A Preliminary Marketing

Study of 555 Sardines

August 4, 2020 |
Marketing Management Mid-term Project

GROUP 2
Kathy Aquino | Custer Co | Joyce Espanola | Joierie Ann Pacumio
 Presentation Content

A. Industry Situation Analysis

• Internal Environment Analysis
• Customer Environment Analysis
• Competitive Advantage & Value Proposition
• External Environment Analysis
• Industry Attractiveness
• Market Size

B. SWOT Analysis
C. Statement of the Problem

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 Company Overview
• Century Pacific Food, Inc is one the largest branded food companies in the Philippines with more than
40 years in the business. It is primarily engaged in the manufacturing, marketing, and distribution of
processed meat, meat, milk, and coconut products.

• The Company listed on the Philippine Stock Exchange in 2014 under the trading symbol of CNPF. It
currently has a market capitalization of PHP51.3B.

• The Company’s own brands hold market-leading positions locally and are growing their presence
abroad. Further, the Company also operates as one of the Philippines’ leading providers of private label
tuna and coconut products for export overseas.

• Production Facilities: 6 manufacturing facilities across the Philippines strategically located adjacent to
supply sources (Tuna and Coconut in General Santos City, Meat in Laguna City, Dairy in Taguig City, and
Sardines in Cavite and Zamboanga City)

• Key Management: Christopher T. Po – Executive Chairman, Teodoro T. Po - President & CEO, Gregory
H. Banzon – Executive Vice President & COO, Edwin C. Africa - Senior Vice President & General
Manager, Oscar A. Pobre – Vice President & CFO

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 Company Overview
Full-Year Financials 2019 Revenue Breakdown

Revenue (in PHP Mill) 7% YoY Coconut OEM

GR
15% CA

Company Portfolio (EO 2019)

Y
Net Income (in PHP Mill) 11% Yo

18 219
brands SKUs

R
17% CAG

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 Sardines Business Unit Overview
In 1984, responding to the sardine shortage in the country, the Company began producing canned sardines under
the 555 name, with a taste profile suited to the Filipino family. Highly visible advertising and marketing strategies
pushed 555 Sardines to new heights.

Certifications Market Ranking

Major Player in Philippine Market
Major Player amongst Filipino brands
(in the Global Market)

Premium Products
(in the PH market)
Source: Nielsen

Global Distribution Financial Highlights

Highest selling Growth Rate
Strongest in
25%
(2018-2019)
Sold in products

65
Middle East
North America Revenue 18%
Asia Contribution Revenue
countries
Africa to Total Marine
Business 25%
Net Profit

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Industry Situation Analysis
 Internal Environment Analysis:
Vision, Mission, Core Values
Mission Vision
Reinforce current businesses and We are a sustainable and responsible global
brands to deliver quality and value for company of entrepreneurs that nourishes and
money products that generate attractive delights our consumers with healthier food
returns through responsible sourcing and and beverages through manufacturing
operational excellence   excellence, nutrition expertise, trusted
Strengthen the organization that attracts, brands and passionate people.
nurtures, and retains passionate and high
performing corporate entrepreneurs and
teams who live balanced lives

Pioneer the development of healthier

and tastier food and beverages that
Core Values
consumers love and trust through latest Respect for the Individual | Teamwork |
credible nutrition science and effective Passion for Excellence | Customer
branding Centric | Humility | Integrity | Malasakit |
Purpose Entrepreneurial Spirit
Scale up the business across the
globe by creating consumer and customer To nourish and delight
connections and experiences in a more everyone, everyday,
profitable and sustainable way across the
value chain
everywhere
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 Internal Environment Analysis:
Mission Analysis
Customer Products
Enjoyment seekers, who work • Responsibly sourced, quality
hard but also seek to enjoy life’s and value for money
little pleasures through their daily products: canned tuna and
meals. Food is their greatest meat categories with growing
daily reward. presence in milk
• •
Healthier and tastier food and
beverages incorporating
developments in nutrition
science, high quality,
convenience and
affordability
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Market Technology
• Caters to varying • R&D Facilities that derive
socioeconomic status of high-quality prototypes
Filipino consumers extensively tested prior to
• Market leaders and production
international food
Business 4.0 ready &
companies on most strictly
regulated markets operating company
• Global distribution in US, • Traceable products from can
Asia, Australia, Europe,
code or sales invoice to
Africa and North America vessel and trip
and Canada
• Large international food
manufacturers for marine &
various coconut products
 Internal Environment Analysis:
Mission Analysis
Concern for Survival, Growth
Philosophy Self-Concept Concern for Public Image
& Profitability

Scale up the business across the • Responsible Sourcing • Packs value with good taste • SOCIAL: CNPF’s marketing
globe by creating consumer and and quality strategies continually adapt
• Operational Excellence
customer connections and to developing trends i.e.
experiences in a more profitable • Entrepreneurial Spirit • Diverse brands and broad
folio of products lines, increase in health-
and sustainable way across the • consciousness among
Healthier and tastier food variants and pack sizes with
value chain. Generate attractive Filipino consumers,
and beverages through reputation for quality catering
returns through responsible
latest credible nutrition to varying preferences, family establishing its products as a
sourcing and operational
excellence  science and effective sizes, and socioeconomic constant essential in
branding statuses of the Filipino changing times.
• Extensive market penetration
and distribution network in the • Trusted brand, passionate consumer • ENVIRONMENTAL:
Philippines, available in >800K people • Robust developments and Companies under Century
outlets nationwide innovation of product lines Pacific Group are officially
• Strategically located production with technical and food 100% “plastic-neutral”
facilities situated close to the industry experts’ input, helping manage post-
sources of main raw materials resilient to unpredictable consumer waste
• Invested in worldwide sales and costs and pricing events
distribution infra that increase
accessibility of branded
products worldwide

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 Internal Environment Analysis:
Mission Analysis
Concern for Public Image Concern for Employees
(con’t)
• ENVIRONMENTAL: Compliant Strengthen the organization that • Provided aid & 1M food packs to Filipinos amid the COVID-19
with International Seafood attracts, nurtures, and retains
Sustainability Foundation passionate and high performing
(ISSF) conservation measures corporate entrepreneurs and
• COMMUNITY: Supported front teams who live balanced lives
liners at the height of the
• Implemented stringent health •
pandemic
and hygiene safety measures
in manufacturing facilities to
protect workers as early as
March 2020
Contribution to Nation-Building
outbreak as part of “Food, Health, and Hope” program and is
pledging to donate 1M assorted packs of ulam and fortified milk
through National Gov’t & partner LGUs. Food packs distributed
nationwide, targeting communities severely impacted by COVID-19 to
bring nourishment to those who need it most
CPG – RSPO: socio-civic arm of Century Pacific Group of companies
exists to contribute to nation-building through various programs and
initiatives. It is established to
• Help in feeding the poor and hungry children
• Provide healthcare if necessary
• Help provide education to deserving students
• Support other charitable and humanitarian causes most
especially protection of environment

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 Internal Environment Analysis:
Sardines Business Strategy
Goal:
Grow the business 10% to 15% a year on the back of rising incomes and the need for
affordable protein and more nutritious food

Cost Leadership Differentiation

• Create the best premium product in the market that can halo
on the regular products
• Utilize cutting-edge R&D for the development of products as
well the reduction of costs, maximizing both internal and
external resources
• Increase operational productivity, manufacturing efficiencies,
as well as sales and distribution coverage
• Work closely with long standing international clients to
develop products for sale in international markets,
manufacturing them in the most cost effective way
• Establish an international presence by pursuing foreign
markets with a sizable Filipino base, utilizing brands that are
close to the Filipinos’ hearts
• Support category growth by innovating new products and
exploring the various sub-segments of the market
• Enhance brand and product innovations through active and
targeted marketing campaigns that differentiate from
competition and inspire customers toward brand loyalty
• Build up world-class manufacturing and export capabilities,
building scale and expertise and becoming a trusted partner
for customers around the world

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 Internal Environment Analysis:
Market Segmentation, Targeting, Positioning
Segmentation Targeting

Geographic Nationwide

Demographics C & D social status; 17-25 y/o

Psychographics Enjoyment seekers who work hard but also seek to enjoy life’s simple
pleasures through their daily meals
Behavioral Food is their greatest daily reward

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 Customer Environment Analysis:
Competitive Advantage & Value Proposition
NEEDS APPROACH
Affordable protein Responsible sourcing
Shelf stable Optimized operations
Easy to prepare Product availability in 950,000 points of sale
Accessible Strict quality standards
Good quality Strong R&D and innovation process
Healthy alternative to meat
Evolving consumer preference

BENEFI COMPETITION
TS
Ready-to-eat Other sardines brand
Easy-open can Other canned fish products
Innovative variants Viands sold at “karinderyas”
Tasty Freshly caught fish sold at the markets
Affordable but good quality

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 Customer Environment Analysis:
Competitive Advantage & Value Proposition
Scoring:
4 – major strength / industry leader 2 – minor weakness
3 – minor strength 1 – major weakness / industry laggard

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 Value Proposition
555 sardines is made available in wide, appetizing, and
innovative varieties that are ready to serve via easy-open cans.
Every can of 555 is made of select, delightful ingredients that
make it exciting to open another viand each day.
It is simple but always surprisingly special—providing
Sarap and Sulit for everyone, everyday, everywhere.

Competitive Advantage
Taste and overall product delivery

Competitive pricing ● Superior taste & quality

“Masarap. Walang kaliskis. Hindi malansa.”

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 External Environment Analysis:
Effects of the Pandemic on the Food Manufacturing Industry
• Social distancing caused logistical issues, shortage of adequate labor,
operations limited to production of essential items
• Robust increase in sales owing to the lack of availability of fresh fruits and
vegetables
• Emergence of new consumer trends: cooking at home, non-traditional
selling channels, health & safety, value for money
• Reduced marketing expenses
• Favorable raw material prices
• Instituted stricter security and safety protocols on all worksites
• Provided health and financial protection to the workforce
• Increased online collaboration and (remote) work activities

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 External Environment Analysis:
PESTLE Analysis
POLITICAL ENVIRONMENTAL SOCIAL
• Terrorism in Mindanao: affects transport of raw • Pollution: Mercury contamination on marine life • Population growth: continuous volume increase
materials and finished goods can hurt supply in the long term of food consumption
• BFAR 5-year Sardine National Management • Sustainability: compliance with International • OFW: creates demand for Philippine products
Plan Seafood Sustainability Foundation (ISSF) for • COVID: consumer behavior
sustainable harvest methods

TECHNICAL LEGAL ECONOMIC

• E-commerce: new channel for consumption (no
longer limited to supermarkets / small retailers)
• Viability to upgrade existing manufacturing
technology
• Compliance with Food & Safety organizations:
necessary for business retention & expansion
• New labor laws: DO-18A (regularization of
contractual workers)
• Plant Safety & Sanitation regulatory
• International trade laws & restrictions
• Avg. PH household income (family of 3-5):
limits product price levels (DTI price protection)
• Inflation: increase in prices of raw materials,
fuel
• TRAIN Law: long & mid-term effects to
consumer purchasing power + business tax
• COVID: closure of business, limited manpower
mobility, basic food supply

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 Industry Attractiveness:
Porter’s 5 Force Model

Potential Entrants
THREAT OF NEW
ENTRANTS

BARGAINING
POWER OF
BUYERS
Industry Competitors

Suppliers Buyers
Rivalry Among
Existing
BARGAINING Competitors
POWER OF
SUPPLIERS

THREAT OF
SUBSTITUTES
Substitutes

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 Industry Attractiveness:
Porter’s 5 Force Model Bargaining Power of Buyers:
• No. of customers: 11.8M avg./mo
• Size of each customer order: 0.650 kgs vol /
buyer
• Differences between competitors: product
differentiation (tomato sauce, hot & spicy,
premium)
• Price sensitivity: PHP 17-18 inelastic
• Buyer’s ability to substitute: high
• Buyer’s information availability: high (internet)
• Switching costs: free

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 Industry Attractiveness:
Porter’s 5 Force Model

Threat of Substitutes Products:

• No. of substitute product available: any canned
product, fresh fish, mongo
• Buyer propensity to substitute: high (sardine
hsehold consumption = avg 5x/mo.*)
• Relative price performance of substitute: high
• Perceived level of product differentiation: high
(more “sosyal” than sardines)
• Switching costs: high
* Source: PSA

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 Industry Attractiveness:
Porter’s 5 Force Model

Bargaining Power of Suppliers:

• No. and size of suppliers: 12 raw mats;
4 can suppliers
• Uniqueness of each supplier’s product:
low
• Focal company’s ability to substitute:
easy - many options (domestic & int’l)

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 Industry Attractiveness:
Porter’s 5 Force Model
Threat of New Entrants:
• Barriers to entry: source of fish, mfg
capacity, distribution capability
• Economies of scale: fish & can price,
production efficiency
• Brand loyalty: regional loyalty
• Capital requirements: manufacturing
equipment or additional toll packers
• Cumulative experience: experience in
the industry
• Government policies: DA-BFAR
sardine-fishing ban; DTI price protection
(sardines is a basic necessity)
• Access to distribution channels: effort
needed to establish channels
• Switching costs: free

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 Industry Attractiveness:
Porter’s 5 Force Model
Rivalry Among Existing Competitors:
• No. of competitors: 60+ in the PHs
• Diversity of competitors: regional, domestic,
international distribution
• Industry concentration: Mindanao
• Industry growth: 5%-6% (pre-COVID); 30%-
40% (during COVID)
• Quality Differences: taste, fish quality, price
• Brand loyalty: regional
• Barriers to exit: low – not high profit
category
• Switching costs: high – sardines has lowest
mfg cost

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 Market Size
Processed Seafood Category Sardines Category
Top Brands

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 Market Share

555 Ligo
14% 13% Sardines Category
Top Brands
Family's
12%
1
YT
23% Others 4%
2

3
Mega
34%

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 Market Share

555 Ligo
14% 13%
Consumer Profile

Family's
●
Affordable
●
Mass Market
●
Value for
12% Premium Money

YT
23% Others 4%

Class C D
MxF
17 to 25 y.o.
Moms; Working Professionals Consumers w/
Mega Premium Products
34% (in the PH market) adventurous palate
Growth Rate
(2018-2019) Mega Php 20.00

18% Youngstown Php 18.50

Revenue
555 Php 19.00

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 GAP ANALYSIS
DESIRED STATE

Premium Increase Core

Dominance Market

Is the business growth at par with the economic and

industry growth?

Is the wide distribution network being maximized to strengthen

nationwide presence?

Are there enough programs in place to communicate value proposition

and establish brand loyalty?

Is the Php 1.00 price advantage enough to persuade consumers?

CURRENT STATE

#1 Premium Products
#3 Core Products

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SWOT Analysis
 SWOT Analysis
Strengths Weaknesses

S •
•
•
•
•
•
•
•
Trusted brand, 11 SKUs
#1 Premium products
Food Safety & Quality Certified
Strength in product innovation
Cost-effective production capability
Wide distribution network
Prudent Forex and Tax & Cost Management
No union
•
•
•
•

•
Imbalanced marketing effort
Weak insights mining
Inability to list premium items in all outlets
Weak promotion of premium items in the global
market
Absence of an effective multilingual packaging
W
Opportunities Threats

O •
•
•
•
•
•
Capture market with regional loyalties
Industry 4.0 capable
Expand distribution to global markets
Pandemic – drive opportunity for growth
Increased consumer awareness on nutrition
Added industry certifications & citations
•
•
•
•
•
•
•
Purchasing power of consumers / behavior
Inflation / global recession / forex
Fuel price fluctuation
Price of raw materials
Threatened raw material supply
Cheaper priced competition
Unionization / Product sabotage
T
• Terrorism
• Unfair practices of other competitors

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 SWOT Analysis
Opportunities Threats
• More aggressive product innovation initiatives • Offer more value for money products
• Bank on other food safety and quality certifications / • Manage price point without compromising quality of
product
Strengths

accreditations for a globally competitive product

• Continue to strengthen regular distribution channels
and explore non-traditional channels
• Optimize plant capabilities to achieve maximum
manufacturing efficiency
• Sustain good employee relations
• Sustain effective forecasting and cost management
• Build stronger brand loyalty
• Sustain good government and community relationship

• Beef up marketing campaigns to widen reach both in

the domestic & global markets
• Invest in market research
Weakness

• Drive distribution of premium items in all domestic

outlets

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Statement of the Problem
 Statement of the Problem
How do we grow the 555 brand in
order to achieve Market
leadership?

Product Price
How do we scale up product How do we sustain competitiveness
innovation? in a price sensitive Market?

Place Promotion
How do we expand domestic & How do we increase Market share
global presence? & brand loyalty?

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End of Presentation |
Thank You!
August 4, 2020 |
Marketing Management Mid-term Project

GROUP 2
Kathy Aquino | Custer Co | Joyce Espanola | Joierie Ann Pacumio