Chapter 2

Market Aspects

The market aspect is the most essential part of this feasibility study. This study
includes the demand, supply, market description, projected consumption and sales
for the next five years, packaging, and competitive position.

Market Description

After thorough studies of the market, Happy Company has established the
dispersal of its product in the areas of Davao City particularly in Matina Crossing and
their factory is located at Toril, Davao City. Huge market demand is expected on
these products since the locations specifically Davao City i s c o n s id e re d
p o l i t i ca l a n d e co n o m ic , so c i a l, c u lt u r a l ce n t e r in M in d a n a o . Matina
Crossing, Davao City being one of the crowded area that contributes to the easy
way of selling of the product.
People in Matina, Davao City and valued customers of Matina Crossing are the
focus market of this study. According to Philippine Statistics Authority, as of 2015,
the total population in whole Matina area (Matina Aplaya, Matina Biao, Matina
Crossing, and Matina Pangi) is 85,712 which represent 5.25% of the total population
of Davao City. This number of people have sweet tooth. All of us are looking for food
that can satisfy are cravings and at the same time provides health benefits to us. We
decided to base our market on the location of our retail store. We believe that our
product can benefit all ages (except: infants, newborn babies).

Business Structure

After carefully considering several different business structures, weighing the

numerous needs of the project partners with the legal, tax and funding implications of
each, the recommendation of this study is that Happy Company be launched as a
private company. It should be organized in a way that will give it maximum flexibility,
allowing managers for profit maximization.
 This structure also allows for varying levels of participation by project partners in
the governance of the organization with the profit motive.

Economic Benefit Analysis

The preceding sections summarize the necessary market components, facility

requirements, costs and corporate structure to prove the viability of the model
concept of ube fries. After processing the data produced though this feasibility
study, operating assumptions and projections will be used to develop a financial
model that empirically supports the anecdotal conclusion that this is a viable,
worthwhile project. Beyond proving the demand for and internal financial viability of
this project, it is important to demonstrate the potential external economic impact of
the Happy Company’s operations.

For the economic benefit analysis, we project that all of the Ube fries sales represent
additional fries product that is especially made for everyone. For the purposes of
demonstrating potential economic benefit, ube fries outlet are located in Matina,
Crossing.

The sales growth assumptions used for financial modeling of this project are
extremely conservative. The low estimates are derived by the study team's
conclusion that sales growth in the short term will be limited by supply and it will take
time to develop a reliable supply network of ube fries that grow on a wholesale scale
and meet the Happy Company’s product values. There is also an opportunity to
source product from outside Davao.

The Philippines is the fastest growing fry import market in the world, with demand up
74.0% to 121,652 tonnes in the year ending April 2017. In April 10,841 tonnes of
fries were imported, an increase of 29.7% on the April 2016 figure.
The average price of fry imports in April was Peso 41,671/tonne, up 15.3% on the
same month last year. However, the year ending price when calculated in US dollars
in April 2017 was up by only 4.9% to US$816/tonne.

All four of the world’s main fry exporting nations have benefitted from the increase in
demand from the Philippines. US fry imports rose by 30.0% to 52,344 tonnes in the
year ending April 2017 and there was a 11.2% increase in April to 4,225 tonnes. The
average price of US fries has increased by 11.4% to Peso 42,543/tonne over the
year.

Belgian imports increased by 75.2% over the annual period to 29,803 tonnes, with a
52.3% increase in April trade to 3,122 tonnes. The average price of Belgian fries has
increased by 15.8% over the last year. Canadian and Dutch imports have both
increased by more than 200% over the last year, but while there was an 80.1%
increase in Dutch fry imports in April, there was a 16.0% drop in demand for
Canadian product during the month.

US exporters to the Philippines are being helped by some stability in the value of the
Peso against the US dollar. The current rate of US$1=Peso51.2 is 10.4% stronger
than a year ago, similar to the rate at the beginning of 2017. That compares with a
rapid strengthening of the euro against the Peso over the last year. The current rate
of €1=Peso60.4 is 15.5% stronger than a year ago with most of that strengthening
taking place since April. There has also been a 7.2% increase in the value of
Canadian dollar since April to Ca$1=Peso40.3.

4.2 Sweet potato (Ipomea batatas) Sweet potato is a starchy tuber of the
Convolvulaceae family and is grown seasonally in tropical and subtropical regions. It
is used mainly for human food. Often thought to be related to white potato from the
Solanaceous family, sweet potato is much more nutritious and comes in a variety of
skin colours including red, purple, brown and white, and of flesh colours of white,
yellow, orange or purple. Sweet potato, of which the orange-coloured flesh varieties
are the most common, is rich in complex carbohydrates, dietary fiber, beta carotene,
vitamins A (200 grams contain 76.9% of the recommended daily requirement), B6
and C. These nutritional and health benefits together with a long shelf-life and ease
of food preparation, make sweet potato a highly sought-after commodity with
growing demand. Sweet potato is a crop with a significantly unrealised potential. It is
capable of producing high yields of dry matter per unit area of land under a wide
range of agro-climates and farming systems.