Industry Background
Bureau of Animal Industry (BAI) that regularly conducts studies of wet market shows that the HANDS of your favorite meat vendors contain more than what you see, like bacteria. The same study revealed that ingredients used by meat vendors to color tocino and langoniza are the same chemicals used to die cloth improper handling, uncontrolled use of ingredients and spices and insufficient supply of meat for local consumption, the meat industry in the Philippines is still in its infancy, experts say. The situation presents a profitable opportunity to establish abattoirs that will supply good meat to processors, restaurants, hotels and households -- especially at a time when consumers are switching from wet markets to meat shops. Consumers are now educated so the trend is to switch from the wet market to the meat retail shops may it be a supermarket or a stand alone shop.
Competitors Profile -Market Leaders (processed food)
Market leader in processed food industry is still Purefoods products, holding a market share of 67%, while in fresh cut, Monterey meat dominates the market with 70% market share. Both under the umbrella of the parent company San Miguel Corporation. San Miguel Corporation serves both markets of fresh and processed meats, but under different companies. Processed food is under the management of the Purefoods-Hormel Company Inc. while fresh meat is under Monterey Foods Corporation.
The Purefoods-Hormel Company, Inc., a joint venture with Hormel USA, produces and markets processed meats which account for nearly two-thirds of the processed meats market, leading both the refrigerated and canned segments. Among its well-loved brands is Purefoods Tender Juicy Hotdog, the country’s largest-selling hotdog. Other popular products are Purefoods Corned Beef, Purefoods Carne Norte, Purefoods Fiesta Ham, Beefies Hotdog, Moby Hotdog, Purefoods Classic Honeycured Bacon, and Lean and Mean Bacon.
The market leader remains focus on their turf. Last year they introduce 145 new products and a number of retail channels to ensure availability of its growing portfolio of its products. They also introduced packing innovations for some of its core brand targeted at a broader consumer group. The iconic Tender Juicy hotdog and cheese are now sold in “ tinggi” and “takal” in many of the wet markets in major urban center.
CDO foodsphere Inchas become one of the leading manufacturers of processed food. Its 30 years of existence was forging ahead as full blown manufacturing company and making waves in the Philippine market. Market share increases from 5% to 30%, displacing the REM Swift hotdogs as previous competitor of Purefoods. Swift hotdog lost its market share and dropped from 43% to now 6% in 2000.CDO is still aggressively promoting in tri media to further push the market share. Their presence can also be felt in most areas in Metro Manila with foot traffic. They are strategically distributing their products through provincial distribution and company owned CDO stores. In terms of aggressive promotion and distribution, CDO can be one of the market benchmark for Mother Earth Philippines Inc.
Pampanga’s Best and Mekeni products are minor competitors because their flagship products are not hotdogs but more of native delicacies like tocino and longganiza.
Competitors Profile using 4P’s
Comparison with competitors
Product Line:Frozen Meat Products
Direct Competitors
San Miguel Pure Foods / RFM (SWIFT) / CDO Foodsphere Inc. / Pampanga’s Best / MEKENI Food Corporation / Mother Earth Products, Inc.Market Share / 67% / 6% / 30%
Awards
Taglines / “ Making Everyday life a celebration
Positioning Strategy: Superior / “ Undeniably good, surprisingly affordable”
“Swift Meat- Bringing Family Together” / “ Food that flourishes life”
“ Can Afford ang Saya”
Positioning Strategy: Affordable / “Pampanga's Best, " truly the "BEST" / - none- / “ Meatier, Tastier,
Delicious”
Products / Refrigerated Meats: Hotdogs, Sliced Hams, Whole Hams, Bacons, Native and Specialty Line; Ready to Cook Line; Grocery Products
Complete product line of processed and canned foods / Swift Meats: Bacon, Frankfurter, Hotdogs, Halal Chicken dogs / Frozen Meat Products: Hotdogs, Patties, Native Delicacies, Traditional Ham, Christmas Ham, specialties, Bacon, Chinese
Delicacies; Grocery Products; Dairy products; Food Service Products; HRI products
Complete product line of processed and canned foods / Process Food Products : Tocino; Longaniza; Tapa; Chorizo Macao; Embutido; Franks; Meat Loaf; Marinated Meat products / Process Food Products: Hotdog, Hamburger Patties, Langoniza, Tocino / Process Meat Products: Beef Franks; Cheezy Franks; Regular Hotdogs; Premium Hotdogs; chicken Franks; Sausage; Langoniza; Tocino/Tapa; Marinated Products; Ground Products
Distribution / Nationwide
Retail through supermarkets, wet markets
Franchises: San Miguel Food shops, TJ Hotdog Fun Factory Booth / Nationwide
Retail through supermarkets and wet markets
no distributor / Nationwide
Retail through supermarkets, wet markets
Distribution through provincial distributors, customized products for hotels,
restaurants and food chains / Central Luzon, Northern Luzon, and Metro Manila
Retail through supermarkets, wet markets
Provincial Distributors / Central Luzon and Metro Manila
Retail through supermarkets, wet markets / Central Luzon and Metro Manila
Retail through supermarkets
Distribution through customized products for hotels, restaurants and food chains.
Price / Hotdog: P182/ kg.
Sliced Ham: P102/250g
Bacons:P275/500g
Burger Patties: P72/250g
Tocino: P104/480g
Longaniza: P74/500g
Sisig:P62/300g
Premium Pricing / Hotdog: P182/ kg.
Sliced Ham:
Bacons:180/400g
Burger Patties: 60/225g
Tocino: 70/500g
Longaniza: 60/kg
Competitive Pricing / Hotdog: 171/kg
Ham:67/250g
Ulam Buger: 42/225g
Bacon: 174/400g
Tocino: 99/450g
Langoniza: 42/500g
Affordable Pricing / Reg Hotdog:119/kg
Ham: 42/250g
Patties: 67/500g
Bacon:120/500g
Tocino : 98/450/g
Langoniza:139/480g
Competitive Pricing / Hotdog : 158/kg
Hamburger Patties: 164/kg
Ham : 208/kg
Tocino: 193/kg
Langoniza: 60/kg
Affordable Pricing / Hotdogs:117/kg
Ham: 42/250g
Patties: 62/500g
Bacon:100/500g
Tocino :79/500g
Langoniza:85/450g
Sisig:67/400g
Tapa:79/500g
Affordable Pricing
Promotion / Website, TV commercials, billboards, print ads / Website, TV commercials,
billboards
print ads / Website, TV show, billboards, Environmental Awareness campaign in school nationwide / Website; Bill boards, print ads / Website; Bill boards; / Leaflets, food tasting, banners, and leaflets
word of mouth and personal and direct selling
Market Leaders (fresh cuts)
Monterey Foods Corporation dominates the fresh meat industry in retail outlets with 70% market share. Today, it is the country's largest hog and cattle operation, with the latest technology in feed milling, breeding, livestock raising, slaughtering, meat retailing.Monterey Foods was the first manufacturer of branded fresh meats to expand into franchising operations. These outlets, known as Monterey Neighborhood Meat Shops, conveniently provide Filipinos across the country with readily-accessible sources of safe, clean and top-quality pork and beef as well as opportunities for entrepreneurship. Monterey meat shops are found nationwide, distribution from Luzon to Mindanao.
Monterey latest technology is one of their advantages. Monterey meats have gone through an advanced blast-chilling process right after slaughter so bacterial growth is neutralized and freshness and nutrition is locked in.One of Monterey competitive edge was its commitment to total quality that extends from its farm to countrywide distribution network. Its quality meat products are delivered by refrigerated Monterey trucks and are available in a variety of Monterey outlets namely Monterey Neighborhood Meatshops, supermarket and Monterey Satellite Outlets. There are already more than 300 outlets operating nationwide.
Others are just follower like Garcia’s Meat and Farm Fresh Meats which are supermarket house brands. They tend to lower price to capture a share from the market leader.
Comparison with competitors
Product Line:Fresh Meat Products
Direct Competitors
Monterey Meat Shop / Garcia’s Meat Shop / Mother Earth Products Inc.Taglines / “ Meat that you can trust” / -none- / “ Meatier, Tastier,
Delicious
Market Share / 70%
Product / Products: pork, beef and lamb cuts, Monterey Ready-to-Cook Meals, Magnolia Chicken and dairy products / Products: Pork cuts: Regular Cuts; Ground Pork; Ribs and Belly; Beef Cuts: Regular Cuts; Ground Beef; Prime Roast; Prime Steaks / Product: Pork cuts: Regular Cuts; Ground Pork; Ribs and Belly; Beef Cuts: Regular Cuts; Ground Beef; Prime Roast; Prime Steaks
Distribution / Nationwide
Retail: supermarkets
Franchise Meat Shops; through customized products for hotels, restaurants and food chains / Luzon
Retail: supermarkets
Distribution customized products for hotels, restaurants and food chains / Retail: supermarkets
Direct Selling through customized products for hotels, restaurants and food chains
Price / Regular Pork cuts: 250/kg
Regular Beef Cuts: 265/kg
Prime Steak: 405/kg
Beef Tenderloin: 799/kg
Rib Eye Steak: 450/kg / Regular Pork cuts: 154/kg
Regular Beef Cuts: 230/kg
Prime Steak: 285/kg
Beef Tenderloin: 640/kg
Rib Eye Steak: 450/kg / Regular Pork cuts: 185/kg
Regular Beef Cuts: 230/kg
Prime Steak: 350/kg
Beef Tenderloin: 799/kg
Rib Eye Steak: 385/kg
Promotion / Website, TV commercials, billboards, print ads / Presence in major supermarkets / Partnership and affiliations
DISTRIBUTION
Trading Structure
There are three layers of traders in the market; the raisers; the assemblers, the butchers, the meat processors & the distributors. The raisers are the ones consolidator group, then the abattoirs or slaughters.
- Raisers – they grow the swine until ready for selling
- Assemblers – procures live animals from raisers or LOMS
- Butchers – slaughter animals himself or thru the abattoirs
- Meat Processors – service provider for choice cuts or may process meat for canning or vacumm sealed meats
- Distributors- distribute meat to the selling outlets
- Sellers – interface with the end consumers
Mother Earth Products Inc. is a production plant involve in the processing and distribution of fresh-chilled/frozen and processed meats.
The Philippine Retail Food Industry
The Philippines food retailing industry involves a wide array of sellers from the sidewalk vendors, wet markets, sari- sari stores, groceries supermarkets, hyper marts, warehouse and discount clubs and convenience stores. Food means brisk business. Food is intricately linked with its culture and traditions. In the family, food accounts for 43% of total expenditures. Outside the home, eating has become lucrative for the retail business. Expenditure for dining out, excluding corporate representation registered an average growth rate of 15 percent to 20 percent per annum in the last 10 years. In the quick service or fast food segment, the total marketing 2000 was over Ph30B (Palma, 2005). According to the Family Income Expenditures Survey (FIES) of the National Statistics Office (NSO), household spending on food increased by 26 percent from 1997 to 2000. Personal consumption expenditures (PCE) on food and beverages in 2002 reached about PhP 448 B from PhP 401.7 B in 1998, or an average annual growth rate of about 3 percent ( Omana, 2005).
In general retail sectors continuously increased its value added in the last decade. Large retailers such as supermarkets largely enjoyed the growth and productivity of the sector. Success of the Supermarkets was reinforced by their high-tech facilities such as the point of sales (POS) scanner system, value added networks (VAN)and the electronic data interchange (EDI) (PASI, 1995) which significantly reduced inventory cost of retailers. The technology has allowed them to automatically purchase from suppliers.
Reference: Case of the Philippines by Salvador P. Catelo
Proposed Distribution Strategy
All the products of Mother Earth (Beef, Pork and Processed Meats) are still at Growth Stage. Competitors are attracted into the market with very similar offerings. Advertising spend is high and focuses upon building brand.Market share tends to stabilize. Products become more profitable and companies form alliances, joint ventures and take each other over.
Projected rise in demand through population growth, consumer education, fast changing lifestyle and awareness of food quality and safetyprovides great market opportunity for Mother Earth Products Inc. MEPI started to curve a niche in the market and it needs to establish a strong presence through multi channel networks and strategic alliances.
Distribution Strategies ( Processed Meats)
Strategy #1
Mother Earth Products INC. (MEPI) needs to strengthen strategic partnership with retailers. MEPI also needs to take the option of joining the SM AND Pure Gold bandwagon. The strategy will realize the household penetration in Metro Manila area. In order to create Brand Awareness MEPI needs to have its products in these supermarkets which are rapidly becoming the main channels for consumers in Metro Manila. It may have to sacrifice margin cuts in the first few years by entering these channels.
For processed food current customers includes big supermarkets such as Robinsons Group of Companies. Walter Mart Group, Vicky Mojica, Pilipinas Macro, Inc. and Sunrich Manufacturing, Corp. In the proposed marketing plan for Mother Earth Philippines, Inc,we proposed to penetrate the largest chain of shopping malls in the Philippines,SM Supermarkets, SM Hypermarts, and Save More Stores and Puregold, having been the fast growing retail outlet in the country.
Data: Increasing Number of Malls constructed nationwide in the last 10years
SM Malls is considered the pioneer of the shopping mall experience in the Philippines. The popularity of these malls have paved the way for the growth of the retail industry in the country. Going to the malls, especially SM Malls (Supermarkets and Hypermarts), have become a part of the weekend urban culture of Filipinos. We would like to capitalized from the two million Filipinos dailySM mall goers who can be potential MEPI customers.
PUREGOLD PRICE CLUB, INC. is engaged in wholesale and retail. It now has 29 retail stores across Metro Manila and nearby provinces, and aggressively expanding nationwide.
With the increasing number of malls being constructed nationwide, it is deem necessary that we saturate this channels to be able to penetrate to Filipino households.
Strategy #2
Establish strong presence in provincial areas through Distributorship. Target areas are Central Luzonand Metro Manila areas for the first year. Second Year concentration will cover on Northern and Southern Luzon. Five years target saturate Luzon and Metro Manila area. Long term plan (10 years) is to introduce products in Visayas and Mindanao.
One of the key ingredients for a profitable business is effective distributions system. The company will capitalize on distributorship that will independently own businesses that take title to the merchandise they handle. carry stock, maintain a sales force, offer credit, make deliveries and provide management services. The distributors will sell primarily to the retailers and provide a full range of services.
Mother Earth Products Inc aim to distribute nationwide in the next five years,aside from ensuring that the product builds solid brand awareness. They also need to make sure that they have strong presence in their target markets. Distributorship is the chosen channel to make the product available for the customer in provinces. Household peneration as a strategy will insure that the product will have strong presence in the market.
The Company will have open house for distributorship in Mother Earth office for Central and Northern Luzon and Metro Manila Area.
How to entice Distributors?
•Offer Above average Distributor’s Discount. Prevailing Volume discount is 7.5%- 10%. We will offer the distributor volume discount of as high as 12-15% with certain volume quota allocations.
•Looser Payment Terms (45 to 60 days), compared to the prevailing market terms of 30 days.
•Promotional Support (Banners, wobblers, pamplets, leaflets, etc)
How to entice Provincial Dealers?
•Offer Above average Dealer’s Discount. Prevailing volume discount for retailers is 3-6%, We will offer the retailers discounts of as high as 6-10% with certain quota allocations
•Looser Payment Terms (45 to 60 days). compared to the prevailing market terms of 30 days
•Promotional Support in the form of providing equipment such as Freezer’s and Refrigerators for guaranteed volume
•Merchandising Support (POP materials)
Requirements:
- Applicant-distributor to submit letter of intent.
- Plans (distribution of Fresh or processed meats or combination).
- Location (with map showing specific location).
- Background information about the aplicant-distributor/dealer
Letter of intent will be submitted to or
Maunawa St, Duquit, Maqbalacat, Pampanga, Philippine 2010
For Other inquiries pla call:
Tel # (6345) 892-65-43 FAX # (6345) 332-3371
- Process Flow
- Submission of Letter of Intent to Mother Earth Philippines, Inc.
- Personal meeting with MEPI’s Marketing officer.
- Inspection and site evaluation/ ocular inspection of MEPI’s designated personnel.
- Assessment, recommendation from MEPI’s management to continue or discontinue.
- Contract signing
- Set-up Procurement and Delivery of MEPI products.
- Training, Calibration of expectation with the distributors and personnel.
- Start of operation.
Distribution Strategy (Fresh Meats)
STRATEGY #1
Mother Earth Products INC. (MEPI) needs to strengthen strategic partnership with its special accounts and distributors. Promote tie-up’s like with Robina Farms and Alcantara Farms. Explore additional customers from hotels, restaurants, caterers, supermarkets and dealers.
Mother Earth Products Inc aim to be the vendor of choice in Metro Manila, Southern, Central and Northern Luzon in the next five years. Aside from ensuring that the product builds solid brand awareness, they also need to make sure that they have strong presence in their target markets. Distributorship is the chosen channel to make the product available for the customer in provinces. Household peneration as a strategy will insure that the product will have strong presence in the market. MEPI also need to ensure availability of products in major supermarkets like SM and Puregold to tapped the bigger markets of mall goers.