Sector Trend Analysis – Dairy powder (powdered milk) trends in the Philippines

Market overview of dairy production

Despite recent production improvements, the Philippines supplies only one percent of its total annual dairy requirements making supplementation from imports necessary, as growing consumption exceeds domestic production.

Production growth in the Filipino dairy industry has been limited in past years due to the inability to increase the size of dairy herds, owing in part to insufficient funding and measured investment from the private sector.^{Footnote 1} Further, private investments in dairy animals have been modest, attributed to the perceived low competitiveness and supply capabilities of local milk in relation to the low cost of imported powder milk. In addition, animal inventory growth is also affected by land availability, with most landholdings averaging 1.5 hectares, which is insufficient for pasture and forage production, contributing to limited feed resources.^{Footnote 2} In response, the National Dairy Authority (NDA) has created various programs and projects to increase the population of dairy animals, boost milk production, and support the development of the country's dairy sector. For instance, the Department of Agriculture through the National Dairy Authority (NDA) and the Philippine Carabao Center (PCC) has implemented a four-year US$31.2 million dairy improvement program to boost the country's livestock herd. The restructured dairy program has expanded its focus from dairy goats to also include cattle and buffalo, including infrastructure development and technology transfer to ensure increased fresh milk production from 2020 to 2024.^{Footnote 2}

Dairy production is dominated by small farms, with a few medium-to-large size operations managed by entrepreneurs. In the dairy farm sector, farm size ranges from small operations with 5 to 10 cows to commercial or large farms managing herds of 50+. Dairy buffalo farms in comparison, range from smaller farms with 5 to 10 buffalos, to medium and commercial or large farms ranging from 25+ head of buffalo, while dairy goat farms range from a small farm with 25 heads and below, to larger farms with 100+ head.^{Footnote 3} In terms of top milk-producing areas, the island of Luzon, including Laguna, Bulacan, and Batangas. Davao and Bukidnon in southern Mindanao are considered major producers.

Milk production is primarily sourced from cattle (54.0%), followed by water buffalo or carabao (39.0%) and goats (7.0%). Milk production for dairy cows averages 10 litres per day, 4.5 litres per day for buffalo and 1.5 litres per day for goats.

Dairy consumption reached 3.0 million metric tonnes in 2021 (Source; NDA), with the vast majority of the product supplied by imports. With an expanding middle class (middle class households spend a higher percentage of their income on dairy products^{Footnote 4}) and a growing population, the Philippines represents a large and expanding market for dairy products with annual per capita consumption of 27 kilograms (noting that rising consumption is also supported by infrastructure investments, particularly in cold chain facilities, supermarkets and display areas)^{Footnote 5}, demonstrating the potential opportunities for dairy producers and food manufacturers to supply packaged dairy products to the Philippine market.

Global trade overview of dairy powder (powdered milk) imports

The global market for powdered milk has experienced positive value growth with a moderate compound annual growth rate (CAGR) of 6.8% as imports have increased from Can$7.9 billion, (3.0 billion kilograms) in 2018 to Can$11.0 billion, (2.6 billion kilograms) in 2023. China was the largest global market for powdered milk in 2023 with imports valued at Can$1.6 billion, (14.2% market share), 346.8 million kilograms, representing a substantial increase in CAGR of 14.7% from Can$787.4 million in 2018, followed by Mexico with imports valued at Can$1.4 billion (12.4% market share), 338.1 million kilograms, and Indonesia, with import values of Can$804.0 million (7.3% market share), 181.8 million kilograms, in 2023, increasing 13.9% annually from Can$419.1 million in 2018.

The Philippines was the fourth largest global import market for powdered milk with Can$646.8 million (5.9% market share), 145.8 million kilograms in 2023, representing an annual increase of 10.3% from Can$395.7 million in 2018. Canada in comparison, was the seventy-fifth largest global market for powdered milk with import values of Can$7.7 million (0.1% market share), 2.2 million kilograms in 2023, representing a decline in CAGR of 7.0% from imports of Can$11.1 million, (4.4 million kilograms) in 2018.

Philippines trade overview of powdered milk imports

The Philippines is a net importer of powdered milk. In 2023, the country's powdered milk trade deficit was Can$646.0 million as imports were valued at Can$646.8 million, while exports were valued at Can$759,787.

In 2023, dairy products were the country's fifth largest agricultural (agri-food and seafood) import after meat and meat products with milk powder imports comprising almost 40.0% of its dairy imports. Of note, the Philippines have imported Can$200.2 million in powdered milk, year-to-date (Jan-Apr 2024).

The Philippines has a diverse network of powdered milk suppliers. In 2023, the top three suppliers of powdered milk to the Philippines were the United States (U.S) with values of Can$412.8 million (63.8% market share), 90.6 million kilograms, followed by New Zealand with values of Can$65.4 million (10.1% market share), 14.7 million kilograms and Belgium with values of Can$47.0 million (7.3% market share), 10.2 million kilograms, increasing 29.7% annually from Can$12.8 million in 2018.

Canada in comparison, according to reported Philippine import data, is the Philippines eighth largest powdered milk supplier, providing Can$8.7 million (1.3% market share), 4.4 million kilograms in 2023, declining 5.5% in annual growth from Can$11.6 million suppled in 2018. Of note, Japan has experienced the greatest performance as supplies from the country have increased 1005.0% annually from Can$1,288 in 2019 to Can$19.2 million in 2023.

Canada's performance

Canada's export market

Canada is a net exporter of powdered milk. In 2023, Canada enjoyed a powdered milk trade surplus of Can$86.4 million with imports of Can$7.7 million, and exports valued at Can$94.1 million (−8.3% from exports of Can$144.9 million in 2018). Of interest, Canada was the fifteenth largest (the U.S was the largest exporter with Can$3.1 billion) global exporter of powdered milk (after Finland and Portugal), supplying a 0.7% market share in 2023. Of interest, Canada has exported Can$165,640 in powdered milk, year-to-date (Jan-Apr 2024) to the Philippine market.

Top export markets for Canadian powdered milk in 2023 were Algeria with Can$25.7 million (27.3% market share), 7.0 million kilograms, Egypt with Can$24.7 million (26.2% market share), 6.4 million kilograms and the United Arab Emirates (UAE) with Can$12.2 million (13.0% market share), 3.4 million kilograms. The Philippines was the seventh largest export market for Canadian powdered milk with Can$2.7 million (2.9% market share), 0.7 million kilograms in 2023, representing a decrease in annual growth of 25.6% from Can$11.9 million in 2018.

In terms of provincial supplies, Québec was the largest exporter of powdered milk to the Philippines, providing Can$1.5 million (54.1% market share). Ontario was the second largest exporter providing Can$770,614 (29.0% market share), followed by British Columbia (B.C) with Can$302,206 (11.2% market share) and Manitoba with Can$167,000 (6.2% market share) in 2023. Year-to-date (Jan-Apr 2024), B.C is the only supplying province, providing Can$165,640 (100.0% market share).

Powdered milk as a packaged food product

Market size

Philippine's per capita powdered milk retail sales were equivalent to US$7.4 in 2023, increasing 3.9% annually from US6.1 in 2018. In the forecast period, the country's per capita powdered milk retail sales will remain positive, strengthening 6.0% annually as per capita retail sales increase from US$7.4 in 2023 to US$9.9 by 2028.

Philippines's per capita powdered milk volume sales were equivalent to 0.9 kilograms in 2023, increasing 2.4% annually from 0.8 kilograms in 2018. The country's per capita powdered milk volumes sales were highest in the retail channel with 0.8 kilograms (88.9% market share), in 2023.

In the forecast period, Philippine's per capita powdered milk volume sales will improve, increasing 2.1% in annual growth to attain 1.0 kilograms by 2028, as per capita powdered milk volume sales in the retail channel remain the largest of the channels in 2028.

Retail sales of powdered milk

Global retail sales of powdered milk

Global retail sales of powdered milk have increased 8.2% yearly from US$12.5 billion in 2018 to US$18.6 billion in 2023 and are expected to increase by an additional 7.9% as retail sales attain US$27.1 billion by 2028.

China was the largest global powdered milk market with retail sales of US$3.4 billion (18.5% market share), followed by Brazil with retail sales of US$2.7 billion (14.4% market share) and Kenya with retail sales of US$1.3 billion (7.3% market share) in 2023. Of interest, Sri Lanka experienced the greatest performance of the top markets in the historic period as the country's retail sales of powdered milk grew 21.3% from US$180.3 million in 2018 to US$474.2 million in 2023, while in the forecast period, Nigeria is expected to experience the greatest growth, increasing 20.3% annually to reach US$1.7 billion by 2028.

The Philippines was the fourth largest global retail sales market for powdered milk, increasing 5.7% annually from US$659.6 million in 2018 to US$869.0 million (4.7% market share) in 2023, and is expected to grow an additional 7.6% in the period to attain US$1.3 billion by 2028. Canada in comparison, was the one hundred and fifth largest retail sales market for powdered milk, accounting for a 0.1% market share with values of US$12.2 million in 2023 (+0.7% from US$11.8 million in 2018). Canada is expected to increase an additional 1.9% annually as retail sales are anticipated to reach US$13.4 million by 2028.

Retail sales of drinking milk products (powdered milk) in the Philippines

The Philippine dairy products and alternatives retail market was valued at US$4.0 billion in 2023. Drinking milk products represented the largest category within the dairy products and alternatives retail market with retail sales of US$1.5 billion (38.4% market share) in 2023. During the 2018-2023 period, retail sales of drinking milk products grew at a CAGR of 8.0% from US$1.0 billion in 2018 (+10.9% from 2019-2020 with the onset of the pandemic). Between 2021-2022, the market increased by 7.6%, and a further 7.7% from 2022 −2023 (as retail sales grew from US$1.4 billion in 2022).

Powdered milk was the largest category in drinking milk products with retail value sales of US$869.0 million (56.4% market share) in 2023 (+5.7% annually from US$659.6 million in 2018), followed by flavoured milk drinks with values of US$350.3 million (22.7% market share) increasing 11.3% from US$205.0 million in 2018, and milk (shelf stable), valued at US$320.9 million (20.8% market share), which was the best performing category historically, increasing 11.7% annually from US$184.5 million in 2018, largely due to the relatively limited availability of fresh milk in many parts of the country. In addition, shelf stable milk is viewed as an economical, ready-to drink and nutritious alternative to having a light meal or snack. However, while the convenience of shelf-stable milk was a key attraction amongst consumers, powder milk also saw robust volume growth in 2023, thanks to its strong penetration within traditional sari-sari stores and widening variety of available products. (Euromonitor International; Drinking milk products in the Philippines, 2023).

Growth in the Philippines drinking milk products is expected to remain positive at 7.9% annually, as retail sales reach US$2.3 billion by 2028. Subsequently, the flavoured milk drink and milk categories will increase in growth, albeit at lower rates, with the exception of powdered milk, which is anticipated to experience greater annual growth of 7.6% in the forecast period, reaching US$1.3 billion by 2028.

Distribution channels

The majority of the Philippine's drinking milk product (powdered milk inclusive) market is distributed through offline retail or grocery retailers. Grocery retailers (offline) distribution of drinking milk products (powdered milk) accounted for a 95.7% market share in 2023, decreasing from a 100.0% market share held in 2018, due to the increasing use of grocery retailing (online), e-commerce in particular, growing 78.2% annually from US$6.6 million (0.6% market share) in 2019 (+250.0% to US$23.1 million in 2020), to US$66.5 million (4.3% market share) in 2023, as major retailers established their own online shopping platforms in order to adapt to a growing consumer demand for convenience.

Online marketplaces, such as Shopee and Lazada, were also increasingly valued by consumers, due to their wide product assortments and reputation as a source of special deals and promotions. Relatedly, smart carts, which automatically scan the products a customer places in the shopping trolley, and self-service smart lockers, which allow customers to pick up or drop off delivery items at their convenience, are technological advancements that also contributed to the growing popularity of e-commerce during the historic period, and 2023 in particular (Euromonitor International; Dairy products and alternatives in the Philippines, September 2023).

Further, within grocery retailers (offline), small local grocers and supermarkets were the predominant distribution channels for drinking milk products representing US$725.8 million (47.1% market share) and US$634.6 million (41.2% market share) respectively, in 2023.

Retail sales of powdered milk in the Philippines

Retail sales of powdered milk was valued at US$869.0 million in 2023 (+6.3% from US$817.2 million in 2022). The category grew by 5.7% annually during the 2018-2023 period, increasing in retail sales from US$659.6 million in 2018.

The Philippine powdered milk market was dominated by Nestlé SA in 2023. Nestlé Philippines, as a predominant manufacture in the overall dairy products and alternatives market, remained the market leader drawing strength from the company's considerable brand equity and distribution capacity. The company also invests heavily in promotions and partnerships with major retailers, as well as social media marketing, in order to ensure that its broad portfolio of brands, including Chuckie, Bear Brand, Nestlé and Nido, remain relevant and visible to the consumer (Euromonitor International; Dairy products and alternatives in the Philippines, September 2023).

In terms of retail sales, Nestlé SA (Brand names; Bear Brand, Nido and Nestlé) was the largest with value sales of US$456.1 million (52.5% market share), followed by Royal FrieslandCampina NV (Brand name; Alaska) with retail sales of US$218.5 million (25.1% market share) and Fonterra Cooperative Group Ltd (Brand names; Anchor and Anlene) with values of US$122.7 million (14.1% market share) in 2023.

In the forecast period, retail sales of powdered milk are expected to experience greater growth, increasing 7.6% to attain US$1.3 billion by 2028.

Volume sales of powdered milk in the Philippines

Total volume sales (retail and foodservice) of powdered milk in the Philippines was equivalent to 104.2 thousand tonnes in 2023 (+3.0% from 89.8 thousand tonnes in 2018). Powdered milk volume sales were the largest through the retail channel, equivalent to 98.6 thousand tonnes (94.6% market share), as volume demand was sustained by continued interest in home cooking (consuming breakfast at home more often) and baking (Euromonitor International; Dairy products and alternatives in the Philippines, September 2023), followed by volume sales to the foodservice channel equal to 5.6 thousand tonnes (5.4% market share) in 2023. Of note, powdered milk volume sales to the foodservice channel declined 5.7% annually from 7.5 thousand tonnes in 2018 (−44.2% from 2019 to 2020 with the onset of the pandemic), and have since recovered, attaining recent annual volume sales of 13.6% between 2021 to 2022, and 12.0% from 2022 to 2023, as consumers increasing mobility saw them returning to bars, cafés and restaurants post-pandemic (Euromonitor International; Dairy products and alternatives in the Philippines, September 2023),

In the forecast period, total volume sales of powdered milk are anticipated to experience greater growth, increasing 4.2% annually to attain 127.8 thousand tonnes by 2028. All powdered milk volume sale distribution channels will experience increased positive growth as volume sales to the foodservice channel in particular, will experience the greatest performance, increasing 5.7% annually to reach 7.4 thousand tonnes by 2028 (+8.9% anticipated from 5.6 thousand tonnes in 2023 to 6.1 thousand tonnes in 2024).

Powdered milk as an ingredient in packaged food products

Powdered milk by ingredient

Powdered milk attained total volume sales of 107,263.2 tonnes in 2023 and is expected to increase 3.8% annually to reach volume sales of 129,290.0 tonnes by 2028.

Powdered (skimmed, full cream and whey) milk, as a primary ingredient, attained volume sales of 91,498.6 tonnes (85.3% market share), followed by fats and oils, with volume sales of 6,513.0 tonnes (6.1% market share), sweeteners with volume sales of 4,625.2 tonnes (4.3% market share), and polysaccharides and oligosaccharides, with volume sales of 3,796.6 tonnes (3.5% market share) in 2023.

Of the powdered milk ingredients, skimmed milk powder was the largest of ingredients with volume sales of 58,544.5 tonnes (54.6% market share), followed by full cream milk powder with 32,117.4 tonnes (29.9% market share) and whey powder with 836.7 tonnes (0.8% market share) in 2023. Of interest, whey powder is used as a quick and convenient way to introduce more protein in one's diet and the product remains popular amongst body builders and gym goers.^{Footnote 6}

In the second largest ingredient category, fats and oils, vegetable oil was the predominant ingredient with 6,500.1 tonnes (6.1% market share) in 2023.

In the forecast period, it is anticipated that volume sales of powdered milk (and primary ingredients), will increase as demand for the product grows.

Market size of milk and (powdered milk) ingredients in industry product categories

Milk (the aggregation of full fat, semi-skimmed and fat-free fresh/pasteurised cow and goat milk), as an ingredient used in the manufacturing of various industry (packaged products), attained volume sales of 773,389.0 tonnes in 2023 (+6.2% from 728,506.8 tonnes in 2022), representing an increase in annual growth of 3.4% from volume sales of 653,698.0 tonnes in 2018.

Skimmed milk (as a segment of milk, and primary ingredient of powdered milk), was the largest powdered ingredient with volume sales of 86,897.4 tonnes (11.2% market share of milk ingredients) in 2023, increasing 2.1% annually from 78,339.9 in 2018, while full cream milk powder achieved the best performance, increasing in growth by 2.5% from 39,929.1 tonnes in 2018 to 45,109.7 tonnes (5.8% milk ingredient market share) in 2023 (+ 4.4% from 43,227.1 tonnes in 2022). Whey powder in comparison, grew by 1.0% from 13,516.6 tonnes in 2018 to 14,196.3 tonnes in 2023 (1.8% milk ingredient market share), and recently increased 2.9% from 13,791.0 tonnes in 2022.

Milk, as an ingredient, is forecast to remain positive, increasing at a larger annual rate of 5.6% to reach volume sales of 1.0 million tonnes by 2028. Skimmed milk powder will remain the largest of the powdered milk and whey ingredients, increasing 3.7% annually, reaching 104,309.0 tonnes by 2028, while full cream milk powder is again expected to achieve the greatest performance, increasing 3.8% annually to reach volume sales of 54,355.1 tonnes by 2028.

Market size of milk and (powdered milk) ingredients in packaged food product categories

Volume sales of milk as an ingredient, in the Philippine packaged food market was valued at 761,580.4 tonnes (98.5% market share of industry product categories) in 2023. During the 2018 to 2023 period, this market grew 3.4% annually from 643,611.2 tonnes in 2018 ( −3.5% from 2019 to 2020). The market has since recovered, increasing 5.9% between 2021 and 2022, and a further 6.2% from 2022 to 2023 (as volume sales grew from 717,205.4 tonnes in 2022). Of the volume sales of milk in the packaged food market, the dairy products and alternatives category yielded the largest volume sales with 729,463.7 tonnes (95.8% packaged food market share) in 2023. Relatedly, in powdered milk and whey ingredients, the dairy products and alternatives category also attained the largest ingredient volumes of the packaged food categories.

Of the powdered milk ingredients, skimmed milk powder attained the largest ingredient volume sales of 83,732.8 tonnes, in packaged foods in 2023 (96.4% market share of industry product categories). Of the packaged food categories, the dairy products and alternatives category yielded the largest ingredient volumes of skimmed milk powder, equivalent to 75,542.9 tonnes (90.2% packaged food market share) in 2023 and is expected to increase 3.6% annually to reach 90,277.5 tonnes by 2028. In comparison, full cream milk powder and whey powder attained packaged food ingredient volumes of 42,146.7 tonnes and 13,053.9 tonnes respectively in 2023, with ingredient volumes also the largest within the dairy products and alternatives category (89.3% and 66.6% respectively, in 2023).

The snack category also held measurable powdered milk (and whey) ingredient volume sales with whey powder ingredient volume sales in particular, attaining 4,237.9 tonnes (32.5% packaged food market share) in 2023, while full cream milk and skimmed milk powder attained ingredient volumes of 3,862.8 tonnes (9.2% market share, mainly in countlines, tablets, and sweet biscuits) and 7,615.6 (9.1% market share, mainly in chocolate confectionery, ice cream and sweet biscuits) respectively, in the snack categories in 2023.

Of interest, powdered milk non-dairy ingredients (soy protein isolate) attained volumes of 53.6 tonnes (28.1% market share of dairy product and alternatives category) volumes in 2023, representing an 3.6% annual increase from 44.9 tonnes in 2018. Soy protein isolate volumes are expected to increase an additional 3.8% annually to reach 64.6 tonnes by 2028.

In the forecast period, packaged food volume sales of milk ingredients are expected to remain positive, experiencing greater growth, increasing 5.6% annually to reach 999,694.8 tonnes by 2028. Similarly, packaged food volume sales of powdered milk and whey powder ingredients will also remain positive, with skimmed milk powder ingredients attaining the largest volume sales, 100,807.9 tonnes by 2028. The dairy product and alternatives category will remain the largest packaged food category in terms of ingredient volume sales of milk and powdered ingredients, in the forecast period. Of interest, full cream milk powder ingredient volumes in the staple foods category, is expected to experience the greatest performance, increasing 6.8% annually from 634.4 tonnes in 2023 to 880.9 tonnes by 2028.

As noted, of the powdered milk (and whey) ingredients present within the dairy product and alternatives category, skimmed milk powder, was the largest in terms of volume sales, with 75,542.9 tonnes in 2023 (+4.1% annually from 72,547.0 tonnes in 2022), increasing 2.3% annually from 67,471.8 tonnes in 2018. Of the dairy product and alternatives categories containing skimmed milk powder as an ingredient, the dairy (drinking milk products) segment, achieved the largest volume sales of 58,569.1 tonnes (77.5% market share) in 2023, with powder milk attaining essentially 100.0% of all volume sales, while the baby food segment (the milk formula segment primarily), represented the remaining volume sales of 16,973.9 tonnes (22.5% market share) in 2023.

In the forecast period, the dairy products and alternatives category containing skimmed milk powder ingredients, are anticipated to increase an additional 3.6% annually to reach volume sales of 90,277.5 tonnes by 2028. Of note, all segments within the dairy products and alternatives category will experience positive growth. The baby food segment in particular, is expected to recover from declining 1.6% annually within the historic period, reaching volume sales of 19,680.2 by 2028 (+3.0% from 16,973.9 tonnes in 2023).

New product launch analysis – Powdered milk as a product

According to Mintel's Global New Products Database (GNPD), there were 104 new powdered milk products (as a product search) launched in the Philippines between January 2018 and December 2023 (there have been four food and three drink products released between January to June 2024).

Of the 104 new products launched historically, eighty-one were categorized as food products and twenty-three were categorized as drink products. The number of yearly product launches has decreased in growth by 8.8% annually from nineteen products in 2018 to 12 products in 2023 (−20.0% from fifteen products launched in 2022).

The predominant categories of new powdered milk products released were dairy (51 products), baby food (28 products), and nutritional drinks and other beverages (14 products). Halal, vitamin/mineral fortified and functional-other were top claims associated with new products released during the prescribed period.

The companies with the highest number of new powdered milk product launches were Nestlé (40 products), followed by Fonterra Brands (15 products) and Mead Johnson Nutrition (9 products). The Philippines was the leading location of manufacture for new product launches with 18 products, followed by Malaysia with 10 products and Ireland with 2 products launched during the prescribed time. Primary ingredients identified were white sugar (86 products), vitamins (85 products), and minerals with 82 products.

Powdered, skimmed and whole were top ingredients preparations, while flexible (91products) was the top package type (87.5% market share), followed by flexible sachet (9 products) and can (3 products) in 2023. Under half (39.4%) of the new product launches were new packaging (41 products), followed by relaunches (37 products) and new variety/range extension products (14 products). Top flavours were unflavoured/plain (58 products), followed by chocolate (17 products), chocolate and malt/malted (11 products), chocolate and malt/malted and milk (4 products) and coffee (3 products).

Examples of new products – Powdered milk as a product

New product launch analysis – Powdered milk as a (value-added) ingredient

According to Mintel's Global New Products Database (GNPD), there were 1,956 new powdered milk (as an ingredient-and all children) products (1,777 food products and 179 drink products) launched in the Philippines between January 2018 and December 2023 (and 162 new powdered milk ingredient products launched year-to-date, January-June 2024). The number of yearly product launches has increased in growth by 1.4% annually from 324 products in 2018 to 348 products in 2023 (+8.8% from 320 products launched in 2022).

The predominant subcategories of new powdered milk products released were sweet biscuits/cookies (291 products), followed by dairy based ice-cream and frozen yogurt (176 products), cakes, pastries, and sweet goods (142 products), seasonal chocolate (114 products), and chocolate tablets (87 products). Liquid and cup/tubs were top format types, while halal, social media and vitamin/mineral fortified were top claims associated with new products released during the prescribed period.

The companies with the highest number of new powdered milk product launches were Nestlé (123 products), followed by Unilever RFM Ice Cream (69 products) and Mondelez (61 products). The Philippines was the leading location of manufacture for new product launches with 362 products, followed by Malaysia with 113 products and Thailand with 74 products launched during the prescribed time. Primary ingredients identified were skimmed milk powder (1,055 products), milk powder (735 products), whole milk powder (450 products), full cream milk powder (116 products) and semi-skimmed milk powder with 9 products.

Powdered, skimmed and mass were top ingredients preparations, while branded labels were prevalent with 1,832 products released during the period. In terms of packaging types, flexible (1,110 products) was the top package type (56.7% market share), followed by tub (185 products) and carton (176 products) in 2023. Just under half (43.4%) of the new product launches were new variety/range extension products (849 products) whereas 27.6% were new packaging (540 products). Top flavours were unflavoured/plain (474 products), followed by chocolate (199 products), strawberry (77 products), hazelnut (59 products) and cheese (54 products).

Examples of new products – Powdered milk as a (value-added) ingredient

Opportunities for Canada

The dairy (powdered milk) market in the Philippines is a measurable and expansive sector, driven by an increasing population and growing middle class. Dairy consumption is continually increasing and has exceeded domestic production, requiring support supplementation from imported products.

In 2023, the Philippines was the fourth largest global import market for powdered milk with Can$646.8 million (5.9% market share), representing an annual increase of 10.3% from Can$395.7 million in 2018. The U.S, New Zealand and Belgium were key suppliers of powdered milk to the Philippines, with Canada exporting Can$2.7 million (2.9% market share) in 2023, representing a decrease in annual growth of 25.6% from Can$11.9 million supplied in 2018.

The Philippines was the fourth largest global retail sales market for powdered milk, increasing 5.7% annually from US$659.6 million in 2018 to US$869.0 million (4.7% market share) in 2023, and is expected to grow an additional 7.6% in the period to attain US$1.3 billion by 2028. Powdered milk was the largest category in drinking milk products within the dairy and alternatives market, with retail value sales of US$869.0 million (56.4% market share) in 2023 (+5.7% annually from US$659.6 million in 2018). Powdered milk is anticipated to experience greater growth, increasing 7.6% annually in the forecast period, reaching US$1.3 billion by 2028.

Powdered milk as a packaged food product in the Philippines, attained total volume sales of 107,263.2 tonnes in 2023, and is expected to increase 3.8% annually to reach ingredient volume sales of 129,290.0 tonnes by 2028, while primary powdered milk ingredients (skimmed, full cream and whey powder) in particular, attained a measurable presence with volume sales of 86,897.4 tonnes, 45,109.7 tonnes and 14,196.3 tonnes respectively, within industry product categories in 2023. In the forecast period, powdered milk products and primary powdered ingredients, are anticipated to increase in volume growth and market share representation within industry (and packaged food products), particularly within the dairy products and alternatives category.

Additionally, recent new product launches of powdered milk products, as well as powdered milk as a value-added ingredient in products within the Philippine dairy market, indicate a growing interest and demand for these particular products, especially due to the relatively limited availability of fresh milk in many parts of the country. Further, while the convenience of shelf-stable milk is influential amidst consumers, the growing penetration and innovation of powdered milk as an alternative product and ingredient option, cannot be discounted.

Given the expected and continued growth in the dairy and powdered milk and ingredient market, Canadian suppliers have the opportunity to enter and expand their exports, including value-added products, to the Philippine dairy market. Canada's brand and reputation for high quality and safe products remain significant and appealing in the Filipino market, demonstrating the potential opportunities for dairy producers and food manufacturers to supply packaged dairy products to the Philippine market. That said, it is important for Canadian exporters to work closely with their importing partners and Trade Commissioners to understand and ensure that the Philippine's import requirements for their specific products are met.

Canada and the Philippines are currently negotiating a free trade agreement in the context of the Canada-Association of Southeast Asian Nations (ASEAN) FTA negotiation (Global Affairs Canada; Canada-Philippines Relations). Since Canada is presently not a free trade agreement partner of the Philippines, Canadian products are subject to the Most Favoured Nation (MFN) tariff duties. According to Executive Order 20, signed April 27, 2017, the Most Favoured Nation (MFN) tariff schedule for all products, including dairy products, assigning a 1.0% tariff rate for skimmed and whole milk powder, and 3.0% tariff rate to buttermilk powder (Source; Philippine Tariff Commission).

Canada is establishing an Indo-Pacific Agriculture and Agri-Food Office (IPAAO) in Manila, Philippines. This new office is a sign of our long-term commitment in the Indo-Pacific, along with the importance we place on building upon Canada's reputation as a stable and trusted supplier for agriculture, agri-food and seafood products. The office will enhance market access, advance technical cooperation, identify new business opportunities for Canadian exporters to diversify their exports and support investment attraction efforts into Canada (Agriculture and agri-food in the Indo-Pacific region). Canadian exporters are also encouraged to leverage the following programs and services in order to enter and expand their products within the Philippine market:

• Canada Brand
• AgriMarketing Program
• Trade Commissioner Service
• Agriculture and Food Trade Show Service
• Single Window for Agri-Food Trade Services
• Agri-food international market intelligence service
• Funding Programs (Global Affairs Canada)
• Solutions for Canadian exporters (Export Development Canada)

For more information

The Canadian Trade Commissioner Service:

International Trade Commissioners can provide Canadian industry with on-the-ground expertise regarding market potential, current conditions and local business contacts, and are an excellent point of contact for export advice.

• Find a Trade Commissioner

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Resources

• Euromonitor International, 2024
  • Country Report; Drinking milk products in the Philippines, September 2023
  • Country Report; Dairy products and alternatives in the Philippines, September 2023
• Executive Order 20; (Philippine Most Favoured Nation (MFN) tariff schedule for all products, including dairy products).
• Global Trade Tracker, 2024
• Mintel Global New Products Database, 2024
• Philippine Tariff Commission
• United States Department of Agriculture: Mojica-Sevilla, Floerence. Dairy and products - Annual (PDF). page 2, October 23, 2023

Sector Trend Analysis – Dairy powder (powdered milk) trends in the Philippines
Global Analysis Report

Prepared by: Laurie Bernardi, International Market Research Analyst

© His Majesty the King in Right of Canada, represented by the Minister of Agriculture and Agri-Food (2024).

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All images, unless otherwise noted, are copyright His Majesty the King in Right of Canada.

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