RP Ice Cream Companies Compete vs MNCs by Lowering Prices

By Trina Melissa Federis

Summer is a time for ice cream, as the hot weather tends to increase demand for this already popular dessert. At this time, Philippine-owned enterprises compete with their foreign counterparts by lowering their prices, the same strategy they have adopted regardless of the season and weather.

Spouses Jun and Angie Castillo, owners of the backyard ice cream company Gold Delight, said that even if they cannot compete head-on with the large ice cream corporations, they said that they are taking the large companies’ market away from them by enticing the consumers with low-priced, high-quality products.

Gold Delight started in Malabon in 1989 selling only ice buko (coconut). In 2000, it became a full-fledged ice cream business selling ice cream on sticks, in cones, cup, quart, and half-gallon containers. Flavors include avocado, cheese, choco fudge, and choco peanut, among others.

The company has a “backyard operation” literally, in the Castillo home on Kalayaan Avenue in Quezon City.

Pwede nang hindi bumili ng Selecta,” (You don’t have to buy Selecta), says Angie Castillo.

Low maintenance

Jun said that unlike a multinational company, his business does not have to spend a lot of money on salaries of executives, and there is “no shipping out of royalty.”

Aside from using different raw materials, the factory is semi-mechanized, therefore lessening the cost of paying for more foreign, expensive machines, Angie said.

Medium-scale businesses such as theirs, she said, are not so much into promoting the brand of their products, as their stores. Other medium-scale ice cream companies include Arce Dairy, Big Scoop, Dan Eric, and Milko.

They admitted that when it comes to distribution, the large companies are able to reach more people through their advertising. However, they claimed that they have saturated the communities within the vicinity of their stores.

Death by 2010?

Angie said that the medium-scale business are not at all affected by the large companies, but rather “kami ang may effect sa kanila (We’re the ones affecting their business).“

They are, however, affected by the rising cost of imported goods.

Much of their raw materials are imported from countries like Poland and Australia through distributors. They claimed that there is no local dairy industry to speak of.

Jun said that the large ice cream companies, such as Selecta-Walls, Nestlé, and Magnolia, will die out by 2010.

He said that the medium ice cream enterprises will take over the market share because they have invented the “all-weather ice cream,” or ice cream that one buys whatever the weather or occasion. This is opposed to the “celebration” ice cream, or the special albeit costly ice cream advertised as the product to splurge on for special occasions. This is an allusion to the common perception that ice cream sales are only fast during certain times of the year.

Jun said that big ice cream companies produce below their actual production capacity, because there is little demand due to the high prices of their products.

On the other hand, the production of medium-scale companies cannot satisfy the demand of the market, because of their limited operations.

Not so peachy

Ibon economist Sonny Africa warned that it is not as peachy as it sounds.

“In the history of any economy, large-scale companies have never disappeared. It’s true that there are individual large-scale companies that fold-up, but the trend in a capitalist economy is always towards fewer and fewer firms grabbing ever larger market shares—that is, towards big companies dominating.”

Medium enterprises may have an advantage because of lower maintenance cost, but the big firms have other advantages.

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