Yoghurt and Sour Milk Products in the Philippines

PROSPECTS

Yakult’s strong position continues to influence the overall performance of the category

Yoghurt and sour milk products saw slower current value growth in 2019 compared with the robust growth seen in 2018, although growth continues to be driven by the favourable performance of Yakult. Drinking yoghurt remained the most dynamic category in 2019, despite Nestlé phasing out its range, with Yakult continuing to perform favourably.

Price is king in Philippines with price adjustments having big impact

Retail price is seen as an important factor for success in the Philippines, with the country’s large population of low-income consumers being very price conscious. For example, Savencia Fromage & Dairy’s Elle & Vire, which is an imported brand, increased its retail prices in 2018, which adversely impacted its growth, according to its retail distributor (Bonjourlait Corp).

Despite Yakult’s dominance, new products and flavours continue to enter

Yoghurt is a very consolidated category in the Philippines with Yakult controlling the market. Nevertheless, the category saw several new entrants in 2018/2019, which helped to expand the range of options on offer.

COMPETITIVE LANDSCAPE

Yakult retains dominance thanks to strong consumer recall, attractive pricing and widespread distribution

Yakult Philippines continued to account for the majority value share of yoghurt and sour milk products in 2019, even though it solely derives its share from drinking yoghurt. Having been operating in the country since 1978, Yakult Philippines enjoys first-mover advantage in probiotic drinking yoghurt.

Nestlé removes two brands as it looks to consolidate its position

Nestlé Philippines Inc witnessed a sharp decline in current value terms in 2019. This was due to the company removing its Nestlé Acti-V brand of fortified flavoured yoghurt and Nestlé brand of drinking yoghurt from the market in 2018.

Philippines an attractive proposition for foreign investors

American company, CP Kelco, is looking to expand into other Asian countries including the Philippines, with the company proving attractive with its use of plant-based ingredients and sustainable manufacturing processes. CP Kelco is an ingredients company looking to take advantage of the trends it has observed in Asia such as demand for high-protein drinks and more clean-label products, among others.

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