Sa kauunlad ng bayan: Magtiis tayo!

Blogger's Note: Adapting to the changing times, the resiliency of the Filipinos once again is showing. The following articles share the coping mechanisms of Filipinos whenever there is a crisis.

Making ends meet
First posted 06:29am (Mla time); Sept 18, 2005; By Inquirer News Service
http://news.inq7.net/opinion/index.php?index=1&story_id=50582

BECAUSE of the surging cost of living as a result of record fuel prices, Filipinos, especially the middle class, are being forced to prioritize their needs over their wants. Instead of eating out on weekends, some families are just staying home. Instead of using a car or taking a taxi or bus, more and more people are riding the MRT or LRT—the light railway system in Metro Manila.

Instead of liquefied petroleum gas, a growing number of households are using kerosene, charcoal or firewood for cooking. Instead of buying a kilo of pork or chicken, they are settling for half or a fourth of a kilo and are turning to vegetables.

Instead of going to malls to buy brand new jeans, blouses or dresses, people are patronizing ukay-ukay (used clothing) stores. Instead of sending their children to private schools, parents are enrolling them in public schools.With incomes unable to catch up with inflation, the list of how consumers are making ends meet is a long one and varies from one income class to another. Those without means of livelihood may go hungry more often.

Manufacturers are rising to the challenge of producing affordable goods. They are rightsizing their products, coming up with 100-gram canned goods, and shampoo, cooking oil, vinegar, soy sauce and tomato sauce in sachets.

People will have to further tighten their belts when the 10-percent expanded value-added tax takes effect.
©2005 www.inq7.net all rights reserved

Small is beautiful: Consumer spending in critical times
First posted 06:28am (Mla time) Sept 18, 2005 By Esther J. Capistrano, Inquirer News Service
http://news.inq7.net/opinion/index.php?index=1&story_id=50583

FOOD, shelter, education and health are still the priority for spending of the Filipino consumer in these difficult times. However, the share of how much is spent on what is changing.

Food, as a percentage of the consumer’s budget, is decreasing although out-of-home consumption of food items is increasing.

Spending on housing and education is going up, while that for medical care, it seems, has remained the same.

What could all these mean? Are people eating less during times of crises? Is the promise of education good enough such that Filipinos see spending on education as an investment in better lives in the future? Does having a house provide a security so that whatever happens, the Filipino family has a place to go home to? And is health the only wealth one can possess during times of crises and is therefore non-negotiable?

Filipino consumers and the value they put on things are interesting.

Of the four, I will delve into what is most common, what is most basic: Food. Food in terms of volume may not have actually gone down. Rather, the Filipino has found a way of satisfying hunger while keeping tabs of their spending. To the DE population, a pack of noodles, which costs about P5, would be a meal for a family of four.

Jollyjeeps
Cooking for the whole family has been replaced by manang and “jollyjeep” [owner-type jeep loaded with home-cooked food and which are usually parked at the back of office buildings] that offer a complete meal in a plastic bag enough to nourish an individual.

Three-in-one single-serve sachets allow for just right spending for a cup of coffee. We still get to enjoy the meals and the drink we want… for less.

Other than cost, the source of this basic commodity is also interesting to look into. The sari-sari store and wet market— traditional trading channels—remain very significant outlets patronized by Filipino consumers. Both channels remain important to the financially challenged shopper.

Venture a guess as to why this is so and chances are you would get it in the first try. Tingi and tawad are necessary skills the Filipino shopper has learned and mastered with years of managing increasing costs and tight budgets.

These are of course the traditional equivalent of modern trade’s price cuts and sachet marketing. Half a cup of cooking oil, a stick of cigarette, a quarter bar of margarine… these are just a few of what is offered by the traditional channels.

Exciting
I now come to the exciting part and I would try to explain why of the four needs monitored, I chose to discuss food.

To manufacturers, understanding how a consumer deals with the most basic of his needs is critical. It is like watching a creature in his natural habitat. The displayed behavior should guide marketers on how this same consumer would act when introduced in a new environment.

If food is something that has to be had, crisis or no crisis, the manufacturer has to be able to provide it. When there is a need for food but buyers are strapped for cash, what is the manufacturer to do? Same volume demanded for less cost. This is where it gets exciting.

The trends we’ve seen are the growth of affordable products available in the market. This was done through downsizing strategies, premium-priced to low -priced products, convenience products, and patronage of traditional trading outlets.

Rightsizing
Downsizing and rightsizing strategies have been taken by makers of practically all fast-moving consumer goods. Pouches, sachets and 100-gram canned products have been introduced.

Rightsizing allows for affordability and gives the Filipino consumer access to a wide range of products even during critical times. This is the counterpart of the tingi strategy seen in traditional trading channels.

Opportunities may still abound for manufacturers, but in different forms.

Lutong bahay
Convenience products and outlets also help consumers cope during critical times. Instant noodles, flavorings and out-of-home food consumption have caught up with the Filipino consumer in a big way.

From the traditional flavors of yesteryears (beef, chicken and pork), noodle companies have developed flavors all the lutong bahay (home-cooked) lovers can dream of. The latest of which is the much-loved sotanghon variant. Even tuna manufacturers have come up with their line up of kaldereta, ginataan, afritada and menudo variants.

Value meals
Among fast food and delivery chains, value, kiddie, executive and student meals are offered. All come with drinks, French fries or salad. For groups, party packages are also available.

In a family of three or four, in which the husband and wife may be working, ordering food or eating out or having food to go instead of preparing a meal at home has become a necessity. A meal at home would require a complete stock of fresh food, ingredients, an equipped kitchen and culinary savvy—things that have become a luxury only a few can enjoy.

Male housewife
Recent studies show that some households in which the housewife is a “he,” the appeal of the fast and the convenient is true. Canned goods, hotdog in packs and other processed meat are the staple.

The changing roles in, and size and structure of the family pave the way for the entry of convenience products, outlets and service offerings. Again, opportunities abound… and again in so many different forms.

The Philippines, which has 85 million people, is a land of many opportunities for manufacturers. It offers a large market base but consumers have very limited money to spend. Consumers are compelled to re-evaluate and prioritize needs over wants, and take drastic measures to cope with today’s crises.

Food is a need and opportunities abound in offering an array of this most basic of commodities in affordable, convenient bite-sizes. The Philippine consumers’ needs are interesting and responding to their distinct needs can be exciting.
(Capistrano is the managing director of ACNielsen Philippines, a leader in market research information and analysis.)
©2005 www.inq7.net all rights reserved



From LPG to firewood
First posted 06:27am (Mla time) Sept 18, 2005 By Inquirer News Service
http://news.inq7.net/opinion/index.php?index=1&story_id=50584

YOU know cooking gas prices have started to become less and less affordable when you see people going back to using charcoal and firewood in cooking their meals. And they have.

More and more Filipinos have started to rely less on liquefied petroleum gas, now that prices have spiraled to between P378 and P430.50 per 11-kg cylinder.

Industry data show that LPG sales dropped by almost 10 percent in the first half to 5,731,893 metric tons (MT) from 6,353,734 MT in the same period last year. This is not because people are conserving energy and cooking less.

Industry executives support this observation. Roberto Kanapi, Pilipinas Shell Petroleum Corp. general manager for external affairs, says people are just seeking alternatives to LPG, using charcoal, firewood and kerosene instead.

While the alternatives are not necessarily cheaper, people resort to using them as they can be bought at amounts that can be consumed in a day or two, he explains.

The high prices of cooking gas have triggered the Filipino’s tingi mentality—buying a small amount of charcoal or firewood for several days’ consumption as opposed to buying an LPG cylinder for close to P400 or even more for a few weeks’ worth of cooking.

Oil firms, which sell LPG, are now feeling the effect of this scrimping of sorts.

Petron Corp.’s LPG sales volume dropped 6 percent to 1.6 million barrels in the first half from 1.7 million barrels in the same period last year. Although this also includes sales to industrial customers such as National Power Corp., the company is not faring much better than its competitors.

Total (Philippines) Corp.’s TotalGaz brand experienced a 14-percent decline in sales in the first half due to the high price of LPG, Total corporate affairs manager Malou Espina says.

She says even people, who own small LPG cylinders that double as stoves—the so-called Super Kalan, depending on which brand one uses—utilize them sparingly, “usually only during the rainy season when there’s no firewood.”

More people taking MRT and LRT
MORE and more people are riding the mass rail transport these days, especially after fares in jeeps and buses went up in June.

MRT 3 ridership used to average about 400,000 daily. Lately, the turnout had been about 420,000. Of course, the average excludes weekends and holidays when volume ranges between 200,000 and 250,000.

For a day, two weeks ago, we hit an all-time high of 465,000 passenger volume. I think it was a Wednesday and MRT 3 was still operating its midnight runs.

Extending the operations of MRT 3 and even the LRT was meant to encourage the public to take the mass trains because our fares are cheaper. We have not increased our fares since we started operations five years ago whereas jeeps and buses have gone through several increases already.

MRT still charges fares ranging from P10 to P15 for the entire 17-km stretch of North Edsa to Baclaran. Aircon buses already charge P10 for the first five km plus P1.75 for every succeeding kilometer [a total of P31 for the same distance].(MRT 3 General Manager Roberto Lastimoso)

Revenue in August for the two lines of the Light Rail Transit Authority reached P189 million compared with the monthly average of P180 million during schooldays.

We noticed a spike in ridership starting July. There are days when volume reached 360,000 whereas we used to average about 320,000 on weekdays.

It helped that we are running more trains, especially on Line 1. We now have 72 trains running the Monumento-to-Baclaran stretch, which is Line 1, after we repaired about six trains. With more trains, we serve more passengers and the turnaround time is faster.

Right now, the LRT is the cheapest form of transport. We have a two-tiered fare of P12 and P15 for the entire 14.5-km stretch of Line 1 and the 13.8-km Line 2. In contrast, jeeps now charge P7.50 for the first 4 km plus P1.25 for every additional distance [equivalent to P19.75 to P20.625 for the whole stretch of Lines 1 and 2].

With the LRT and MRT, we offer air-conditioned rides and no traffic. The problem is that government is forced to subsidize the operations of the railway because we have not increased our fares. Ours is a case of rising cost and steady fares. Fuel, electricity and wages have gone up but our fares are still the same.(LRTA Administrator Mel Robles)

Orders for poultry products weaken
DEMAND for poultry products in the third quarter was quite weak. As a matter of fact, we have had some cancellations or lowering of orders though it’s not across-the-board. Demand from institutional and commercial retail buyers has dropped, but we have not adjusted production. We are just building inventory stocks for the holiday season.

During the past six months, supply went up, affecting farm gate prices. For integrators (big agribusiness firms) prices range from P49 to P50 a kilo, but prices of commercial raisers are between P47 and P48 a kilo. The commercial sector sells at these prices because it sells mostly live birds and there is a narrow window to move them. Off-take arrangements for broiler integrators, who are also engaged in retailing, have also been affected.

Because of surging fuel prices, our production cost has increased but our selling prices are determined by supply and demand. The lowest retail price now is P80 a kilo and the highest is P110. We hope the demand during the holidays will improve.(Rita Imelda Palabyab, president, Philippine Association of Broiler Integrators)

Demand from ham makers slips
OUR farm gate prices have declined because of low demand. At this time, we expect orders from manufacturers of hams in time for the holidays but we are not getting the usual surge of orders.
People are really feeling the pangs of inflationary pressures and are holding on to whatever cash they have.

Wet market retailers to whom we sell our produce say buyers have lowered their usual purchase of pork products from one kilo to half or to even a fourth of a kilo. Our wet market customers now buy three hogs, down from the usual five. The difficulties have been felt beginning in the second quarter when rising fuel prices pushed up production costs.

In Manila, live weight price on the farm ranges from P82 to P86 a kilo compared with P88 to P95 a kilo during a good period. In the provinces, the farm gate price is lower at P72 to P74 a kilo, down from P78 to P80 per kilo. Retailers explain that the price at wet markets is still at P145 to P150 and has not declined because they say they need to recover additional costs.(Albert R.T. Lim Jr., president, National Federation of Hog Farmers Inc.)

Liquor market softening
SAN MIGUEL CORP.’S SUBSIDIARY, Ginebra San Miguel Inc., has reported an 11-percent decrease in local sales volume to 15.4 million cases for the first seven months.

We attribute this primarily to the increase in prices of raw materials, which translate to higher prices of our products. In the first half of the year, we observed an increase in revenue despite a decrease in volume—we were selling fewer products at higher prices.

As for data covering January to July, the decrease in volume was seen both for our gin line (7 percent year-on-year) and our Vino Kulafu Chinese wine, which is popular in the provinces (51 percent).

Only the Gran Matador brandy, a relatively new product, showed strong sales with an increase of 112 percent. But this accounts for a small percentage of gin drinkers, who are shifting to brandy because of its perceived health benefits. Like wine, brandy is made from grapes and accords the drinker a sosyal status of sorts.

Amid the softening liquor market, we are experiencing rising cost pressures on raw materials like molasses, and rising taxes on our products.(A San Miguel Corp. official, who asked not to be named.)

(Interviews by Abigail L. Ho, Clarissa S. Batino, Christine Gaylican and Ron Domingo.)

©2005 www.inq7.net all rights reserved