Friday, February 8, 2013

Gardenia Sales To Top P4B

Gardenia Bakeries, the country's largest breadmaker, expects sales to break R4-billion mark this year and double the sales to R8 billion in seven years on back of a strong economy and growing awareness of Filipinos of the health benefits of bread. "Right now, we're targeting R4 billion in sales. In seven years, we hope to make it to R8 billion," said Gardenia president Simplicio Umali Jr., , who steered the Singaporean subsidiary's bread company in the Philippines to become a household brand. But that is not much to crow about this lofty figure, said Umali. No doubt Gardenia is the country's single biggest bread manufacturing plant, the most modern with the most innovative products at world-class quality, but the industry is engaged in a cutthroat competition in this fast moving but low margin product. "In terms of profitability, we are managing, but not very much. Bread sector is not a highly profitable sector," said Umali as the company celebrates its 15th Anniversary. There are lots of factors affecting bread business in the country. "You can generate enough income, but it's not the type that would generate a lot of income like other investments because the cost of investment is too much," said Umali. Besides, he said, Gardenia cannot price its products in the Philippines as they should be because they have to consider the affordability among Filipino consumers. But in terms of volume, Gardenia is doing good. Their sales volume improves but their price did not move as much as competition heats up particularly from the Pinoy Tasty, the loaf bread designed for the low-income sector. Its competitors even resort to buy 1 take 1 promo or half the price. Gardenia enjoys a 65 percent market share for the total bread category. This year, Umali is more optimistic because it is an election year and based on experience consumption picks up during election year. "We are very optimistic. There is an increase in demand because with election, money flows to the countryside. There are a lot of expenditures they spend locally. There's a lot of money coming out into circulation so even the low income sector will have some money to spend," Umali said. Prices of bread have remained stable, but Umali said there is the possibility it can climb a little bit. Gardenia has proven to be good for the industry. While Gardenia has raised the bar in producing quality breads in the country, it has also the sheer muscle to keep prices in check. "We are not the type who takes advantage of the market. We create an opportunity. We do not want to destroy the competition. We encourage in fact the competition to expand in terms of product mix. If they are our direct competitor, we try to push them to develop other products wherein they can generate more income," said Umali. Umali, however, believes there is still enough room for new players but in areas where the giants are not present noting that some of the big players are even offering their products buy 1 take 1. Gardenia's real competition though is not the other fellow bread maker but rice, the staple food of Filipinos. It's not clear if they are winning in their campaign.