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(Updated 5:47 p.m.) Fastfood chain operator Jollibee Foods Corp. is taking a different approach to penetrate other markets in Southeast Asia where it has no footprint yet ahead of the 2015 ASEAN single market.
Instead of acquiring a local brand like it did in China, and is currently doing in the US, Jollibee is bringing its various brands to Malaysia and Indonesia, a ranking official said Wednesday.
Jollibee is currently on the prowl for partners to expand in the two other Southeast Asian markets, CFO Ysmael Baysa said on the sidelines of the Economic Journalists Association of the Philippines (EJAP)-ING Bank Forum in Makati City.
"The only reason [we're bringing our brands there] is we are not able to find local brands for sale," he said.
"We hope that within the next two years we will be able to go back to Indonesia and enter Malaysia," he said.
Baysa noted how Jollibee tried to enter the Indonesian market in the second half of the 1990s, but pulled out eventually due to the 1997 Asian Financial Crisis.
So far, Jollibee has stores in Vietnam, Singapore and Brunei.
In addition to Jollibee stores, Jollibee also has Highlands Coffee and Pho24 in Vietnam after forging a 50-50 joint venture with SuperFoods Group in 2011.
Baysa said they plan to start a small scale penetration in Indonesia and Malaysia to get a handle on how the market works – like what it did in Vietnam.
"In Vietnam, we started slow and learned the market first...we had initially five to 10 stores in three to five years," he said. "It's only in the recent couple of years we're growing aggressively," he added.
As of end-March, Jollibee has 43 stores operating in Vietnam.
Once Jollibee enters the Indonesian and Malaysian markets, Baysa said they will have to figure out how the consumers behave.
"Before you expand, you keep on improving your food and restaurant service, your food and products and brands, and marketing. It's only when these things seem to be working, you go expansion," the Jollibee CFO said.
For its acquisition plans in the US, Baysa said discussions are still ongoing with various parties.
Last June, Jollibee announced it was looking to acquire a US brand as a way of expanding its presence in the world's largest economy and take advantage of a growing consumer base.
This year, Baysa said all Jollibee brands will impose a slight price increase due to higher costs of raw materials on the home front.
"For Jollibee, price increases were since the fourth quarter of 2013 while most of our brands made adjustments twice this year, but very small increments," he said. "We adjusted only slight and despite those adjustments, we still see growth."
He noted the price adjustments were a result of higher costs of coconut oil, rice and pork.
"Coconut oil, because of the devastation of typhoon Yolanda in coconut farms and because of the coconut tree pest. Rice prices have gone up while pork prices have also gone up on a worldwide basis because of a pig disease in the US," he said.
The coconut industry took a beating from Typhoon Yolanda on Nov. 8, 2013, and is now plagued by coconut tree pests.
The price of rice rose by P2 per kilo in public markets since June and will normalize by September when farmers start to harvest, according to the National Food Authority.
The Jollibee official, however, believes the high costs of raw materials will not last long.
"The significant price increases... we believe... it will not be long-term. They will make some corrections next year, because these are created by one-time events," Baysa said.
"Overall, we are seeing a 4 percent year-on-year increase on raw materials, which is close to the inflation rate that the government is projecting," he added.
Inflation quickened to its fastest in nearly three years to 4.9 percent in July on high food prices and cost of utilities, which is on the upper end of the 3 to 5 percent government target for the year, the Philippine Statistics Authority (PSA) reported Tuesday. – VS GMA News