They deliver

Kelloggs took a beating from Nestlé Phils. until it limited its cereal distribution to upscale supermarkets and to key provincial locations where fresh milk was available.

In the case of Japan-based Mandom, the distribution strategy for its Gatsby brand of hair gel was to be in as many of the retail outlets as possible patronized by the C-D market. Today, Gatsby is market leader.

Kelloggs and Mandom are two of the 25 key principals of JDH (Phils), Inc., a subsidiary of Hong Kong-based JDH Marketing, which is, in turn, one of five core businesses under Li & Fund (Distribution) Ltd.

"Our greatest asset is the quality of the companies we represent. It reflects well on the quality of the services we provide. We have multinational companies like Kelloggs as principals, with whom we have been in business with for over 30 years. And we also have local principals like Pascual Laboratories," said JDH (Phils) managing director Grant Pace.

Excluding multinational companies which have local manufacturing operations, Philippine companies currently account for less than 20% of JDH’s total portfolio, which easily generates an aggregate sales volume of over P6 billion annually.

"We’re focused on fast-moving consumer products in need of a competitive edge," said general manager Alexander Bally. "Unless you are a big player and have been in business in the Philippines for a long time, chances are you do not have the retail connections and the manpower needed to give your products the kind of shelf exposure they need."

Advantages

Breaking into the retail trade has country-to-country nuances. In the Philippines, for example, the owner of the retail outlet sees the business as a rental business. Shelves and display counters are rented out. It is the company which paid for the shelves, not the store owner, which is responsible for stocking up or ensuring that its products are on the shelves.

Under such a set-up, the best locations (in terms of shelves, islands, and impulse display counters near the cashiers) are cornered by big and established companies with huge volumes of products to sell.

"We have the critical mass to compete for store space and to give the products of our different principals the best possible shelf exposure and optimum turnover. If they did it on their own, they might not be able to get as good a deal because of the volumes involved," said Pace.

While careful to keep a good relationship with key major retailers, JDH (Phils) has made it a point to increase its network by an average of 1,500 outlets a year. To date, the company has a nationwide network of 60,000, including sari-sari stores.

"We have, for example, an excellent relationship with the dominant drugstore chain in the country, Mercury. But we would like to think that we have developed an equally satisfying relationship with each of the 6,000 other drugstore owners," said Bally.

Working relationship

The extent of what JDH (Phils). does in the supply chain depends entirely on its client.

"We give our principals a checklist of what we could do for them. If they want us to meet the shipment at the harbor, then that becomes part of our work. If they want us to recommend how to best market their brands, then that too becomes part of our work," said Pace.

Most of the time, the contract worked out every three years focuses on getting the products to the retail shelves. JDH outsources the physical delivery of the different products and the merchandising needed at the store level.

"Our principals save on cost because they share the cost of delivery and in-store activities," said Bally.

JDH has also organized its sales teams in such a way that it can distribute two competitive brands without the issue of conflict of interest being raised by the incoming principal. One team handles one brand and another team handles another brand.

Both teams are expected to aggressively push their assigned brands.

In large part, this is because JDH is paid a certain percent of the sales generated.

"In one particular case, the client was so happy with the sales generated that he gave our sales force gift checks after the first month sales came in and treated them out to dinner after the second month," said Pace.

Selling overseas

Even as multinational companies have tapped JDH to distribute their products in the local market, the opposite is also possible. Philippine companies can use JDH to distribute their products in the markets of other Southeast Asian countries and in China.

"Using JDH Marketing in multiple markets gives many benefits to principals. These include one point of contact, consistency of approach and learning quickly from successes and failures," the Li & Fung Distribution Group brochure noted

The group currently employs over 6,000 staff in Hong Kong, China, Taiwan and Southeast Asia, serving 600 multinational principals by delivering 20,000 accounts covering more than 100,000 retail points.

The success of JDH Marketing speaks for itself. They have delivered in the Philippines.