Butter and margarine are mainly used as a spread in the Philippines. As such, demand is adversely affected by substitutes such as jams and nut spreads. Butter and margarine are also not widely used for cooking since they are expensive, such that vegetable and seed oil is more preferred by households. Cooking fats and spreadable oils, meanwhile, continue to be unpopular due to limited availability. Home bakers and small-scale baking businesses which purchase supplies through grocery retailers are, thus, an important source of growth for butter and margarine since it is not an essential packaged food which households generally stock.
Magnolia Inc accounted for 65% of total value sales of butter and margarine in 2017. It also recorded the fastest value growth of 7% in 2017. Its favourable performance partly stems from its wide brand portfolio of butter and of margarine and spreads which includes Star, Magnolia, Magnolia Gold, Dari Creme, Dari Creme Lite, Baker’s Best and Buttercup. Its strength lies in margarine and spreads with non-refrigerated margarine brand, Star, which is making the biggest contribution to its total value sales in 2017. Star has a strong recall among consumers as its height-building nutrients have been highlighted in its promotions over the years. It has been specifically promoted as a suitable addition to rice and has coined the term “Star rice” which is more nutritious for children.
Butter and margarine is expected to record a value CAGR of 2% at constant 2017 prices over the forecast period which is slightly slower than its review period performance. The growing health consciousness of consumers is expected to be one factor that will be unfavourable to the growth of butter and margarine as it is generally perceived as unhealthy. As such, it is likely to lose out to substitutes such as nut spreads and jams for use as a spread. Companies can, thus, address this expected development by reaching out to baking enthusiasts and small-scale businesses which sell baked goods. They can also upload easy dessert recipes through social media sites in order to stimulate sales.
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