Malaysian food company starts entry to PH market

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Sunday, January 19, 2014


DELIMA Oil Products Sdn Bhd (Delima Oil), a subsidiary of Felda Global Ventures Holdings Berhad (FGV) based in Malaysia, launched over the weekend the entry of its food products in the Philippine market, with Cebu as the pilot area.

FGV also signed a partnership agreement with local company Intisari Mulia International Inc. (IMI) for the distribution of nine consumer and industrial products of Delima Oil in Cebu, such as the Saji cooking oil.

Fairuz Ismail, FGV executive vice president for transformation management, said the expansion in the Philippines was driven by the country’s booming economy and big population. He said they picked Cebu as pilot area of the expansion because of its retail boom given the “additional 64 new hypermarkets that will be developed in the province.”

Exports increase

With their foray into Cebu, he said exports to Asean countries, excluding Malaysia, is expected to increase to 15 percent from the current 10 percent.

“Our aim is to further distribute our palm oil based consumer products, manufactured by Delima Oil, beyond the Malaysian shores by helping to fulfill customer’s needs as they now have access to a wider range of goods. This is a win-win situation that will be mutually beneficial to both the marketer and the consumers,” said Ismail.

With the partnership, Delima Oil hopes to achieve 10 percent market penetration by 2017 in the Philippines.

FGV is under the Felda Group, the largest oil palm plantation operators in the world. Felda manages 500,000 hectares of plantation belonging to its settlers while FGV operates about 360,000 hectares of oil palm plantation in Malaysia that produced 5.3 million MT of fresh fruit bunches in 2012.

On the other hand, Delima Oil’s top products, Saji cooking oil and Seri Pelangi margarine, have captured a market share of 27 percent and 50 percent respectively.

Seventy percent of Delima Oil products are sold in Malaysia.

Supply

IMI managing director Marin Francisco Escudero said they will initially supply about 600 tons per month to Cebu and Mactan and will eventually increase to 1,000 tons per month. Cebu’s cooking oil requirement stands at 5,000 tons per month.

“Of the figure, we intend to capture 20 percent of the market. In the next five years, we intend to corner 20 percent of the Philippines’ volume,” said Escudero in a press conference.

Zakaria Arshad, senior vice president and acting head of Downstream at FGV, said their expansion in the Philippine market is part of the company’s strategic move to position their products ahead before the Asean integration happens in 2015.

Aside from the Philippines, the company is strengthening its presence in Myanmar, Cambodia, Laos, and Vietnam. They also plan to expand in Pakistan and India.

Arshad said their plan to grow in Cebu is by penetrating the consumer market first and eventually tapping the industrial market. He reported they are now in talks with big companies here.

“We will first grow in Cebu and expand to neighboring islands in Central Visayas, Southern Mindanao and lastly, in Luzon,” said Arshad.

Delima Oil products entered the Philippine market in February last year, officials reported that the market feedback was overwhelming, despite the country being known as top producer, exporter and consumer of coconut and corn cooking oil.

“The initial response and demand by the Philippine’s domestic consumers have encouraged us to expand the market by introducing more product offerings,” said Ismail.

Dr. K Sundram, deputy chief executive officer of Malaysian Palm Oil Council (MPOC), said that despite the production of coconut and corn oil in the Philippines, the quantity produced is still not enough to feed the entire population and that the country still imports large quantities of edible oil.

Data from the MPOC indicates that in 2009, the Philippines imported from Malaysia only 119,255 metric tons (MT) of palm oil. However, imports increased to 204,731 MT in 2010 and 543,000 MT in 2011 valued at P28.03 billion, making the Philippines the third biggest importer of the Malaysian palm oil among the 18 countries in the Pacific Region after China and Japan.

Reports said that the importation is projected by MPOC to grow at 11 percent a year for the next 10 years. This is translated to an importation volume of 597,000 MT to 962,000 MT from 2012 to 2017 or over P45 billion worth of imported palm oil annually.

Not new

Sundram expressed confidence the Malaysian cooking oil brand will do well in the Philippine market saying that palm oil is not new to Filipinos and that they are already accustomed to palm products.

“With Saji cooking oil, the Philippine market is guaranteed with quality and sustainable supply,” he said.

Aside from Saji, IMI will also distribute Seri Pelangi margarine, Adela margarine, Sajimee instant noodle, Mariana shortening, Sajimayo mayonaise and Sunbear peanut butter, Saji sweetened beverage creamer and Adela Cake pre mix, in Cebu.

The firm will also create small packaging to address the sachet-economy of the Philippines, said Ismail.

A kilo of Saji cooking oil is priced P55-P60 in wet markets and P86 in supermarkets.

In conjunction with their presence here, the company opened a Delima Oil showroom located at RGY Building, J. De Veyra St. North Reclamation Area. The showroom is the third opened in the Asean region and will serve as the trading office for Delima Oil as well as representative office for FGV.

Published in the Sun.Star Cebu newspaper on January 20, 2014.

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