new source splash

7/21/2019 New Source SPLASH

1/39

The Philippines' Markets for Functional

Foods, Nutraceuticals and Organic Foods:

An Introduction for Canadian Producersand Eporters

March !"##

Prepared for:

The Counsellor and Regional Agri-Food Trade Commissioner,

Southeast Asia, and Embassy of Canada in the Philippines.

Prepared by:

Stanton, Emms Sia

!" Raffles Pla#e, $e%el &'-"(,

)*+ Plaa (,

Singapore "!'

Tel: /'0 '&& 1"&"

Fa2: /'0 '& "("

Email: emmsia3pa#ifi#.net.sg 45eneral6

This report #ontains mar7et information that has been #olle#ted by Stanton, Emms Sia,

some of 8hi#h may be #onsidered as #ommer#ial #onfidential. The 5o%ernment of Canada

assumes no liability for the a##ura#y and reliability of the mar7et information and intelligen#e

pro%ided herein.

#$ Introduction

#$# The goals of this report

This report is prepared by Stanton, Emms Sia for Canadian produ#ers and e2porters of

fun#tional foods, nutra#euti#als and organi# food and drin7s, and for The Counsellor and

Regional Agri-Food Trade Commissioner, Southeast Asia, and Embassy of Canada in the

Philippines.

The goals of this report are to pro%ide Canadian e2porters 8ith an introdu#tion to the

Philippine mar7et for fun#tional foods, nutra#euti#als and organi# food and drin7s, in#luding

insight into:

the state of the Philippines re#ent e#onomi# de%elopment, the stru#ture of its mar7et for

food and drin7s9 in#lusi%e of 7ey demand #hara#teristi#s9
mailto:[email protected]:[email protected]


2/39

the distribution #hannels through 8hi#h fun#tional foods, nutra#euti#als and organi#

food and drin7s pass to end #onsumers and, as rele%ant, users9

the mar7ets for imported fun#tional foods, nutra#euti#als and organi# food and drin7s,

in#lusi%e of an o%er%ie8 of the regulatory en%ironment and its impa#t on imported

produ#ts9 and,

a re%ie8 of future strategi# opportunities for Canadian produ#ers and e2porters of

fun#tional foods, nutra#euti#als and organi# food and drin7s.

The reader should note that, in the Philippines, there are a number of different names used to

des#ribe the nutra#euti#al industry, in#luding the health supplement industry, the food

supplement industry and the health and food supplement industry. This industry generally

operates as part of the pharma#euti#al industry, although there is also an herbal medi#ine

industry. For the purposes of this report, the term nutra#euti#al industry has been used,

rather than the abo%e mentioned names.

#$! Product definitions and localised co%plications arising fro% the i%pact

of local food fortification la&s

For the purposes of this report:

fun#tional foods are defined as produ#ts that are similar in appearan#e to #on%entional

foods, are #onsumed as part of a normal diet and ha%e demonstrated physiologi#al

benefits and;or ha%e the ability to the redu#e the ris7 of #hroni# disease, 8hi#h goes

beyond their nutriti%e fun#tion, i.e. they #ontain bioa#ti%e #ompounds9

nutra#euti#als are defined as produ#ts isolated or purified from foods and generally sold

in po8ders, pills and other medi#inal forms, not usually asso#iated 8ith food, and that

ha%e been demonstrated to ha%e physiologi#al benefits or to pro%ide prote#tion against

#hroni# diseases9 and,

organi# food produ#ts that ha%e been produ#ed in a##ordan#e 8ith organi# produ#tion

standards and #ertified by a duly #onstituted organi# #ertifi#ation body or authority.

The abo%e te#hni#al definitions 8ere sour#ed from .

?t should be noted that there is signifi#ant #onfusion in the Philippines o%er the nature of

fun#tional foods, 8hi#h are refle#ted in the trade and go%ernment feedba#7 that 8as used in

preparation of this report. Some 7ey points on this matter to note are as follo8s:

a ma@or problem in the definition of fun#tional foods in the Philippines lies in the area

of fortified and enri#hed foods. These foods ha%e been the sub@e#t of ma@or poli#y and

regulatory initiati%es by the Philippine go%ernment. These initiati%es lie in the

reuirement that pro#essed foods, i.e. basi#, intermediate and higher pro#essed


3/39

produ#ts, that are #ommonly #onsumed by the Philippine mass mar7et to be fortified 8ith

a range of different produ#ts9

the =epartment of


4/39

Fun#tional food and drin7s 4as defined in Canada6 that are e2ported to the Philippines from

Canada 8ill generally play in a ni#he that sits outside the mainstream fortified food mar7ets.

This area of the mar7et also in#ludes the fun#tional;enri#hed produ#ts of multinationals 8ith a

strategy of ma7ing better margins from ni#he health and 8ellness demand from 8ealthier

families and #onsumers. Su#h multinationals in#lude Bestl, yeth and Ga7ult.

!$ The Philippines in profile

!$# Econo%ic deelop%ent status and population in oerie&

The Philippines is regarded as a lo8er middle in#ome #ountry by the orld +an7. ?ts

#urrent 5=P per #apita is about CH (,D11 4#urrent pri#es basis6 or CH &,'1& 4pur#hasing

po8er parity;PPP basis6, 8hi#h puts its e#onomi# status at a similar le%el to Iietnam, ?ndia

and Jongolia, and mu#h 8ea7er thanASEABs more ad%an#ed mar7ets, e.g. Jalaysia.

The Philippines 5=P gre8 at 1.&K in "(", up from ".DK in ""D. The "(" e#onomi#

gro8th 8as reported to be the highest sin#e (D!'. The #ountry re#o%ered from the ""!;"D

global finan#ial re#ession due mainly to resilient domesti# #onsumption 4as supported by large

remittan#es from its ! million o%erseas Filipino 8or7ers6, a gro8ing business pro#ess

outsour#ing industry and a rebound in e2ports and in8ard foreign in%estments.

The Philippines population is estimated at #lose to D million persons in "(". The population

is pro@e#ted to gro8 by about (.!K per annum o%er the period to "(0. A##ording to the

pro@e#tion made by Bational Statisti#s *ffi#e, the population is fore#ast to gro8 to ("& million

people by "(0. Some other 7ey points to note about the population are as follo8s:

the Philippines has a predominantly 8or7ing age population. *%er '"K of its population

is no8 aged bet8een (0 years and 0D years. The unemployment rate is reported at 1.'K

by the go%ernment9

o%er '0K of the population no8 li%es in the urban areas9 and,

the adult litera#y rate is high at around DK.

!$! The structure of the consu%er %arket and related de%and

characteristics

!$!$# The %a(orit) of Filipinos are not a %arket for functional foods, nutraceuticals

and organic food and drinks

Close to '"K of the Philippine population is offi#ially #lassified as lo8 in#ome or poor

#onsumers. These #onsumers generally spend their disposable in#ome on housing, food and


5/39

essentials. They ha%e %ery little to spare for spending on non-essential goods of any 7ind.

These families usually do not spend mu#h on lu2uries, if at all.

These #onsumers are not a mar7et for any of the imported produ#ts #o%ered by this study,

although they 8ill be #onsuming a range of fortified and enri#hed food produ#ts, if they are

a#ti%ely #onsuming any Philippine-made pro#essed foods.

!$!$! The %iddle and upper inco%e group %arket

The Philippines has a relati%ely small middle in#ome group, 8hi#h #omprises around (DK of

the population, or about (! million persons.

Trade sour#es ad%ise this group is di%ided into:

an upper middle in#ome group of #onsumers 8ho number bet8een ' and ! million

persons, and,

a lo8er middle in#ome group, 8hi#h #omprise the balan#e of (" to ( million persons.

There is also a high in#ome group, 8hi#h is mu#h smaller and #omprises about K of the

population, or around million persons.

?n addition to these #onsumer groups, there are also around ! million persons 8ho 8or7 as

#ontra#t 8or7ers outside the Philippines. These indi%iduals remit the bul7 of their o%erseas

earnings ba#7 to the Philippines. This effe#ti%ely turns their families into middle in#ome

households, be#ause they use the in8ard remittan#es so they #an a#ti%ely lead the lifestyle of

the middle in#ome group.

Some 7ey points to note about the %arious #onsumer groups in the Philippines are as follo8s:

the middle in#ome group tend to lead a more #omfortable lifestyle, 8hen #ompared to

the lo8 in#ome groups. They are a mar7et for household goods, ele#tri#al and ele#troni#

produ#ts, et#., and mainly li%e in the Jetro Janila area, 8ith some sieable po#7ets in

other 7ey #ities, e.g. Cebu. Trade sour#es #omment that they are:

o trend follo8ers, 8hi#h is rele%ant to produ#ts su#h as organi#s, branded food

and drin7s and healthy eating and lifestyle trends9

o brand #ons#ious9 and

o pri#e sensiti%e, and 8ill al8ays see7 %alue in terms of produ#ts that are of the

uality they reuire, ha%e the other #hara#teristi#s demanded, and ha%e a pri#e

they are 8illing to pay.

These #onsumers are a mar7et for a range of fun#tional foods, i.e. more than the basi#

fortified and enri#hed produ#ts, nutra#euti#als and, in some #ases, organi# fresh produ#e,

and pro#essed food and drin7s9 and,


6/39

the upper in#ome group lead a lu2urious lifestyle that is not too dissimilar to the upper

in#ome groups in other parts of East Asia.

A##ording to retail trade sour#es, they are the #ore of the Philippines mar7et for the

produ#ts that are #o%ered by this study. Some 7ey points to note are as follo8s:

o their spending, lifestyle and #onsumption habits are %ery important be#ausemar7eters in the Philippines fo#us on them in high profile mar7eting #ampaigns.

These #ampaigns pro%ide ma@or spin-off benefits in the area of middle in#ome

#onsumers be#ause tele%ision #ommer#ials and other forms of AP a#ti%ities are

underta7en on a nation8ide basis a#ross the Philippines9 and,

o these spin-off benefits are reported to be substantial in the area of mid to

high-end branded fun#tional foods, e.g. infant and #hildrens produ#ts and health

and 8ellness foods for adults, and also in the nutra#euti#al mar7ets, e.g. the

sports nutrition and beauty ; diet segments.

These fa#tors underpin a #onsumer mar7et that is be#oming in#reasingly pri#e #ons#ious,

espe#ially 8hen it #omes to imported produ#ts that are e2pensi%e, 8hen #ompared to lo#ally

produ#ed food and drin7s.

These middle and upper in#ome groups are a mar7et for imported food and drin7s, e.g. meat

and 8ines. At the le%el of higher pri#ed and e2oti# 4un7no8n6 produ#ts 8ithin Canadas large

portfolio of organi# produ#ts, fun#tional foods and nutra#euti#als only the 8ealthiest

#onsumers 8ill be a target mar7et. This target mainly #omprises #onsumers 8ho reside in

Jetro Janila, the #apital #ity area, and #ould number bet8een and & million persons.

This area of the #ountry also has a sieable number of e2patriates, although e2a#t numbers

are not a%ailable on the sie of this target. For this reason, physi#al distribution of importedprodu#ts to high end supermar7ets and spe#ialty shops is a %ery important part of a foreign

e2porter;Philippines importers strategy.

!$* The foundation to the Philippines %arket for health and &ellness food

and drinks

!$*$# The Philippines disease profile toda)

The Philippines essentially has t8o different disease profiles, 8hi#h e2ist be#ause of the

stru#ture of its population and the 8ide di%ersity in its household in#omes:

the middle and upper in#ome groups and lo8er in#ome urban residents tend to ha%e a

=e%eloped orld disease profile, 8hi#h in%ol%es heart disease, #ir#ulatory diseases,

diabetes and #an#er be#ause they lead a stressful lifestyle, la#7 e2er#ise and ha%e a diet

that is high in fat, salt and sugar, and they are also affe#ted by %arious pollutants9 and,


7/39

the rural poor 8ho suffer from malnutrition and diseases that are #ommon in the

=e%eloping orld,e.g. tuber#ulosis, malaria, dysentery, #hild birth #ompli#ations and the

li7e.

A##ording to the +ureau of


8/39

Self medi#ation and health #on#erns are no8 dri%ing middle in#ome demand for modern

nutra#euti#als and traditional indigenous and non-indigenous herbal medi#ines. This demand

is generally stimulated by %ery aggressi%e mar7eting #ampaigns, in#luding tele%ision and

radio #ommer#ials, usually in%ol%ing Filipino #elebrities.

Ja@or trends no8 being seen in the Philippines urban areas in#lude:

in#reasing #on#erns about food safety issues9

in#reasing health #ons#iousness and in#reasing a8areness of modern lifestyle related

health diseases9

gro8ing demand for disease pre%ention produ#ts and ser%i#es, leading to in#rease in

self medi#ation9 and,

gro8ing demand for organi# foods and organi# non-food produ#ts, albeit from a small

base.

These #onsumer mar7et trends, as they ta7e pla#e 8ithin the Philippines middle and upper

in#ome group so#ieties, are boosting demand for health and 8ellness produ#ts, 8hi#h in#lude

lo#al and imported fun#tional foods, nutra#euti#als and organi# food and drin7s.

Follo8ing se#tions of this report pro%ide more details about the Philippines mar7et for

fun#tional foods, organi# foods and nutra#euti#als.

*$ The distri+ution channels in the Philippines toda)

*$# The structure of the channels for functional foods, nutraceuticals and

organic products

The imported produ#ts #o%ered by the study are mainly distributed through the Philippines

modern trade retail #hannels today. $o#ally produ#ed organi#s also ha%e important #hannels

to #onsumers through spe#ial organi# mar7ets, but these do not appear to #arry any imported

produ#ts at present. Some produ#ts are sold through dire#t selling #hannels.

They ha%e some of the most fragmented modern trade distribution #hannels in the

Philippines today 4see Chart belo86.


9/39

Description

Source: Trade sources and market observation

There are t8o main #hannels for the imported produ#ts that are #o%ered by this study:

mainstream food and drin7 retailers that target the middle and upper in#ome groups

and #arry fun#tional pro#essed food and drin7s and organi# food and drin7s.

These #omprise smaller #hains of stores that are lo#ally o8ned. hile these #hains e2ist,

there has been no signifi#ant foreign in%estment in the se#tor be#ause of past restri#tions

o%er su#h in%estments. For this reason, the se#tor does not in#lude any %ery large and

dominant foreign #hains as #an be seen in Jalaysia, Thailand and ?ndonesia, e.g. run by

Tes#o, Carrefour and =F?9 and,

mainstream drug, personal #are and health and 8ellness stores.

Butra#euti#als and food supplements are retailed through #hannels that are uite

#on#entrated and in%ol%e three larger players, namely, Jer#ury =rugstores 4o%er 1""

outlets6, atsons Personal Care Stores 4(1" outlets6 and Rose Pharma#y 4(" outlets6.

The 5eneri#s Pharma#y is also a 7ey #hannel for generi# produ#ts.

A##ording to the go%ernment, the Philippines has about 0,""" retail outlets that

spe#ialise in drugs, health and beauty produ#ts today.

Trade sour#es #omment that due to the immature state of demand for organi# food anddrin7s, the bul7 of organi#s are distributed by importers;8holesalers that may also operate

one or more smaller sied retail outlets. This e2ists in an en%ironment 8here the high end

supermar7ets ha%e been in#reasing their shelf spa#e for organi#s and the range of produ#ts

that they #arry.

?n addition to the abo%e, there are also a %ery small number of food ser%i#e operations that

utilise organi# ingredients and menu items.


10/39

The follo8ing points should also be noted:

fun#tional foods are distributed in the same manner and along the same distribution

#hannels as non-fun#tional foods.

Fun#tional foods, 8hi#h also in#lude enri#hed and fortified produ#ts 4a##ording to the

lo#al trade definition6, are usually displayed alongside non-fun#tional foods. ?n thePhilippines, a 8ide %ariety of these produ#ts are a%ailable, and are be#oming mainstream

produ#ts in the mar7et. Su#h produ#ts are readily a%ailable in all distribution #hannels,

e%en in the small roadside sari-sari stores in the remote %illages, although these are 4in

reality6 legally #ompliant fortified ; enri#hed foods9

The distribution #hannel for enri#hed and fortified foods is mainly #omprised of a huge

net8or7 of small mom and pop stores 7no8n as sari-sari stores. Sari-sari stores ma7e up

D"K of the retail outlets. Jost of the sari-sari retail stores in the Philippines are small,

home-based, unregistered businesses and employ a #ouple of staff, if at all, 8ith food

#omprising about '0K to 1"K of the stores produ#ts.

The other distribution #hannels for enri#hed and fortified foods in#lude 8et and dry

mar7ets, gro#ery shops, supermar7ets, hypermar7ets, 8arehouse and dis#ount #lubs and

#on%enien#e stores.

hile this distribution s#enario e2ists, the most important #hannels for imported produ#ts

are the larger higher end retailers, in parti#ular the main supermar7ets, su#h as RustanLs

and $andmar7, that operate in Jetro Janila and the other 7ey #ities, e.g. Cebu9

organi# food and drin7s ha%e a highly fragmented retail #hannel, 8hi#h does impa#t on

imported produ#ts be#ause of the lo8 le%el e2isten#e of spe#ialty organi#s shops in the

Philippines.

$o#ally produ#ed organi# foods are largely distributed %ia a small number of fresh food

stalls that operate in the 8ee7end 8et mar7ets in the ma@or #ities in thePhilippines, e.g. Jaras *rgani# Jar7et 4J*J6.

$ess than a handful of spe#ialist health food stores ha%e opened up in the ma@or #ities to

#ater to the small, but gro8ing, organi# foods demand, e.g. the *PTA Cooperati%e

*rgani# Baturally Store, Ieggie +outiue and +areFood. Some organi# suppliers are

in%ol%ed in home deli%eries of their produ#ts.

Some of the larger supermar7et #hains also ha%e a small se#tion of organi# foods in their

stores, 8hi#h in#lude both lo#al and imported produ#ts. The 7ey outlets that #arry

imported food and drin7s, and some organi#s, are $andmar7 in Ja7ati and Trinoma,

Rustans Supermar7ets in Shangrila, 5ate8ay Cubao, 5reenbelt, San Antonio, Ro#78ell,

Ja7ati and Corinthians, altermart in Ja7ati, Shop8ise in $ibis, CS? Supermar7ets in

=agupan, )rdaneta, San Fernando 4$a )nion6, San Carlos, Alaminos and +aguio, BCCCSupermar7ets in =a%ao and Pala8an, Jetro 5aisano in Jetro Jar7et, Cebu, $egaspi and

$u#ena. ?n addition to these, SJ Supermar7ets and Robinsons Supermar7ets also #arry

some organi# produ#e in their stores.

The #urrent distribution reality is that imported organi# foods, largely dry foods and

pro#essed food produ#ts, are mainly distributed to the small number of modern health

food stores, e.g.


11/39

the distribution of non-pres#ription pharma#euti#al o%er-the-#ounter 4*TC6 produ#ts,

in#luding food supplements, are through hospital pharma#ies, non-hospital pharma#ies

and personal #are and health and 8ellness shops.

E2amples of these #hannels in#lude atsons Personal Care, Jer#ury =rugstores, South

Star =rugstores, The 5eneri#s Pharma#y and


12/39

The Philippine also has ne8 organi# food and drin7 regulations that are separate to these food

regulations. These are o%er%ie8ed in a follo8ing se#tion of this report.

The Food and =rug Administration 4F=A6, an agen#y under the =epartment of


13/39

food means any pro#essed substan#e 8hi#h is intended for human #onsumption and

in#ludes drin7s for human beings, be%erages, #he8ing gum and any substan#es 8hi#h

ha%e been used as an ingredient in the manufa#ture, preparation or treatment of food9

drug means:

4(6 arti#les re#ognised in offi#ial pharma#opoeias and formularies, in#luding offi#ialhomeopathi# pharma#opoeias, or any do#umentary supplement to any of them, 8hi#h

are re#ognised and adopted by the F=A9

46 arti#les intended for use in the diagnosis, #ure, mitigation, treatment or pre%ention of

disease in man or other animals9

4&6 arti#les 4other than food6 intended to affe#t the stru#ture of any fun#tion of the body

of human beings or animals9 or

46 arti#les intended for use as a #omponent of any arti#les spe#ified in #lauses 4(6, 46,

or 4&6 but do not in#lude de%i#es or their #omponents, parts or a##essories9.

health produ#ts means food, drugs, #osmeti#s, de%i#es, biologi#als, %a##ines, in-%itro

diagnosti# reagents and household;urban haardous substan#es and;or a #ombination of

and;or a deri%ati%e thereof. ?t shall also refer to produ#ts that may ha%e an effe#t on

health 8hi#h reuire ne8 regulations to be de%eloped, as determined by the F=A.

food;dietary supplement means a pro#essed food produ#t intended to supplement the

diet that bears or #ontains one or more of the follo8ing dietary ingredients: %itamin,

mineral, amino a#id, herb, or other dietary substan#e of botani#al, animal, artifi#ial or

natural origin to in#rease the total daily inta7e in amounts #onforming to the latest

Philippine re#ommended energy and nutrient inta7es or internationally agreed minimum

daily reuirements 4R=As6. ?t is usually in the form of #apsules, tablets, liuid, gels,

po8ders or pills and is not represented for use as a #on%entional food or as the sole itemof a meal or diet or a repla#ement for drugs and medi#ines9

%itamins and minerals shall be #lassified as a drug, based on the follo8ing #riteria:

o the #lini#al therapeuti# indi#ation or #laim made for the preparation is for a

spe#ifi# %itamin defi#ien#y or state or disease9

o the strength or #on#entration per dosage form is ("0K R=A for fat soluble

and (0"K R=Afor 8ater soluble %itamins9

o it is a pharma#euti#al dosage form;or in@e#table form9

o it is highly purified9 and,

o additional pharma#ologi#ally a#ti%e ingredient4s6 is 4are6 present9

%itamins and minerals shall be #lassified as a food supplement, based on the follo8ing

#riteria:


14/39

o the indi#ation is as a dietary supplement9

o the strength or #on#entration per dosage form is Q("0K R=A for fat soluble

and Q(0"K R=Afor 8ater soluble %itamins9

o it may be a%ailable as non-pharma#euti#al or pharma#euti#al dosage form,e2#ept parenteral9

o it may be a%ailable as purified or as natural produ#t9 and

o there are no additional pharma#ologi#ally a#ti%e ingredient4s69

in general, a food or dietary supplement is not %ie8ed as a drug and is regulated as a

food produ#t. An F=A ad%isory stated that food supplements ha%e no pro%en therapeuti#

benefit and are therefore not re#ommended for the medi#al treatment of diabetes,

obesity, hypertension or any other medi#al #ondition. ?n addition, the Philippine

Pharma#ists Asso#iation stated that food;dietary supplements are not supposed to be

used for treatment or #ure, simply be#ause they are not drugs9

unli7e pres#ription drugs, o%er the #ounter 4*TC6 produ#ts, in#luding food supplements,

#an be dire#tly ad%ertised to the publi#. The F=A has the authority to pres#ribe general

standards and guidelines for food ad%ertisements. The F=A is also responsible for

monitoring and as#ertaining the %era#ity of nutritional and medi#inal #laims in food

ad%ertisements in the %arious media9

the =epartment of


15/39

the F=A adopts the Code2 Alimentarius Commission 5uidelines for )se of Butrition and


16/39

the +ureau of Agri#ulture and Fisheries Produ#t Standards 4+AFPS6 is authorised to

grant offi#ial a##reditation to an organi# #ertifying body or entity. All organi# food and

input establishments 8ill ha%e to be registered 8ith the +AFPS. The label of organi#

produ#e shall #ontain the name, logo or seal of the organi# #ertifying body and the

a##reditation number issued by the +AFPS. *nly third party #ertifi#ation is allo8ed to be

labelled as organi#ally produ#ed9

in addition, retail establishments or stores of organi# produ#e shall designate a separate

area to display the organi# produ#e to a%oid mi2ing it 8ith non-organi# produ#e. Ji2ing

organi# 8ith non-organi# produ#ts is not allo8ed. *nly produ#ts #ertified as organi# in

a##ordan#e 8ith the ?RR of the *rgani# Agri#ulture A#t #an be displayed in the organi#

se#tion and labelled as su#h9 and,

the *rgani# Certifi#ation Center of the Philippines 4*CCP6 is an independent, pri%ate,

membership-based organi# standards setting and organi# #ertifi#ation body. Established

in "", *CCP is the #urrently a##epted organi# #ertifi#ation body in the Philippines. This

agen#y is in #harge of ensuring that organi# produ#ers under their endorsement are

#omplying 8ith the safety and uality regulations to standardise organi# produ#tion in the

#ountry. Trade sour#es #omment that sin#e "", only " or so organi# produ#ers sought

#ertifi#ation from *CCP.

?t should be noted that this legislation is #urrently only fo#used on lo#al produ#ts. Trade

sour#es #omment that this #ould #hange in future, if there is fraud against #onsumers in the

mar7et for imported organi#s. Some traders #omment that there may already be in#iden#e of

su#h fraud in%ol%ing imports of #ertain produ#ts from Borth Asia, but this has not yet been

#hallenged by #onsumer groups or the regulators. Jore information on the use of foreign

#ertifi#ations is pro%ided in a follo8ing se#tion #o%ering the Philippines mar7et for organi#produ#ts.

*$ The Philippines reie&s its policies, la&s and regulations on an on-

going +asis

The #ontinuous re%ision and updating of the regulations is #ondu#ted by the F=A. This is done

to ta7e into #onsideration ne8 food and drug introdu#tions, ne8 s#ientifi# findings and ne8

te#hnologies in the manufa#ture of food and drugs, so as to ensure that the publi# is

#ontinuously prote#ted from health haards and fraud in the preparation, sale and use of

foods and drugs.

?n addition to this, +AFPS is also 7eeping the organi# food and drin7s regulatory en%ironment

under re%ie8, so updates in the abo%e referred la8s, regulations and standards 8ill also li7ely

ta7e pla#e in future. Su#h updates may ha%e ad%erse impa#ts on imported produ#ts and

mar7et a##ess for them, if importer-e2porters do not ensure that there is full #omplian#e 8ith

ne8 regulations.


17/39

For this reason, the reader is ad%ised to obtain the latest updates from the rele%ant

authorities, through their business partner in the Philippines, to fa#ilitate their o8n #ontinued

mar7eting due diligen#e on the Philippines as an e2port mar7et for their produ#ts.

$ Functional foods

$# The Philippines %arket for i%ported food and drinks, a .uick snap shot

The Philippines has a %ery large food and be%erage mar7et, 8hi#h is %alued at more than (.!

trillion 4about CH ( billion6 today. ?mports are %ery important and amounted to a total

around CH 0.0 billion in ""D.

Trade sour#es #omment that:

the retail food and drin7 mar7et has been gro8ing in e2#ess of ("K per annum for thepast 0 years, apart from ""D 8hen it #ontra#ted by K. This #ontra#tion o##urred

be#ause #onsumers rea#ted negati%ely follo8ing the #ountrys e#onomi# slo8do8n in that

year9 and

8ithin this large mar7et is a sieable mar7et for fun#tional foods, 8hi#h by lo#al

definition in#ludes legally #ompliant enri#hed and fortified produ#ts, and other produ#ts

that are more rele%ant to this study.

$! The si/e of the functional food and drink %arket toda)

Bo information is readily a%ailable on the o%erall sie of the fun#tional food mar7et today,although opinions on the sie of the fun#tional drin7 mar7et are a%ailable. Currently, there are

no dedi#ated tariff #odes for fun#tional foods, be#ause fun#tional foods are still not separately

re#orded by the go%ernment or the food industry. The fragmented nature of the mar7et also

ma7es it %ery diffi#ult to estimate its sie from a #ombination of trade estimates and in-

mar7et obser%ations.

$* The functional drinks seg%ent

The Philippines has a %ery small fun#tional drin7 mar7et 8ithin its %ery large be%erage

mar7et. This mar7et in%ol%es a range of different produ#ts, 8ith the main produ#ts being

reported as energy drin7s, sports drin7s and #ultured mil7 drin7s. Trade sour#es estimate that

the mar7et is only 8orth around CH 10 million today. Per #apita #onsumption is %ery lo8 at

around ".0 litres per annum, 8ith the %olumes being #onsumed estimated at bet8een " and

0" million litres, up bet8een (0 and " million litres in """.

Although the past (" years has seen rapid annual gro8th in sales of about (0K per annum

from a lo8 base, fun#tional drin7s ha%e ma@or #hallenges to de%elop in a large mar7et that is


18/39

dominated by brand-o8ners supplying #arbonates and still drin7s and supporting them 8ith

%ery aggressi%e and highly effe#ti%e mar7eting #ampaigns.

$ The functional food seg%ent

Trade sour#es estimate that fun#tional foods #omprise any8here bet8een &"K and 0"K ofthe total retail pa#7ed pro#essed food and drin7s mar7et today, depending upon 8hat the

definition of fun#tional foods is #onsidered. As mentioned in the introdu#tion to this report,

signifi#ant #onfusion o%er the definition of fun#tional foods in the Philippines is a huge

problem for determining the stru#ture of the mar7et.

From a pra#ti#al standpoint, the largest #on#entrations of fun#tional foods are reported to be

in infant foods, other mil7 po8der formulas and other dairy produ#ts. As an e2ample, Bestl

Philippines has a range that in#ludes:

+ear +rand mil7 drin7, 8hi#h is fortified 8ith ?ron, in# and Iitamin C9

ready-to-drin7 Jilo, 8hi#h is fortified 8ith CT?5EB-E, a #ombination of ! %itamins and

minerals9

Bestl o7o run#h brea7fast #ereals, 8hi#h is fortified 8ith ! %itamins9

Cerela# branded baby food, 8hi#h #ontains Prote#t Plus U, a #ombination of +ifidus +$

V and =


19/39

ba7ed produ#ts, #ereals, sand8i#h spreads, margarine, dairy produ#ts, @ui#es, meat and

fish produ#ts, #ondiments and sau#es and salt9

some fun#tional food produ#ts are in#reasingly de%eloping a higher presen#e and profile

in the mar7et. These in#lude food produ#ts that are promoted as ha%ing health benefits.

They in#lude fermented mil7 drin7s, yoghurt 8ith la#toba#illus, spirulina #ereal,ganoderma #offee and mil7 8ith +ifidoba#teria. These produ#ts are generally targeted at

the middle to high in#ome group of #onsumers residing in the ma@or #ities. They are

usually #onsidered non-essential by the lo8er in#ome group, 8ho also find them

e2pensi%e9

Ga7ult Philippines, 8ith its #ultured mil7 drin7s, is one of the largest fun#tional food

businesses operating in the Philippines today. Trade sour#es #omment that its produ#ts

are %ery 8ell 7no8n by #onsumers to be good for their digesti%e system, something that

has been de%eloped from many years of aggressi%e mar7eting by the #ompany9

Philippine food manufa#turers are no8 adding bioa#ti%e ingredients to their produ#ts so

that they #an #reate ne8 higher margin produ#ts. This ne8 de%elopment e2ists amongst

lo#al food manufa#turers as 8ell as multinationals 8ith manufa#turing plants in the

Philippines. Bestl is already a ma@or user of *mega & and ' in its mil7 formulas

produ#ed for the ASEAB region, along 8ith some fun#tional brea7fast #ereals it is also

produ#ing for the Philippines and the region9 and

Filipino #onsumers 8ill generally prefer the fortified %ersion to the regular produ#t, if a

#hoi#e 8as presented to them. This de#ision 8ill be made on uite #omple2 %alue

#onsiderations and not @ust pri#e. The de#ision points #an in#lude fun#tionality of the

produ#t 8ithin their diets, produ#t uality, and pri#e 8ithin a total %alue-for-money#onsideration.

$2 The state of de%and for i%ported functional food and drink products

The bul7 of the fun#tional food produ#ts 4as defined by Philippine trade sour#es6 in the mar7et

are lo#ally manufa#tured produ#ts.

?mports in#lude produ#ts from other ASEAB #ountries, Australia, the )SA and Europe. As

these produ#ts are re#orded together 8ith non-fun#tional foods, there is no #lear data on the

sie of the mar7et for imported fun#tional foods. Additionally, due to the highly fragmented

nature of the retail industry, there is no organisation that has top-line insight o%er the %alue

or %olume of fun#tional food sales being made in supermar7ets.

Some other #omments from trade sour#es in#lude9

on the 8hole, Filipinos li%ing in urban #entres are re#epti%e to 8estern brands,

espe#ially Ameri#an brands. They are also interested in ne8 inno%ations in health and

nutrition, although pri#e sensiti%ity #an be an issue in a#hie%ing sales of su#h produ#ts. ?t


20/39

is %ery important to note that being re#epti%e to 8estern brands may not ne#essarily

mean being re#epti%e to 8estern produ#ts9 and,

8hile there is a range of imported estern-type pro#essed fun#tional foods in the higher

end supermar7ets, most of these produ#ts are #onsumed by the e2patriates and the

more sophisti#ated higher in#ome Filipinos.The ma@ority of Filipinos are generally not interested in estern-type pro#essed

fun#tional foods be#ause these produ#ts are too e2pensi%e, 8hen #ompared to the lo#al

alternati%es. This s#enario also in#ludes the middle in#ome groups, 8ho are highly pri#e

sensiti%e to8ards imports, and 8ill generally ignore su#h produ#ts as too e2pensi%e.

For Canadian e2porters, the abo%e des#ribed mar7et s#enario 8ill almost #ertainly marginalise

their produ#ts to high end ni#hes 8here:

the pri#e of their produ#t is a##eptable to higher in#ome group #onsumers, and,

their )SPs 4uniue selling points6 #an a#ti%ely be used to #reate a mar7et for their

produ#ts amongst #onsumers 8ho ha%e strong demand for %arious types of health and

8ellness food and drin7s.

0$ Organic foods

0$# The si/e and state of the organic food and drink %arket toda)

Bo information is readily a%ailable on the sie of the organi# food mar7et today. Currently,

there are no dedi#ated tariff #odes for organi# foods be#ause organi# foods are still not

offi#ially re#orded by the go%ernment or the food industry.

Rough estimates from trade sour#es put the organi# food mar7et %alue at around Peso &&

million 4CHD million6, 8hi#h is an insignifi#ant part of the total food and be%erage mar7et

today.

*n a positi%e note, they ad%ise that the organi# mar7et has been gro8ing rapidly at double

digits,i.e.("K to &"K per annum, depending on produ#t type, for the past fe8 years. These

high rates of gro8th arise be#ause the mar7et has been gro8ing from a %ery small base, and

the industry has seen ne8 supplies #ome on-stream as the go%ernments stimulus forde%elopment has had an impa#t.

Filipino interest in organi# food 8as almost non-e2istent 0 years ago, e2#ept amongst some

enthusiasts. ?n the past, lo#al demand for organi# produ#ts, both lo#al and imported produ#ts,

#ame mostly from the estern e2patriate #ommunity, 8ho 8ere more a8are about organi#s

and 8ere #on#erned about issues su#h as pesti#ide abuse by lo#al farmers, and so 8ere

8illing to pay higher pri#es for organi# fresh produ#e. There 8as also some demand from

persons suffering from #an#er, or re#o%ering from it.


21/39

Today, the mar7et for organi# foods in the Philippines, 8hether lo#ally produ#ed or imported,

is still %ery mu#h at an immature and introdu#tory stage.

0$! The state of the organic food suppl) toda)

The past (" years has seen organi# agri#ulture in the Philippines being in#reasinglyen#ouraged by some #on#erned farmer organisations and non-go%ernment organisations

4B5*s6. Some of this a#ti%ity has been done to #ounter the threat from lo#al field trials of

geneti#ally modified maie and some other 5J#rops. This has led to the a%ailability of organi#

produ#e in the mar7et, although on a %ery small s#ale.

Trade sour#es #omment that:

organi# farming is still %ery ne8 in the Philippines. The go%ernment has only %ery

re#ently be#ome in%ol%ed in de%eloping the organi# farming se#tor through the Jinistry

of Agri#ulture. This 8as done be#ause it has noti#ed the global trend, and the potential

for organi# produ#ts.

The =epartment of Agri#ulture has no8 allo#ated a budget of around Peso D"" million

4CH" million6 to support the implementation of the ne8ly promulgated *rgani#

Agri#ulture A#t. Currently, the Philippines has an estimated (,(& he#tares of land and

&,DD" farms under organi# management. This is a signifi#ant in#rease o%er "", 8hen

there 8ere only &,0"" he#tares and 0"" farms under organi# management. ?n addition,

organi# fertilisers are also produ#ed lo#ally to support this gro8ing agri#ultural se#tor9

Begros ?sland is reported to be the Philippines organi# agri#ultural #entre 8here a small

number of #ompanies, operating on (,&"" he#tares, ha%e obtained #ertifi#ation for

organi# farming. The island already produ#es a number of organi# food brands, in#luding

the Rainforest Jt. anlaoon premium #offee 4Arabi#a6 blend, Rainforest BegrenseRobusta blend, 5ourmet Spi#es and Spe#ialties $ight Jus#o%ado and FreshStart bla#7

ri#e, 8hite ri#e, and bro8n ri#e. The Begros ?sland Sustainable Agri#ulture and

=e%elopment Foundation ?n#., 8hi#h issues the organi# farming #ertifi#ation, plans to

ma7e the island into a totally-organi# farming ha%en 8ithin the Philippines9

around '"K of lo#ally produ#ed organi# food is #onsumed lo#ally, 8hile "K of #urrent

produ#tion is e2ported. Trade sour#es estimated that the e2port %alue of organi# foods is

about (.& billion 4CHD million6. The ma@or destination of Philippines organi# e2ports is

the )SA, 8ith other destinations being Canada, apan 4a ma@or mar7et for organi#

bananas6, Europe, the Jiddle East and other Asian #ountries9

the Philippines is a net e2porter of organi# foods. Certifi#ation of organi# e2ports is

pro%ided by European #ertifi#ation agen#ies, su#h as the ?nstitute for Jar7et E#ology

4?J*, based in S8iterland6, Baturland 45ermany6, and E#o#ert 4Fran#e6. ?J* is

a##redited for organi# #ertifi#ation by the S8iss A##reditation Ser%i#e 4SAS6,

the )S=A and the apanese Agri#ultural Standards 4AS69 and,


22/39

organi# #rops targeted at the lo#al mar7et, su#h as ri#e, maie, %egetables and root

#rops, are largely produ#ed by small-s#ale farmers. ?n #ontrast, organi# #rops for e2port,

su#h as bananas, mangos, #o#onuts, #offee and sugar#ane, are largely produ#ed through

gro8er arrangements amongst #ommunity-based organisations, agri#ultural #ooperati%es

and de%elopment, B5*s or pri%ate #orporations;asso#iations.

The abo%e des#ribed industry s#enario 8ill ha%e #ompetiti%e impa#ts on the e2port of #ertain

organi# produ#ts from Canada to the Philippines. E2amples in#lude temperate #limate fresh

produ#e and lo#ally pro#essed food, e.g. #offee and sugar, 8hi#h are already a#ti%ely

distributed through the lo#al organi# retail #hannels. Jore information on the #urrent state of

organi# food and drin7s supplies is pro%ided in the follo8ing se#tion.

0$! Organic food and drinks in the %odern trade retail channels

*rgani# foods are slo8ly ma7ing their 8ay into the modern retail se#tor. This #an be seen

from the gro8ing %ariety of organi# produ#ts, in#luding imported produ#ts, that are being sold

in the ma@or supermar7ets in Jetro Janila. These ma@or supermar7ets are also dedi#atingse#tions in their stores to organi# food produ#ts, parti#ularly those outlets that target the

middle to high in#ome #ustomers.

Some gro#ery stores no8 ha%e a se#tion for organi# ri#e, fruits and %egetables. ?n addition, a

small number of restaurants ha%e a menu for organi# food for their health-#ons#ious

#ustomers9

hile this is happening, trade sour#es #omment that:

the bul7 of the organi# foods are still being sold at 8ee7end 8et mar7ets. ?ndependent

small-and medium-sied produ#ers ha%e organised 8ee7end organi# mar7ets targeting

the middle and upper in#ome groups in Jetro Janila and other 7ey #ities around the

#ountry.

?t should also be noted that organi# produ#e is not 8idely a%ailable in mass mar7et 8et

mar7ets. ?ndeed, %ery fe8 traditional 8et mar7ets ha%e organi# food stalls in them9

the organi# mar7et is no8 dominated by a 8ide %ariety of fresh %egetables, and a

smaller sele#tion of fresh lo#al fruits. *rgani# meats are o##asionally a%ailable.

Fresh organi# produ#e a%ailable in the mar7et today in#lude a %ery 8ide %ariety of lo#al

%egetables, Fren#h beans, bro##oli, #abbage, #auliflo8er, #elery, #hi%es, lee7s, parsley,

potato, radish, spina#h, sugar beets, 8ater#ress, 8heat grass, u##hini, basil, tarragon,

pepper, #arrots, peas, fresh mushroom, ri#e, lo#al fruits, eggs, por7, poultry and #he%on9

Filipino #onsumers are most re#epti%e to fresh organi# produ#e, su#h as %egetables and

fruits. The other organi# food types, parti#ularly the pro#essed food produ#ts are the

least pur#hased by lo#al #onsumers. This situations e2ists be#ause they usually do not

see the %alue in the higher-pri#ed organi# produ#ts, 8hen #ompared to the #heaper

#on%entionally manufa#tured alternati%e9 and,


23/39

also a%ailable on a physi#al distribution basis is a small and fragmented sele#tion of

pro#essed organi# food and drin7s, 8hi#h are mainly imported produ#ts.

0$* I%ported supplies of organic food and drinks

The small sele#tion of pro#essed organi# foods, mainly imported produ#ts, in#lude %inegar,honey, tea, #offee, spi#es, pa#7aged unpro#essed #ereals and pulses, brea7fast #ereals, infant

foods, ba7ed produ#ts, sna#7 foods, sau#es, seasonings, soft drin7s and 8ines.

Retailers #omment that these produ#ts are largely demanded by the e2patriates, be#ause

these produ#ts are not readily a%ailable in the lo#al mar7et, or used in the Filipino diet.

Jost of the imports are from the )SA 48ith an estimated 0"K to '"K share today6.


24/39

strong demand for safe and nutritious foods. They understand the benefits of organi#

food produ#ts. These better informed #onsumers are #on#erned about #onsuming higher

pro#essed foods and ha%e ma@or #on#erns o%er food health and safety s#ares and other

issues, e.g. geneti#ally modified foods.

0$0 The challenges for deeloping the organics %arket in the Philippines

*rgani# food is generally not promoted and the general publi# is not 8ell informed, ma7ing it

diffi#ult to #on%in#e the a%erage #onsumers to pay more for food labelled organi#. ord-of-

mouth has in#reased the a8areness of organi# foods amongst the better informed health

#ons#ious Filipinos, parti#ularly those residing in the ma@or #ities 8ho see7 a healthier

lifestyle.

$o#al organi# produ#e is sold at a pri#e premium of bet8een &"K and '"K abo%e the pri#es

of non-organi# eui%alent produ#ts. Pro#essed food and drin7s #an be pri#ed at e%en higher

premium.

A##ording to trade sour#es, pri#e, a8areness and mar7eting are also 7ey #hallenges for

imported organi#s in the Philippines mar7et today. These matters ha%e to be #onsidered in the

strategy of any organi# food and drin7 e2porters that de#ide to target mar7et de%elopment in

the Philippines.

2$ Nutraceuticals

2$# The pro+le% &ith infor%ation on nutraceuticals in the Philippines

As 8ith fun#tional foods, there is also some #onfusion 8ithin the trade o%er the nature of

nutra#euti#als, 8hi#h has spin-offs into mar7et definitions and #omments on trend analysis.

This arises be#ause of the differen#es that e2ist bet8een the definitions of produ#ts that are

deemed to be drugs, %itamin and mineral produ#ts, health supplements and food

supplements.

As mentioned in the introdu#tion to this report, there are also se%eral different names used in

the Philippines to des#ribe nutra#euti#als, in#luding health supplements and food

supplements, so this also adds to the #onfusion o%er nutra#euti#als in terms of defining the

industry and its produ#ts.

2$! Consu%ers of nutraceuticals in the Philippines

Butra#euti#als are mainly pur#hased by the middle to high in#ome group. They in#lude

#onsumers:

8ho ha%e a desire to maintain 8ellness and prefer to ta7e pre%entati%e measures 8hen

it #omes to their health9


25/39

8ho are body image #ons#ious or health #ons#ious, parti#ularly the young 8or7ing

professionals9 and,

8ho are health #ons#ious parents that are #on#erned about their family members

8ellness, parti#ularly their #hildrens health.

These #onsumers, 8ho number up to & million persons, are 7ey targets for nutra#euti#als that

are e2ported from Canada.

2$* The nutraceutical %arket si/e, recent gro&th trends and driers

A##ording to the =epartment of


26/39

o in#reased self medi#ation9

o the more affluent #onsumers desire to ta7e pre%entati%e measures to maintain

8ellness9

o 8ider spread distribution through modern #hains of pharma#ies and personal#are shops9

o a#ti%e promotional #ampaigns by brand-o8ners9

o greater a%ailability of food supplements9 and,

o #on#erns o%er health threats from A%ian flu %irus,


27/39

o the employment of #elebrity endorsers 8ith testimonials about their supposed

#urati%e effe#ts has made su#h ad%ertising ta#ti#s more persuasi%e9

this mar7eting s#enario has resulted in go%ernment debate o%er ne8 #ontrols and also

to a situation 8here the F=A #ontinues to tighten #ontrol o%er the unethi#al ad%ertising

and promotional ta#ti#s of health and food 4nutra#euti#al6 suppliers based on e2istingla8s. Some trade sour#es belie%e this 8ill #ause the mar7et to #hange, 8ith some le%el of

de#line in sales o%er the ne2t year or so9

aside from regulatory pressure from the go%ernment, the dri%ing for#es in the mar7et

o%er the period to "(& 8ill #ontinue to be:

o fear of disease and medi#al #onditions, e.g. heart diseases, %as#ular system

diseases, #an#er, pneumonia, #hroni# lo8er respiratory disease and diabetes, an

in#reasing a8areness about nutra#euti#als, and a gro8ing belief that pre%ention

is better and #heaper than the #ure9

o body image #ons#iousness, 8hi#h 8ill #ontinue to be %ery important amongst

the young middle and upper in#ome groups, affe#ting both 8omen and men. This

8ill be dri%en by the #ontinued use of Filipino #elebrities as role models to

support 7ey brands9

o the ability of the middle to high in#ome #onsumers to pay for nutra#euti#al

produ#ts and the #ontinued high #osts of pres#ription drugs9 and,

o ne8 produ#t laun#hes by manufa#turers and suppliers of imported produ#ts9

The abo%e s#enarios, and issues e2isting, in the mar7et ha%e dire#t impa#ts on imported

produ#ts. The 7ey impa#ts are:

the strength of lo#al brands that are supported hea%y AP9 and,

the impa#t of regulatory mo%es 4#urrent and future6 to #ontrol unethi#al pra#ti#es of

businesses that are in%ol%ed in mar7eting health and food supplements.

These matters 8ill ha%e to be #onsidered by Canadian e2porters that 8ish to de%elop the

Philippines as a mar7et for their nutra#euti#als in future.

2$ The Philippines nutraceutical sector and its inole%ent in the %arket

The Philippines industry that supplies the health supplement, food supplement and

nutra#euti#als mar7ets #omprises pharma#euti#al manufa#turers and manufa#turers of herbal

medi#ines and nutra#euti#als.

Around 'K of this industrys output in ""1 #omprised food and health supplements,

a##ording to the Jedi#ines Transparen#y Allian#e, Philippines. Conseuently, nutra#euti#als


28/39

represent only a small ni#he 8ithin the mar7et, 8hen #ompared to #on%entional

pharma#euti#als.

The nutra#euti#als se#tor is small. Aside from the %ery small herbal medi#ine se#tor, only

about a doen or so Philippine-based pharma#euti#al #ompanies are in%ol%ed in the

manufa#ture of nutra#euti#als. Jost of these #ompanies produ#e a %ery small range of

produ#ts des#ribed lo#ally as food or health supplements, mainly %itamins in tablet form.

The ma@or #ompany in%ol%ed in this se#tor is )nited $aboratories 4also 7no8n as )nilab6,

8hi#h is a Philippine pharma#euti#al manufa#turer. This #ompanys annual sales are

around CH '"" million. ?ts 7ey brands in this mar7et segment in#lude Appebon, Ener%on

4enri#hed nutritional produ#ts and %itamins6, Re%i#on, ?-*B 4nutritional supplements and

energy drin7s6, Jyra 4%itamins and %itaminised s7in #are6, Butrople2 and Ti7i Ti7i 4#hildrens

supplements6.

*ther pharma#euti#al #ompanies in%ol%ed in produ#ing nutra#euti#als, in#lude Terramedi#,

?n#., Sando Philippines, Abbotts Philippines, yeth, Bo%artis, Jetro Pharma and CCJ

?nternational 4Philippines6, ?n#.

Aside from the abo%e mentioned pharma#euti#al #ompanies, there are also some herbal

medi#ine #ompanies, e.g. A+S


29/39

((,""" in ""0. ?mports #omprise t8o different #ategories of produ#ts, neither of 8hi#h are

#lassified as *TC%itamins and dietary supplements, namely:

Food supplements #ontaining %itamins and minerals, 8hi#h #omprise about 1"K of

imports9 and

Food supplements #ontaining herbs and other botani#als, 8hi#h #omprise the balan#e of

imports.

Description

Note: There was a coding system change in 2007, so the Phiippines used 2 codes !or these products instead o! " code

Source: #overnment o! the Phiippines Trade Data

The sie of imports highlighted by the abo%e offi#ial trade data indi#ates that Canadian food

supplement e2porters #urrently ha%e a %ery small ni#he mar7et to target.

Ja@or distributors of supplements, 8hi#h are legally determined to be in drug forms, in#lude

uellig Pharma and P


30/39

and most ad%an#ed #ontra#t manufa#turing fa#ility in Asia. ?ts #lient base

numbers o%er 0" multinational #ompanies and it has o%er (,"" formulations

#urrently in produ#tion9 and,

o an asso#iated #ompany, 7no8n as ?nterphil $aboratories. This #ompany is also

in%ol%ed in the manufa#ture of pharma#euti#als and food supplements under itso8n brand-name. ?ts produ#ts are targeted at the lo#al mar7et, and ha%e a fo#us

on the independent and small drugstores, espe#ially those lo#ated in the

Philippine pro%in#es.

This group of businesses may pro%ide an area of mar7et opportunity for Canadian

nutra#euti#al ingredient e2porters to e2plore in future.

2$ 3eie& of future strategic opportunities for Canadian producers

and eporters

2$# The driers of future de%and for functional foods, nutraceuticals and

organic foods

+ased on feedba#7 from trade sour#es, the Philippine mar7ets for fun#tional foods,

nutra#euti#als and organi# foods 8ill almost #ertainly #ontinue to gro8 in future. The 7ey

dri%ers 8ill be:

its future e#onomi# gro8th, 8hi#h is uite positi%e. Fore#ast e#onomi# gro8th for "((is estimated at around 0K, 8ith 0.K being fore#ast for "( under more stable global

e#onomi# #onditions. These fore#asts are %ery positi%e for gro8th in #onsumption of a

range of foods and drin7s, in#luding fun#tional foods, organi# foods and nutra#euti#als9

its gro8ing population, 8hi#h is fore#ast to gro8 to o%er ("& million people by "(09

the middle in#ome and high in#ome groups, numbering around &" million today, 8ho

are the potential #onsumers of fun#tional foods, organi# foods and nutra#euti#als. They

are trend follo8ers, are usually brand #ons#ious, 8hile remaining pri#e #ons#ious at the

same time. The ma@ority li%e in the urban areas, parti#ularly in Jetro Janila9 and,

demand sophisti#ation 8hi#h is also in#reasing, espe#ially in the area of personal health,

food uality, food safety and nutrition. This in%ol%es both the middle and high in#ome

#onsumers residing in Jetro Janila.


31/39

These fa#tors are generally positi%e for demand for the imported produ#ts that are #o%ered by

the study, 8hether retail pa#7ed, or in the #ase of nutra#euti#als, ingredients for use by

Philippine-based food supplement pa#7ers and manufa#turers.

2$! The challenges for deeloping future de%and for functional foods,

nutraceuticals and organic foods

hile there are some %ery positi%e demand dri%ers, there are a number of fa#tors that are

#hallenging the mar7et for imported food and drin7s, in#luding the produ#ts #o%ered by this

study, namely:

the 8ea7 %alue of the Philippines Peso against the 8orlds ma@or #urren#ies9

higher #rude oil pri#es 4affe#ting in8ard freight #osts6 and food #ommodity pri#es9

#onseuently, imported retail and 8holesale pri#e inflation, espe#ially in areas of the

mar7et that #annot be satisfied by lo#al produ#tion9

inherent pri#e sensiti%ity to8ards imports9 and,

a la#7 of demand sophisti#ation to8ards all of the produ#ts #o%ered by this report,

8hi#h pro%ides #onsiderable #hallenges for organi#s, fun#tional foods and nutra#euti#als

that are not really 8ell understood by the bul7 of the Philippines middle in#ome group

#onsumers.

2$* Trade opinions on future gro&th in de%and for functional foods,

nutraceuticals and organic foods

hile the Philippine food and drin7 mar7ets ha%e performed uite 8ell o%er the past 0 years

or so, ""D sa8 some problems de%elop be#ause of the fa#tors highlighted in the pre%ious

se#tion.

Jost #onsumers rea#ted by in#reasing #onsumption of lo#al produ#ts, and this negati%ely

impa#ted the retail mar7et for imported food and drin7s and higher pri#ed produ#ts, su#h as

organi# foods, fun#tional foods and nutra#euti#als.

Trade sour#es operating in the organi#s, fun#tional foods and nutra#euti#al mar7et segments

are generally positi%e about the future of these mar7ets. They #omment that:

the fun#tional food segment 8ill li7ely see a faster gro8th of bet8een DK to ("K in

"((, under more stable e#onomi# #onditions. $onger term fore#asts are not readily

a%ailable9

the organi# foods segment 8ill li7ely #ontinue to e2perien#e gro8th of around "K per

annum for the ne2t & years or so9 and,


32/39

the nutra#euti#al segment 8ill li7ely #ontinue to gro8 at bet8een K and ("K per

annum o%er the ne2t & years.

hile this fore#ast is pro%ided there are some in the nutra#euti#al trade that are more

#autious. They belie%e that the mar7et 8ill li7ely see a slo8er gro8 of bet8een K and 'K

for the short term as #onsumers rea#t to the re#ent go%ernments ad%isory on foodsupplements. *n a positi%e note for their industry, they also foresee a resumption of faster

gro8th of around ("K per annum thereafter, as #onsumers in their attempts to maintain

8ellness, resort to pur#hasing nutra#euti#als in rea#tion to the higher future #osts of

health#are.

The abo%e fore#ast rates of gro8th are generally higher than those for the broader based food

and drin7 mar7et be#ause most, if not all, fun#tional, organi# and nutra#euti#al produ#ts

operate in ni#he mar7ets today. These fore#ast gro8th rates should pro%ide Canadian

businesses 8ith ne8 opportunities to de%elop in the Philippines o%er the ne2t & to 0 years.

2$ Canadian eporter strateg) to deelop future de%and for their productsin the Philippines

Ta7ing the fore#ast opportunities in the #omple2 Philippine #ompetiti%e mar7et en%ironment

8ill reuire that a stru#tured strategi# approa#h be ta7en. ?n parti#ular, one that is

underpinned by:

a longer term %ie8 of the return from business de%elopment a#ti%ities for produ#ts that

are uniue to the Philippines mar7et, and #an pro%ide ne8 opportunities for players

4importers, distributors, pa#7ers, manufa#turers or retailers6 in the mar7et9 and,

%ery importantly, a strong e2port business and mar7eting strategy, 8hi#h has both

a ++ 4business-to-business6 and ++ 4business-to-#onsumer6 fo#us.

This is e2tremely important be#ause there are a number of 7ey #hallenges that fa#e Canadian

e2porters today:

the relati%ely small demand base and immature demand #onditions for all of the

produ#ts #o%ered by this study9

the strengths of the e2isting brands and produ#ts, parti#ularly in fun#tional foods and

nutra#euti#als. These brands ha%e a 8ide range of produ#ts in their portfolio, do meet

#losely 8ith Filipino demand e2pe#tations, ha%e good distribution #o%erage and are

supported by freuent and, usually, aggressi%e ad%ertising and promotional a#ti%ities9

the pri#e sensiti%ity of the Filipinos, in#luding amongst the sieable group of middle

in#ome #onsumers9


33/39

#ompetition from Asian suppliers, the )SA and Australia for imported nutra#euti#als,

and from lo#al produ#ers of fun#tional foods, nutra#euti#als and organi# foods, espe#ially

in the area of better uality fresh produ#e9

a la#7 of 7no8ledge amongst the trade 4importers, 8holesalers and retailers6 and

#onsumers about Canadian produ#ts, i.e. uality, #hara#teristi#s and benefits9

Trade and go%ernment sour#es ad%ise that Canada is not a leading supplier of any of the

produ#ts #o%ered by this study. Canadas share of the food supplement mar7et in ""D 8as

less than (K. Bo data is a%ailable on its share of the other mar7ets #o%ered by this study,

although mar7et obser%ations suggest its o%erall share is e2tremely lo8.

Canadian produ#ts ha%e a mu#h 8ea7er position in the mar7et, 8hen #ompared to the ma@or

suppliers 4lo#al and foreign6 be#ause its produ#ts ha%e remained relati%ely un7no8n to

importers and #onsumers.


34/39

food and drin7 manufa#turers, i.e. users of fun#tional ingredients9 and,

pharma#euti#al and health ; food supplement manufa#turers and pa#7ers, i.e. users of

nutra#euti#al ingredients.

http://www.ats-sea.agr.gc.ca/ase/5843-eng.htm

Jose G. Vega, SVP and GM for Philippine operations; Garyzaled O. Morales, AVP and head of direct

selling; Pedro G. Picornell, VP for research and supply chain management; ric !oel . "omagas,

president and #OO; Veneranda M. $omas, VP and chief financial officer; Ace Vincent V. Villa%real, AVP

and head of international di&ision; and 'ynneth P. Mala(anan, VP for corporate ser&ices

MA)*'A, Philippines % After + successful years, Splash #orporation, the country-s top personal care,

(eauty, health and ellness company, is no shifting into higher gear.

/Splash is no at a &ery e0citing stage of its e0istence,1 said "r. !olando 2ortaleza, Splash chairman. /*n

the last + years, e sa a small (ac3yard operation ith P4+,555 in starting capital gro into a multi%

(illion%peso, pu(licly listed firm and (ecome among the top companies in its industry. Splash is truly a

6ilipino (usiness dream come true. 7ut no, our dream is to go (eyond our achie&ements 8 to go

(eyond our shores, our current portfolio of products, our current distri(ution channels. )o longer are e

9ust aiming to (e the (est and the (iggest in the Philippines. :e ant to ma3e a difference in the

orld. And *-m happy to say e-re no in a great position to do 9ust that.1

2ortaleza decided to (eef up the company-s management team (y hiring highly seasoned managers ho

ha&e had e0tensi&e e0perience in international (usiness, product de&elopment and mar3et

e0pansion. !ecently, Splash formally announced the appointment of the folloing 3ey e0ecuti&es ho illser&e as mem(ers of the 0ecuti&e #ommittee ric !oel . "omagas, president and #OO, as

pre&iously &ice president and director%)on Alcoholic 7e&erage S?@55%million e0pansion in Asia and Australia.

Veneranda M. $omas, VP and chief financial officer, as senior &ice president and director of Group

Audit at San Miguel #orporation and is currently a mem(er of the (oard of directors of Seaoil Philippines,

*nc.

Jose G. Vega, SVP and GM for Philippine Operations, as SVP for sales and distri(ution of "igitel Mo(ile

Philippines *nc.

Pedro G. Picornell, VP for !esearch and Supply #hain Management, as the former senior &ice

president for operations of Sen(el 6ine #hemicals.

'ifestyle 6eature < Article M!ec =, pagematch 4, sectionmatch
http://www.ats-sea.agr.gc.ca/ase/5843-eng.htmhttp://www.ats-sea.agr.gc.ca/ase/5843-eng.htm


35/39

'ynneth P. Mala(anan, VP for #orporate Ser&ices, re9oined the company on April 4, (ringing more than

4 years of e0perience in information technology, enterprise resource planning, systems integration, SAP,

uality assurance and (usiness process reengineering.

Ace Vincent V. Villa%real, AVP and head of *nternational "i&ision, started his stint ith Splash on April 4

as assistant &ice president for (usiness de&elopment under the same di&ision.

Garyzaled O. Morales, AVP and head of direct selling, started his career at Splash as a mem(er of the

finance group, here he as an in&entory staff mem(er in 4BB and materials analyst in 4BBC.

/:e ha&e dran up the roadmap to esta(lish Splash as a truly orld%class company,1 said 2ortaleza.

http://www.philstar.com/business-life/585798/splash-beefs-management-team

uly +554 % +55+ Splash #orporation


36/39

organizations % suppliers, "istri(utors, Ser&ice

Pro&iders

27#, *nc < retail arm of Splash #orp ;

*SO B554 certified =

Mindanao A&e. cor Duirino 2i%ay, D#

Store Operations Manager % lateral transfer from

Splash #orp.

!esponsi(le for the fi&e 3ey result areas namely,

!e&enue generation, Profit achie&ement, *n&entory

management, #ustomer ser&ice, and 2ouse3eeping E

security of (ranches.

Measures o&erall Store Performance using the

7alanced Scorecard

6ormulates the o&erall direction for (ranches

Mem(er, Site Selection #ommittee

Opened 4F stores in year +555

4BBF%4BBB Splash Manufacturing #orporation

Valenzuela, MM


37/39

functions to yield high uality finished goods at

the least possi(le cost

Selects and coordinates ith rd party toll

manufacturers

Acted as the Duality Management !epresentati&e

s

(oth local and international

nsures that all (illed sales orders that goes to

the central arehouse are properly pic3ed, pac3ed,

and dispatched to their specific point of

destination.


38/39

As Euromonitor ?nternational #ontinues to e2plore the impa#t of gro8ing ethni# di%ersity in the mar7etpla#e

in #ountries dri%en by immigration, the e%olution of beauty #are remains in the spotlight.

?n Canada, immigration #ontinues to be s7e8ed to8ards the #ountries of Asia Pa#ifi#, fuelled by sour#e

mar7ets li7e China and the Philippines. ?n fa#t, offi#ial sour#es indi#ate that Canada issued a re#ord number

of %isas to Chinese nationals in "(, 8ith the total number of ne8 permanent residents standing at &,DD"

that year.

hitening is an important feature of fa#ial #are produ#ts in the Philippines and China a#ross all age groups.

?n the Philippines, in "(, fa#ial moisturisers 8ith 8hitening benefits a##ounted for a '0K %alue share of all

moisturisers, 8hile fa#ial #leansers 8ith 8hitening benefits a##ounted for a 1K share of o%erall sales of

#leansers. ?n China, s7in 8hitening produ#ts held a &1K %alue share of fa#e mas7s in "(, the highest

penetration in any #ategory that year.

Although s7in brightening and dar7 spot #orre#tion features ha%e been in#reasingly the fo#us of produ#t

de%elopment from many mainstream brands in Canada, these do not satisfy demand from the gro8ing

number of 8omen from Asia. The emphasis on anti-ageing e2#ludes a large number of younger #onsumers,8ith produ#t effi#ien#y also uestioned. This has resulted in Asian #onsumers turning to ethni# retailers,

8hi#h offer a 8ide range of imported brands to meet demand.

Imported Face Masks with Brightening Benefits in Strong Demand at Asian

Supermarkets in Canada

Ethni# retailers in Canada #arry a large number of imported brands and produ#ts 8ith 8hitening benefits.

For e2ample, the T T Supermar7et #hain 4operated by $obla8s Cos6 dedi#ates signifi#ant shelf spa#e to

su#h produ#ts.

T TLs best-selling produ#ts in#lude Jy +eauty =iarybranded mas7s, in#luding those 8ith 8hitening;brightening benefits. The brand is mar7eted by the

Tai8anese-based President Pharma#euti#al Corp and is one of the top-selling mas7 brands in Tai8an. At T

T supermar7ets in Canada, mas7s #ome mostly in pa#7s of (" and retail for CH(1.DD. The range 8ith s7in

8hitening;brightening benefits in#ludes +la#7 Pearl 4hydrating and 8hitening6 and Red ine 4anti-o2idation,

brightening, firming6. The brand also in#ludes produ#ts 8ith anti-ageing, oil #ontrol, pore #onstringing and

other benefits.
http://www.euromonitor.com/canadahttp://www.euromonitor.com/skin-care-in-china/reporthttp://www.euromonitor.com/canadahttp://www.euromonitor.com/skin-care-in-china/report


39/39

T T also offers another Tai8anese mas7 brand from the same manufa#turer, Fa#e W. The range offers a

%ariety of benefits, in#luding 8hitening;brightening as 8ell as forming and anti-ageing properties. The

pa#7aging is unli7e that of many mainstream brands, featuring girlish #artoon-li7e #hara#ters.

The Popularity of the Jy +eauty =iary brand as 8ell as other imported brands among Asian shoppers at T T

supermar7ets is refle#ted in the retailerLs further planned

e2pansion of the shelf spa#e dedi#ated to a 8ider

range of imported Asian brands of beauty #are so as to ensure a good sto#7 of fast-selling produ#ts, su#h as

s7in #are 8ith 8hitening benefits.

Lessons for the Mature Canadian Beauty Care Market

hile the Canadian beauty #are mar7et is e2pe#ted to see a positi%e performan#e going for8ard, slo8

population gro8th and a high le%el of saturation are e2pe#ted to ha%e an ad%erse impa#t on the o%erall pa#e

of gro8th. ?n these #onditions, addressing the needs and demands of the rising number of female shoppers

of Asian ba#7ground 8ill #ontinue to represent an opportunity for retailers and brand manufa#turers to

in#rease sales and dri%e #ategories for8ard, espe#ially in s7in #are. Current Euromonitor ?nternational

fore#asts e2pe#t retail sales of fa#e mas7s in Canada o%erall to post a fairly modest gro8th, supported

#hiefly by the premium segment. E2ploring opportunities in sheet mas7s, in#luding those 8ith brightening

benefits, might help to gi%e the #ategory further boost in the #oming years.

?t is 8orth noting that Canada is not the only estern mar7et 8hi#h is 8itnessing gro8ing demand for

imported Asian brands. South of the border, for instan#e, in the )S, TA?? Cosmeti#s has been reporting

gro8th in demand for its o8n fa#e mas7s.

As many mainstream retailers ha%e been in#reasingly sto#7ing produ#ts to appeal to ethni# shoppers a#ross

a number of #onsumer goods #ategories, beauty #are 8ill be the ne2t logi#al step.

new source splash

Documents