippines 39.5 40.7 45.1 45.4 45.5

Inc

Nestlé Philippines Inc 22.8 23.6 25.6 25.7 25.8

Wyeth Philippines Inc 19.3 19.8 21.7 21.5 21.1

Abbott Laboratories 15.1 12.8 4.7 4.5 4.5

(Phils) Inc

Alaska Milk Corp 0.4 0.4 0.2 - -

Others 3.0 2.8 2.7 2.9 3.0

Total 100.0 100.0 100.0 100.0 100.0

Table 7 LBN Brand Shares of Baby Food: % Value 2020-2023

% retail value rsp

Brand (GBO) Company (NBO) 2020 2021 2022 2023

Lactum (Reckitt Mead Johnson Philippines 23.1 25.8 26.2 26.4

Benckiser Group Plc Inc (RB))

Nido (Nestlé SA) Nestlé Philippines Inc 9.5 10.7 10.8 11.0

S-26 (Nestlé SA) Wyeth Philippines Inc 9.9 10.8 10.7 10.6

Enfamil (Reckitt Mead Johnson Philippines 8.2 8.9 8.9 8.9

Nan (Nestlé SA) Nestlé Philippines Inc 6.2 6.7 6.7 6.7

Nestogen (Nestlé SA) Nestlé Philippines Inc 5.2 5.6 5.6 5.6

Alacta (Reckitt Mead Johnson Philippines 4.8 5.3 5.2 5.1

Enfagrow (Reckitt Mead Johnson Philippines 4.5 5.0 5.1 5.1

Bonamil (Nestlé SA) Wyeth Philippines Inc 3.6 3.9 3.9 3.8

Promil (Nestlé SA) Wyeth Philippines Inc 2.6 3.0 2.8 2.8

Similac (Abbott Abbott Laboratories 2.2 2.4 2.4 2.4

Laboratories Inc) (Phils) Inc

Bonakid (Nestlé SA) Wyeth Philippines Inc 2.1 2.4 2.3 2.2

Cerelac (Nestlé SA) Nestlé Philippines Inc 2.2 2.2 2.2 2.2

PediaSure (Abbott Abbott Laboratories 10.6 2.3 2.2 2.1

Bonna (Nestlé SA) Wyeth Philippines Inc 1.6 1.7 1.7 1.6

Gerber (Nestlé SA) Nestlé Philippines Inc 0.3 0.2 0.2 0.2

Cerelac NutriPuffs Nestlé Philippines Inc 0.2 0.2 0.2 0.2

(Nestlé SA)

Friso (Royal Alaska Milk Corp 0.4 0.2 - -

FrieslandCampina NV)

Gain (Abbott Abbott Laboratories - - - -

Alacta (Mead Johnson Mead Johnson Philippines - - - -

Nutrition Co) Inc

Enfagrow (Mead Mead Johnson Philippines - - - -

Johnson Nutrition Co) Inc

Enfalac (Mead Johnson Mead Johnson Philippines - - - -

Nutrition Co) Inc

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Enfamil (Mead Johnson Mead Johnson Philippines - - - -

Nutrition Co) Inc

Enfapro (Mead Johnson Mead Johnson Philippines - - - -

Nutrition Co) Inc

Lactum (Mead Johnson Mead Johnson Philippines - - - -

Nutrition Co) Inc

Sustagen (Mead Mead Johnson Philippines - - - -

Johnson Nutrition Co) Inc

Progress (Nestlé SA) Wyeth Philippines Inc - - - -

Others Others 2.8 2.7 2.9 3.0

Total Total 100.0 100.0 100.0 100.0

Table 8 Distribution of Baby Food by Format: % Value 2018-2023

% retail value rsp

2018 2019 2020 2021 2022 2023

Retail Channels 100.0 100.0 100.0 100.0 100.0 100.0

- Retail Offline 100.0 99.1 97.4 96.0 95.4 95.1

-- Grocery Retailers 58.1 57.7 56.9 56.2 55.9 55.8

--- Convenience Retail 1.1 1.1 0.9 0.9 0.8 0.8

---- Convenience Stores 1.1 1.1 0.9 0.9 0.8 0.8

---- Forecourt Retailers - - - -

--- Supermarkets 40.3 39.9 39.7 39.4 39.1 39.1

--- Hypermarkets 6.3 6.3 6.4 6.4 6.5 6.5

--- Discounters - - - -

--- Warehouse Clubs - - - -

--- Food/drink/tobacco - - - -

specialists

--- Small Local Grocers 10.4 10.3 9.9 9.5 9.4 9.4

-- Non-Grocery Retailers 41.9 41.4 40.5 39.8 39.5 39.3

--- General Merchandise - - - -

Stores

--- Apparel and - - - -

Footwear Specialists

--- Appliances and - - - -

Electronics Specialists

--- Home Products - - - -

Specialists

--- Health and Beauty 41.9 41.4 40.5 39.8 39.5 39.3

Specialists

--- Leisure and - - - -

Personal Goods Specialists

--- Other Non-Grocery - - - -

Retailers

-- Vending - - - -

-- Direct Selling - - - -

- Retail E-Commerce - 0.9 2.6 4.0 4.6 4.9

Total 100.0 100.0 100.0 100.0 100.0 100.0

Table 9 Forecast Sales of Baby Food by Category: Volume 2023-2028

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2023 2024 2025 2026 2027 2028

Baby Food (Not - - - -

calculable)

Dried Baby Food ('000 2.0 2.1 2.1 2.1 2.1 2.1

tonnes)

('000 tonnes)

Other Baby Food ('000 0.1 0.1 0.1 0.1 0.1 0.1

tonnes)

Milk Formula (Not - - - -

calculable)

- Standard Milk Formula - - - -

(Not calculable)

Formula (million litres)

-- Powder Standard Milk 9.3 9.4 9.5 9.6 9.8 9.9

Formula ('000 tonnes)

- Follow-on Milk - - - -

-- Powder Follow-on 10.6 10.7 10.9 11.1 11.3 11.5

- Growing-Up Milk - - - -

-- Powder Growing-Up 42.4 43.1 44.1 45.2 46.5 47.8

- Special Baby Milk - - - -

-- Powder Special Baby 1.6 1.7 1.7 1.7 1.8 1.9

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

Table 10 Forecast Sales of Baby Food by Category: Value 2023-2028

PHP million

2023 2024 2025 2026 2027 2028

Baby Food 52,868.6 54,613.9 56,192.4 58,002.5 60,031.4 62,254.7

Dried Baby Food 1,170.2 1,192.5 1,212.7 1,230.9 1,245.7 1,258.1

Other Baby Food 103.7 107.1 110.9 115.3 120.2 125.8

Milk Formula 51,484.2 53,200.2 54,750.5 56,533.5 58,537.1 60,736.3

- Standard Milk Formula 11,500.0 11,678.7 11,904.6 12,167.5 12,472.7 12,800.9

Formula

-- Powder Standard Milk 11,500.0 11,678.7 11,904.6 12,167.5 12,472.7 12,800.9

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Formula

- Follow-on Milk Formula 9,630.4 9,823.0 10,049.0 10,290.1 10,547.4 10,821.6

Milk Formula

-- Powder Follow-on 9,630.4 9,823.0 10,049.0 10,290.1 10,547.4 10,821.6 Milk Formula

- Growing-Up Milk Formula 28,678.1 29,972.5 31,022.7 32,257.2 33,658.5 35,218.0

Milk Formula

-- Powder Growing-Up 28,678.1 29,972.5 31,022.7 32,257.2 33,658.5 35,218.0 Milk Formula

- Special Baby Milk 1,675.7 1,725.9 1,774.3 1,818.6 1,858.6 1,895.8

Formula

Milk Formula

-- Powder Special Baby 1,675.7 1,725.9 1,774.3 1,818.6 1,858.6 1,895.8 Milk Formula

Table 11 Forecast Sales of Baby Food by Category: % Volume Growth 2023-2028

2023/24 2023-28 CAGR 2023/28 Total

Baby Food (Not calculable) - - -

Dried Baby Food (% volume growth) 1.3 1.0 4.9

Prepared Baby Food (% volume growth) 2.6 3.0 15.9

Other Baby Food (% volume growth) 2.4 2.7 14.3

Milk Formula (Not calculable) - - -

- Standard Milk Formula (Not calculable) - - -

-- Liquid Standard Milk Formula (% volume - - -

growth)

-- Powder Standard Milk Formula (% volume 1.0 1.4 7.2

growth)

- Follow-on Milk Formula (Not calculable) - - -

-- Liquid Follow-on Milk Formula (% volume - - -

growth)

-- Powder Follow-on Milk Formula (% volume 1.0 1.5 7.9

growth)

- Growing-Up Milk Formula (Not calculable) - - -

-- Liquid Growing-Up Milk Formula (% volume - - -

growth)

-- Powder Growing-Up Milk Formula (% volume 1.8 2.4 12.8

growth)

- Special Baby Milk Formula (Not calculable) - - -

-- Liquid Special Baby Milk Formula (% - - -

volume growth)

-- Powder Special Baby Milk Formula (% 2.3 2.7 14.5

volume growth)

Table 12 Forecast Sales of Baby Food by Category: % Value Growth 2023-2028

% constant value growth

2023/2024 2023-28 CAGR 2023/28 Total

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Baby Food 3.3 3.3 17.8

Dried Baby Food 1.9 1.5 7.5

Prepared Baby Food 3.3 4.0 21.7

Other Baby Food 3.2 3.9 21.3

Milk Formula 3.3 3.4 18.0

- Standard Milk Formula 1.6 2.2 11.3

-- Liquid Standard Milk Formula - - -

-- Powder Standard Milk Formula 1.6 2.2 11.3

- Follow-on Milk Formula 2.0 2.4 12.4

-- Liquid Follow-on Milk Formula - - -

-- Powder Follow-on Milk Formula 2.0 2.4 12.4

- Growing-Up Milk Formula 4.5 4.2 22.8

-- Liquid Growing-Up Milk Formula - - -

-- Powder Growing-Up Milk Formula 4.5 4.2 22.8

- Special Baby Milk Formula 3.0 2.5 13.1

-- Liquid Special Baby Milk Formula - - -

-- Powder Special Baby Milk Formula 3.0 2.5 13.1