Gokongwei-led URC plans Myanmar venture

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TWO GENERATIONS. Father and son John Jr (right) and Lance (left) Gokongwei address the stockholders of food firm Universal Robina Corp. in an annual meeting on April 18. Photo by Aya Lowe

MANILA, Philippines – The food and beverage arm of the Gokongwei group, Universal Robina Corp. (URC), will enter Myanmar market over the next two years, said Vice Chairman and CEO Lance Gokongwei.

Speaking on the sidelines of a stockholders meeting on Thursday, April 18, Gokongwei said their plan is to set up manufacturing facilities in Myanmar with an investment of $20 million to $30 million.

“Over the next two years, the plan is to set up a facility and organization to start selling various products in Myanmar which we cannot disclose at this point,” said Gokongwei, who was at the annual meeting with his father, tycoon John Gokongwei Jr.

“It’s a long term play. Myanmar is rapidly transforming into another tiger like Vietnam or the Philippines. It’s got certain advantages: a large population of 50 million, a very good location in Asia and a lot of inherent natural resources and beauty from its tourism product,” he added.

Gokongwei said he expects some exports out of Myanmar, which is part of the approval of an investment license. “The plan is to address both the domestic and export market,” said Gokongwei.

Regional markets

In 2012, URC’s international sales grew 6%. The main drivers were Vietnam and Indonesia, growing at 16% and 15% respectively. Thailand’s growth slowed to 4% in 2012, while Malaysia’s and Singapore’s combined dropped 4%. Both China and Hong Kong grew 3%.

In its Vietnam market, the primary growth driver was its beverage brands, such as C2, which is the number one brand in terms of market share in key cities accross Vietnam. In Thailand, softer sales were attributed to lingering effects of the flooding in 2011.

“This (Thailand flooding) put a lot of people out of a job and prompted consumers to save, particularly on various impulse and discretionary products, such as biscuits and sweet drinks,” said Gokongwei.

While the growth driver has historically come from their international markets, Gokongwei said he expects the local market to get a boost this year.

“Historically the growth driver has been international because it’s from a smaller base. The international market makes up 25% of overall revenues, but this year, because of the strength of the peso we expect the Philippines business to grow faster than the international business,” he said.

Company growth

URC will spend P8 billion for expansion and investments in 2013 as it continues to enjoy strong product sales.

Universal Robina Corp. of JG Summit Holdings Inc. said P4.3 billion of the amount would be spent to expand the capacities of its snack and other grocery products, and upgrade existing beverage facilities in the Philippines.

It will also go the company’s operations overseas. The company will expand its snack, chocolate and biscuit lines in Thailand, Indonesia and Malaysia, and put up new beverage and bakery lines in Vietnam.

In 2012,key new products in coffee mixes such as Great Taste and salty snacks such as Mang Juan led to an increase in local market share. In snacks, its market share grew from 37% to 40% from 2011 to 2012. In the coffee segment its market share grew from 8% to 13% between 2011 and 2012.

URC booked a net income of P7.73 billion in its fiscal year 2012, 67% higher than the P4.63 billion it recorded in the previous year, thanks to strong sales.

URC manufactures popular brands, including C2 ready-to-drink tea and Jack N’ Jill snack foods. –

Source: Rappler

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