Gardenia set P600M for capacity expansion

Bread maker Gardenia Bakeries Philippines, Inc. has allocated P600 million this year to increase the capacity of its production facility in Binan, Laguna. Gardenia President and General Manager Simplicio Umali, Jr. said that the new plant will allow Gardenia to produce an additional 150,000 loaves a day to augment its current capacity of 190,000 loaves a day. Gardenia currently has three plants in its 2.2 hectare facility located in the Laguna International Industrial Park. The fourth one, which the company has been setting up since last year, is slated to come onstream by 2007. "This new building will accommodate a more advanced bread manufacturing plant capable of producing nearly another 150,000 loaves per day to meet the continuously growing demand for Gardenia bread in Metro Manila," Mr. Umali said. He said that the P600 million that the company will need for this year will be sourced from bank loans. "These will be from local banks. We want it to be peso denominated," he said. He also said that the new plant will allow Gardenia to hire an additional 150 employees. The firm currently has 700 employees. "Most of the 150 will be for distribution, while some will be for production," he said. Once the new facility operates, Gardenia will be producing 340,000 loaves daily. The company will also move one of the smaller plants, possibly one that produces 2,000 loaves an hour, to Cebu after the new plant goes onstream. The relocated plant, Mr. Umali said, will serve the Cebu and Northern Mindanao markets. Currently, the brand does not offer its products to these areas due to constraints in distribution. Gardenia makes sure that its products are distributed within 24 hours after these go out of the processing plant. Since the only facility Gardenia currently has is in Laguna, it could not, at the moment service Mindanao and some areas in the Visayas. "There is a big potential for these markets. Currently, the requirements in the areas are being served by small and medium sized bakeries," Mr. Umali said. Officials said that the company is currently scouting for one to 1.2 hectare sites in Cebu. "We're quite open to very large areas because we think long term," Mr. Umali said. He could not give estimates on how much the transfer and the upgrade of the plant to Cebu would cost, saying these are as yet unavailable. Gardenia Bakeries Philippines is a unit of Singapore based Gardenia International Pte. Ltd. The firm has operations in Singapore, Malaysia, Indonesia, and the Philippines. It is known for the freshness of its products as it delivers the products within 24 hours after they come out of the factory and retrieves from consignees unsold bread that stay on shelves for at most two days. The firm has a color coded G-lock seal system that allows consumers to know if the bread they are buying is fresh just by looking at the color of the tab. The local operations started in 1998 both as a manufacturer of Gardenia bread and distributor of milk produced by sister company Cowhead. The firm now produces and distributes cake snacks and pan de sal in addition to its over 30 variations for sliced bread. For this year, the local company is eyeing P1.5 billion to P1.6 billion in sales after ending 2005 with sales amounting to P1.2 billion for 2007, the firm expects to further increase its sales to P1.8 billion as it continues to expand its market and products.