COFFEE IN THE PHILIPPINES - ANALYSIS

Country Report | Mar 2019

HEADLINES Market Sizes

Coffee registers retail volume growth of 5% to reach 158,300 tonnes and current Sales of Coffee
retail value growth of 2% to reach PHP62.5 billion in 2018 Retail Value RSP - PHP million - Current - 2004-2023
Coffee mixes products become increasingly price competitive
Coffee grows faster in foodservice with 8% volume growth
62,481 Forecast
100,000
Nestlé Philippines Inc leads with 37% of retail value sales
Coffee is expected to register a retail volume CAGR of 5% over the forecast period to 80,000
reach 198,600 tonnes in 2023 and a current retail value CAGR of 5% (CAGR of 2% at
constant 2018 prices) to reach PHP81.1 billion
60,000
PROSPECTS
40,000
Instant coffee sustains growth in 2018
The category registered retail volume and current retail value growth in 2018 despite
increasing price competition particularly in coffee mixes, driven primarily by the 20,000
greater shift to twin packs. As more consumers recognised greater value in this pack
type because of its opportunities to save money, the challenge for players is to
maintain healthy margins while maintaining volume expansion. For example, a 50g 0
2004 2018 2023
twin pack of Kopiko Black is cheaper than the 25g pack of the same variant by 16% on a
per-gram basis. Meanwhile, the recurring importance of convenience further
dampened demand for instant standard coffee since coffee mixes are seen as products
that are easier to prepare. Sales Performance of Coffee
% Y-O-Y Retail Value RSP Growth 2004-2023
Over the forecast period, coffee is expected to register slower retail volume and
current retail value CAGRs compared to the review period as instant standard coffee is
anticipated to further decline and coffee mixes to become mature. The importance of
1.9% Forecast
having a product that can be conveniently prepared can cater to consumers’ 20%
increasingly hectic lifestyles, and this would allow coffee mixes to be the category’s
main growth driver.
15%
Premiumisation and health trends seen in foodservice and retail
Premiumisation and health concerns were captured in the product mix within coffee,
and were even more evident in 2018. Fresh coffee also contributed to the retail 10%
expansion of the category in 2018 as players expanded their availability. Recognising
that consumers are shifting away from original-flavoured coffee mixes, Universal
Robina Corp expanded its Great Taste brand with Great Taste Muscovado in late 2017.
This variant appealed to health-conscious consumers as it uses muscovado sugar, a 5%
sugar variety perceived to be healthier than white sugar. Similarly, Goldshine
Pharmaceuticals Inc launched Jimm's Cafe Clara El Maca, a coffee mix low in fat and
nutritious. Greater premiumisation was seen in the category as the support for Nescafé
Nespresso’s use in households fuelled its popularity in retail particularly in 2018. This 0%
2004 2018 2023
trend also supported growth in fresh coffee in the retail and foodservice channels as
more full-service restaurants and other foodservice establishments had more
dedicated coffee menus.
Sales of Coffee by Category
Over the forecast period, health concerns and premiumisation are expected to
Retail Value RSP - PHP million - Current - 2018 Growth Performance
continue to define the direction of players as consumers shift away from original
variants of coffee. Instant coffee and fresh coffee are set to continue growing, albeit at
Fresh Coffee
slower rates than over the review period with greater fragmentation leading to intense 2,923.8
price competition. Nonetheless, the expected growth in the economy will support
Instant Coffee
consumption of premium products and fresh coffee in the retail channel is set to 59,556.7
benefit from the decline in instant standard coffee.
-5% 15% 35%

COFFEE 62,480.5 CURRENT % CAGR % CAGR

COMPETITIVE LANDSCAPE YEAR % 2013-2018 2018-2023
GROWTH
Mayora Indak Tbk leads coffee in volume terms
Nestlé Philippines was previously the leader in coffee in terms of retail volume, but as
Mayora Indah Tbk took shares from companies in instant coffee mixes it took the lead
in the overall category. Much of the sustained growth of Mayora can be attributed to its
expansion in its penetration in traditional retailers, gravitation of consumers to its twin
pack, and aggressive above-the-line and below-the-line strategies.

© Euromonitor Interna onal 2019 Page 1 of 2

With Mayora Indah Tbk expected to continue to increase its penetration of modern and Competitive Landscape
traditional retailers, the company is set to maintain its lead, despite fierce competition
in coffee mixes. Its greatest challenge will be to ensure that its products remain on
store shelves, and it is imperative for the company to cement its ties with traditional Company Shares of Coffee
retailers as a go-to brand for instant coffee. % Share (NBO) - Retail Value RSP - 2018

Nestlé Philippines Inc 36.7%

International players continue to dominate coffee
Mayora Indah Tbk PT 32.5%
While Gourmet Farms, a local company, led fresh coffee, international players with
Universal Robina Corp 24.4%
greater distribution and marketing resources dominate the overall category. The top
two players, Mayora Indah Tbk and Nestlé Philippines Inc, together accounted for over Gourmet Farms Inc 2.2%
two thirds of retail value sales in coffee. International players were particularly San Miguel Super Coffee ... 1.5%
aggressive in terms of implementing marketing campaigns that supported different
variants, and invested significantly in merchandising. Culinary Exchange, The 0.5%

Over the forecast period, while there is room for premiumisation in coffee, the bulk of Kraft Foods (Philippines... 0.4%
consumers in retail will remain price sensitive. As such, for international players to Silva's Coffee Mill 0.4%
maintain their competitiveness, it is important for them maintain price affordability
Merlo Agricultural Corp 0.3%
and create value for consumers.
Continental Association ... 0.2%
Monastery Farms 0.1%
Others 0.6%

Brand Shares of Coffee

% Share (LBN) - Retail Value RSP - 2018

Nescafé 34.7%
Kopiko 32.5%
Great Taste 23.4%
Gourmet Farms 2.2%
San Mig Coffee 1.5%
Blend 45 1.1%
Nescafé Taster's Choice 0.5%
Culinary Exchange 0.5%
Maxwell House 0.4%
Siete Baracos 0.4%
Batangas Brew 0.3%
Continental 0.2%
Dolce Gusto 0.2%
Monk's Blend 0.1%
Others 2.0%

Increasing share Decreasing share No change

© Euromonitor Interna onal 2019 Page 2 of 2