adss institutional

3/3/2011

1

Institutional markets for fresh vegetables

S.B. Concepcion

SEARCA Professorial Chair

2

Consumption Trends

3/3/2011

2

3

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

3/3/2011

3

SEARCA Professorial Chair Lecture, 1 March 2011

5

0

10

20

30

40

50

60

1978 1982 1987 1993 2003

kilos

Per capita consumption of vegetables, PhilippinesSource: FNRI 2003


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

3/3/2011

4


Per capita consumption of vegetables in the Philippines is low

8

Retail Trends

3/3/2011

5

SEARCA Professorial Chair Lecture, 1 March 2011 9

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


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

3/3/2011

6


Increased purchases from supermarkets rather than wet markets is likely


Objective

ToidentifythedifferentinstitutionalmarketsegmentsforvegetablesinsouthernPhilippines

Todeterminetheneedsandcharacteristicsofthesemarketsegment

Tofindopportunitiesforsmallholderfarmers

3/3/2011

7


Methodology

Keyinformantinterviews Fastfoodindustrybuyers Executivechefs Foodserviceoperators Wholesalersandconsolidators Retailers

MajorurbancentersinMetroManila,Visayas&Mindanao


CebuBacolodTagbilaran

IloiloTaclobanOrmocDavao

Dumaguete

CagayandeOroGeneralSantos

MetroManila

3/3/2011

8


The Philippine Vegetable Supply Chain 15

Vegetable Farmer

Wholesalers from Urban Wet Markets

Traders/Consolidators

Vegetable Processors

SupermarketsFast Food ChainsHotels & Restaurants

Wet Marketretailers Consumers


Segmentation

Dividingthemarketintodistinctgroupsofbuyerswithdifferentneeds,characteristics,orbehaviorwhomightrequire

separateproductsormarketingmixes

16

3/3/2011

9

MarketSegmentagroupofcustomersandconsumerswhorespondina

similarwaytothegivensetofmarketingstimuli

17


Urban centers

Rural areas

Upper income Household

market

Institutionalmarket

Upper income Household

market

3/3/2011

10


Consumer segments

ABhashighconsumptionofalmostalltypesofvegetables

WhiletheCandDhavehigherconsumptionthanABinstringbeans,eggplant,ampalaya,camote topsandpechay

Ehavelowestpercapitaconsumptionofallkindsofvegetables

(CountryStat )


Segmentation variables

Roleinthechain Wheretheyare Whotheyserve Whatproductstheyrequire Whatvolumeandquality

3/3/2011

11


SEGMENT 1:Upscale hotels,

resorts, restaurants,

supermarkets

Foreign tourist

Upper income consumers


3/3/2011

12



Segment 1

PlushMarket Pleasure,leisureandworkinupscalestyle

3/3/2011

13


Segment 1: Plush Market

ProductNeeds Requiresthewidestrange,includingsaladvegetables,temperatevegetables(chopsuey)andtropicalvegetables(pakbet),andspicesandherbs(lamas)

specialtyvegetableslikebabycarrots,mushrooms,leeks,differentkindsofsaladvegetables

Requiresvegetablestobewashed,freeofsoil,trimmedandridofallpackaging

Mayrequireonion,garlicandgingertobepeeled



Mostlyqualitydiscerning Somehaveformalproductdescriptions Somerequiresupplierstohavefoodsafetyprogram Somerequirethatsourcespracticesustainableagriculture

Someinstitutionsfixpricesweekly

3/3/2011

14



Accountsfor5%oftheMetroManilaandMetroCebumarket MetroManila

586,500individuals or451tonsperweek

MetroCebu 40,800individuals or31tonsperweek

27



Understandstheconceptoforganicandsafevegetables

Willingtopaya10%premiumfororganicvegetables

Implications Producersmustmovetowardtheproductionofsafe,lowchemicaland/ororganicvegetables

Ifonly10%ofthesegment1marketwillactuallybuyorganic,thisisstillasizeabledemandof45tonsaweek

28

3/3/2011

15



Implications: Producersmustbeabletogrowallkindsofvegetablesthroughouttheyear.

Therefore,theywillneedprotectedcroppingorrainshelters.

But,MindanaoalsohasawindowofopportunityduringthemonsoonmonthsofLuzon

29


SEGMENT 2:Business hotels,

mid-priced resorts &

restaurants, supermarket

chains

Budget tourists

Convention market

Upper income and some middle

income consumers

3/3/2011

16

Segment 2: Bus & Bud

Oneofthemanybrandsnowvisibleinsupermarketchains


3/3/2011

17



Segment 2: Bus & Bud

Morepriceconsciousthansegment1 Practicedflexibilityintheproductstheyoffersothattheunavailabilityofonetypeofvegetablewillnotaffectoperations

Seldomhassaladvegetables,mostlytemperate(chopsuey)andtropicalvegetables(pakbet)

3/3/2011

18



Vegetable Farmer




Wet Marketretailers consumers


1



SEGMENT 3:Wholesalers

Consolidators

Upscale institutional market

Business market

Wet market retailers

3/3/2011

19


Segment 3: the Trad Mid

ThetraditionalmiddleWholesalers Consolidators Traders

38

3/3/2011

20

39

40

3/3/2011

21

41

42

3/3/2011

22

43

44

3/3/2011

23

45

46

3/3/2011

24

47

48

3/3/2011

25

49


Segment 3: The Trad Mid

Requirethewidestrangeoffreshvegetables Accountsforthelargestvolumeofvegetablestradedonwholesalemarket

Usethebetterqualityvegetablestosupplysegment1,andthelowerqualitytoserviceothermarkets

Usemultiplesources Hasthecapacitytoimportiftheirlocalsupplierscannotmeettheirdemand.

3/3/2011

26

Tomato wholesaler in Iloilo



Vegetable Farmer





Wet Marketretailers consumers



Wet Marketretailers

3/3/2011

27


SEGMENT 4:Wet market

retailers

Canteens and eateries

Middle and lower income consumers


Segment 4: the Wets

Accountsfor7580%ofretailsalesoffreshvegetablesinthePhilippines

Qualityrequirementsnotverystrict Verypriceconscious Mostlytropicalvegetables Generallynoshortageofsupply Productsthatbegintodeterioratearecutandmadeintoreadytocookvegetablemixes.

3/3/2011

28

Bacolod

IloiloTacloban

Ormoc

3/3/2011

29


Implications for smallholder producers

SmallProducersmustchoosetoservemarketsegmentsthatarewithintheircapacitytosupply

Collaborativemarketinggroupsareimperative Marketdevelopmentforspecificmarketnichescanhelpexpandthemarketofsmallproducersfortheirproducts,howeverchaincoordinationbecomesanessentialingredientforsuccess.


Challenges for small producers

Legalidentitiesanddocuments Needforshorttermcreditfacilities Needfortechnicalinformation,esp forspecialtyvegetables

Needtocommittothemarketandestablishlongtermrelationships

3/3/2011

30


Acknowledgment

ACIAR CurtinUniversity,WesternAustralia UPSTREAM


Thank you

adss institutional

Documents