King of dough

In the span of five years, Gardenia Bakeries Phils. Inc. has become the country’s biggest breadmaker, with an overall 37% market share even though it is distributed mainly in Metro Manila.

"We are happy that we have satisfied the A-B-C markets through 3,000 outlets. But, to be truly successful, we have to reach the lower income groups," said general manager Simplicio Umali, Jr. "Our sales formula is to make use of existing retailing groups like ice cream, vegetable, and corn peddlers on bikes or tricycles who can penetrate the small alleys of crowded areas of Metro Manila and nearby provinces. GBPI is jointly owned by Filipino investors and Singapore-based Gardenia International (S) Pte. Aside from the Philippines, the Gardenia bread line is sold in Malaysia, where it controls 50% of the bread market, and in Singapore, where has a dominant 80% market share.

"Our rapid growth has been due to a focus on producing premium and export quality bread for the satisfaction of our consumers. Profitability is only a secondary focus," said Umali. GBPI generated sales of P500 million in 2002. This year, sales is expected to reach P750 million.

Underdeveloped market

GBPI started in 1998 with a capital of P13 million. Today, the company’s fully-automated plant at the Laguna International Industrial Park has assets worth P113 million.

A favorite educational tour site (with an average of 1,000 to 1,500 visiting students per day from Metro Manila and neighboring provinces), the plant produces 15,000 to 20,000 loaves a day, significantly more than the production runs of major bread labels such as Goldilocks, with 2,000 loaves a day; Bakeline in Pampanga, with 3,000 loaves ; and Cindy’s in Tarlac, with 2,000 loaves

"The P1.5 billion bread market of Metro Manila and surrounding provinces remains highly unexploited and underdeveloped," said Umali. "There are about 40 small breadmakers in the country, many of which have been operating in the country for longer than we have and many of which are not exclusively into bread business but are also into cakes and bakeshop products and even fast food. "

Historically, the bread industry has grown at the rate of 8% to 10% a year. In contrast, GBPI grew by 65% in 2002 and expects to grow by 40% to 45% this year. As of the first quarter of 2003, GBPI posted a 40% sales growth.

"Although there is no lean period for bread, the peak periods are payday weekends, Christmas, Halloween, Holy Week and the summer months. Rainy season sales definitely shoots up because people tend to eat more," he said.

Production

GBPI produces white breads, flavored loaves, toasted bread, and buns as well as pan de sal, which sells at P2.20 a piece compared to the sari-sari store’s P1.50.

"Our bread comes in uniform sizes and remains soft even after the seventh day. Our distributors, however, replace them by the second or third day to ensure that our consumers have freshly baked bread all the time," said Umali.

The returns, which account for 10% to 20% of total bread distributed, as well as factory rejects (or undersized or oversized breads) are either sold to fish mills as fish food or are given away, either to charitable institutions which ask for them, or to employees to take home.

By next year, GBPI is putting up another plant to meet demand not only in Metro Manila but also as far north as Baguio City and as far south as San Pablo in Laguna and Batangas City in Batangas in the south.

"Right now, we are only meeting 60% to 70% of the demand for our bread," said Umali, who intends to completely cover the Luzon market in the next three years.

Another plant, preferably in Cebu, which can reach Western Mindanao by boat, will then be put up to sell to the Visayas and Mindanao.

"We’re confident we would be ISO certified by July this year. We have prepared well for the accreditation of our good manufacturing practices. Our employees are committed to making GBPI Gardenia a world-class company," said Umali.