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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 countrys 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 Inc has 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.

Pampangas 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 4Ps


Comparison with competitors
Product Line: Frozen Meat Products
Direct Competitors

San Miguel Pure RFM (SWIFT) CDO Pampangas MEKENI Food Mother Earth
Foods Foodsphere Inc. Best Corporation Products, Inc.

Market 67% 6% 30%


Share
Awards
Making Everyday Undeniably Food that Pampanga's - none- Meatier, Tastier,
Taglines life a celebration good, flourishes life Best, " truly the Delicious
surprisingly "BEST"
affordable Can Afford
ang Saya
Swift Meat-
Bringing Family
Together
Positioning Positioning
Strategy: Superior Strategy:
Affordable

Products Refrigerated Swift Meats: Frozen Meat Process Food Process Food Process Meat
Meats: Hotdogs, Bacon, Products: Products : Products: Products: Beef
Sliced Hams, Whole Frankfurter, Hotdogs, Patties, Tocino; Hotdog, Franks; Cheezy
Hams, Bacons, Hotdogs, Halal Native Longaniza; Tapa; Hamburger Franks; Regular
Native and Chicken dogs Delicacies, Chorizo Macao; Patties, Hotdogs; Premium
Specialty Line; Traditional Ham, Embutido; Langoniza, Hotdogs; chicken
Ready to Cook Christmas Ham, Franks; Meat Tocino Franks; Sausage;
Line; Grocery specialties, Loaf; Marinated Langoniza;
Products Bacon, Chinese Meat products Tocino/Tapa;
Delicacies; Marinated Products;
Grocery Ground Products
Products; Dairy
products; Food
Service
Products; HRI
products
Complete product Complete
line of processed product line of
and canned foods processed and
canned foods
Distribution Nationwide Nationwide Nationwide Central Luzon, Central Luzon Central Luzon and
Retail through Northern and Metro Metro Manila
Retail through Retail through supermarkets, Luzon, and Manila
supermarkets, wet supermarkets wet markets Metro Manila Retail through
markets and wet Distribution Retail through supermarkets
Franchises: San markets through Retail through supermarkets, Distribution through
Miguel Food shops, provincial supermarkets, wet markets customized products
TJ Hotdog Fun no distributor distributors, wet markets for hotels, restaurants
Factory Booth customized Provincial and food chains.
products for Distributors
hotels,
restaurants and
food chains

Price Hotdog: P182/ kg. Hotdog: P182/ Hotdog: 171/kg Reg Hotdog : 158/kg Hotdogs: 117/kg
Sliced Ham: kg. Ham:67/250g Hotdog:119/kg Hamburger Ham: 42/250g
P102/250g Sliced Ham: Ulam Buger: Ham: 42/250g Patties: 164/kg Patties: 62/500g
Bacons: P275/500g Bacons: 42/225g Patties: 67/500g Ham : 208/kg Bacon:100/500g
Burger Patties: 180/400g Bacon: 174/400g Bacon:120/500g Tocino: 193/kg
P72/250g Burger Patties: Tocino: 99/450g Langoniza:
60/225g Langoniza: Tocino : 60/kg Tocino :79/500g
Tocino: P104/480g 42/500g 98/450/g Langoniza:85/450g
Longaniza: Tocino: 70/500g Langoniza:139/4 Sisig:67/400g
P74/500g Longaniza: 80g Tapa:79/500g
Sisig:P62/300g 60/kg

Competitive Affordable Competitive Affordable


Premium Pricing Pricing Pricing Pricing Pricing Affordable Pricing
Promotion Website, TV Website, TV Website, TV Website; Bill Website; Bill Leaflets, food
commercials, commercials, show, billboards, boards, print ads boards; tasting, banners, and
billboards, print ads billboards Environmental leaflets
print ads Awareness word of mouth and
campaign in personal and direct
school selling
nationwide

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 Garcias 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 Garcias 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, Products: Pork cuts: Regular Cuts; Product: Pork cuts: Regular
Monterey Ready-to-Cook Meals, Ground Pork; Ribs and Belly; Beef Cuts; Ground Pork; Ribs and
Magnolia Chicken and dairy Cuts: Regular Cuts; Ground Beef; Belly; Beef Cuts: Regular
products Prime Roast; Prime Steaks Cuts; Ground Beef; Prime
Roast; Prime Steaks

Distribution Nationwide Luzon Retail: supermarkets


Direct Selling through
Retail: supermarkets Retail: supermarkets customized products for hotels,
Franchise Meat Shops; through Distribution customized products for restaurants and food chains
customized products for hotels, hotels, restaurants and food chains
restaurants and food chains
Price Regular Pork cuts: 250/kg Regular Pork cuts: 154/kg Regular Pork cuts: 185/kg

Regular Beef Cuts: 265/kg Regular Beef Cuts: 230/kg Regular Beef Cuts: 230/kg

Prime Steak: 405/kg Prime Steak: 285/kg Prime Steak: 350/kg


Beef Tenderloin: 799/kg Beef Tenderloin: 640/kg Beef Tenderloin: 799/kg
Rib Eye Steak: 450/kg Rib Eye Steak: 450/kg Rib Eye Steak: 385/kg
Promotion Website, TV commercials, Presence in major supermarkets Partnership and affiliations
billboards, print ads

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.
1. Raisers they grow the swine until ready for selling
2. Assemblers procures live animals from raisers or LOMS
3. Butchers slaughter animals himself or thru the abattoirs
4. Meat Processors service provider for choice cuts or may process meat for canning or vacumm sealed meats
5. Distributors- distribute meat to the selling outlets
6. 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.

Supply
MEPI Abattoir

Fresh Cut Processed

Supermarket HORECA HORECA Distributors Supermarkets


Hotel, Restaurants, Canteen Hotel, Restaurants, Canteen

North Park (R)


Robinsons Luk Foo (R) Angels Burger (R) ABCON Robinsons
Sizzling Plate (R) Twins Burger (R) Laras Gen. Mer. Waltermart
Big Buddha (R) Sea Merchant (H) Rivera, Jojo Pilipinas
Kenny Rogers MACRO
(R) Magic Club
Hacor Phils (R) Shopwise
Jollibee (R)
Maxs (R)
Sea Merchant
Inc. (H)
Double
Happiness (H)
Makati Shangrila
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
safety provides 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 daily SM 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 Luzon and 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 Distributors 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 Dealers 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 Freezers and Refrigerators for guaranteed volume
Merchandising Support (POP materials)
Requirements:
1. Applicant-distributor to submit letter of intent.
o Plans (distribution of Fresh or processed meats or combination).
o Location (with map showing specific location).
o Background information about the aplicant-distributor/dealer

Letter of intent will be submitted to www.motherearth.com.ph or


Maunawa St, Duquit, Maqbalacat, Pampanga, Philippine 2010
For Other inquiries pla call:
Tel # (6345) 892-65-43 FAX # (6345) 332-3371

2. Process Flow
o Submission of Letter of Intent to Mother Earth Philippines, Inc.
o Personal meeting with MEPIs Marketing officer.
o Inspection and site evaluation/ ocular inspection of MEPIs designated personnel.
o Assessment, recommendation from MEPIs management to continue or discontinue.
o Contract signing
o Set-up Procurement and Delivery of MEPI products.
o Training, Calibration of expectation with the distributors and personnel.
o 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-
ups 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.
Mother Earth commitment to the seal of quality, extended from its abattoirs in Pampanga to its chosen distribution networks. Quality
meat products are delivered by refrigerated Mother Earth trucks. MEPIs track will be deployed base on a well planned schedule of
Production Planning and Control department to well serve its customers.