Baby food market in the Philippines to grow to USD 676.37 M by 2024

Baby Food Market in Philippines was valued at USD 466.16 million in 2018 and is estimated to reach USD 496 million by 2019.

It is expected to grow at the CAGR of 6.4% within the time horizon of 2019-2024 because of rising women workforce and nutrition programs.

Definition / Scope
Market Overview
Market Risks
Market Trends
Industry Challenges
Technology Trends
Market Size and Forecast
Market Outlook
Technology Roadmap
Competitive Landscape
Competitive Factors
Key Market Players
Strategic Conclusion
References

Definition / Scope

Baby food are the easily consumable prepared foods either organic or inorganic of very soft consistency, which are manufactured specially for the babies of age group between four months to two years.

It comprises of infant formula, baby cereals and canned baby food in a variety of flavors (strawberry, banana, apple) and textures (mashed, liquid paste, lumps, bars).

In the context of Philippines, the first baby food is usually given to babies at the age of three to six months and lugao (rice porridge) and mashed fruits or vegetables or soft bread are the food of choice.

The per capita consumption of the baby food is at 0.7 kg in 2019. The baby food market is concerned with the production, distribution and sales of the baby food products. This market is segmented into following types on the basis of food category:

Milk formula
Standard milk powder (0-6 months)
Follow on milk powder (6-12 months)
Growing-up milk formula (above 1 year)
Dried and prepared Baby Food
Others (cereal, snacks)

Market Overview

The market size of the baby food market in Philippines was valued at USD 466.16 million in 2018 and is estimated to reach USD 496 million by 2019.

It is expected to grow at the CAGR of 6.4% within the forecasted time period of 2019-2024 to reach USD 676.37 million by 2024 because of the increasing awareness about infant health and nutrition and the rising demand for the baby food from the rising women workforce in Philippines.

On the basis of the food category, the milk formula products is leading the baby food market, which accounts for almost 84.9% of the total baby food market in Philippines.

Increasing awareness about the infant nutrition, growing women workforce, and introduction of the fortified food products are the major factors driving the growth and development of its market.

However, rising breastfeeding promotion activities and risk of contamination might restrain the growth of the baby food market.

The key market players engaged in this market are Mead Johnson Philippines, Nestle SA, Abbott Laboratories, and DMK Deutsches Milchkontor GmbH. The leading baby food products are Lactum, Nido, Promil, and Bonamil.

Market Risks

Declining birth rate

In the context of the Philippines, the number of registered live births is in declining trend. The number of live births has decreased from 1,790,367 live births in 2012 to 1,700,618 in 2017.

Over this five-year period, the birth rates have been decreasing by 5% as shown in figure below. The total fertility rate has declined to 2.7 children per woman in 2017. The total number of live births in 2018 was decreased to 1,618,315 live births.

This declining birth rate might negatively influence the demand for the baby food products, which will ultimately create the significant risk for the growth of the baby food market.

Top Market Opportunities

Growing governmental nutrition programs

In the context of Philippines, the government is developing different nutritional plans, policies and organizing the nutritional programs to promote the overall dietary habits and health of the individuals including infants and children in collaboration with other private and non-governmental organizations.

For instance, the government has developed the Medium-term Philippines Plan of Action for Nutrition, which focus on the food based interventions for the production and consumption of the fortified and nutrition enriched food.

Besides this, July is celebrated as the nutrition month in order to promote the awareness about the importance of the healthy diet and nutrition on the annual basis. Thus, the nutritional programs will raise the awareness about the infant nutrition among women, which will ultimately raise the demand for the organic baby food products.

Easy availability and accessibility of the baby food products

The baby food products are available through a variety of distribution channel in Philippines.

For example, these products are available at retail shops, health and beauty specialist retailers, supermarkets, hypermarkets, internet retailing, convenience stores and independent small grocers, which increases the convenience for the accessibility of these baby food products.

The online retailing of the product is gaining popularity because of the time and effort savings from it. The leading websites selling these products in Philippines are Lazada, Shopee, Mummy Buddy, etc.

It will facilitate the consumers to buy and utilize the product at their own convenient channel, which will create the significant opportunity to promote the demand for the baby food products.

Market Trends

Increasing focus on production of fortified baby food products

In 2018, the fortification of the baby food with the variety of nutrients is one of the key strategies adopted by the companies to increase the nutritional quality of the baby food. For instance, a leading company,

Mead Johnson Philippines has introduced milk fat globule membrane in its popular brand Enfagrow A+ four in order to make it closer to breastmilk in terms of the health benefits. It will create the significant opportunity among the working mothers to build trust upon the prepared baby food and milk formulas.

As a result, it will positively influence the demand for these products and promote the growth of its market.

Increasing women participation in employment activities

In the context of the Philippines, the number of the employed women is in increasing trend. Almost 15973 women were employed in a variety of employment activities, which is increased from 15,172 employed women in 2015. Majority of them were engaged as managers, service and sales workers and in elementary occupations.

This increasing participation of women in income generating activities will promote the use of the prepared baby food products as it is difficult to manage the time for the infant feeding from their fixed working schedule.

Increasing number of employed women will significantly facilitate the rise in demand for the baby food products and the development of the baby food market in the Philippines.

Government regulations for breastfeeding promotion

In the context of Philippines, the department and health in collaboration with the world Vision Philippines is developing strategies such as lactation station to promote the breastfeeding of the children.

It is going to develop the legislation for the expansion of the maternity leave for current 60 days to promote breastfeeding. As the workingwomen are available for feeding their newborns, the demand for the prepared milk formula will be declined.

It will finally restrain the growth of the baby food market.

Heavy metals contamination of baby foods

The baby food products are often available in glass jar, containers (metal, plastic), and packets. The food products manufactured and packed in the container are found to be contaminated with the heavy metals.

A study conducted by Healthy Babies Bright Futures Organization has revealed that 95% of all tested 168 commercial baby foods (infant formula, infant cereal, biscuits and rice puffs) were contaminated with one or more toxic heavy metals such as arsenic, lead as shown in table below.

Here rice based foods contained the most toxic chemicals. The baby food brands included in this study for testing are the popular brands such as Enfamil, Similac, Gerber, etc, which were bought from supermarkets, baby stores and superstores.

These heavy metals can cause the negative impact on the baby’s brain health, IQ, and also might increase the chances of cancer among them. It will cause the significant impact upon the choice and trust of parents towards the popular baby food brands.

These incidents of contamination might create the risk for the development of the baby food market.

Heavy metals	Percentage of tested baby foods contaminated
Lead	94%
Cadmium	75%
Arsenic	73%
Mercury	32%
Lead, cadmium, arsenic & mercury	26%

Industry Challenges

Highly concentrated market

The multinational companies in the Philippines mostly dominate the baby food market. Here, more than 80% of total market value is accompanied by just two key market player Mead Johnson and Nestle.

As a result, it is quite challenging for other local based and other multinational companies to establish and grow their market value in the context of Philippines.

Technology Trends

Advancement in the baby food production is driving the innovation ideas in the formulation, processing and packaging of infant formula, cereals, and other baby food products. Some of the technological changes occurring in this market are discussed as follows:

Precise baby formula machines: This machine facilitates the consumer to prepare fresh heated baby formula through the use of a single button.

Smart baby bottle sleeves: The baby bottle is connected with the application, which enables the monitoring of the nutritional value, temperature, quantity of the food being fed through it.

Robotic baby food devices: It is complete food making robot which has the function of heating, sterilizing, cooking , freezing and creating the purees of the baby food products. It prepares baby meals with high nutritional value and balanced calorie intake.

Purist formula packaging: It is fresh white based and smooth rounded shaped pastel colored packing enables to identify the qualities of the infant edible content and level of contamination in the baby food and milk formula.

UV disinfects infant bottles: It is designed to clean and kill any form of the unwanted microorganisms available in the baby formula or milk. It is replacing the use of the plastic for the packaging of the baby food products.

Trackable baby bottles: It provides the facility of tracking the infant and children feeding patterns through the use of the smartphone-based applications. It also assesses the timing of the feeding patterns to match with children hunger and satiety.

Color changing baby bottles: It facilitates the preparation of food at the ideal temperature without the use of thermometer of finger. It consists of a set of bowl, spoon and bottle, which changes color in accordance with temperature.

Pricing Trends

The price of the baby food products depends upon the food category, brand name, quality, quantity and nature of the product.

The average price of the baby food is USD 6.18 per unit in 2019. The price of the best baby food products in Philippines are discussed as:

Product name	Price (2019)
Nestle Cerelac Wheat and milk	USD 6.24 per 120 gm
Happy Baby Organic Probiotic Baby cereal: oatmeal	USD 9.9
Chicco Easy Meal Baby Food System	USD 10.02
Woolworths Bubs Organic baby Rice Cereal	USD 6.14 per 125 gm
Heinz Little kids Whole Grain Cereal Bars	USD 6.34
Plum organic baby food pear and spinach and pea	USD 6.62 per 113 gm
Nestle Gerber Baby Food Applesauce	USD 4.43 per 80 gm
Baby food Mixed fruits and soya	USD 2.34 per 250 gm

Regulatory Trends

Department of Health and Philippines Food and Drug Administration are the governmental authorities responsible for the regulation of the baby food market in the Philippines.

They develop plans, policies, acts and laws to regulate its market. Some of the key regulatory adoptions for the infant formula and baby food market are discussed as follows:

Milk code 1986: It was issued in 1986 with a view to ensure the supply of adequate nutrition for the infant through the promotion of breastfeeding activities and proper use of the milk substitutes and supplements through appropriate marketing distribution mechanism.

Department Circular No. 2008-0006: According to this, the labeling of the infant formula must include product and brand name, net contents and drained weight, the primary messages, list of ingredients, nutritional value, production and expiration date, storage instructions, usage instructions, country of origin, lot identification, and food registration number.

Administrative order No. 2014-0029: The business entities engaged in the production, import, export, trade and distribution of any processed food products including infant formula and baby food must have a license to operate and certificate of the product registration from PFDA before engaging the product for trading in the market.

Bureau Circular No.2009-0228: It consists of the list of the food additives which are allowed to use in the production of any prepared food products including baby food and infant formula. It consists of 75 food additives such as alginic acid, agar, ascorbic acid, beet red, azorubine, curcumin, citric acid, etc.

Market Size and Forecast

In the context of the Philippines, the total market size of the baby food market was valued at USD 466.16 million in 2018. Its market value is estimated to reach USD 496 million by the year 2019. It is expected to grow at the CAGR of 6.4% within the forecasted time period of 2019-2024.

On the basis of the food category

The milk formula products are leading the baby food market in Philippines. It accounts for almost 84.9% of the total baby food market. The total market size of this segment in the baby food market of Philippines was valued at USD 394.37 million in 2018 and is estimated to reach USD 496 million by 2019. Among the milk formulas, the growing up milk formula is leading segment of the milk formula market in Philippines.
The dried and prepared baby food segment holds 10.1% of total Philippines baby food market. Its market size was valued at USD million in 2018.
Other baby food products such as cereals, snacks, etc account for 5% of the total market value of baby food market.

Market Outlook

The baby food market in Philippines is expected to grow at the CAGR of 6.4% within the time horizon of 2019-2024. It will reach USD 676.37 million by the year 2024 because of the rising demand for the prepared food products and increasing nutritional awareness.

Technology Roadmap

In the context of the baby food market, the new technological devices such as robots, android-based sensors, temperature stabilizers, quality control monitors, UV based sterilization and disinfection technology, etc are replacing the conventional normal plastic packaging and production technology.

This replacement is working in accordance with the busy lifestyle and working schedule of mothers and other child caretakers. The technological innovation and advancement in terms of the formulation of the new baby food products through fortification, packing through UV disinfection, colored chemical materials are the major opportunity creating the demand for the prepared baby food products.

Besides this, the use of the digital media and online platform for the buying and selling of the baby food products will further enhance the development of the baby food market in the context of the Philippines.

Distribution Chain Analysis

The key stakeholders engaged in the operation of the bay food market are the product manufacturers, distributor, suppliers, distribution channels and consumer.

Firstly, the companies formulate and manufacture the baby food products, which must be approved in accordance with the governmental laws. After approval, the products are placed in the market for sale through different distribution channels.

The most popular distribution channels available to consumers are health and beauty specialist retailers, supermarkets, hypermarkets, internet retailing, convenience stores and independent small grocers.

Competitive Landscape

In the context of Philippines, Mead Johnson Philippines Inc. is dominating the leading the baby food market of Philippines with 45% of total market share. Nestle is the second leading player in this market, which holds almost 35% of the total baby food market share.

The rest of the market size is accounted by other market players such as Abbott laboratories, Alaska Milk Corporation, HiPP GmbH and Co.

Competitive Factors

In the context of Philippines, the market is dominating is by few multinational companies engaged in the production of the baby food market.

They are competing to introduce the technological innovations in the baby food products while other local companies are focused towards the improvement in the sales of the existing products and establishment of their brands product in the market.

Besides this, they are competing to make the provision of fortified products with high nutritional value at the affordable price.

Key Market Players

The short profiles of top market players in the baby food market in Philippines are as follows:

Mead Johnson Philippines: It is the first largest market players in the Philippines baby food market. It is also named as Reckitt Benckiser Group. It is specialized in the production of the infant milk formula brands such as Lactum, Enfamil, Alactagrow, Alacta, etc. Its market size was valued at USD 209.77 million in 2018.
Nestle SA : It is the second leading market player engaged in baby food market. Its most popular brands are Nido, Promil, Nan, S-26, and Bonamil. Its market size was valued at USD 163.15 million in 2018.
Abbott Laboratories: It is the life science and technology based company engaged in the production of nutrition, branded generic pharmaceuticals, medical devices, and diagnostics. It is also one of the leading manufacturers of baby food products.
DMK Deutsches Milchkontor GmbH: it is the largest manufacturer of the dairy products especially GMO-free milk.
Holle baby Food GmbH: It is the leading manufacturer of the organic baby food products which manufacturersinfant formula, follow on milk, organic baby porridges, organic junior Mueslis, organic Milk Cereals, baby rusks, and other products.
Alaska Milk Corporation: It is the company engaged in the manufacture of milk products in Philippines. Its popular product brands are Alaska, Alpine, Carnation, Cow Bell, Friso, Krem-Top, etc.
HiPP GmbH and Co.: It is the multinational company specialized in the production of the infant formula, dietary supplements and other baby products of superior quality. It has classic food retailers, drugstore markets, pharmacies and drugstores.

Strategic Conclusion

Baby food market in Philippines is growing at a rate of 6.4% because of rising health awareness, the increasing female workforce and implementation of innovative fortification technology.

However, declining birth rate, breastfeeding promotion initiatives, and heavy metal contamination might restrain the growth of its market. So, the market players should be focused about the improvement of the quality of the food products.

References

Appendix

PFDA= Philippines Fisheries Development Authority
USD= United States Dollar
CAGR= Compound Annual Growth Rate
GmbH= Gesellschaft mit bescgrankter hafting (company with limited liability)