October 16, 2013
Aldaba Theater, University of the Philippines
Quezon City, Philippines
5th RIPESS International Meeting on Social
Solidarity Economy

University of the Philippines-College of Social Work and
Co...
Growth opportunities
for organic products
Domestic organic market
described as a “niche” market sold
mainly in specialty ...
Growth opportunities
for organic products
Export market valued at US$18M
(2006), small compared to the
growing global dem...
Growth opportunities
for organic products
 Of the 2,480 sacks or 124 MT per
month or 488 MT per year ,
GlowCorp now trade...
Growth Opportunities
for Organic Products
Recognition from the Philippine
Association of Supermarkets, Inc (PASI)
and Hot...
Problem analysis
 Poverty is predominantly
rural, where 70% of the
poor reside in the
countryside. Two-thirds of
which de...
Problem Analysis
Constraints that undermine the
participation of small farmers in the
market:
Small-scale producers are
f...
Problem Analysis
Small producers are often
on the disadvantage due to
unfavorable trading
arrangements such as pricing
sc...
Principal Shareholders
Kappia, Abra
(Muscovado)
CARRD, Manila
(Muscovado, Organic Rice)
UMFI, Manila
(Market Consolidator)...
Our Business Model
Micro
Entrepreneurs
(MEs)

Premium Pricing
Dividends
Technical Assistance

Local
Consolidators
(LCs)
GL...
Vision
GlowCorp to be the leading market
distributor of globally-competitive
organic, natural and healthy agribased commod...
Mission
GlowCorp to develop new, nontraditional markets as well as
increase market share of organic
and natural products s...
Product lines
Our supply and
marketing chain
(rice)

CONSUMERS

Supermarkets

Distributors

Logistics

PDCI/Bios
Processing
Farmer
PDCI/...
Our supply and
marketing chain
(muscovado)

CONSUMERS

Supermarkets

Logistics

SKMFMC
Trading

Farmer

Processing
(SKMFM)...
Target Markets
Domestic Markets

 Rice retailers and
distributors
 Hotels and
restaurants
 Supermarkets

Export Markets
GLOWCORP in the [Value
Chain*]

*Michael Porter
Challenges and issues in the
Organic Value Chain

1.
PRODUCTION

Production inputs (seeds and
fertilizers)
2. Infrastructu...
Challenges and issues in the
Organic Value Chain

Processing

1.

Infrastructure (rice mills,
colour sorter, ware house/
p...
Challenges and issues in the
Organic Value Chain

Logistics

1.

Logistics operator/ cargo
forwarder



Bringing agricult...
Marketing
and Sales

Challenges and issues in the
Organic Value Chain
1. Warehousing
2. Marketing and distribution
system
...
Challenges and issues in the
Organic Value Chain

1.
Service

2.
3.

Technical support to organic
farmers in ensuring prod...
Engaging the Market: What are the
market requirements

Major factor in engaging
the market
Price
Product quality
Suppl...
Engaging the Market: What are the
market requirements
 In engaging supermarkets, be
prepared to provide:
 Mailer support...
GlowCorp’s experiences and challenges
in organic marketing
 Limited working capital for
expansion
 Erratic supply to sus...
GlowCorp’s experiences and challenges
in organic rice marketing
 Barriers of entry as new player in
the organic marketing...
Making the Organic Value Chain
Works
 Product differentiation-offer

something new or unique, create
barriers of entry
 ...
Making the Organic Value Chain
Works
 Producers, financing institutions

and government are necesarry
support system for ...
Making the Organic Value
Chain Works




Aside from the environmental implication of
organic farming, economic incentive...
Our Learning
Reducing the number of players in
the value chain becomes more
profitable and sustainable for
organic (rice) ...
Our Learning
 Every business must undergo a

life cycle: from development
stage to growth, maturity, and
decline. The fir...
Our learning
 Diversification (product,

strategy, etc) is one of the key
elements in sustained
marketing. Overtime GlowC...
Social Impact
12
Direct jobs created
within GLOWCORP
Community Based Entrepreneurs (CBEs) benefited
Direct Investors
4 (or...
Close to 170 buyers/ distributors/
supermarkets as regular clients
 1 exporter from Hong Kong
 Ongoing negotiation with ...
What have we done
Monetary benefits provided to shareholders
and other producers
Organization

2010

2011

2012

Total

Pe...
Environmental Impact
 Practice of organic farming

helped sustain environmental
protection and preservation
 Organic far...
2013 Target
Target
Gross Sales

Minimum-Php22M
Maximum-Php32.3M

Sales volume
Organic rice
Muscovado sugar
Coco-sugar

279...
What have we done
Year on Year Sales Growth
What have we done

Sales Trend
19,875,168.99
17,116,233.79

8,254,730.00

1,385,815.00
2010

2011

2012

2013
Financial performance:
YoY Growth
Year-on-Year Growth
2010
2011
2012
2013*
Total Sales

Difference

Percent Growth

1,385,...
What have we done
Profitability

*As of June 2013
Sales Projection

Target

2013

2014

2015

Sales

32,266,000

40,332,500 50,415,625 63,019,531 78,774,414

Income

406,66...
Prime Organics outlets










Coconut House
Fanomart
Raw Matters
HDR
Rollide Corp
Foodah
Citimart
Produktong
Ka...
Salamat!
Bernie berondo
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Bernie berondo

  1. 1. October 16, 2013 Aldaba Theater, University of the Philippines Quezon City, Philippines
  2. 2. 5th RIPESS International Meeting on Social Solidarity Economy University of the Philippines-College of Social Work and Community Development Manila, Philippines October 16, 2013
  3. 3. Growth opportunities for organic products Domestic organic market described as a “niche” market sold mainly in specialty stores and weekend markets in Metro Manila (80% of domestic organic consumers are located). Mainstream markets slowly absorb organic products Total value traded P266.7M (USDA, 2000). 2007 estimate is between PhP860-PhP1.3 billion (PDAP)
  4. 4. Growth opportunities for organic products Export market valued at US$18M (2006), small compared to the growing global demand for organic food and beverages estimated to have reached US$15.6B in 2009 increasing by over US$5 billion/year Organic rice requirements for Manila is 2,480 sacks or 124 MT per month or 488 MT per year (ICCO, 2011); muscovado sugar-2,049 MT (PDAP) Annual growth of organic consumption-20% (DA)
  5. 5. Growth opportunities for organic products  Of the 2,480 sacks or 124 MT per month or 488 MT per year , GlowCorp now trades 1,250 sacks of organic rice in the past months  Potential export market with actual inquiries for organic rice (Europe, Russia, US and Hong Kong); certified muscovado sugar in Taiwan, South Korea, Singapore
  6. 6. Growth Opportunities for Organic Products Recognition from the Philippine Association of Supermarkets, Inc (PASI) and Hotel and Management Association of the Philippines (HMAP) of the organic products Increasing number of farmers going into organic farming Enactment of Organic Agriculture Law
  7. 7. Problem analysis  Poverty is predominantly rural, where 70% of the poor reside in the countryside. Two-thirds of which depends on agriculture  Initiative to increase income among farmers is through sustainable agriculture and organic farming
  8. 8. Problem Analysis Constraints that undermine the participation of small farmers in the market: Small-scale producers are focused on local markets (direct sells and mobile stalls) Specialty stores for organic products are limited in scope and reach Supermarkets favor large commercial suppliers over small farmers
  9. 9. Problem Analysis Small producers are often on the disadvantage due to unfavorable trading arrangements such as pricing schemes, overdue payments by distributors, lack of logistical support Middle-men most often generate the most income than farmers
  10. 10. Principal Shareholders Kappia, Abra (Muscovado) CARRD, Manila (Muscovado, Organic Rice) UMFI, Manila (Market Consolidator) PDCI, Camarines Sur (Organic Rice) AFCCUI, Antique (Muscovado) Don Bosco, North Cotabato (Organic Rice) Bios Dynamis, North Cotabato (Organic Rice) SKMFMC, Sultan Kudarat (Muscovado) KSN, South Cotabato (Organic Rice)
  11. 11. Our Business Model Micro Entrepreneurs (MEs) Premium Pricing Dividends Technical Assistance Local Consolidators (LCs) GLOW CORP Profit TARGET MARKET MEs Quality Products LCs Branded Quality Products
  12. 12. Vision GlowCorp to be the leading market distributor of globally-competitive organic, natural and healthy agribased commodities produced by marginalized groups and community-based enterprises that promote economic empowerment of the rural poor and improved quality of life
  13. 13. Mission GlowCorp to develop new, nontraditional markets as well as increase market share of organic and natural products such as organic rice and muscovado sugar from 1% to 5%, leading to creation of more jobs and increase in income among community-based enterprises/ farmers.
  14. 14. Product lines
  15. 15. Our supply and marketing chain (rice) CONSUMERS Supermarkets Distributors Logistics PDCI/Bios Processing Farmer PDCI/Bios Trading PDCI/Bios PDCI/Bios Distribution and Marketing GlowCorp
  16. 16. Our supply and marketing chain (muscovado) CONSUMERS Supermarkets Logistics SKMFMC Trading Farmer Processing (SKMFM) SKMFMC Distribution and Marketing GlowCorp
  17. 17. Target Markets Domestic Markets  Rice retailers and distributors  Hotels and restaurants  Supermarkets Export Markets
  18. 18. GLOWCORP in the [Value Chain*] *Michael Porter
  19. 19. Challenges and issues in the Organic Value Chain 1. PRODUCTION Production inputs (seeds and fertilizers) 2. Infrastructure (farm to market roads, irrigation, equipment and post harvest facilities) 3. Production and trading capital
  20. 20. Challenges and issues in the Organic Value Chain Processing 1. Infrastructure (rice mills, colour sorter, ware house/ packing house) 2. Packaging equipment and materials 3. Product quality
  21. 21. Challenges and issues in the Organic Value Chain Logistics 1. Logistics operator/ cargo forwarder  Bringing agricultural products from Mindanao is more expensive than sending these products to other countries
  22. 22. Marketing and Sales Challenges and issues in the Organic Value Chain 1. Warehousing 2. Marketing and distribution system 3. Marketing capital 4. Certification 5. Consumer awareness/education 6. Product quality 7. Supermarket fees and discounts 8. (listing fee, introductory discount, trade/regular discount, mailer, freight, promo fees) Additional market (export)
  23. 23. Challenges and issues in the Organic Value Chain 1. Service 2. 3. Technical support to organic farmers in ensuring product quality and organic integrity Support to organic producers in the installation of ICS Relationship management with buyers and consumers
  24. 24. Engaging the Market: What are the market requirements Major factor in engaging the market Price Product quality Supply consistency
  25. 25. Engaging the Market: What are the market requirements  In engaging supermarkets, be prepared to provide:  Mailer support (SM-Php250,000/SKU annually)  Introductory discount (all retail stores5% for new product for 6 months)  Trade discount (all retail stores-5-10% perpetual)  Value pack support (SM-Php11,000/ SKU/ store)  Anniversary support (Metro GaisanoPhp20,000-Php100,000.00)  Freight charges (SM-5% Luzon; 7% Visayas, 10% Mindanao)
  26. 26. GlowCorp’s experiences and challenges in organic marketing  Limited working capital for expansion  Erratic supply to sustain the growing market (especially during off-season)  Although consumption is growing, most of consumers are not yet aware of the benefits of organic products  80% of organic consumers are concentrated in Manila. There is need to focus more awareness and education campaign in the key areas of the country
  27. 27. GlowCorp’s experiences and challenges in organic rice marketing  Barriers of entry as new player in the organic marketing is high:  institutionalization of the internal system  introduction of new product  identification and getting new clients  working capital  cash flow management  exorbitant entry/listing fees and discounts  sustained product supply and quality  Logistics, warehousing
  28. 28. Making the Organic Value Chain Works  Product differentiation-offer something new or unique, create barriers of entry  GlowCorp recognizes its limitation in the value chain. It needs partners and other players to complete the whole chain
  29. 29. Making the Organic Value Chain Works  Producers, financing institutions and government are necesarry support system for capacity building, production, processing, sales and marketing  Changing the mindset of farmers to become organic producers was not done overnight. It is a continuing process.
  30. 30. Making the Organic Value Chain Works   Aside from the environmental implication of organic farming, economic incentive motivates farmers to sustain the organic (rice) production. Pecuaria for example provided incentive to certified farmers (up to Php20K/cropping). GlowCorp’s expertise is in marketing. The partnership with its shareholders ensures consistent supply of organic products making it easier for GlowCorp to concentrate in marketing.
  31. 31. Our Learning Reducing the number of players in the value chain becomes more profitable and sustainable for organic (rice) farmers and marketing organizations like GlowCorp  Organic production demands a paradigm shift. Aside from environmental consideration, farmers need economic motivation to ensure sustainability of organic farming 
  32. 32. Our Learning  Every business must undergo a life cycle: from development stage to growth, maturity, and decline. The first 2 years of GlowCorp’s organic marketing is the period of introduction. Low consumer awareness and product newness resulted to low sales volume and income
  33. 33. Our learning  Diversification (product, strategy, etc) is one of the key elements in sustained marketing. Overtime GlowCorp offered new products to market. In 2010, it started with rice and muscovado. Coco-sugar, cocosyrup were added later.
  34. 34. Social Impact 12 Direct jobs created within GLOWCORP Community Based Entrepreneurs (CBEs) benefited Direct Investors 4 (organic rice) 3 (muscovado) 1 (organic rice & muscovado) 17 individuals Other CBE-producers 4 organic rice producers 2 muscovado producers 1 coco-sugar producer 1 coffee producer Farmers reached 1,900 farmers/millers (muscovado) (estimates) 2,000 farmers (organic rice) 100 farmers (coco-sugar) Sales Income Generated Php46.2M (2010-2013)
  35. 35. Close to 170 buyers/ distributors/ supermarkets as regular clients  1 exporter from Hong Kong  Ongoing negotiation with exporter for the export of organic rice flour to Europe; organic rice to Russia 
  36. 36. What have we done Monetary benefits provided to shareholders and other producers Organization 2010 2011 2012 Total Pecuaria SKMFMC Bios Dynamis Kappia CARRD Kool-NE Agtalon Linabu UMFI UPSCALE Kablon 485,700.00 7,873.77 102,500.00 124,700.00 47,250.00 137,500.00 - 4,245,039.00 1,190,500.00 1,231,327.00 24,400.00 26,030.00 264,500.00 117,100.00 85,000.00 52,168.48 8,827,750.00 2,475,000.00 55,250.00 4,500.00 5,970.00 93,000.00 624,000.00 33,669.00 13,558,489.00 3,665,500.00 1,294,450.77 131,400.00 32,000.00 389,200.00 210,100.00 709,000.00 47,250.00 137,500.00 85,837.48 Grand Total 905,523.77 7,236,064.48 12,119,139.00 20,260,727.25 Php12.058M purchases as of June for 2013
  37. 37. Environmental Impact  Practice of organic farming helped sustain environmental protection and preservation  Organic farming is seen as one of mitigation and adoptation measures for climate change
  38. 38. 2013 Target Target Gross Sales Minimum-Php22M Maximum-Php32.3M Sales volume Organic rice Muscovado sugar Coco-sugar 279MT 137MT 17MT Net Income Php594,000 Number of stores/clients Existing-123 New-245 Total-368 Staff complement 5 core 1 outsourced 8 production personnel Farmers reached 2,500
  39. 39. What have we done Year on Year Sales Growth
  40. 40. What have we done Sales Trend 19,875,168.99 17,116,233.79 8,254,730.00 1,385,815.00 2010 2011 2012 2013
  41. 41. Financial performance: YoY Growth Year-on-Year Growth 2010 2011 2012 2013* Total Sales Difference Percent Growth 1,385,815.00 8,254,730.00 6,868,915.00 496% 17,116,233.79 8,861,503.79 107% 19,875,168.99 2,758,935.20 16% 46,631,947.78 *As of September 2013
  42. 42. What have we done Profitability *As of June 2013
  43. 43. Sales Projection Target 2013 2014 2015 Sales 32,266,000 40,332,500 50,415,625 63,019,531 78,774,414 Income 406,666 879,468 809,326 2016 2017 1,756,660 2,862,272
  44. 44. Prime Organics outlets         Coconut House Fanomart Raw Matters HDR Rollide Corp Foodah Citimart Produktong Katutubo        Alturas Bohol Citimart Got Heart Eight Guys Choco Lover Green Bean Tardo Filipinas
  45. 45. Salamat!

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