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3/3/2011

Institutional markets
for fresh vegetables
S.B. Concepcion
SEARCA Professorial Chair

Consumption
Trends

3/3/2011

Imports and Exports of Vegetables


in the Philippines 1990-2005
000 MT

800
600
Export Quantity
400
Import Quantity
200

2004

2002

2000

1998

1996

1994

1992

1990

Year

Source: FAOSTAT

1,800
1,600
1,400
1,200
1,000
800
600
400
200
-

Production
Imports
Total Supply
Exports

2000
2001
2002
2003
2004
2005
2006
2007
2008
2009

Axis Title

Philippine Supply of Vegetables


2000-2009

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kilos

60
50
40
30
20
10
0
1978

1982

1987

1993

2003

Per capita consumption of vegetables, Philippines


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Source: FNRI 2003
SEARCA Professorial Chair Lecture, 1 March 2011

Vegetable Consumption and Production in the


Philippines (1990-2005)
6,000
5,000
4,000
3,000
2,000
1,000
0
-1,000
-2,000

1990 1992 1994 1996 1998 2000 2002 2004


Year
Consumption

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Source:
FAOSTAT

Production

Surplus/(Deficit)

SEARCA Professorial Chair Lecture, 1 March 2011

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Per capita consumption of


vegetables in the
Philippines is low

SEARCA Professorial Chair Lecture, 1 March 2011

Retail Trends

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Retail Market Indicators, Philippines, 2004-2006


Growth rates
(%)

Year

Retail market indicators

200405

200506

2004

2005

2006

38,319

43,718

50,103

14

15

444

498

560

12

12

24,172

27,284

30,948

13

13

280

311

346

11

11

Modern grocery distribution,


total sales (USD mn)

8,946

9,813

11,520

10

17

Modern grocery distribution,


total sales /capita (USD)

104

112

129

15

Modern grocery distribution,


Grocery sales (USD mn)

7,552

8,382

10,198

11

22

88

95

114

20

Retail sales (USD mn)


Retail sales / capita (USD)
Grocery retail sales ( USD mn)
Grocery retail sales / capita
(USD)

Modern grocery distribution,


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Grocery sales/capita(USD)

SEARCA Professorial Chair Lecture, 1 March 2011

Source: Planet Retail

Top 5 grocery retailers 2005

Company

No. of
Stores

Sales Area
(sq.m)

Average
Sales
Area
(sqm)

Retail
Banner
Sales 2005
(USD mn)

Market
Share (%)

SM Group

181

438,250

2,421

1,163

11.9

Mercury
Drug

510

153,000

300

879

224
183

287,600
214,348

1,284
1,171

562
449

5.7
4.6

16

134,400

8,400

332

3.4

3,385

34.5

6,428

65.5

9,813

100

Robinsons
Rustan
SHV Makro
Sub Total
Other
Total
10

1,114 1,227,598

SEARCA Professorial Chair Lecture, 1 March 2011

Source: Planet Retail

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Increased purchases from


supermarkets rather than
wet markets is likely

SEARCA Professorial Chair Lecture, 1 March 2011

Toidentifythedifferentinstitutional
marketsegmentsforvegetablesin
southernPhilippines
Todeterminetheneedsand
characteristicsofthesemarketsegment
Tofindopportunitiesforsmallholder
farmers

Objective
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Keyinformantinterviews

Fastfoodindustrybuyers
Executivechefs
Foodserviceoperators
Wholesalersandconsolidators
Retailers

MajorurbancentersinMetroManila,
Visayas&Mindanao

Methodology
SEARCA Professorial Chair Lecture, 1 March 2011

MetroManila
Cebu
Bacolod
Tagbilaran
Dumaguete
Iloilo
Tacloban
Ormoc
Davao
CagayandeOro
GeneralSantos
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Wholesalers
from Urban
Wet Markets
Vegetable
Farmer

Traders/
Consolidators

Wet
Market
retailers

Consumers

Supermarkets
Fast Food
Chains
Hotels &
Restaurants

Vegetable
Processors

The Philippine Vegetable Supply Chain

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SEARCA Professorial Chair Lecture, 1 March 2011

Segmentation
Dividingthemarketintodistinctgroupsofbuyerswithdifferent
needs,characteristics,orbehaviorwhomightrequire
separateproductsormarketingmixes
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MarketSegment
agroupofcustomersandconsumerswhorespondina
similarwaytothegivensetofmarketingstimuli

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Upper income
Household
market
Institutional
market

Upper income
Household
market

Urban centers

Rural areas

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ABhashighconsumptionofalmostall
typesofvegetables
WhiletheCandDhavehigher
consumptionthanABinstringbeans,
eggplant,ampalaya,camote topsand
pechay
Ehavelowestpercapitaconsumptionof
allkindsofvegetables
(CountryStat )

Consumer segments
SEARCA Professorial Chair Lecture, 1 March 2011

Roleinthechain
Wheretheyare
Whotheyserve
Whatproductstheyrequire
Whatvolumeandquality

Segmentation variables
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SEGMENT 1:
Upscale hotels,
resorts,
restaurants,
supermarkets

Foreign tourist

Upper income
consumers

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PlushMarket Pleasure,leisureandworkin
upscalestyle

Segment 1
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ProductNeeds
Requiresthewidestrange,includingsaladvegetables,
temperatevegetables(chopsuey)andtropical
vegetables(pakbet),andspicesandherbs(lamas)
specialtyvegetableslikebabycarrots,mushrooms,
leeks,differentkindsofsaladvegetables
Requiresvegetablestobewashed,freeofsoil,
trimmedandridofallpackaging
Mayrequireonion,garlicandgingertobepeeled

Segment 1: Plush Market


SEARCA Professorial Chair Lecture, 1 March 2011

Mostlyqualitydiscerning
Somehaveformalproductdescriptions
Somerequiresupplierstohavefoodsafetyprogram
Somerequirethatsourcespracticesustainable
agriculture
Someinstitutionsfixpricesweekly

Segment 1: Plush Market


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Accountsfor5%oftheMetroManilaandMetro
Cebumarket
MetroManila
586,500individuals
or451tonsperweek
MetroCebu
40,800individuals
or31tonsperweek

Segment 1: Plush Market

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SEARCA Professorial Chair Lecture, 1 March 2011

Understandstheconceptoforganicandsafe
vegetables
Willingtopaya10%premiumfororganic
vegetables
Implications
Producersmustmovetowardtheproductionofsafe,
lowchemicaland/ororganicvegetables
Ifonly10%ofthesegment1marketwillactuallybuy
organic,thisisstillasizeabledemandof45tonsa
week

Segment 1: Plush Market

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Implications:
Producersmustbeabletogrowallkindsof
vegetablesthroughouttheyear.
Therefore,theywillneedprotectedcropping
orrainshelters.
But,Mindanaoalsohasawindowof
opportunityduringthemonsoonmonthsof
Luzon

Segment 1: Plush Market

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SEARCA Professorial Chair Lecture, 1 March 2011

SEGMENT 2:
Business hotels,
mid-priced
resorts &
restaurants,
supermarket
chains

Upper income
and some middle
income
consumers

Budget tourists

Convention
market
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Oneofthe
manybrands
nowvisiblein
supermarket
chains

Segment 2: Bus & Bud

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Morepriceconsciousthansegment1
Practicedflexibilityintheproductsthey
offersothattheunavailabilityofone
typeofvegetablewillnotaffect
operations
Seldomhassaladvegetables,mostly
temperate(chopsuey)andtropical
vegetables(pakbet)

Segment 2: Bus & Bud


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Wholesalers
from Urban
Wet Markets
Vegetable
Farmer

Traders/
Consolidators

Wet
Market
retailers

consumers

Supermarkets
Fast Food
Chains
Hotels &
Restaurants

Vegetable
Processors

The Philippine Vegetable Supply Chain

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Upscale institutional
market
SEGMENT 3:
Wholesalers
Consolidators

Business market

Wet market retailers


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Thetraditionalmiddle
Wholesalers
Consolidators
Traders

Segment 3: the Trad Mid


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40

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46

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Requirethewidestrangeoffreshvegetables
Accountsforthelargestvolumeof
vegetablestradedonwholesalemarket
Usethebetterqualityvegetablestosupply
segment1,andthelowerqualitytoservice
othermarkets
Usemultiplesources
Hasthecapacitytoimportiftheirlocal
supplierscannotmeettheirdemand.

Segment 3: The Trad Mid


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Tomato wholesaler in Iloilo

Wholesalers
from Urban
Wet Markets
Vegetable
Farmer

Traders/
Consolidators

Wet
Market
retailers

consumers

Supermarkets
Fast Food
Chains
Hotels &
Restaurants

Vegetable
Processors

The Philippine Vegetable Supply Chain

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SEGMENT 4:
Wet market
retailers
Canteens and
eateries

Middle and lower


income consumers

SEARCA Professorial Chair Lecture, 1 March 2011

Accountsfor7580%ofretailsalesoffresh
vegetablesinthePhilippines
Qualityrequirementsnotverystrict
Verypriceconscious
Mostlytropicalvegetables
Generallynoshortageofsupply
Productsthatbegintodeterioratearecut
andmadeintoreadytocookvegetable
mixes.

Segment 4: the Wets


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Bacolod

Ormoc
Iloilo
Tacloban

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SmallProducersmustchoosetoservemarket
segmentsthatarewithintheircapacityto
supply
Collaborativemarketinggroupsareimperative
Marketdevelopmentforspecificmarketniches
canhelpexpandthemarketofsmallproducers
fortheirproducts,howeverchaincoordination
becomesanessentialingredientforsuccess.

Implications for
smallholder producers
SEARCA Professorial Chair Lecture, 1 March 2011

Legalidentitiesanddocuments
Needforshorttermcreditfacilities
Needfortechnicalinformation,esp for
specialtyvegetables
Needtocommittothemarketand
establishlongtermrelationships

Challenges for small


producers
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ACIAR
CurtinUniversity,WesternAustralia
UPSTREAM

Acknowledgment
SEARCA Professorial Chair Lecture, 1 March 2011

Thank you

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