MANILA – The maker of C2 ready-to-drink tea and Jack ‘N Jill snack foods is building up its branded consumer food business and eyeing acquisitions in a bid to become an Asean powerhouse.
During the BPI Securities 2014 Market Outlook Conference on Saturday, Universal Robina Corporation (URC) vice president Michael Liwanag said the company wants to grow its branded business to $3 billion in five to six years, expanding at a rate of 12-15 percent per year.
“We want to double our branded business every five to six years,” Liwanag said.
Gokongwei-owned URC is hiking its capital spending to $150 million in the fiscal year 2014 -- higher than the $120 million spending in the last three years – to finance its foray into Myanmar in the next six months. The company may tap the debt market or use internally generated funds to finance its capex given its net cash position of around $200 million.
Aside from organic growth, URC can tap acquisitions outside the Philippines for $500 million to $1 billion.
"The priority is to become an Asean multinational down the road with strong brands," Liwanag said.
Myanmar is the next challenge for the Philippine firm after establishing a strong presence in Vietnam, Thailand and Indonesia through its brand-building efforts and distribution capability.
"Vietnam is the next Philippines. Thailand is a mature market. If we can grow it [in the] low to mid teens, that is the target," Liwanag said, adding that URC expects challenges in Indonesia in the form of higher wages, devaluation of rupiah and the removal of the oil subsidy.
He said pricing products to target the middle market and adapting to consumer tastes were the factors behind URC's successful foray into these foreign markets.
URC has taken a market leadership position in various food categories, including snacks, candies, chocolates, biscuits, canned beans, cup noodles, coffee and ready-to-drink tea.
In expanding its footprint in the region, the food-and-beverage company has replicated this multi-category strategy on a selective basis and is among the top three in categories it is in.
"We have what it takes to erode market share of multinationals," Liwanag said. URC has made inroads in the coffee category through number two player Great Taste with the leading multinational's market share falling to 54 percent from 92 percent.
"We thought the Philippine market [was] mature, but the innovation like coffee in Philippines [gave] room for us to grow. Modern retailing is growing, we have to come up with products for modern retailing," Liwanag said.
URC, which is also in the commodity and agro-industrial businesses, expects net sales to grow by 13.3 percent to P80.7 billion in the 2013 fiscal year ending September from P71.2 billion in the same period last year.
The company's local branded business will jump 23 percent year-on-year to P42.2 billion this fiscal year from the previous year's P34.4 billion, 20 percent of which will come from volume growth and three percent from price increase. International sales will increase by a tenth to $520 million from $471 million last year.
Earnings before interests and taxes will hit $10 billion in 2013, up by almost 30 percent from year ago levels.
"[For 2104] you just have to monitor the soft commodity prices. Over the short term until December, we're protected," Liwanag said, adding that it will "selectively increase prices" but robust growth of the outsourcing industry and remittances will prop up demand for its products.
source: interaksyon.com
