Philippines among most friendly markets for consumer brands in AsPac

MANILA, Philippines — The Philippines is among the most friendly markets in Asia Pacific (AsPac) for incumbent consumer brands, according to global consultancy Bain and Co.

In its report which analyzed 23 consumer product goods categories across 11 AsPac markets from 2018 to 2022, Bain and Co. found that Malaysia, the Philippines and India are the most favorable markets for incumbent players.

“This trend can be attributed to the dominance of traditional trade, especially in the Philippines and India, and the relatively low penetration of e-commerce,” Bain and Co. said.

It said the complex channel dynamics in the three markets create a challenging environment for new entrants.

In the Philippines, traditional trade accounts for about 53 percent of the retail value across the 23 categories analyzed, emphasizing the importance of having a robust route-to-market capability to succeed in the market.

“Such a landscape presents a formidable barrier to entry for new competitors,” Bain and Co. said.

The report showed established incumbents in the Philippines only lost in seven categories such as color cosmetics, fragrances, hair care, skin care, pet food, sweet biscuits, and drinking milk products out of the 23 that were analyzed.

Bain and Co. said this reflects the continued dominance of incumbent players in a market where traditional channels still have a crucial role.

The report showed South Korea, Singapore and China were the most friendly markets to insurgents or new players.

Aside from South Korea being one of AsPac’s leaders for e-commerce development, Bain and Co. said the country also has a robust infrastructure of third-party suppliers, allowing small brands to outsource parts of their value chain.

“Such an ecosystem significantly reduces the barriers to entry for new businesses, intensifying the competitive pressure on established companies,” Bain and Co. said.

Overall, the beauty and personal care sector was the most receptive to insurgent brands in AsPac.

On the other hand, the confectionery category was the stronghold for incumbents.

Bain and Co. said winning incumbent brands are those adopting strategies inspired by their insurgent competitors, while maximizing their advantages for being in the market longer.

It said successful incumbents capitalize on their experience to identify emerging market opportunities and are willing to innovate based on emerging trends.