SWEET SPREADS IN THE PHILIPPINES - ANALYSIS

Country Report | Dec 2021

KEY DATA FINDINGS Market Sizes

Continuation of home seclusion in 2021 leads to sustained growth in demand for Sales of Sweet Spreads
sweet spreads Retail Value RSP - PHP million - Current - 2007-2026
In 2021, value sales go up by 5% to PHP3.9 billion while volume sales increase by 4%
to 11,700 tonnes 3,901 Forecast
6,000
Chocolate spreads is the category with the highest value growth in 2021, with a sales
rise of 8%
5,000
The average unit price increases by 1% in 2021
Newborn Food Products Inc leads sales with an 18% share in 2021 4,000

Over the forecast period, sales are poised to yield a current value CAGR of 7% (2021
constant value CAGR of 4%) and reach PHP5.5 billion in 2026 3,000

2021 DEVELOPMENTS 2,000

Sales dynamics begin to normalise 1,000

Value growth and volume growth of sweet spreads spiked in 2020 versus 2019 as it was
among the categories that benefited from many consumers eating breakfast at home 0
2007 2021 2026
more often and snacking at home more often. This is because bread with spread is
frequently eaten either during breakfast or as an afternoon snack.
Home seclusion is expected to persist until the end of 2021 as COVID-19 cases in the Sales Performance of Sweet Spreads
Philippines remained significant as of July 2021. The spike in category growth in 2020 % Y-O-Y Retail Value RSP Growth 2007-2026
reflected the jump in demand arising from consumers who shifted to a more home-
bound lifestyle. As such, by the end of 2021, category growth is likely to be slower than
in 2020 as demand stabilises.
5.2% Forecast
15%
Nutella sales hit sweet spot
Chocolate spreads is expected to continue to be the fastest-growing category in 2021 in 10%
value terms and volume terms. Being the smallest in size in spreads excluding honey,
chocolate spreads has the most room for expansion, which it has been able to realise in
2020 and 2021 owing to an increased frequency of meal and snack preparation at home. 5%

Nutella is among the top-of-mind brands for chocolate spreads. Nutella had used a
breakfast truck to promote its products in 2019 (pre-crisis). In December 2020, it 0%
sustained its efforts to promote itself by using its All-Day Breakfast Truck, which made
stops in different areas in Metro Manila.
-5%
In December 2020, the brand partnered with the full-service restaurant Via Mare, which
created rice cakes such as puto bumbong and bibingka topped with Nutella. This is
Nutella’s way of highlighting the versatility of its chocolate spreads, which can be -10%
paired even with traditional Philippine rice cakes. 2007 2021 2026

Mature category nut and seed based spreads collaborate for new
dynamism
Sales of Sweet Spreads by Category
In spreads excluding honey, it is nut and seed based spreads that is expected to record Retail Value RSP - PHP million - Current - 2021 Growth Performance
the most sluggish volume growth in 2021. This partly stems from nut and seed based
spreads having the biggest volume size in spreads excluding honey. As such, it has the Honey
397.5
smallest room for growth.
Chocolate Spreads
However, the leading company in nut and seed based spreads, Newborn Food Products 643.2
Inc, is seen to be sustaining consumer interest in peanut butter through different forms Jams and Preserves
of promotions. In the third quarter of 2020, it collaborated with the savoury biscuit 1,144.3
brand Skyflakes, with the launch of Skyflakes Sandwich Peanut Butter. This was a Nut and Seed Based Spreads
limited-time offering, featuring two popular brands – Skyflakes and Lily’s peanut 1,716.3
butter. 0% 10% 15%

In April 2021, Newborn also collaborated with the foodservice player The Lost Bread, as SWEET SPREADS 3,901.3 CURRENT % CAGR % CAGR
YEAR % 2016-2021 2021-2026
the latter unveiled a Peanut Butter Brownie Fudge ice cream flavour, which is also GROWTH
available for sale through its website.
The Lost Bread has generally been engaging in collaborations in creating new ice cream
flavours. Other brands it has partnered with include Swiss Miss and Chocnut (chocolate

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confectionery brand), among others. Competitive Landscape
Companies in sweet spreads are collaborating with different players in packaged food
or foodservice in order to stir consumer interest in their brands. It is also seen as one Company Shares of Sweet Spreads
way by which sweet spread brands can provide consumers with ideas on how they can % Share (NBO) - Retail Value RSP - 2021
be creative in incorporating sweet spreads into other food categories.
Newborn Food Products In... 17.7%

PROSPECTS AND OPPORTUNITIES Samuya Food Mfg Inc 16.6%

Ferrero & related partie... 12.5%
Higher gains predicted thanks to home seclusion and baked goods
Sioux Honey Association 8.9%
Sweet spreads is expected to record a slightly faster volume CAGR and value CAGR in Sysu International Inc 7.6%
the forecast period versus the review period. This reflects the favourable effect that
the sustained home-bound lifestyle is having on sweet spreads. Although vaccines are Hormel Foods Corp 5.3%
being rolled out in 2021, it is predicted that it will take time before Philippine Unilever Foods Philippin... 3.1%
consumers will feel comfortable again to go out as often as they used to. As such, there
will likely be more frequent meal consumption at home in the forecast period if JM Smucker Co, The 2.8%
compared with the review period. This is expected to benefit various packaged food ConAgra Brands Inc 0.9%
categories including sweet spreads, which are often used during breakfast or snack
time. All Crump NV 0.7%
Brinkersfood BV 0.1%
The performance of sweet spreads will also continue to benefit from baked goods, with
sweet spreads being a convenient breakfast or snack option, suiting busy lifestyles, Others 23.7%
especially those of urban dwellers. Furthermore, the local player in baked goods,
Gardenia, opened two new manufacturing plants in 2019. In addition, new brands to
enter the baked goods landscape included Sari Roti (SariMonde Foods Corp), Fuwa
Fuwa (Nippon Premium Bakery Inc), CDO (CDO Foodsphere), Baker John (Unilversal
Robina Corp) and Maison Ichipan (Japanese-style bread from Cebu City). This continued Brand Shares of Sweet Spreads
growth in the baked goods landscape will keep boosting sales of sweet spreads across % Share (LBN) - Retail Value RSP - 2021
the forecast period.
Lily's 17.7%
Across the forecast period, nut and seed based spread players are set to drive growth Ludy's 15.4%
through innovation. In 2019, Pili Butter made from local nut Pili was launched by
domestic player Mount Mayon. Efforts to use locally grown ingredients are set to Nutella 12.5%
improve over the forecast period, especially as this will be a key way to support local Clara Olé 7.6%
farmers during and after COVID-19. The spread of the virus will increase the importance
of supporting local farmers in the food supply chain. As such, new types of nut butter Sue Bee 5.9%
made from locally grown nuts are likely to increase in availability over the forecast Skippy 5.3%
period. This is especially the case as consumers from urban areas will have improved
Lady's Choice 3.1%
access to different produce grown in rural areas.
Aunt Sue 3.0%
Home baking could become longer-term trend, boosting chocolate Smucker's 2.8%
spreads
Yummy 1.2%
Chocolate spreads is set to record the fastest volume CAGR and value CAGR over the Peter Pan 0.9%
forecast period. Aside from the increase in at-home breakfasts and snacking, chocolate
spreads is likely to benefit from the rise in home baking, which began in 2020 when Crumpy 0.7%
consumers were confined to their homes. Their recreating of sweet treats that they Nusica 0.1%
long for could also have been a means for them to relieve their emotional stress. Some
individuals, meanwhile, established a home-based baking business in order to improve Others 23.7%
their finances. 5-Year Trend
Increasing share Decreasing share No change
This increased frequency of home baking is likely to linger over the forecast period,
especially if households have already invested in small appliances and they have
already developed the habit of baking sweet treats for themselves.
Chocolate spreads is thus poised to benefit from this development, since the products
are also used to provide frosting for cakes/cupcakes. The versatility of chocolate
spreads and the usage of the products in baking sweet treats will work to its advantage
amidst the heightened interest in home baking, which could persist over the forecast
period.

Sweet spreads to generate bigger online share

E-commerce is expected to record a robust growth rate in sweet spreads in 2021 as
many households have shifted to online shopping in order to avoid going out. Although
the channel’s share of sweet spreads is likely to remain small, over the forecast period,
sales of e-commerce in this category are predicted to continue to grow by double digits
as consumers establish the habit of shopping online.
Companies in sweet spreads have also improved their presence in major online
platforms, such as Lazada and Shopee, while some category players have opted to
develop their own e-commerce platform. The brands owned and distributed by Sysu
International Inc, for instance, can be bought through its own e-commerce website
called Sysu Food Hub. Aside from Clara Olé, various well-known brands, eg Smucker’s,
Jif, McCormick, Tabasco, San Remo, Lee Kum Kee and La Española, are also available
through this site. The increase in the number of online platforms available for
consumers will be among the sources of continued growth of e-commerce over the
forecast period.

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