IV.

MARKET SITUATION ANALYSIS

1. Macro-environment
Chocolate drinking in the Philippines dates back in the Spanish colonial times
and that chocolate were introduced by the Aztecs to the Filipinos during the
Manila-Acapulco trade. As time went by there has been a lot of changes with
chocolate drinks in the Philippines. Today, a chocolate drink is no longer just
powdered there are ready-to-drink. Its no longer plain chocolate; different flavors
were now incorporated with it. We are also more health conscious than before
that we are now checking the nutrient content of everything we buy. And of
course, the convenience of eating and drinking is also very popular today that
there are several kinds packaging from the market that we could see every time
we went to the grocery. And lastly, chocolate drinks are no longer just available
during cold season. It is now available in hot or cold. Be it powdered or ready-todrink. And be it plain chocolate flavor or a 3-in-1 drink.

A. Political-Legal
Table 4.1
Political-Legal Macro-Environment

Factor

Implication

Implementation of the
law about informing
consumers about
nutritional
1
value (Republic Act No.
8976)

With the implementation of

the said law, all the food and
beverage will now have a
printed nutritional content on
its entire product. Therefore,
an increase in the
awareness of the consumer
buying food and beverage
would be noticeable.

House Bill 4021 or the

proposed Healthy
Beverage Options Act of
20142

Healthy Beverage Options

Act of 2014 will increase the
demand for healthier drinks
to be offered in the market.
This would also increase the
number of health conscious
consumer.

Increased tax on soft

drinks proposed3

When there will be an

increased tax on soft drinks,
there will be a probability
that consumers will change
its preferred drink.
Consumers may choose to
drink healthy drinks.

Effect on proposed
product
The food fortification
law will inform the
entire consumer about
the content of the
product. Therefore, it
will encourage more
consumer to buy the
product because of
they would now see
the vitamins and
minerals present in the
product.
This will result for the
parents, students and
other consumers as
well to prefer the
product for it has
health benefits and will
encourage them to
start a healthy living
life.
Therefore, there would
be an increase in
demand for healthier
drinks which would
also affect the
consumption of the
product.

Republic Act no. 8976 -The Philippine Food Fortification Act of 2012
1 www.gov.ph
2 www.philstar.com
3 http://www.mb.com.ph/increased-tax-on-soft-drinks-proposed/

Since the government promotes the right to health of the people, according to Section 6,
Manufacturers of processed food or food products shall include on the label a statement
of "nutrition facts" indicating the nutrient(s) and the quantities of said nutrients added in
the food. Consumers will now have information about the food they eat or the beverage
they drink. It would help them recognize the products which has a bad effect on them or
would suffice the needed vitamins.

House Bill 4021 or the proposed Healthy Beverage Options Act of 2014
It is a bill where in selling of soft drinks will be ban in schools. Banning soft drinks may
prevent the children from harmful substances. Soft drinks comprise a lot of sugar,
artificial sweeteners, caffeine, phosphorus and carbon acids, which have dangerous
effects on the body. The bill seeks to impose a fine of P100, 000 on schools and officials
who may violate the said law. Healthy Beverage Options Act of 2014 will help to
increase the demand for healthier drinks to be offered in the market. Aside from it, it
would minimize the growth rate of diabetes, obesity, tooth decay, etc. in the Philippines.

Increased Tax on Soft Drinks Proposed

The bill will impose a 10-percent ad valorem tax on soft drinks and all sweetened
beverages which gained support from other sectors such DOH or Department of Health,
Department of Finance (DOF) and other academic experts. Soft drinks are unsafe
drinks which may harm our kidneys and can cause diabetes. It contains ingredients
called aspartame and caramel coloring which has a negative consequence in out body.

This bill will not only help the consumers from getting away from the soft drinks but also
increase the demand on healthier products.

B. Economy
Table 4.2
Economic Macro-Environment

Factor
The countrys annual
headline inflation slowed
down to 4.4 per cent in
June.4
Rising global prices for
cocoa for this period.5

Implication
Possible the same selling
prices from last year. Due
to inflation the market will
opt to maintain the price
the same as before
With the increasing price
for cocoa, prices of cocoa
based products might
increase as well. This will
have an effect on the price
of the product.

Effect on proposed product

Since they would still offer
the same prices for the
product there might be no
effect to the product.
The Ovaltine is based in
cocoa, there might be an
increase in the price which
would affect the demand of
the product which would
result to decrease in
demand.

Domestic Economy
As of June, prices increase on food like ice, garlic, sugar, pork, chicken, eggs and
ginger. According to Annual Inflation in Areas outside NCR (AONCR), in the case of
non-alcoholic beverages index, slower annual growths were posted in the rest of the
commodity groups.

Rising Global Prices for Cocoa for this Period

The price for cocoa has skipped to near three-year highs on the demand for chocolate
across Asia. Over the past five years, demand of cocoa in Asia has increased to 29%.
4 www.census.gov.ph
5 http://www.ft.com/intl/cms/s/0/849650f2-f7b5-11e3-b2cf-00144feabdc0.html

Chocolate industry is concerned on how to be able sustain the supply of cocoa.

Products which have cocoa will be affected by this problem. Prices of cocoa based
products might increase as well. This will have an effect on the price of the product.
C. Socio-cultural
Table 4.3
Socio-cultural MacroEnvironment
Factor

Implication

Effect on proposed
product

Due to their busy lifestyles,

consumers want caffeine
like coffee6

With the fast change of

lifestyle of the consumer,
the coffee demand will
surely increase which affect
the chocolate based drinks.
Informing the consumer
that chocolate based drinks
also contain caffeine would
be noticeable. There might
be a tough competition for
coffee and chocolate based
drinks.

The consumer will then be

comparing which among
the two drinks will cater to
their need to stay up late at
night and still have energy
to finish all their work would
noticeable.

Consumers now prefer

healthier drink.7

Appearance of healthier
drink would increase the
competition in the beverage
industry. This in return
would affect the chocolate
based drinks.

Consumers stick to
sachets.8

There will be a greater

demand on small packs
because it also fits the
budget of the consumers

Increasing the awareness

of the consumer that
chocolate based drinks are
healthy as well should be
improve still have a
demand for the healthy
living consumer.
Since consumers prefer to
buy smaller packs they
most likely purchase the
product. Hence, there will

6 www.euromonitor.com- Other Hot Drinks in the Philippines and Coffee in the

Philippines
7 www.euromonitor.com-Consumer Lifestyles in the Philippines and Tea in the
Philippines
8 MarketLine Industry-Hot drinks in the Philippines

Filipinos shifting from sarisari stores to

supermarkets9

Filipinos buying less more

often10

and possible lesser

demand on large packs.
Due to varying consumers
behavior and rising growth
of supermarkets, it may do
some store promotions in
which may help to increase
the sales of beverage
industry.
There might be a possible
price war or other
manufacturers will release
sachets to be able to target
the current and new
market.

be an increase in sales.

TV remains main source of

product info11
Commercials increased
their brand preference.12

3 out of 5 Filipinos suffer

from Vit-D deficiency13

Because of the working

conditions of the
consumers, they will find
healthy alternatives to
supply their deficiency.
Thus, healthier drinks
would raise the competition
in the beverage industry
which would also affect the
chocolate based drinks.

Due to their busy lifestyles, consumers want caffeine like coffee

9 http://business.inquirer.net/133509/filipinos-shifting-from-sari-sari-stores-tosupermarkets
10 http://www.rappler.com/business/8865-filipinos-buying-less-more-often-nielsen
11 http://www.rappler.com/business/features/32721-what-influences-filipinos-decision-tobuy-products
12 http://www.rappler.com/business/features/32721-what-influences-filipinos-decisionto-buy-products
13 http://www.philstar.com/health-and-family/2014/05/13/1322297/3-out-5-filipinossuffer-vit-d-deficiency

Due to the increasing number of people working in BPO or business process

outsourcing industry, the lifestyle of the consumers change and prefer to drink coffee to
keep themselves wide-awake at night. Today, the coffee manufacturers are
experiencing high demand from the consumers. Consumers should be informed that
cocoa based drinks have small quantities of caffeine. Chocolate based or cocoa based
drinks have better benefits as compare to caffeine based drinks. Too much caffeine can
cause to hypertension, insomnia, early death and others.

Consumers now prefer healthier drink.

Today, more and more Filipinos prefer to go to gym or enroll in any sports. Some
practice on using organic and healthy products. All ages, now prefer to live healthy also
because with the influence of the other sectors of the government specifically DOH or
Department of Health. Some representatives of the government even proposed a bill to
encourage the Filipinos to shift to healthy lifestyle.

Consumers stick to sachets.

Then before, Filipinos are fond of procuring small packs because of some reasons:
affordability and practicality. 14 Filipinos are known to be smart buyers and also the
purchasing power of the Filipinos are not that high compare to other countries such as
South Korea, United States and other developed countries. Sachets are practical to
use because they do not need to find a container to put the remaining product. Some

14 http://www.entrepreneur.com.ph/business-ideas/understanding-the-filipino-s-uniquemicro-repacking-mentality

Filipinos consumed immediately consumed the product after they buy rather than
stocking it.

Filipinos Shifting From Sari-Sari Stores to Supermarkets

Sari-sari stores are already part of the Filipino culture. Currently, there are several
supermarkets has been established which close to their homes. Because of the short
distance of supermarket to home, consumers at this time find it more convenient to
make frequent short trips. Supermarkets also offer what sari-sari stores can offer.
Consumers can buy the products in micropackging or also known as tingi.

Filipinos buying less more often

According to Nielsen, Filipinos visited grocery stores more frequent than last year, but
bought fewer items. The report found that 45% of Filipinos went to supermarkets on a
weekly basis in 2011, up from 30% in 2010. Nielsen Philippines managing director
Stuart Jamieson said, "Consumers are decreasing their basket size in order to manage
their available cash, shopping only as the need arises." There might be a possible price
war or other manufacturers will release sachets to be able to target the current and new
market.

TV remains main source of product info

According to a Nielsen online survey showed that advertising especially on TV
strongly influences Filipino respondents preference for a brand. Television remains the
main source of product information for Filipino respondents for items, such as

cosmetic/skin care, food and beverage, personal care, health care/medicine, household
product and home appliance.

Commercials increased their brand preference.

3 out of 5 Filipinos suffer from Vit-D deficiency

D. Technological

Table 4.4
Technological Macro Environment

Factor

Implication

Effect on Proposed Product

Tetra Pak announced the

introduction of Tetra Top
packaging12

The introduction of this

packaging will enable the
consumers to appreciate
the product more and in
return will attract more
customers

The new packaging will

encourage more consumers to
buy the product because of its
design and the convenience
that it will bring to the
customers.

Tetra Pak and Fluxxion

Announce Partnership to
Jointly Develop Microfiltration
Technology13

The partnership of this two

company, it will increase the
processing capacity and still
maintaining a high level of
product quality for the
customers.

The new microfiltration system

would be applicable to cheese
and drinks products that would
be space and cost efficient.
Which in return could result to
a much affordable price for the
product

Food Fortification introduced

by Food and Nutrition
Research Institute (FNRI)14

Emergence of Facebook,
Twitter and other social
medias.

Food fortification is the

addition of one or more
micronutrients to food and
drinks. With this addition,
the product could match up
with the current trend of
delicious yet healthy drinks.

The micronutrients that are

added to the products were
not produced by the body. It
can only be found on the food
and drinks that we intake. With
this, the product would be
healthier than before.

A possible increase in
consumer awareness and
word-of-mouth.

With the introduction of the

new product, posting it on
different social media flat form
would help in creating a buzz
that would catch the attention
of the consumer.

15

Tetra Pak announced the introduction of Tetra Top packaging

The primary function of packaging is to protect the product. We want the product to still
be in its best condition even after the customer has purchased the product. With the
new packaging of the product, the consumers will to have a packaging that is trendy
and will represent the new Ovaltine. Because the product design will convey the quality,
and taste of product this could increase the customers who will buy the product. Since it
is easy to open, re-close and drink from the consumers, will surely be appreciating this
new packaging.

Tetra Pak and Fluxxion Announce Partnership to Jointly Develop Microfiltration

Technology
15 http://www.interaksyon.com/business/46707/philippines-allots-p192-m-for-coffee-cacao-production-toride-on-mocha-trend12 http://www.tetrapak.com/ph/Documents/Fusion3-08.pdf/page9
13
http://www.tetrapak.com/ph/Documents/Fusion3-08.pdf/page12
14
http://www.fnri.dost.gov.ph/index.php?option=content&task=view&id=689

This Microfiltration Technology is said to be applicable to dairy and cheese products.

The Ovaltine has milk content by using also this technology with a chocolate drink will
extend its shelf-life which will be beneficial to us. Due to longer shelf-life, the product
could be seen longer in the shelves by the customers unlike the other products. This
could lead us to be the chosen products of customers who were keen on the expiration
date of the products that they use.

Food Fortification introduced by Food and Nutrition Research Institute (FNRI)

Many people lack the micronutrients that are needed by the body. These micronutrients
are not produced by the body. Because of that, incorporating micronutrients in the
products will make our product be part of the things to be considered by the customers.
Being part of the choices that the customers will choose when buying drinks for them
and their family can increase the number of customer as well as their consumption of
the product because of the micronutrients we incorporated in Ovaltine.

Emergence of Facebook, Twitter and Other Social Medias

VII. STRENGTHS, WEAKNESSES,

OPPORTUNITIES AND THREATS
STRENGTHS
Product
Ovaltine has a lot of vitamins and minerals as compare to Chocquik and Swiss Miss
Price
Affordable as compare to Milo
As to compare to Milo, Ovaltine is more affordable. Ovaltine All-in-One 20 grams cost 5
pesos and Milo 20 grams cost 5.50 grams.

WEAKNESSES
Product
No smaller pack
Price
Place
Poor when it comes to availability
Grocery retailers like sari-sari stores (local traditional mom and pop stores) favor lower
and middle income consumers because of their affordable offerings and proximity to
buyers.16 Non-availability of Ovaltine in sari-sari stores have a large impact on sales.

Promotion
No recent TV Advertisement.
The last TV advertisement released by Ovaltine was around 2007. It starred John
Manalo showing how Ovaltine can help our bones to become stronger and think
intelligently.

16 Euromonitor-hot drinks in the Philippines

No celebrity endorser for the last few years.

Milo has several celebrity athlete endorsers such as Jeron Teng, Kiefer Ravena and
Chris Tiu. These endorsers helped the brand increased sales and more awareness.

OPPORTUNITIES
Product
Republic Act No. 8976 - The Philippine Food Fortification Act of 2012
Since the government promotes the right to health of the people, according to Section 6,
Manufacturers of processed food or food products shall include on the label a statement
of "nutrition facts" indicating the nutrient(s) and the quantities of said nutrients added in
the food.

Consumers now prefer healthier drink or lifestyle.

Consumption of hot drinks, which are traditionally drunk in the morning, increased in
frequency, especially among cities where longer work hours and time poverty is higher.
The rise of the business process outsourcing (BPO) industry brought a change in the
lifestyle of consumers who work at night. 17
According to DOH or Department of Health (2013), there are 54 percent of
deaths among Filipinos, with cardiovascular as the leading killer. Around 30 to 32
percent of non-communicable diseases (NCDs) involve people who are below 60-yearsold. DOH release a project called Pilipinas Go4Health which also influences the
Filipinos in choosing a healthier lifestyle.

18

17 Euromonitor-Hot drinks in the Philippines

18 www.philstar.com

Stick to the sachets

Sachets and break-bulks, commonly called tingi, continue to be immensely popular
among Filipino consumers, manifested in their purchase of top FMCG. Their lower per
capita income compared to their Asian neighbors accounts for the dominance of tingi
selling in the country. 19 It should be noted that despite the savings associated with the
purchase of bigger packs, Filipinos are concerned about the high cost to purchase the
packs. 20
Healthy Beverage Options Act
It is a bill where in selling of soft drinks will be ban in schools. Soft drinks contain a lot
of sugar, artificial sweeteners, caffeine, phosphorus and carbon acids, which have
harmful effects on the body. It is the responsibility of the State to protect our children
from exposure to harmful substances. HB 4021 seeks to impose a fine of P100,000 on
schools and officials found guilty of violation of provisions of the law.
Higher tax on unhealthy food products
I will serve as an opportunity to chocolate drink manufacturers since the
consumers will pay higher tax on unhealthy or junk food products.
Increased Tax on Soft Drinks Proposed
Food Fortification introduced by Food and Nutrition Research Institute (FNRI)
Filipinos buying less more often
19 http://www.philstar.com/business-life/475037/shopping-styles-filipino-consumer
20 Euromonitor-Hot drinks in the Philippines

3 out of 5 Filipinos suffer from Vit-D deficiency

Place
Filipinos shifting from sari-sari stores to supermarkets
Boom in convenience store sector seen in the Philippines
Promotion
Emergence of online campaigns
The Philippines tops the list with 93.9 percent of the nation reportedly signed up to
Facebook21Philippines ranked 10th in the list of countries with the most number of users
on Twitter.22 Manufacturers of chocolate drinks and other brands belonging to other
industry take this opportunity to raise awareness to their consumers. For instance, Milo
invests in Facebook ads. Milo also has a Facebook page wherein they give updates
about their activities like fun run and products.
TV remains main source of product info
Commercials increased their brand preference
THREATS
Product
Low growth in sales
From 2009 to 2010, AB Food and Beverages Philippines, Inc. had a -10.41% sales
growth. -17.49% from 2010 to 2011, -9.30% from 2011 to 2012 and -62.49% from 20122013.
High income loss
21 http://asiancorrespondent.com/54475/philippines-named-the-social-networkingcapital-of-the-world-indonesia-malaysia-amongst-top-10/
22 http://technology.inquirer.net/15189/philippines-has-9-5m-twitter-users-ranks-10th

In 2009, AB Food and Beverages Philippines, Inc. had Php -52,931,332 income
loss; Php -53,368,247 income loss of 2010; Php 79,222,704 total income of 2011; Php
25,368,327 total income of 2012 and Php -6,424,212 income loss of 2013.

Rising global prices for cocoa

Cocoa prices have jumped to near three-year highs for chocolate across Asia. 23
Chocolate drink manufacturers tend to deal with this factor and the manufacturers will
think of another way in order for them to price the product affordable.

23 http://www.ft.com/intl/cms/s/0/849650f2-f7b5-11e3-b2cf00144feabdc0.html#axzz3BH25SGPm

VIII. SWOT MATRIX

Product

Strengths
Has a lot of
vitamins and
minerals as
compare to
Chocquik and
Swiss Miss

Table 7.1
SWOT Matrix
Weaknesses
Opportunities
No smaller
The countrys
pack
annual headline
inflation slowed
down to 4.4 per
cent in June.

Threats
Rising global
prices for
cocoa

Consumers now
prefer healthier
drink or lifestyle.

Due to their
busy lifestyles,
consumers
want caffeine
like coffee

Stick to the
sachets.

High income
loss

Fortification Act

Low growth in
sales

Healthy Beverage
Options Act
Higher tax on
unhealthy food
products
Increased tax on
soft drinks
proposed
Food Fortification
introduced by
Food and
Nutrition
Research Institute
(FNRI)
Filipinos buying
less more often
3 out of 5
Filipinos suffer
from Vit-D
deficiency

Price

Affordable as
compare to Milo

Place

Poor when it
comes to
availability

Filipinos shifting
from sari-sari
stores to
supermarkets

Promotion

No recent TV
advertisement

Emergence of
online campaigns

No celebrity
endorser for
the last few
years.

TV remains main
source of product
info
Commercials
increased their
brand preference.

XI. KEY SUCCESS FACTORS

The factor that greatly contributed to the achievement of Ovaltine is Customer
Loyalty. For several decades, Ovaltine never departed the Philippine market. Some
customers had already built their loyalty to the brand despite of the lack of promotional
activities and innovations to the product. Ovaltine continue to serve the consumers by
giving them minerals and calcium in line with their positioning statement, with Ovaltine
power, Ovaltine!.

X. MARKETING OBJECTIVES
Through the proposed Marketing Plan, AB Food and Beverages Philippines Inc.
(Ovaltine) aspires to achieve the following operational objectives:
1. Achieve an incremental net loss after tax of not more than or equal to -P1.0
million by the end of calendar year 2015, as compared to -P 6,424,212 at yearend 2013.

XI. TOWS MATRIX

Internal

Table 11.1
TOWS Matrix
Strengths
1. Affordable as
compare to
Milo
2. Has a lot of
vitamins and
minerals as
compare to
chocquik and
Swiss Miss

External
Opportunities
1. The countrys
annual headline
inflation slowed
down to 4.4 per cent
in June.
2. Consumers now

SO
Market
Penetration
Educating the
consumers about
the health benefits
of Ovaltine through
advertisements.

Weaknesses
1. No smaller pack.
2. Poor when it comes to
availability
3. No recent TV advertisement
4. No celebrity endorser for
the last few years.

WO
Product Development
Availability of small packs with
healthier benefits which meets the
taste of the consumer (W1,
O1,O2,O3,O4,O6,O8,O9,O12,O13,
O14)

prefer healthier
drink or lifestyle.
3. Stick to the sachets.
4. Fortification Act
5. Healthy Beverage
Options Act
6. Higher tax on
unhealthy food
products
7. Emergence of
online campaigns
8. Filipinos shifting
from sari-sari
stores to
supermarkets
9. Food Fortification
introduced by Food
and Nutrition
Research Institute
(FNRI)
10. TV remains main
source of product
info
11. Commercials
increased their
brand preference.
12. Filipinos buying
less more often
13. 3 out of 5 Filipinos
suffer from Vit-D
deficiency
14. Increased tax on
soft drinks
proposed
Threats
1. Rising global prices
for cocoa for this
period.
2. Due to their busy
lifestyles,
consumers want

(S2,O2,O4,O5,O6,
O7,O9,O10,O11,O
13,O14)

Market Penetration
Launch a TV Advertisement and
endorsed by Ryzza Mae Dizon
(W3,O10,O11)
Sponsor game shows which displays
sportsmanship and smartness
(W1,W3,O10,O11)
Place articles, updates and
advertisements in social medias
(W1,W2,O1,O7)
Availability of the proposed product
should focus more in supermarkets
(W1,W2,O8,O12)

ST

WT

caffeine like coffee

3. High income loss
4. Low growth in sales