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HEADLINES
Total volume sales of functional drinks reach 89.6 million litres after a 30% increase in 2010
Business process outsourcing and the health and wellness trend facilitate growth in 2010
Energy drinks sees the strongest performance, growing by 50% in total volume terms in 2010
Unit prices of functional drinks continue to decline in 2010
PepsiCo International Inc continues to dominate functional drinks in 2010
Functional drinks is projected to see a total volume CAGR of 13% over the forecast period
TRENDS
Functional drinks benefited from the continued increase in the number of business process
outsourcing offices, as well as the health and wellness trend in 2010. Demand for energy drinksimproved,
since more Filipinos needed an energy boost to keep them alert during their unconventional working hours.
In addition, a switch to healthier lifestyles amongst consumers resulted in higher consumption
of sports drinks, as they exercised and participated in sporting activities on a more regular basis.
Functional drinks experienced 30% total volume growth in 2010; five percentage points faster
growth than in 2009. This robust performance can be attributed to the higher penetration ofenergy drinks in
both the off-trade and on-trade channels, as well as the growing number ofsports enthusiasts due to the
health and wellness trend.
Energy drinks recorded 50% total volume growth in 2010 significantly stronger growth
than sportsdrinks. This vibrant growth can be attributed to increasing product awareness, mainly due to
heavy advertising of Asia Brewerys Cobra brand, a broader consumer base because of the availability of
low-priced brands, as well as better penetration in both the off-trade and on-trade channels.
Unit prices of functional drinks continued to decline in 2010. The growing preference for low-
pricedenergy drinks such as Cobra, Sting, Samurai and Xplode facilitated the downwards price movement,
as price remained an important factor in consumers purchasing decision. The availability
of energy and sports drinks in returnable glass bottles also contributed to the decline in unit price, as these
are cheaper than their PET bottle and metal can counterparts.
In 2010 sports drinks registered a 20% increase in total volume sales. This improved demand can
be attributed to more Filipinos including sport and exercise into their regular activities, as they adopt
healthier lifestyles. Running, cycling and triathlon competitions, such as Cobra 70.3 Ironman Philippines,
Mens Health Urbanathlon and Milo Marathon, amongst others, became more visible.
The off-trade channel continued to account for the bulk of total volume sales in functional drinks,
with a 99% share and recording 30% growth in 2010. This strong growth can be attributed to the
aggressive expansion of chained supermarkets/hypermarkets and convenience stores, and the increasing
presence of these products in sari-sari stores due to the availability of returnable glass bottles for
several energy and sports drink brands.
On-trade volume sales remained small, contributing only 1% to total volume sales of
functionaldrinks in 2010. Nevertheless, the channel registered robust volume growth of 23% in 2010. This
strong growth can be attributed to improved penetration due to the availability of
some energyand sports drinks brands in returnable glass bottles, including Cobra, Samurai, Sting and
Gatorade. This strategy enabled manufacturers to offer their products in carinderias, which are common
eating establishments amongst the Filipino masses.
Non-carbonated functional drinks, mostly standard brands such as Gatorade and Red Bull, continued
to dominate the Philippine market in 2010. However, demand for carbonated variants is growing at a rapid
pace, due to the strong following for economy energy drinks, namely Cobra, Sting and Xplode.
In sports drinks, 100 Plus is the most visible carbonated product.
The main market for energy drinks in the Philippines is shift workers such as truck, taxi and bus
drivers, and call centre employees who are in need of an energy boost due to their unusual and constantly
changing working hours. On the other hand, the key consumers of sports drinks are athletes
and sports enthusiasts who need to rehydrate their fluids during or after training, competition or any
strenuous sporting activities. These functional drinks are commonly consumed on a per need basis.
COMPETITIVE LANDSCAPE
PepsiCo International Inc continued to dominate functional drinks with an off-trade value share of
68% in 2010. This strong performance can be attributed to the companys presence in both categories of
functional drinks, as Gatorade dominates sports drinks, and Sting is one of the fastest growing players
in energy drinks. Its decision to offer returnable glass bottles in 2009 proved successful in deepening its
penetration and improving its share in 2010.
Taisho Pharmaceutical experienced the biggest fall in off-trade value share, declining by nearly five
percentage points in 2010. Weaker sales can be attributed to the prominence of economy brands, which are
five times cheaper than Lipovitan. Furthermore, locally-produced energy drinkshad far better off-trade and
on-trade distribution, as brands such as Cobra, Sting and Samurai are available even in sari-sari stores and
carinderias, whilst Lipovitan is mainly sold in supermarkets/hypermarkets, convenience stores and
drugstores.
Multinationals continued to dominate functional drinks in 2010, accounting for a 78% share of off-
trade value sales. The strong presence of international companies can be attributed to first-mover
advantage, as they introduced sports and energy drinks to Filipinos. Nevertheless, local manufacturers are
aggressively improving their shares by using a low-pricing strategy to attract the lower-income group.
Universal Robina Corp entered energy drinks in the last quarter of 2009 through the introduction of
Xplode. The new low-priced product is different from existing brands, as it is the first to offer flavours:
Atomic Orange, Lemon Blaze and Flaming Cola. Although Xplode is positioned as anenergy drink, it is also
positioned to compete with carbonates, given the resemblance of its flavours to the taste of cola and noncola carbonates.
Cobra remained the most visible tri-media advertiser in functional drinks. In 2010, Asia Brewery
continued its title sponsorship for the biggest triathlon event in the country Cobra 70.3 Ironman
Philippines. Gatorade was also a sponsor, but on a smaller scale. By contrast, Universal Robina Corp
commissioned wrestling superstar Dave Batista to promote its Xplode brand in its 2010 advertising
campaign.
In energy drinks, sales of standard and premium products continued to slow down due to the
growing popularity of economy brands such as Cobra, Sting and Samurai, which held a combined share of
68% of off-trade value sales in 2010. The trend is different in sports drinks, as standard brand Gatorade has
almost monopolised the category, with a 94% share of off-trade value sales. Private label
functional drinks were non-existent in the Philippines until the end of 2010.
PROSPECTS
Functional drinks is expected to continue to post vibrant growth in terms of volume and value sales
over the forecast period. Stronger demand for these products is anticipated due to the projected increase in
business process outsourcing offices across the country, and the expectation that the health and wellness
trend will continue over the forecast period.
Functional drinks is expected to see a total volume CAGR of 13% over the forecast period; a
significant reduction in growth compared with the CAGR of 24% in the review period. The slowdown in
growth can be attributed to higher penetration, brought about by the wide availability and strong distribution
of locally-produced economy brands.
The perception that sports and energy drinks are unhealthy beverages is one of the anticipated
threats to growth over the forecast period. Growing health-consciousness amongst Filipinos is expected to
take its toll on demand for functional drinks, as these consumers either minimise their consumption or
switch to other non-alcoholic drinks options which can provide similar benefits.
Energy drinks is projected to see a total volume CAGR of 16% in the forecast period, which is a
stronger performance in comparison with sports drinks. High demand for energy drinks is expected to come
from shift workers, particularly those in business process outsourcing, due to their unconventional and
constantly changing work hours. Nevertheless, sports drinks is also anticipated to record a robust total
volume CAGR of 11%, as a result of the health and wellness trend.
Unit prices of functional drinks are expected to decline over the forecast period. This can be
attributed to the anticipated further increase in demand for locally-produced economy brands, particularly
in energy drinks, and the improvement in market penetration of returnable glass bottles, which are cheaper
than their PET bottle counterparts, between 2011 and 2015.
Xplode energy drink is expected to see success over the forecast period. This new product is
anticipated to capture some share from both other energy drinks and carbonates, as the taste of its three
variants highly resembles cola and non-cola carbonates. Given the similar pricing, it is anticipated that some
regular consumers of carbonates will switch to Xplode, especially those in need of an energy boost, due to
the added value offered.
Product differentiation is expected to be the main focus of manufacturers in the forecast period, due
to strong competition within the category. Companies are expected to launch more innovative products to
specifically set them apart from other players. Concentrated and more potent functional drinks are possible
developments between 2011 and 2015.
CATEGORY DATA
2009
2010
100.0
100.0
100.0
100.0
100.0
0.0
0.0
0.0
0.0
0.0
100.0
100.0
100.0
100.0
100.0
Source: Euromonitor International from official statistics, trade associations, trade press, company research,
store checks, trade interviews
Table 2 Off-trade Sales of Sports and Energy Drinks by Category: Volume 2005-2010
Million litres
2005
2006
2007
2008
2009
2010
Energy Drinks
4.3
5.1
11.0
15.9
22.2
33.3
Sports Drinks
26.7
30.5
34.8
39.3
46.4
55.6
30.9
35.6
45.7
55.1
68.6
88.9
Source: Euromonitor International from official statistics, trade associations, trade press, company research,
store checks, trade interviews, trade sources
Table 3 Off-trade Sales of Sports and Energy Drinks by Category: Value 2005-2010
Ps million
2005
2006
2007
2008
2009
Energy Drinks
2010
900.1
1,071.1
1,387.1
1,574.4
1,684.6
1,794.1
Sports Drinks
1,724.9
2,026.8
2,351.1
2,703.7
3,082.3
3,852.8
2,625.0
3,097.9
3,738.2
4,278.1
4,766.8
5,646.9
Source: Euromonitor International from official statistics, trade associations, trade press, company research,
store checks, trade interviews, trade sources
Table 4 Off-trade Sales of Sports and Energy Drinks by Category: % Volume Growth 2005-2010
% volume growth
2009/10
2005-10 CAGR
2005/10 TOTAL
Energy Drinks
50.0
50.7
677.0
Sports Drinks
20.0
15.8
108.7
% volume growth
Sports and Energy Drinks
2009/10
2005-10 CAGR
2005/10 TOTAL
29.7
23.5
187.4
Source: Euromonitor International from official statistics, trade associations, trade press, company research,
store checks, trade interviews, trade sources
Table 5 Off-trade Sales of Sports and Energy Drinks by Category: % Value Growth 2005-2010
% current value growth
2009/10
2005-10 CAGR
2005/10 TOTAL
Energy Drinks
6.5
14.8
99.3
Sports Drinks
25.0
17.4
123.4
18.5
16.6
115.1
Source: Euromonitor International from official statistics, trade associations, trade press, company research,
store checks, trade interviews, trade sources
Table 6 Company Shares of Sports and Energy Drinks by Off-trade Volume 2006-2010
% off-trade volume
2006
2007
2008
2009
PepsiCo International Inc
2010
67.1
71.1
67.8
66.1
63.0
10.6
17.2
21.9
27.1
1.7
0.8
0.5
1.6
2.5
6.2
5.5
4.1
2.6
1.4
0.7
0.7
0.8
0.8
0.8
4.9
4.1
3.2
1.8
0.7
0.1
0.7
0.7
0.7
0.9
0.6
0.5
0.2
0.2
Osotspa Co Ltd
0.0
18.5
6.6
5.2
4.3
3.6
100.0
100.0
100.0
100.0
100.0
Source: Euromonitor International from official statistics, trade associations, trade press, company research,
store checks, trade interviews, trade sources
Table 7 Brand Shares of Sports and Energy Drinks by Off-trade Volume 2007-2010
% off-trade volume
Company
2007
2008
2009
2010
Gatorade
69.2
64.5
61.9
57.7
Cobra
10.0
15.8
20.7
26.0
Sting
1.9
3.3
4.3
5.2
Samurai
1.0
1.9
Red Bull
5.5
4.1
2.6
1.4
100 Plus
0.6
1.4
1.2
1.1
Bacchus
0.7
0.8
0.8
0.8
Cillit
4.1
3.2
1.8
0.7
Pocari Sweat
0.1
0.7
0.7
0.7
% off-trade volume
Company
2007
2008
2009
2010
Powerade
0.8
0.5
0.6
0.6
Revicon I-on
0.6
0.5
0.2
0.2
Shark
Osotspa Co Ltd
Gatorade
Others
Others
Total
Total
6.6
5.2
4.3
3.6
100.0
100.0
100.0
100.0
Source: Euromonitor International from official statistics, trade associations, trade press, company research,
store checks, trade interviews, trade sources
Table 8 Company Shares of Sports and Energy Drinks by Off-trade Value 2006-2010
% off-trade value rsp
2006
2007
2008
2009
PepsiCo International Inc
2010
53.0
59.5
60.7
63.3
68.1
5.5
9.7
13.8
17.5
14.1
13.6
10.6
8.0
4.0
14.6
12.9
11.0
6.9
2.3
1.4
1.7
1.8
1.9
1.8
1.0
0.5
0.3
1.0
1.6
0.1
0.5
0.6
0.7
1.4
1.0
0.8
0.5
0.4
Osotspa Co Ltd
0.0
14.6
5.3
4.5
4.1
3.6
100.0
100.0
100.0
100.0
100.0
Source: Euromonitor International from official statistics, trade associations, trade press, company research,
store checks, trade interviews, trade sources
Table 9 Brand Shares of Sports and Energy Drinks by Off-trade Value 2007-2010
% off-trade value rsp
Company
2007
2008
Gatorade
Cobra
Red Bull
Sting
Cillit
Bacchus
Samurai
100 Plus
Pocari Sweat
2009
2010
58.5
58.8
60.5
64.4
5.2
8.9
13.0
16.8
13.6
10.6
8.0
4.0
1.0
1.9
2.8
3.7
12.9
11.0
6.9
2.3
1.7
1.8
1.9
1.8
0.5
1.0
0.3
0.8
0.7
0.7
0.1
0.5
0.6
0.7
Powerade
0.5
0.3
0.5
0.5
Revicon I-on
1.0
0.8
0.5
0.4
Shark
Osotspa Co Ltd
Gatorade
Others
Others
5.3
4.5
4.1
3.6
Company
2007
2008
2009
2010
Total
Total
100.0
100.0
100.0
100.0
Source: Euromonitor International from official statistics, trade associations, trade press, company research,
store checks, trade interviews, trade sources
Table 10 Forecast Off-trade Sales of Sports and Energy Drinks by Category: Volume 2010-2015
Million litres
2010
2011
2012
2013
2014
2015
Energy Drinks
33.3
43.3
52.0
59.8
65.7
71.0
Sports Drinks
55.6
66.2
74.8
81.5
87.2
92.5
88.9
109.5
126.8
141.3
153.0
163.5
Source: Euromonitor International from trade associations, trade press, company research, trade interviews,
trade sources
Table 11 Forecast Off-trade Sales of Sports and Energy Drinks by Category: Value 2010-2015
Ps million
2010
2011
2012
2013
2014
2015
Energy Drinks
1,794.1
2,278.5
2,711.4
3,172.3
3,648.1
4,085.9
Sports Drinks
3,852.8
4,546.3
5,001.0
5,251.0
5,408.6
5,462.6
5,646.9
6,824.8
7,712.3
8,423.3
9,056.7
9,548.6
Source: Euromonitor International from trade associations, trade press, company research, trade interviews,
trade sources
Table 12 Forecast Off-trade Sales of Sports and Energy Drinks by Category: % Volume Growth
2010-2015
% volume growth
2014/15
2010-15 CAGR
2010/15 TOTAL
Energy Drinks
8.0
16.3
113.1
Sports Drinks
6.0
10.7
66.2
6.9
12.9
83.8
Source: Euromonitor International from trade associations, trade press, company research, trade interviews,
trade sources
Table 13 Forecast Off-trade Sales of Sports and Energy Drinks by Category: % Value Growth
2010-2015
% constant value growth
2010-15 CAGR
2010/15 TOTAL
Energy Drinks
17.9
127.7
Sports Drinks
7.2
41.8
11.1
69.1
Source: Euromonitor International from trade associations, trade press, company research, trade interviews,
trade sources