EXECUTIVE SUMMARY

Baked Goods
TRENDS
The stronger performance of the Philippine economy helped to fuel the consumption of baked goods in
2013. It is expected that retail current value sales will jump by 6%, as Filipinos are starting to consume
bread, pastries and cakes more frequently. This is especially noted amongst busy middle-income urban
consumers, who prefer to have sandwiches instead of rice and other dishes in order to save time on food
preparation. On the other hand, pastries and cakes benefited from the aggressive expansion of chained
bakery fast food brands such as Red Ribbon and Goldilocks in key cities nationwide. By the end of 2013,
sales of baked goods are expected to reach Ps34.8 billion.
COMPETITIVE LANDSCAPE
Baked goods is dominated by small bakeries which bake and sell their products on-site. In 2013, it is
expected that unpackaged/artisanal offerings will account for a 48% share of total sales in baked goods.
Amongst packaged/industrial players, Gardenia Philippines is expected to see the biggest revenue
contribution. The companys share is expected to reach 11% in 2013. Gardenia Philippines banks on its
reputation as a manufacturer of freshly baked bread which is delivered to retailers daily. In recent years
the company expanded its product line to include pastries, high fibre bread and healthier alternatives.
PROSPECTS
Baked goods faces bright prospects in the medium term. Demand for these products will be driven by
the improvement in the Philippine economy and the faster paced lifestyles of Filipino consumers. As the
Philippines experiences better economic growth, consumers incomes will improve and lead to more
robust demand for baked goods. Faster paced lifestyles will stimulate the consumption of convenience
products such as baked goods. The opening up of more chained modern grocery retailers and bake shops
across the country will further improve the penetration of packaged/industrial brands.
PROBLEMS
MANILA, Philippines Despite soaring costs of ingredients, the local baking industry sees single-
digit growth this year, mainly on account of a rising demand for cheaper, generic breads.
Simplicio Umali Jr., president of Philippine Baking Industry Group (PhilBaking) said on Thursday
they expect to grow by 7 percent in 2011 from a flat growth last year; and by about 8 percent in
2012.
He said the success of the generic Pinoy Tasty and Pinoy pan de sal has helped expand the market.

However, the biggest challenge of the P8-billion industry is the high cost of ingredients, particularly
flour. "The cost of flour is very expensive," Umali said, adding that this had resulted in a 2-
percentage-point decline in their margins.
Meanwhile, the PhilBaking, Filipino-Chinese Bakers Association Inc. (FCBAI) and Philippine
Federation of Bakeries Associations, Inc. (PFBAI) together with the Department of Trade and
Industry (DTI), have formally launched the Pinoy pan de sal.
The bread, touted as a good source of Iron and Vitamin A, is produced using only the basic
formulation, with bakeries using locally milled, high-protein enriched flour.
The price of Pinoy pan de sal is P25 per 10pc pack (250g) in supermarkets, lower than the prevailing
price of branded pandesal which ranges from P30 to P40 per pack.
Umali said the initial target is to produce 150,000 to 200,000 per month, but it could increase.
Among those that will produce Pinoy Pandesal are PhilBaking members including Gardenia,
Creative Bakers, Cindys, Uncle George, Marby, MLM (Fortune Bakeshop), FrenchBaker and
Sunmaru and some community bakeries.
The industry now produces 600,000 to 700,000 of Pinoy Tasty or about 10 percent of the total
market share.
Pinoy Tasty sells for only P36 per loaf, much cheaper than the branded variety, priced between P42
and P45.
Bakers hope flour prices will drop soon, considering the declining costs of wheat in the global
market.
Bread prices routinely go down for every corresponding decrease in flour prices.
By: Daryl Gutierrez, InterAksyon.com
October 6, 2011 8:24 PM
http://www.interaksyon.com/business/14614/generic-breads-popularity-seen-boosting-baking-industry

MANILA, PhilippinesThe Philippine Baking Industry Group (PhilBaking) is seeking a discounted rate for a specific
volume of flour to be sold to local bakers, to enable them to maintain the price of the generic Pinoy Tasty.
In an interview with the Philippine Daily Inquirer, Philbaking director Simplicio Umali Jr. said the proposal was
submitted to the Philippine Association of Flour Millers in August, but the millers had yet to respond.
We want to further reduce the price of the Pinoy Tasty, so we asked the millers if they could provide a discounted
price for a certain volume of flour to be used by the entire baking industry for the Pinoy Tasty. If they could bring
prices lower, maybe we could even cut prices of our branded loaves, he said.
Since its launch a year ago, he related that the Pinoy Tasty now accounted for 10 percent of the overall loaf bread
market.
While the generic Pinoy Tasty had eaten into some of the market for branded loaves, he said its introduction had also
helped the industry capture new customers mainly consumers who used to shun away from bread products due to
price concerns.
Right now, the Pinoy Tasty is priced at P38.50 a loaf. When it was launched late in 2010, it sold for P36 a loaf.
Pinoy Tasty is a joint effort of Philbaking, Filipino-Chinese Bakery Association Inc., and Philippine Federation of
Bakeries Association Inc.
The generic loaf will be manufactured by members of these three organizations using standard bread ingredients.
The low price point is attributed to the absence of enriching ingredients such as milk, eggs, margarine, cream, and
butter. Also, instead of using white sugar, bakers use the cheaper washed sugar to make the Pinoy Tasty.
In a related development, millers have filed a notice with the Department of Trade and Industry about their plan to
hike prices by P10 per 25-kilogram bag, but an actual price increase has not been implemented.
The DTI is still waiting for the millers to submit the latest ex-mill prices to enable it to determine whether a price hike,
at this point, is justifiable.
An industry source revealed that the DTI wanted to scrutinize how flour millers priced their products to ascertain that
these were priced appropriately.
The DTI declined to comment on the matter.


Read more: http://business.inquirer.net/19451/bakers-seek-flour-price-discounts-to-reduce-bread-
prices#ixzz37sDvLsb6
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By Abigail L. Ho |Philippine Daily Inquirer
10:56 pm | Thursday, September 15th, 2011


Read more:http://business.inquirer.net/19451/bakers-seek-flour-price-discounts-to-reduce-bread-
prices#ixzz37sE2lxKu
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QUEZON CITY, Feb. 4 (PIA)- The Department of Trade & Industry (DTI), in joint cooperation with bakery
associations Philippine Baking Industry Group (PBIG), Filipino-Chinese Bakery Association Inc (FCBAI), and
Philippine Federation of Bakeries Association Inc. (PFBAI) pooled their resources together in helping stabilize the
supply of bread in areas hit by the 7.2 magnitude earthquake and typhoon Yolanda last year.

In 2013, the bread industry served majority of calamity-stricken areas in Samar and Leyte, specifically: Ormoc City,
Leyte; Maasin City, Leyet; Baybay City, Leyte; Calbayog City, Samar; Catbalogan City, Samar and Tacloban City.

A total of 80,800 loaves and snack products were donated to the affected families in said areas.

Of these donations, Pinoy Tasty contributed a total of 10.3% (1.86M kilograms of loaves) market share in the white
bread category in terms of volume or 8.6% share in the bread market in peso value. Supply of Pinoy Pandesal also
improved to 15.4% (more than 150,000 kilograms of loaves) volume share and 11.6% market share in peso value,
according to a Nielsen study.

This joint project of the DTI and the bakers group is part of their corporate social responsibility to provide accessible and
affordable bakery products to consumers. The introduction of this project triggered the proliferation of many other reasonably-
priced loaves and breads in the market, said DTI Secretary Gregory Domingo.

Pinoy Tasty and Pinoy Pandesal are available in Luzon and key cities in the Visayas region in an effort to supply the
demands and bread requirement of the Filipino masses.

Apart from donating goods during calamities, the bread industry likewise participated in the DTIs Diskwento Caravans
which aided in the stabilization of food supply since most of the supermarkets and retail stores in these areas were
non-operational.

The DTI, together with other food manufacturing firms, sold basic necessities and prime commodities that are not
included in the relief packages at a discounted rate of 20%. (RJB/AKG-PIA-NCR/DTI)
- See more at: http://news.pia.gov.ph/index.php?article=281391503933#sthash.yDCEOJpr.dpuf
Pinoy Tasty, Pandesal help in
stabilizing bread supply in
calamity areas
Tuesday 4th of February 2014
- See more at: http://news.pia.gov.ph/index.php?article=281391503933#sthash.yDCEOJpr.dpuf