Industry Analysis of Universal Robina Corporation

I.

Company Background

Universal Robina Corporation (URC) is one of the largest branded consumer food and beverage product companies in the Philippines and has a significant and growing presence in the ASEAN markets. URC is among the Philippines‟ pioneers in the industry. It has been in operations for over 50 years since John Gokongwei, Jr. established Universal Corn Products, Inc, a cornstarch manufacturing plant in Pasig, in 1954. URC is engaged in a wide range of food-related businesses, including the manufacture and distribution of branded consumer foods and is also in commodities namely sugar million band refining and flour milling and in Agro industrial businesses of farms mainly hogs and animal feed milling and related products. URC is the leading branded snackfoods and beverage company in the Philippines. URC – the first “Philippine Pan ASEAN Multinational” – has proven itself to be a trailblazer in manufacturing with a strong and loyal consumer base. The company has unswervingly showcased its innovation and excellence through its groundbreaking products, wide distribution network, and effective marketing. This is also evident in URC‟s formidable market leadership in snackfoods and beverages. John Gokongwei Jr. established a vision for URC to become one of the leading pan Asian players in snack foods and beverages. This vision is gradually being realized as URC has managed to transform itself from a Philippine operation to

a recognized Asian multinational with full scale operations in eight countries outside the Philippines, and soon in emerging markets like Myanmar, Laos and Cambodia. In addition, URC‟s products are already being exported to mainstream markets in the US, Europe, Japan, Korea the Middle East and frontier markets in West Africa, like Ghana and Nigeria. URC has built three strong regional brands over the years; “Jack „n Jill” for snack foods, “C2” for ready to drink tea, and “Great Taste” for coffee, with these brands becoming popular across the ASEAN region. URC‟s key to success is to build very strong branding through a robust product innovation pipeline, consumer-centric marketing and world-class manufacturing and supply chain management. URC will continue to transform itself in line with the changing external dynamics in line with increasing opportunities in Asia and beyond. Mission Universal Robina Corporation (URC) is one of the largest branded food product companies in the Philippines and has a growing presence in other ASEAN markets. Vision URC's vision is to be the best Philippine food and beverage company, with a powerful presence throughout the ASEAN region, carrying a wide portfolio of delightful brands of exceptional quality and value, equipped with

efficient systems and motivated people. We are committed in making lives a truly fun experience. Core Values Passion to Win: We build organizational capability by being entrepreneurial and proactive, driven by a sense of urgency and purpose. We continuously challenge ourselves to deliver world-class brands and consistently rally our people to strive for excellence. Dynamism: We cultivate a culture of innovation and productive working relationships. We continuously find ways to improve organizational and people capabilities to meet constantly challenging consumer needs. Integrity: We are guided by transparency, ethics, and fairness. We build the business with honour and are committed to good governance. Our processes and products meet the highest standards. We are credible in our dealings with both internal and external stakeholders. Courage: We seize opportunities in building long-term, sustainable businesses. We make tough people and business decisions to ensure competitive advantage.

II.

Industry Analysis

2.1

Competitive Analysis

2.2

Financial Analysis

2.3

Marketing Analysis

Current Target Market 

“Health conscious” people.

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Demographic (10-45,M/F, social class ABCD, single/married)

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People who leaves in an urban places.

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Generation Y who wants healthy-living needs to stay healthy in both mind and body.

Positioning 

Branded Consumer Foods Group- Domestic



Universal Robina Corporation (URC) is the leading branded convenience food and beverage company in the Philippines. Touted as the country‟s first “Philippine multinational‟ as it has the widest geographical footprint among local manufacturers, URC has blazed the trail for the branded foods industry.



URC is also a trendsetter in the beverage industry with its coffee and ready-to-drink products. It grew the local non-carbonated beverage market with the successful launch and continuing promotion of C2 Cool & Clean and Green Tea.

Brand Consumer Foods Group- International 

Looking ahead to “a world without borders,” URC has expanded steadily outside the country. At present, URC maintains manufacturing facilities in China, Thailand, Malaysia, Vietnam and Indonesia and has a strong foothold in the countries it presently operates in. URC products, under the “Jack ‟n Jill” megabrand, are widely available in most trade channels in Thailand, Malaysia, Singapore, Indonesia, Vietnam, China, and Hong kong.



“ACES,” a brand bought by URC from Aces food Network Pte Ltd in 2005, continues to be a leader in the instant cereal and oatmeal markets in China. The purchase of the brand is a strategic move for URC

as it

allows improved distribution in key geographic markets and provides a strong, well-regarded brand that will be a platform for future growth in china. Products- Promotion Program Analysis 

Music videos, commercials, and booths

SWOT Analysis  Strengths 

Broad Products Portfolio

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Markets Leadership: Philippines

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Effective communication

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High R&D

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Innovation

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Online growth

 Weaknesses 

Operational Performance

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Trade Receivables

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No online presence

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Not innovative

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Not diversified

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Poor supply chain



Weak management team



Weak real estate

 Opportunities  Growing Snacks Market  Markets Outlook: Chocolate Confectioneries  Acquisitions  Asset leverage  Financial markets ( raise money through debt, etc,)  Emerging markets expansion abroad  Innovation  Online  Threats  Changing Consumer Preferences

 Stringent Governmental Regulations  Competition  Cheaper technology  Economic slow down  External changes (governmental, politics, taxes, etc.)  Exchange rate fluctuations  Lower cost competitors or imports III.

Company Analysis

Company History Universal Robina Corporation (URC) traces its beginnings all the way back to 1954. John Gokongwei was doing very well then as a trader/importer. He had learned the trade when his father died before the war, and had worked hard through the war and post war years to prosper. However, while he thrived, he took a long hard look at his company, and correctly predicted that trading would remain a low-margin business. On the other hand, a successful manufacturer controlling its own production and distribution would command more profitable margins. Mr. John decided to construct a corn milling plant to produce glucose and cornstarch, Universal Corn Products (UCP), the first linchpin of the company that would become the URC we know today. For a time, business was good. However, Mr. John was still looking ahead, working with an eye towards the future. While the business was doing very

well, it was producing essentially a commodity, which a customer could easily access elsewhere. To stay ahead in the game, Mr. John had to diversify by producing and marketing his own branded consumer foods, similar to the multinational companies in the country like Nestle and Procter & Gamble. In a sense, he wanted to put up the first „local‟ MNC, borne out of their best practices. Thus, in 1961, Consolidated Food Corporation was born. Their first „home run‟ product was Blend 45, the first locally-manufactured coffee blend, dubbed as the “Pinoy coffee”. This became the largest-selling coffee brand in the market, even beating market leaders Café Puro and Nescafe. After coffee came chocolates. Nips, a panned chocolate were a staple of Filipino childhood. In 1963, Robina Farms started operations, beginning with poultry products. This was also the beginning of the vertical integration of the Gokongwei businesses, as the farms would be able to purchase feeds from UCP in the future. Later that decade, Robichem Laboratories would be put up, to cater to the veterinary needs of the farms businesses. Robina Farms expanded as it entered the hogs business in the latter part of the 70s. 1966 saw the establishment of Universal Robina Corporation, which pioneered the salty snacks industry through Chiz Curls, Chippy, and Potato Chips, under the “Jack „n Jill” brand. Other snack products would follow over the years, as

the company successfully introduced market leaders like Pretzels, Piattos, and Maxx. The coming decades saw more acquisitions and expansion. In the early 1970s, the family entered the commodities business through the formation of Continental Milling Corporation, for flour milling and production. The late 1980s brought the acquisition of three sugar mills and refineries, under URC Sugar. These two businesses provided stable cash flows, and allowed for further vertical integration in the supply chain, to help URC weather any volatility in the cyclical commodities markets. In line with this strategy, the late 1990s saw the entry of URC into the plastics business, through URC Packaging. While the businesses became more diversified, the companies were slowly integrated in order to streamline and minimize costs. In 2005, the present structure of the group was completed. All the different companies are now organized under the Universal Robina Corporation umbrella, divided into 3 focused groups: •

The Branded Consumer Food Group, comprised of BCFG Domestic

(including packaging) and International •

The Agro-Industrial group, comprised of Universal Corn Products, Robina

Farms, and Robichem •

And the Commodities group, with the Sugar and Flour divisions