For years, powder concentrates has relied on its price competitiveness to drive volume. However, the sugar tax in 2018 badly hit the performance of powder concentrates, with prices a 25-30g pack size, which converts to one litre of RTD juice or tea, rising by as much as 90%.
As powder concentrates products lost their price advantage because of the sugar tax, the convenience-seeking motives of consumers came to the fore. Nestlé Philippines responded to the challenging market conditions with the introduction of single-serve packs of Nesfruta and Nestea, which convert to 250ml, or one cup.
Over the forecast period, the outlook for powder concentrates remains weak, as the recent price rises have encouraged consumers to shift to RTD beverages. It is imperative for players to keep their products available in retailers, and maintain efforts to engage consumers with above-the-line and below-the-line advertising.
Mondelez Philippines Inc led the category in terms of off-trade value sales in 2018, owing to its unmatched product mix, aggressive marketing and strength in distribution. The company was not too badly affected in terms of volume sales by the sugar tax implementation, as it was able to keep its products available in traditional retailers.
Nestlé Philippines was particularly active in launching new products in 2018. Following the increasing concerns regarding sugar consumption, and the implementation of the sugar tax, the company launched Nestea Zer0% Iced Tea to appeal to consumers who want to avoid sugary products but want to drink iced tea.
Over the forecast period, it is important for incumbent players to maintain their efforts in marketing and distribution, while also emphasising the benefits of their products over RTD beverages. The impact of the sugar tax has been to diminish the price advantage of concentrates, and it is crucial for players to offer value to consumers in other ways.
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This industry report originates from Passport, our Soft Drinks market research database.