Jeffrey Capili Sarmiento

INTRODUCTION / EXECUTIVE SUMMARY / COUNTRY PROFILES / APPENDIX 4 PHILIPPINES Promotional activity and product choice ensures popularity of store-based modern grocery retail formats Distribution Channel Dynamics Purchasing motivations vary by modern or traditional channel • Supermarkets are the leading channels in terms of offering choice of format, pack size and type of insecticide. However, local community independent grocers (sari-sari stores) are abundant and conveniently located close to residential areas, and are thus a popular go-to for more common insecticides, such as mosquito coils, roach traps, moth balls and chalk. © Euromonitor International Internet retailing a channel to watch for the future Baygon dominates electric, bait and aerosol insecticides • SC Johnson products dominate modern and traditional channels with approximately 85% of shelf space occupied by its Baygon brand. Market strategies observed in-store include shelf space exclusivity, POS advertising, 5% reduction on selected SKUs, 10% free volume on 600ml aerosol variants, and bundle-buys of aerosols with other home care products. • Taking advantage of the nascent internet retailing channel will emerge as a key pathway for distribution of home insecticides, particularly for bulk-buy or larger format purchases of aerosols, as internet retailers such as Lazada and Alibaba expand their delivery capabilities and range of products, and consumers embrace even more modern retail channels. INTRODUCTION / EXECUTIVE SUMMARY / COUNTRY PROFILES / APPENDIX 5 PHILIPPINES Heading: to do (BK) Analysis: to do (BK) Average Pricing Per 100 g / ml (EUR value, 2018) Electric Insecticides Insecticide Baits Insecticide Coils Spray/Aerosol Insecticides Other Home Insecticides - 0.0 Supermarkets Hypermarkets Independent Small Grocers Convenience Stores *Footnote 1: Store audit data captured in January 2018 *Footnote 2: Our store audits include visits to physical retail outlets, as well as internet retailing © Euromonitor International Variety Stores Internet Retailing Health and Beauty Specialist Stores INTRODUCTION / EXECUTIVE SUMMARY / COUNTRY PROFILES / APPENDIX 6 PHILIPPINES Perceptions around health, affordability and efficacy drive competition Factors Impacting the Competitive Landscape Internal Factors ▪ Baygon is firmly established as the market leader in most categories, with the highest degree of competition coming from Greencoil Industries Inc within insecticides coils, a format that continues to be popular in the rural areas of the Philippines and amongst the low-income families. ▪ Despite their widespread use, coils are coming under increasing scrutiny due to their potential adverse health impact. ▪ Filipino consumers are becoming increasingly aware of odourless home insecticides, although there are some doubts about the efficacy of this innovation. According to trade sources, scepticism remains regarding scented or odourless home insecticides. © Euromonitor International External Factors ▪ Numerous reports over the dangers of Dengue and Zika and campaigns enacted by the Philippines Department of Health have resulted in driving the volume and value sales of home insecticides, especially in the coil and aerosol format. ▪ Accordingly, top-selling brand Baygon has released aerosol spray products that specifically target mosquitoes, such as the Baygon mosquito Killer and the Baygon Anti-Dengue Mosquito Killer. ▪ While the emerging grey market of Chinese imports sold through variety stores is leading to more intense price competition, media reports about unregistered and potentially toxic brands compel consumers to rely on the tried and tested brands. INTRODUCTION / EXECUTIVE SUMMARY / COUNTRY PROFILES / APPENDIX 8 PHILIPPINES Big brands benefit by saturating categories, channels and geographies Market Structure of Home Insecticides Market lacks consistent crosscategory competition for Baygon Leading brands adopt an all-channel approach in the Philippines Product price a key driver in determining presence in channels ▪ While Baygon dominates much of the market for home insecticides in the Philippines, the landscape beyond this is considerably fragmented, with brands such as Mortein, Raid and Kwik competing for share. ▪ Major players have direct distribution in all retail channels in the Philippines. Trade source indicate that these brands don’t just focus on selected channels, but instead ensure that their reach spans even to the smallest of stores. ▪ The presence of the leading players is nevertheless most evident in modern retail channels, in which consumers have a higher degree of selection in regards to range. ▪ Smaller players in the market include Temox, Cobra, Patrol Katol, Pest-Off, Wawang, Baoma and Advanced. Most are locally based but others are imported from China. Small players are more prevalent in variety store and thrift stores. © Euromonitor International ▪ The market leading brands pride themselves on a network of distribution partners located in key cities and municipalities to maximise their coverage to ensure a nationwide strategy. ▪ Most notably, products with a higher average price per unit, such as electronic insecticides and insecticide baits from multinational competitors, are not generally carried through traditional channels, which are more geared around low-cost “everyday” purchases. INTRODUCTION / EXECUTIVE SUMMARY / COUNTRY PROFILES / APPENDIX 9 PHILIPPINES Strong product recognition essential for legitimate players Top Active Ingredients Prallethrin The grey market coming in from China makes competition even more intense. The lack of control from government agencies in regulating unregistered brands makes it very difficult for legitimate players to grow to their maximum. Pralethrin — Distributor d-allethrin 12% d-phenothrin 11% 10% 53% 7% 7% Imiprothrin Others *This % split is based on a frequency count by SKU per outlet from an audit of 14 physical retail stores and 1 online retail website • • Transfluthrin sits just outside the top active ingredients, with a 6% share of representation in the store audit. Sumitomo active ingredients such as Prallethrin, Imiprothrin, d-allethrin, d-phenothrin feature heavily in the top active ingredients present during the store audit. SC Johnson is the main manufacturer to use Sumitomo actives; however findings revealed that domestic brands LionTiger and Cobra use d-allethrin in their coils. The long-standing presence of Baygon in supermarkets, hypermarkets and almost all channels is one of its key strength. It has created brand loyalty through its diverse portfolio. In mosquito coils, local player LionTiger still dominates due to its lower pricing. Its strongholds are “sari-sari” and convenience stores. — Manufacturer There is a widespread practice to attract consumers. Commonly found home care products, like furniture polish and toilet cleaners, are bundled together with home insecticides, usually aerosols. Some advertise one as a free item, while others discount both items. —Manufacturer Following highly publicized scares involving unregulated and potentially toxic parallel imports, strong branding awareness of regulated active ingredients will resonate well with consumers, in consideration of their health and welfare. © Euromonitor International