THE slower increase in the country’s population may have improved the chances of the Philippines to reap the demographic dividend but some sectors of the economy, specifically baby food manufacturers, may suffer losses.
GlobalData, a UK-based research and consultancy firm, said the country’s baby food market is expected to decline by 4.5 percent to only P42 billion or $826.7 million in five years.
Apart from the demographic developments, rising inflation is expected to limit household spending on baby food products in the immediate future, according to GlobalData.
“Demographic changes taking place with respect to the baby population and live birth rates, and the government’s measures to restrict the number of births, coupled with an increase in the number of working women will contribute to a decline in the Philippines’s baby food market,” Shraddha Shelke, Consumer Analyst at GlobalData, said.
In December 2022, the impact of inflation was severely felt by Filipinos as food and energy prices reached their highest levels since 2008 in the country.
With high inflationary pressures expected to continue in 2023, the cost-of-living crisis will undermine sales of premium products in the immediate future.
The per capita expenditure (PCE) on baby food in the Philippines increased from $204.1 in 2017 to $267.1 in 2022, surpassing both the regional level at $177.3 and the global level at $167.2.
“However, as the economy rebounds in the upcoming years, consumer spending on baby food is set to recover in terms of value sales. As a result, the Philippines’s PCE on baby food is projected to reach $271.2 by 2027,” Shelke said.
Shelke said, however, that the expected rise in the disposable income of Filipino families is expected to jack up sales of premium and organic baby food products.
“To build a stable consumer base in the country amid changing demographic conditions, manufacturers should focus on offering affordable premium baby food products with value-added benefits,” Shelke said.
Hypermarkets & supermarkets was the leading distribution channel in the Philippines baby food market in 2022, followed by convenience stores and drugstores and pharmacies.
Brands manufactured by Nestlé, Mead Johnson (Reckitt Benckiser), and Abbott Laboratories were the leaders in the Philippines’s baby food sector in 2022.
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