PAMPI: Meat processors wary as monopoly looms

CEBU, Philippines - The Philippine Association of Meat Processors of the Philippines, Inc. (PAMPI) seeks the help of the government to level the playing field in the industry, as it now faces a tough competition.

PAMPI president Felix Tiukinhoy said that the sector is experiencing the “survival of the fittest” and the onset of a possible monopoly, as bigger players are spending huge money to gain exclusivity of their products in the supermarkets.

Tiukinhoy, who is also the chief executive officer and president of the Virginia Foods Inc. (VFI) said that the entry of cheaper brands from other countries, which are now taking over the prime shelves location in huge supermarkets, have made the industry suffer more.

According to Tiukinhoy, the group may approach the House of Representatives to take legislative actions on this matter. Otherwise, the industry will eventually be dominated by a few giants.

Tiukinhoy mentioned the unfair business practice being done with some meat processors who are spending millions of pesos just to get exclusivity of their products inside a supermarket, and worse, they are dealing with supermarket chains.

With this, the consumers do not have enough choice of processed food brands, as most stores are controlled by the big brands.

One of the concerns though, he said is these manufacturers are members of PAMPI, and that only a legislative intervention is seen to resolve this problem by giving way to the small food processors to thrive.

“The problem now is that the big ones are buying space in the supermarket for exclusivity of their products,” Tiukinhoy said adding that this practice can kill the smaller ones, whose companies do not have enough financial resources to buy spaces on the supermarket.

“The industry is now very competitive. The margins are very low. That is why, food processors have to continuously innovate in introducing new variant to the consumers,” he said.

Aside from the exclusivity moves of food processing giants, Tiukinhoy said these companies are also trying to buyout the smaller ones. This move makes the industry controlled by only a few, and a threat of price cartel may be expected.

Meanwhile, last year, VFI announced to pour in P80 million capital expenditure (capex) starting 2010 to expand its operations and improve product quality

VFI is the maker of the Virginia, El Rancho, Winner, Champion, and Australian Brands of canned goods and frozen processed meat.

VFI vice president Stanley Go in an earlier interview said that company is looking at other potential areas where it can expand its distribution network in the Visayas and Mindanao.

“VFI has a major penetration in the Visayas and Mindanao areas but we still intend to grow our market here. We still foresee the need to extend our consumer-base,” Go said.

VFI is closely competing with Purefoods, CDO, Pacific Meat and a growing number of meat processors in the Philippines.