University of Santo TomasCollege of Commerce and Business Administration

1st Semester, A.Y. 2015 – 2016

A Term Paper on Del Monte Philippines, Inc.

Submitted to:Mr. Tony Topacio

Submitted by:Bonite, Adrian John

Co, Nellwyn RuthOngo, Leslie Anne

Placido, Raven JohnValmeo, Geneva Marie

Third Year Marketing Class 9

November 29, 2015

I. Company Profile

A. Brief History

Del Monte Philippines, Inc.

The Del Monte brand started when a premium blend of coffee was designed by a food distributor

for the Hotel Del Monte on the US Monterey peninsula during 1880's. By 1892 the Del Monte brand was

introduced by this same company as a line of canned peaches.

In 1899, the Del Monte brand was marketed by California Fruit Canners Association - CFCA. This

company grew to operate 60 canneries throughout the United States. In 1917, CFCA acquired pineapple

lands and a cannery in Hawaii as well as the Philippines.

Del Monte Corporation was sold to tobacco giant R J Reynolds in 1980 which was in turn

acquired by Nabisco in 1983. In 1990 as a result of a massive leveraged buyout the overseas Del Monte

companies were split up.

Del Monte Philippines, Inc. is now a subsidiary of Del Monte Pacific Limited. which is already

unrelated to Del Monte Asia owned by the Kikkoman Corporation of Japan. Del Monte Pacific Limited has

the rights to the Del Monte trademark for the Philippines, the Indian subcontinent territories and Myanmar.

In 1996, Del Monte Foundation Inc., with the tradition to "help people who help themselves," was

established in order to provide educational training centers in Bukidnon and Cagayan de Oro as well as

satellite centers in South Bukidnon and Misamis Oriental. This has become their social responsibility in

the provinces wherein they conduct their most important operation – the pineapple plantation.

Today, Del Monte Philippines is already the largest operator of pineapple operation in the world,

and is now the leading producer of pineapple and other food products in the market. The company, which

owns 20,000 hectares of pineapple land in Bukidnon and Misamis Oriental, is now providing jobs to 4,000

people of the Mindanao province.

B. Vision / Mission Statement

OUR VISION1

To be one of the fastest growing global branded food and beverage companies.

OUR MISSION

To bring to life health and wellness

We live up to our heritage of growing premium quality food and beverage brands which

are the top choice of all generations for enjoyable and healthy living.

We leverage deep market knowledge coupled with technology and innovation to create

and deliver relevant health and wellness breakthroughs to our broad base of customers.

1 http://www.delmontepacific.com/Website/Content.aspx?i=11

We continuously build on our knowledge and experience in agriculture, while enhancing

the sustainability of the lands we cultivate.

We adhere to the highest standards of corporate behavior in our relationships with our

employees, business partners, and the communities around us.

We are a benchmark in corporate social responsibility and the preservation of the

environment.

We build a highly energized, high-performance organization with a strong commitment to

teamwork and to embracing better ways of doing things.

We value our people and commit to provide opportunities for learning, professional

growth and a better quality of life.

II. Threats and Opportunities

A. Macroenvironment Analysis

Economic Macro-Environment Factors

Factor Implication Effect on Product

Consumer Confidence in the Philippines increased to -11.60 in

the third quarter of 2015 from -16.20 in second quarter of 20152

A possible increase in demand due to its positive relationship with

the purchasing power of the consumers

Increase in sales revenue of Del Monte Philippines, Inc.

Consumer Spending in Philippines increased to 1301703 PHP Million in the second quarter of 2015 from

1284551 PHP Million in the first quarter of 20153

A possible increase in sales, and higher inventory turnover due to

increasing demand of consumers; Macroeconomic factors are affecting spending activity

positively

Increase in sales revenue of Del Monte Philippines, Inc.

The Corporate Tax Rate in Philippines stands at 30% (1997-

2015)4

Lesser possibility for companies to a lot additional costs for product

developments; no decrease in the Corporate Tax Rate means that

there will be no beneficial effect to a business

Deductions from net income of Del Monte Philippines, Inc.; somehow hinders possible development for company

products such as 100% Del Monte Pineapple Juice

Consumer Confidence

The consumer confidence in the Philippines, as stated above, increased to -11.60 in the third

quarter of 2015. This is probably due to the impressing statistics about global and national economy the

government consistently reports to the public which increases their confidence, and discourages savings.

2 http://www.tradingeconomics.com/philippines/consumer-confidence3 http://www.tradingeconomics.com/philippines/consumer-confidence4http://www.tradingeconomics.com/philippines/corporate-tax-rate

Although the quantitative measure remains negative, it is still a positive indication for the economy

because consumers feel confident about the stability of their incomes which results to more spending

activity, and therefore helps to develop the overall shape of the country.

Consumer Spending

The consumer spending has increased by 17,152 PHP in the second quarter of 2015.

Consumption is financed primarily out of income received; therefore, a possible increase in income

satisfaction can be stated. This scenario is a positive indication in the Philippine economy for the more the

consumer purchase goods and services, the faster the money cycles in the country. There would be less

idle money which hinders the growth of economy in the system.

Corporate Tax Rate

In the Philippines, Corporate Income Tax Rate is the tax collected from companies. Since the

Corporate Tax Rate stands at 30% from 1997 until 2015, no huge impact will be expected for the mean

time. However, a high Corporate Tax Rate benefits the government more than the business corporation,

because corporate tax gives corporations less disposable income. A higher corporate tax equates to

higher costs for businesses.

Political-Legal Macro-EnvironmentFactors

Factor Implication Effect on Product

The upcoming 2016 election

There would be a new set of legislative body of the government which may cause changes in the

Philippine legal laws

Del Monte Philippines, Inc. might be affected by the possible new

legal laws, and might take time to adjust from these changes

Impact of the Food and Drug Administration

There would be and obliged observance upon the different

rules and requirements implemented by the agency

Legality of Del Monte 100% Pineapple Juice ACE;

improvement to the overall manufacturing process and final

products of Del Monte Philippines, Inc.; all Del Monte

Philippines, Inc. products will be monitored by a higher authority

Food Safety Act of 20135

Promotion and protection of the right to health of the people;

honesty of companies about their products

Compliance of Del Monte 100% Pineapple Juice ACE with the food regulatory system (e.g.,

safety of the food product, honesty of the product in terms

of facts and information)

2016 Election

5http://www.gov.ph/2015/02/20/implementing-rules-and-regulations-of-republic-act-no-10611/

The upcoming 2016 election is approaching. Soon enough, the country will be having new

executive and judicial people in the government. Having a new president and new set of senators

increases the possibility of implementation of new laws, and occurrence of new style of governance.

Those who will be blessed to win a position in the legislative branch will surely have proposed laws to be

presented to the Congress. If additional laws will be implemented, different sectors, including the

business ones, might take time to adapt to the possible changes and respond to the changes in the legal

framework.

Food and Drug Administration

The Food and Drug Administration was created under the Department of Health to license,

monitor, and regulate the flow of food, drugs, cosmetics, medical devices, and household hazardous

waste in the Philippines. The FDA's main goal is to ensure the health and safety of food and drugs made

available to the public. Because of this agency, food industries are obliged to follow rules and regulations

to make their products legally and credibly available to the consumers. FDA approved products allow

consumers to think that these products are safe, and increase the chances of possible sales.

Food Safety Act of 2013

“AN ACT TO STRENGTHEN THE FOOD SAFETY REGULATORY SYSTEM IN THE COUNTRY

TO PROTECT CONSUMER HEALTH AND FACILITATE MARKET ACCESS OF LOCAL FOODS AND

FOOD PRODUCTS, AND FOR OTHER PURPOSES”

The main objective of this act is to protect public from food-borne and water-borne illnesses and

unsanitary, unwholesome, misbranded or adulterated foods which can be obtained through purchasing of

products. The main sector affected by this law is the food industry sector which is obliged to follow all the

implementing rules under this Republic Act. Advertising is also a scope of this act; it refers to the business

of conceptualizing, presenting or making available to the public, through any form of mass media, fact,

data or information about the attributes, features, quality or availability of food and its related products for

the purpose of promoting its sale or distribution and enhancing economic activity (Article II of the Republic

Act No. 10611). This law promotes honesty of food corporations towards matters such as product labels

which must include information about the product, such as nutrition, size, and distribution and

manufacturing information. For consumers, this act makes a certain product more credible. Failure of

corporations involved to comply with laws could face lawsuits for violation.

Socio-cultural Macro-Environment Factors

Factor Implication Effect on ProductConsumers are becoming more

health conscious6People would increase their demand regarding healthier

products

A possibility that the company would invest in researching to

create a new or improve products in align to the healthy

commodities that the consumers perceive

Increase in the demand for Del Monte 100% Pineapple Juice

with ACE because it is known for building body resistance used to

prevent diseases

A possible increase in the generated sales but price increase if there will be

improvement to the product

Additional variety of Del Monte Pineapple Juice

Consumers like to try new things, but loyalty is often elusive7

A possible increase in the cost for creating an innovative product

The value of new products could be easily extinguished in a short

period of time

Inconsistency regarding the sales of Del Monte 100% Pineapple Juice with ACE

Filipinos are short to medium in height8

Increase in the demand for Fortified and Functional Products

Improvement in the quality of a product that would satisfy the well-

being of the consumer

The demand for Del Monte 100% Pineapple Juice with ACE would increase because the pineapple juice that is offered by Del Monte

Philippines, Inc. is already fortified.

Supermarkets remain as the key distribution channel9

A possible creation of an additional distribution channel

The company would give more value and importance to

relationship retailing.

Possible increase in the availability of Del Monte

Philippines, Inc. products in in supermarkets.

Consideration of having more sari-sari store retailers.

Health Conscious Consumers

People nowadays do pay attention to the different diseases that is emerging as well as to the

burden of high expenses when it comes to medical treatment. These factors lead them to become more

health conscious and wary to what they are consuming. The most noteworthy about this is it actually

increases the opportunity to innovate products which can accommodate the health concerns of the

people. Furthermore, as the companies put consideration in this matter, they are expected to offer healthy

products and at the same time be responsible in informing the people about the benefits of the ingredients

that are associated in the product.

Customers Perception in New Products and Their Loyalty

6Health and Wellness in the Philippines, Euromonitor. October 10, 20157Philippines: Country Pulse, Euromonitor. October 10, 20158Health and Wellness in the Philippines, Euromonitor. October 10, 20159Health and Wellness in the Philippines, Euromonitor. October 10, 2015

A company is expected to maintain and strengthen its relationship with its customers by providing

them a good value when it comes to their needs and wants. Not doing so, consumers would shift to other

companies that they think give more value. It is because consumers can be easily attracted by a new and

creative product especially if it is affordable.

In addition, it is true that the level of difficulty for a company to make sure that their customers

would remain loyal to them is high; however, understanding their behavior, needs and wants would

somehow help the companies to keep the customers even for some time and at the same time gather

more customers.

Filipinos’ Height

The people are now conscious with their physical attributes and that lead them to use products

that have nutritious contents for physical developments but more than that they are more concern with

their health.

The process of using fortification and functionality by a company would give them a distinction to

their competitors who also provide healthy products and would lead their consumers to their hopes of

achieving wellness. This is because the contents or ingredients of a fortified beverage are healthier than

other products.

Supermarket as the Key Distribution Channel

Sari-sari stores are still the preferred channel of distribution by the final consumers. However,

because of the limitations in the space in their stores and not so good ventilation, the beverages that

provide wellness are often accessible to the supermarkets. Furthermore, supermarkets are aggressively

expanding and that lead other companies to make their products available to the vicinity of their target

market.

Demographic Macro-EnvironmentFactors

Factor Implication Effect on ProductSocial class E is the dominant social class in the Philippines10

People would spend less and buy what is more necessary

Decline in the sales of Del Monte 100% Pineapple Juice with ACE

Lesser economic opportunities for the food and beverage

industriesPhilippines is predominantly rural11 Increase the availability of

products in rural areas

A possible increase in generated sales upon the penetration of the

company in rural areas

Del Monte 100% Pineapple Juice with ACE would be widely

distributed to the people in rural

There would be additional channels in rural areas for

distribution purposes.

10Income and Expenditure: Philippines, Euromonitor. October 10, 201511New Emerging Markets: Nigeria, Indonesia, Mexico, the Philippines and Turkey, Euromonitor. October 11, 2015

Increase the cost in distribution or transportation of the products

as well as in the promotional strategy of the company

Social Class E

Philippines is dominated by a large group of social class E or low-income earners. In fact,

according to Euromonitor Social class E is expected to remain as the dominant social class in the

Philippines by 2030, representing 40.7% of the country’s population aged 15+ by that year. The age

group 15-19 will continue to be most representative in social class E by 2030, driving demand for basic,

budget necessities, such as food and clothing. The data would give companies the interpretation that it is

more necessary to create products that have a good quality but somehow affordable, a product that is

worth the value for their customers’ money and price that is aligned in their income.

Philippines is Predominantly Rural

The rural areas in the Philippines are still predominant and 45% of the populations are classified

as urban. This means that the companies should also focus their attention to the possible market shares

that the people in the rural could give. Furthermore, they should also try to engage in modern retailing in

order to attract people in a way that the companies give people something new, convenient and

affordable shopping.

Technological Macro-EnvironmentFactors

Factor Implication Effect on ProductInnovative Packaging Industry Corp

to venture overseas12A possible improvement in the

packagingA more environmental friendly

packaging

There could be a possible modification of the packaging in

Del Monte 100% Pineapple Juice with ACE that would still

preserve its quality but gives people more convenience.

Emergence and slow growth of Internet Retailing13

The continuous increase in the significance of store-based

retailing

Internet Retailing might overcome store-based retailing in the future

The Del Monte Philippines, Inc. should focus on distributing Del Monte 100% Pineapple Juice

with ACE in physical stores but they must not lose sight of the benefits that internet retailing

could possibly give.Social Media14 Increase of the consumers’

awareness about the productPeople will be easily provided with different information about

Del Monte 100% Pineapple Juice

12Innovative Packaging Industry Corp in Packaging Industry (Philippines), Euromonitor. October 10, 201513Retailing in the Philippines, Euromonitor. October 10, 20151414 Food Trends to Watch in 2014: Part Two, Euromonitor. October 10, 2015

Less costly promotional advantage

with ACE

Uncontrollable opinions of the people about the product flaws,

which would give Del Monte 100% Pineapple Juice with ACE

a bad image

Reduced advertisement expenses

B. Microenvironment Analysis

Competitor Analysis

Del Monte DoleProduct Del Monte 100% pineapple juice with

ACEDole 100% Pineapple Juice

Target Market Equal ratio of male and female; 16 years old and above

Health-conscious peoplePeople who are considering to transfer

into a healthy lifestyleAthletes and Sports Enthusiast

Students and Professionals

Equal ratio of male and female; 16 years old and above

Health-conscious peoplePeople who are considering to transfer

into a healthy lifestyleAthletes and Sports Enthusiast

Students and ProfessionalsFeatures and Benefits

100% pineapple juice; rich with nature’s phytochemicals; with Vitamins A, C, and E; no sugar added; rich in anti-oxidants

100% pineapple juice; rich in immunity-boosting Vitamin C; fat-free;

cholesterol- free; no sugar addedPackaging

240ml BPA-free can; packaging design includes an illustration of a real pineapple

Available in 190mL and 240mL BPA-free can; packaging design includes an

illustration of a refreshing pineapple juice in a pineapple core

Labeling Green, red, and blue combination of colors; provides nutritional and

ingredients information; emphasizes “100% pineapple juice” and “Good source

of Vitamins A-C-E”

Blue, yellow, red combination of colors; provides nutritional and ingredients

information; emphasizes “100% pineapple juice”

Wholesale and Suggested Retail Price

SRP Php 21.90 - Php 31.00 SRP Php 21.45 - Php 32.00

Distribution Network

Available in Big-Box Stores, Convenience Stores, Drug Stores/ Pharmacies, Full-

Line Discount Stores or Mass Merchandisers, Grocery Stores,

Hypermarkets, Merchant Wholesalers, Sari-Sari Stores, Supermarkets

Available in Big-Box Stores, Convenience Stores, Drug Stores/

Pharmacies, Full-Line Discount Stores or Mass Merchandisers, Grocery Stores, Hypermarkets, Merchant Wholesalers, Sari-Sari Stores,

Supermarkets

III. Positioning

A. Primary Target Market

1. Demographic

The primary target market is of equal ratio of male and female, 16-45

years old, are students and employed individuals, and those who are within

Broad C to AB of socio economic group.

2. Behaviouristic

Consumers who purchase juice drinks more than once a week, and

considers Del Monte as the brand they use most often.

3. Psychographic

The primary target markets are those consumers who are health-

conscious, converters into a healthy lifestyle, and/or sports enthusiasts.

B. Sales

According to the annual report presented by Del Monte Pacific Limited, sales in the

Philippines were US$350.9 million for the 16 months ending April 2015 and US$303.0 million

for FY 2015, a record for the Group in this market. FY2015 sales were 6% higher in US dollar

terms and 10% higher n Peso terms versus US$186.7 million in CY2013.

C. Marketing Mix

Product Offerings

I. Beverages

A. Del Monte Tipco

1. Tipco 100% by Del Monte Cranberry Juice

2. Tipco 100% by Del Monte Pomegranate Juice

3. Tipco 100% by Del Monte Broccoli Juice

4. Tipco 100% by Del Monte Mixed Vegetable Juice

5. Tipco 100% by Del Monte Orange Medley Juice

6. Tipco 100% by Del Monte Aloe Vera Juice

7. Tipco 100% by Del Monte Red Grape Juice

8. Tipco 100% by Del Monte Cherry Berry Juice

B. Del Monte Pineapple Juice

1.Del Monte 100% Pineapple Juice Drink

2.Del Monte Bone Smart 100% Pineapple Juice

3.Del Monte Bone Smart Orange Juice

4.Del Monte 100% Pineapple Juice with ACE

5.Del Monte 100% Pineapple Juice Fiber Enriched

6.Del Monte 100% Pineapple Juice Heart Smart

7.Del Monte Orange Juice Drink Heart Smart

8.Del Monte Sweetened Pineapple Juice Drink

9.Del Monte Sweetened Orange Juice Drink

10. Del Monte Sweetened Mango Juice Drink

11. Del Monte Sweetened Four Seasons Juice Drink

12. Del Monte Pineapple Orange Juice Drink

13. Del Monte Pineapple Crush Juice Drink

C. Del Monte Fit ‘N Right

1.Del Monte Fit ‘n Right Pineapple Juice Drink

2.Del Monte Fit ‘n Right Pineapple Orange Juice Drink

3.Del Monte Fit ‘n Right Four Seasons Juice Drink

4.Del Monte Fit ‘n Right Apple Juice Drink

5.Del Monte Fit ‘n Right Orange Juice Drink

6.Del Monte Fit ‘n Right Watermelon Juice Drink

7.Del Monte Fit ‘n Right Pineapple Juice Drink

8.Del Monte Fit ‘n Right Pineapple Juice Drink

D. Del Monte Fruitastic

1.Del Monte Fruitastic Pineapple Juice Drink

2.Del Monte Fruitastic Orange Juice Drink

3.Del Monte Fruitastic Four Seasons Juice Drink

II. Culinary

A. Condiments

1.Del Monte Original Blend Ketchup

2.Del Monte Sweet Blend Ketchup

3.Del Monte Hot 'n Spicy Ketchup

4.Del Monte Sweet Chili

5.Del Monte Red Cane Vinegar

6.Del Monte Spaghetti

7.Del Monte Spaghetti Merienda Pack

8.Del Monte Salad Macaroni

9.Del Monte Elbow Macaroni

B. Sauces

1.Del Monte Quick n Easy Products

a) Del Monte Quick 'n Easy Mechado Sauce

b) Del Monte Quick 'n Easy Caldereta Sauce

c) Del Monte Quick 'n Easy Menudo Sauce

d) Del Monte Quick 'n Easy Afritada Sauce

e) Del Monte Quick 'n Easy Sweet and Sour Mix

f) Del Monte Quick 'n Easy KareKare Mix

g) Del Monte Quick 'n Easy Curry Mix

h) Del Monte Quick 'n Easy Gata Mix

i) Del Monte Quick 'n Easy BBQ Marinad

j) Del Monte Quick 'n Easy Breading Mix

k) Del Monte Quick 'n Easy Sweet Pizza Sauce

l) Del Monte Quick 'n Easy Italian Pizza Sauce

2.Del Monte Original Style Tomato Sauce

3.Del Monte Tomato Sauce with MMK

4.Del Monte Tomato Paste

5.Del Monte Filipino Style Tomato Sauce

6.Del Monte Italian Style Spaghetti Sauce

7.Del Monte Sweet Style Spaghetti Sauce

8.Del Monte Filipino Style Spaghetti Sauce

9.Del Monte Cheese Magic Sauce

10. Del Monte Tomato & Cheese Gourmet Pasta Sauce

11. Del Monte Beef & Mushroom Pasta Sauce

12. Del Monte Original Style Tomato Sauce (200g)

13. Del Monte Restaurant Style Fried Chicken Mix

III. Fruits

A. Mixed Fruits

1.Del Monte Fiesta Fruit Cocktail

2.Del Monte Fruit Snacks - Tropical Mix

3.Del Monte Fruit Snacks - Pine Orange

B. Pineapples

1.Del Monte Sliced Pineapple

2.Del Monte Pineapple Tidbits

3.Del Monte Pineapple Chunks

4.Del Monte Crushed Pineapple

Image courtesy of: delmontepacific.com

Place of Distribution

Current Distribution Network: (Distribution Channel Structure)

Current Distribution Network: Explanation

Del Monte Philippines, Inc.’s system of getting its goods available to the consumers has a very

wide scope. The company makes sure that its products are available wherever the demand and the

competition are.

Based on the diagram above, the transfer of goods starts from the manufacturer, wholesalers,

retailers, and ends with the consumers. The company must make sure that its products are available

wherever the demand may be in order to promote perfect retail value.

Del Monte Philippines, Inc. includes Big Box Stores, Convenience Stores, Drug Store/

Pharmacies, Full-line Discount Stores/ Mass Merchandisers, Supermarkets and Hypermarkets, Grocery

Stores, and even Merchant Wholesalers as its channel members. From the company, the goods are

distributed to all these channel members who then sell through retailing. These channel members, also

known as retailers, make the Del Monte Philippines, Inc. products available to the end-users - the

consumers. Through different agreements made by Del Monte Philippines, Inc. and its channel members,

retailers are able to sell products at agreed upon prices. Usually, the convenience stores offer the most

expensive price to the market.

Del Monte Philippines Inc.Big Box Stores

Consumers

Convenience Stores

Consumers

Drug Stores

Consumers

Full-line Discount Stores or Mass Merchandisers

Consumers

Supermarkets and Hypermarkets

Consumers

Grocery Stores

Consumers

Merchant Wholesalers

Consumers

A good distribution channel paves way to company growth in terms of sales and profits and

product availability. It is one of the main factors that a company must consider in accordance to the

pursuit of having a good position in the market. A good relationship between manufacturer and retailers is

also required to avoid conflicts and to promote synergy between each other. Without a proper and

planned distribution channel, a company may find it difficult to make its products available to consumers,

which can result to loss of profit and poor turnovers.

Price

Del Monte Philippines, Inc. provides high quality products that accommodate the needs and

wants of the consumers. People who are actively engaged in buying and consuming the products of Del

Monte could be assured that the process of producing all its products is International Standardization

Organization certified. This creates a strong indication that the value of DMPI’s products is reflected on

their price. It is reasonable for the company to come up with how they put prices on their products

because of the fact that they are basing it on the expenses that they incurred and the assumed profit that

they could possibly get.

Promotion

Del Monte Philippines, Inc. products are promoted through traditional way of marketing (i.g.

television, posters, and magazines). The products are mostly promoted through television

advertisements, and are advertised by personalities who are highly influential to people. DMPI also

exposes its products through product display in different participating outlets.

DMPI uses content marketing in order to share all the important content of the product in order to

acquire or retain customer. It is an approach focused on creating and distributing valuable, relevant, and

consistent content to attract and retain a clearly-defined audience — and, ultimately, to drive profitable

customer action.