Gardenia: launches 850 million PHP expansion program

Manila / PH. (gb) Gardenia Bakeries (Philippines) Inc., subsidiary of Singapore-based QAF Limited and the Philippines biggest bread maker, announced it is going to fast track the implementation of its 850-million PHP (Philippine Peso) bread manufacturing expansion program to meet increased demand of bread following the downward trend in bread prices and to support a company goal of doubling growth in five years.

Gardenia president Simplicio Umali Junior said in a statement, the company hopes to sustain a 25-percent growth in value annually, although volume growth is limited between eight to ten percent only. The company growth is contrary to the negative four percent growth in the overall bread market and ten percent drop in volume due to higher prices of bread this year, he said.

700 million PHP of the total expansion program would be used to fast track the construction of its fully automated new loaf bread plant at its existing plant in Laguna. The plant with a production capacity of 150’000 loaves per day would be fully operational by the second half of next year.

The new plant is expected to employ 60 people for a three shift operation, 100 to 200 on the distribution side and another 100 on the reside side. With the global economic recession, the company expects a longer return on investments of seven to ten years should interest rates go higher from six to seven-year recovery period under normal situation.

The remaining 150 million PHP would be spent for a new bread manufacturing plant in Cebu in 2010. Umali said they have to locate in one of the economic zones in Cebu to ensure a safe environment for a food manufacturing plant. The Cebu plant is going to serve the Visayas and Mindanao areas. At present, its Laguna plant is taking care of the Luzon area and is also minimally serving Bacolod via the RO-RO vessels. Umali: «Our thrust is to grow the bread market by about 25 percent for the Luzon area alone and should capture that as our growth without displacing the existing players».

At present, the entire bread market of the Philippines, including the unbranded, is placed at eight billion PHP of which the branded market is close to two billion PHP. For the bread loaf market, Gardenia accounts for a dominant 60 percent share and 50 percent for pan de sal (local speciality) market in supermarkets and grocery stories in Luzon. The other branded bread producers have eight to nine percent share each.

Umali also revealed plans to produce a new bread segment to be able to provide nutritious bead to the lower income bracket. This bread would be distributed through special stores in poor communities and production volume would depend on the demand. «But we are not going to promote this bread», he said to «balita-dot-ph». According to «balita» Gardenia products are ten percent more expensive than other bread across the Philippines. For its new plant, Gardenia boasts of using state-of-the-art technology to producing only superior and nutrient pack bread. Unlike traditional bakeries that utilize a lot of manual handling for the preparation of dough and baking of bread, the new plant will produce high quality loaves of bread untouched by human hand.