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3/3/2011
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Institutional markets for fresh vegetables
S.B. Concepcion
SEARCA Professorial Chair
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Consumption Trends
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Source: FAOSTAT
Imports and Exports of Vegetables in the Philippines 1990-2005
0
200
400
600
80019
90
1992
1994
1996
1998
2000
2002
2004
Year
000
MT
Export Quantity
Import Quantity
- 200 400 600 800
1,000 1,200 1,400 1,600 1,800
2000
2001
2002
2003
2004
2005
2006
2007
2008
2009
Axi
s Titl
e
Philippine Supply of Vegetables 2000-2009
ProductionImportsTotal SupplyExports
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SEARCA Professorial Chair Lecture, 1 March 2011
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0
10
20
30
40
50
60
1978 1982 1987 1993 2003
kilos
Per capita consumption of vegetables, PhilippinesSource: FNRI 2003
SEARCA Professorial Chair Lecture, 1 March 2011
Vegetable Consumption and Production in the Philippines (1990-2005)
-2,000-1,000
01,0002,0003,0004,0005,0006,000
1990 1992 1994 1996 1998 2000 2002 2004Year
Consumption Production Surplus/(Deficit)
6Source: FAOSTAT
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SEARCA Professorial Chair Lecture, 1 March 2011
Per capita consumption of vegetables in the Philippines is low
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Retail Trends
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Retail market indicatorsYear Growth rates (%)
2004 2005 2006 2004-052005-
06Retail sales (USD mn) 38,319 43,718 50,103 14 15Retail sales / capita (USD) 444 498 560 12 12Grocery retail sales ( USD mn) 24,172 27,284 30,948 13 13Grocery retail sales / capita (USD) 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 8 15
Modern grocery distribution, Grocery sales (USD mn) 7,552 8,382 10,198 11 22
Modern grocery distribution, Grocery sales/capita(USD) 88 95 114 8 20Source: Planet Retail
Retail Market Indicators, Philippines, 2004-2006
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Top 5 grocery retailers 2005
CompanyNo. of Stores
Sales Area(sq.m)
Average Sales Area (sqm)
RetailBanner
Sales 2005 (USD mn)
Market Share (%)
SM Group 181 438,250 2,421 1,163 11.9Mercury Drug 510 153,000 300 879 9
Robinsons 224 287,600 1,284 562 5.7Rustan 183 214,348 1,171 449 4.6SHV Makro 16 134,400 8,400 332 3.4Sub Total 1,114 1,227,598 3,385 34.5
Other 6,428 65.5
Total 9,813 100
Source: Planet Retail
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Increased purchases from supermarkets rather than wet markets is likely
SEARCA Professorial Chair Lecture, 1 March 2011
Objective
ToidentifythedifferentinstitutionalmarketsegmentsforvegetablesinsouthernPhilippines
Todeterminetheneedsandcharacteristicsofthesemarketsegment
Tofindopportunitiesforsmallholderfarmers
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Methodology
Keyinformantinterviews Fastfoodindustrybuyers Executivechefs Foodserviceoperators Wholesalersandconsolidators Retailers
MajorurbancentersinMetroManila,Visayas&Mindanao
SEARCA Professorial Chair Lecture, 1 March 2011
CebuBacolodTagbilaran
IloiloTaclobanOrmocDavao
Dumaguete
CagayandeOroGeneralSantos
MetroManila
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The Philippine Vegetable Supply Chain 15
Vegetable Farmer
Wholesalers from Urban Wet Markets
Traders/Consolidators
Vegetable Processors
SupermarketsFast Food ChainsHotels & Restaurants
Wet Marketretailers Consumers
SEARCA Professorial Chair Lecture, 1 March 2011
Segmentation
Dividingthemarketintodistinctgroupsofbuyerswithdifferentneeds,characteristics,orbehaviorwhomightrequire
separateproductsormarketingmixes
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MarketSegmentagroupofcustomersandconsumerswhorespondina
similarwaytothegivensetofmarketingstimuli
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Urban centers
Rural areas
Upper income Household
market
Institutionalmarket
Upper income Household
market
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Consumer segments
ABhashighconsumptionofalmostalltypesofvegetables
WhiletheCandDhavehigherconsumptionthanABinstringbeans,eggplant,ampalaya,camote topsandpechay
Ehavelowestpercapitaconsumptionofallkindsofvegetables
(CountryStat )
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Segmentation variables
Roleinthechain Wheretheyare Whotheyserve Whatproductstheyrequire Whatvolumeandquality
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SEGMENT 1:Upscale hotels,
resorts, restaurants,
supermarkets
Foreign tourist
Upper income consumers
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Segment 1
PlushMarket Pleasure,leisureandworkinupscalestyle
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Segment 1: Plush Market
ProductNeeds Requiresthewidestrange,includingsaladvegetables,temperatevegetables(chopsuey)andtropicalvegetables(pakbet),andspicesandherbs(lamas)
specialtyvegetableslikebabycarrots,mushrooms,leeks,differentkindsofsaladvegetables
Requiresvegetablestobewashed,freeofsoil,trimmedandridofallpackaging
Mayrequireonion,garlicandgingertobepeeled
SEARCA Professorial Chair Lecture, 1 March 2011
Segment 1: Plush Market
Mostlyqualitydiscerning Somehaveformalproductdescriptions Somerequiresupplierstohavefoodsafetyprogram Somerequirethatsourcespracticesustainableagriculture
Someinstitutionsfixpricesweekly
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Segment 1: Plush Market
Accountsfor5%oftheMetroManilaandMetroCebumarket MetroManila
586,500individuals or451tonsperweek
MetroCebu 40,800individuals or31tonsperweek
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Segment 1: Plush Market
Understandstheconceptoforganicandsafevegetables
Willingtopaya10%premiumfororganicvegetables
Implications Producersmustmovetowardtheproductionofsafe,lowchemicaland/ororganicvegetables
Ifonly10%ofthesegment1marketwillactuallybuyorganic,thisisstillasizeabledemandof45tonsaweek
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Segment 1: Plush Market
Implications: Producersmustbeabletogrowallkindsofvegetablesthroughouttheyear.
Therefore,theywillneedprotectedcroppingorrainshelters.
But,MindanaoalsohasawindowofopportunityduringthemonsoonmonthsofLuzon
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SEGMENT 2:Business hotels,
mid-priced resorts &
restaurants, supermarket
chains
Budget tourists
Convention market
Upper income and some middle
income consumers
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Segment 2: Bus & Bud
Oneofthemanybrandsnowvisibleinsupermarketchains
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Segment 2: Bus & Bud
Morepriceconsciousthansegment1 Practicedflexibilityintheproductstheyoffersothattheunavailabilityofonetypeofvegetablewillnotaffectoperations
Seldomhassaladvegetables,mostlytemperate(chopsuey)andtropicalvegetables(pakbet)
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The Philippine Vegetable Supply Chain 35
Vegetable Farmer
Wholesalers from Urban Wet Markets
Traders/Consolidators
Vegetable Processors
Wet Marketretailers consumers
SupermarketsFast Food ChainsHotels & Restaurants
1
Vegetable Processors
SEARCA Professorial Chair Lecture, 1 March 2011
SEGMENT 3:Wholesalers
Consolidators
Upscale institutional market
Business market
Wet market retailers
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Segment 3: the Trad Mid
ThetraditionalmiddleWholesalers Consolidators Traders
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Segment 3: The Trad Mid
Requirethewidestrangeoffreshvegetables Accountsforthelargestvolumeofvegetablestradedonwholesalemarket
Usethebetterqualityvegetablestosupplysegment1,andthelowerqualitytoserviceothermarkets
Usemultiplesources Hasthecapacitytoimportiftheirlocalsupplierscannotmeettheirdemand.
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Tomato wholesaler in Iloilo
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The Philippine Vegetable Supply Chain 52
Vegetable Farmer
Wholesalers from Urban Wet Markets
Traders/Consolidators
Vegetable Processors
SupermarketsFast Food ChainsHotels & Restaurants
Wet Marketretailers consumers
Wholesalers from Urban Wet Markets
Traders/Consolidators
Wet Marketretailers
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SEGMENT 4:Wet market
retailers
Canteens and eateries
Middle and lower income consumers
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Segment 4: the Wets
Accountsfor7580%ofretailsalesoffreshvegetablesinthePhilippines
Qualityrequirementsnotverystrict Verypriceconscious Mostlytropicalvegetables Generallynoshortageofsupply Productsthatbegintodeterioratearecutandmadeintoreadytocookvegetablemixes.
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Bacolod
IloiloTacloban
Ormoc
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Implications for smallholder producers
SmallProducersmustchoosetoservemarketsegmentsthatarewithintheircapacitytosupply
Collaborativemarketinggroupsareimperative Marketdevelopmentforspecificmarketnichescanhelpexpandthemarketofsmallproducersfortheirproducts,howeverchaincoordinationbecomesanessentialingredientforsuccess.
SEARCA Professorial Chair Lecture, 1 March 2011
Challenges for small producers
Legalidentitiesanddocuments Needforshorttermcreditfacilities Needfortechnicalinformation,esp forspecialtyvegetables
Needtocommittothemarketandestablishlongtermrelationships
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Acknowledgment
ACIAR CurtinUniversity,WesternAustralia UPSTREAM
SEARCA Professorial Chair Lecture, 1 March 2011
Thank you
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