Universal Robina Corp - Hot Drinks Philippines

Euromonitor International : Local Company Profile March 2011

Universal Robina Corp - Hot Drinks

Philippines

List of Contents and Tables

Strategic Direction .................................................................................................................................................. 1 Key Facts ................................................................................................................................................................. 1 Summary 1 Universal Robina Corp: Key Facts .................................................................................... 1 Summary 2 Universal Robina Corp: Operational Indicators................................................................. 1 Company Background ............................................................................................................................................ 1 Production ............................................................................................................................................................... 2 Competitive Positioning .......................................................................................................................................... 2 Summary 3 Universal Robina Corp: Competitive Position 2010.......................................................... 2

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Universal Robina Corp - Hot Drinks

Philippines

UNIVERSAL ROBINA CORP

STRATEGIC DIRECTION
Universal Robina aims to increase its share of hot drinks, despite strong competition from both large and small companies, by launching more products through its Great Taste, Blend 45 and Choco Lava brands. It is expected to offer healthier alternatives to current offerings in order to take advantage of the growing health and wellness trend in the Philippines. Furthermore, the company is anticipated to focus its marketing campaigns on younger consumers who are more adventurous with regard to trying new products.

KEY FACTS
Summary 1 Universal Robina Corp: Key Facts Universal Robina Corp 110 E Rodriguez Jr Avenue, Quezon City, Philippines +63 (2) 671 2935/47 www2.urc.com.ph Manufacturer and exporter of consumer goods, agroindustrial products, commodity foods and packaging
Euromonitor International from company reports

Full name of company: Address: Tel: www: Activities:

Source:

Summary 2

Universal Robina Corp: Operational Indicators 2008 2009 Ps50.5 billion Ps4.1 billion 2010 Ps57.7 billion Ps8.1 billion

Net sales* Net profit*

Source: Notes:

Ps45.5 billion Ps341.0 million

Company research Year ended 30 September

COMPANY BACKGROUND
Universal Robina is a publicly-listed company on the Philippine Stock Exchange. It is a major subsidiary of JG Summit Holdings, one of the largest business conglomerates in the Philippines with interests in diverse industries including non-alcoholic drinks, packaged food, banking, real estate, air transportation, publishing and telecommunications. Its beginning dates back to 1954, when it was established as Universal Corn Products to produce glucose and cornstarch. Sales were good, however the companys founder, John Gokongwei, aspired to diversify its business by producing and marketing its own brands of consumer products to compete with the multinational companies selling food and beverages. In 1961, Mr Gokongwei founded Consolidated Food. Its first branded product was Blend 45, the first domestically-manufactured coffee. It then ventured into chocolates and launched Nips. In 1966, Universal Robina was established and it mainly produced snack products under the Jack n Jill brand. The succeeding years were marked by acquisition and integration of Mr Gokongweis businesses in order to build synergies and reduce costs, with the present structure of Universal Robina being finalised in 2005. In 2010, Universal Robina was one of the biggest fmcg manufacturers in the Philippines. The company operates three distinct divisions, namely the Branded Consumer Food Group; the Agro Industrial Group; and the Commodities Group. Of these, the Branded Consumer Food Group is its largest division, accounting for over three quarters of its turnover, which includes non-alcoholic drinks. It has also taken steps to conquer a wider market by entering other Asian countries such as Thailand, Vietnam, Indonesia, Singapore and Malaysia.

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Universal Robina Corp - Hot Drinks

Philippines

Universal Robinas non-alcoholic drinks are distributed nationally. It utilises an extensive network of retail distributors and leverages on its parent companys chain of supermarkets, convenience stores and restaurants to ensure that its hot and soft drinks are widely available to consumers in both off-trade and ontrade channels such as supermarkets, convenience stores, sari-sari stores, full-service restaurants, fast food establishments and carinderias.

PRODUCTION
Universal Robina has several manufacturing plants in key locations across the Philippines, including Pasig City, Quezon City, Laguna, Cebu, Tarlac, Pampanga, Cavite, Cagayan de Oro and Laguna, to meet domestic demand for its branded consumer food and non-alcoholic drinks products. These production and warehouse facilities are strategically located in various regions in order to reduce both transportation costs and delivery times. The companys success in the Philippines has encouraged it to venture into other international markets. In 2010, Universal Robina products were available in the US and other Asia Pacific countries. To facilitate the steady supply of goods to its export markets, Universal Robina has established its own manufacturing facilities in some of the territories where its products are well-distributed. This includes Indonesia, Vietnam, Thailand and Malaysia for biscuits, beverages and other product types. The recent success of C2 green tea has unlocked business opportunities for the company. The potential for growth is enhanced by the spread of the health and wellness trend across Asia and other continents.

COMPETITIVE POSITIONING
In 2010, Universal Robina was ranked second in hot drinks. Despite its strong position, its Ps1 billion sales in hot drinks only accounted for 3% of the markets total retail value sales in 2010 due to the domination of Nestl Philippines. The companys value share continued to decline in 2010 due to a lack of marketing and advertising campaigns for Great Taste coffee, which is Universal Robinas main sales driver in hot drinks, and increased competition due to the growing popularity of lower-priced brands such as Kopiko. In hot drinks, the company is positioned in more mature hot drinks offerings. In 2010, total volume sales of chocolate-based flavoured powder drinks recorded 1% growth. This was mainly due to the growing popularity of its RTD counterpart, which offers more convenience for consumers. Nevertheless, instant coffee remained dynamic despite high household penetration, registering 8% total volume growth in 2010. Universal Robina positions its products as mass market brands as the company targets middle- and lowincome consumers who comprise the bulk of the Philippine population. The company has a narrow hot drinks portfolio, competing only in instant coffee and chocolate-based flavoured powder drinks. Nonetheless, the company participates in other non-alcoholic drinks such as RTD tea, RTD coffee, energy drinks, bottled water and fruit/vegetable juice, which insulates it from threats faced in individual product categories. Universal Robina is more of a follower than an innovator in hot drinks. Instead of launching new and innovative products, the company tends to take the lead of international industry players and offer its own brand of the current popular hot drink available. To differentiate its offerings, Universal Robina takes into consideration the preference of Filipino consumers, tailoring its products to domestic tastes and selling products at more affordable prices.
Universal Robina Corp: Competitive Position 2010 Value share 2.6% 3.8%
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Summary 3 Product type Hot drinks Instant coffee

Source:

Rank 2 2

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