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RFM Cooks Up More Affordable Spaghetti to Sustain Growth

Joey Concepcion's company shares how it is making billion-peso brands
By Lorenzo Kyle Subido |


RFM Corp Chairman Joey Concepcion

 

 

RFM Corp., one of the country’s leading players in the consumer food industry, reported a net income of Php1 billion in 2016, a 10.5-percent increase from the year before. This came with a six-percent growth in revenue, amounting to Php12.7 billion in the same period.

 

“RFM’s profitability was driven by its branded consumer products focusing its efforts on higher-margin core businesses,” the company said in its annual report. “The company remains bullish on the market leadership strength of its core brands Selecta, Fiesta and Royal.”

 

Under the leadership of Jose “Joey” A. Concepcion III, who is also the founder of entrepreneurship advocacy group Go Negosyo, Selecta dominated the ice cream segment with 72 percent of market share in 2016. Not lagging far behind, both its Fiesta and Royal brands led the pasta segment. Together, the two brands controlled 35 percent of the market in terms of value of sales.

 

 

Related story: How Joey Concepcion defeats the Goliaths

 

 

In its recently released 2016 annual report, the company revealed some of the key steps it carried out last year to sustain revenue and profit growth amid more intense competition.

 

 

1. More Affordable Spaghetti 

RFM ran a marketing campaign called “Fiesta Spaghettipid” to encourage housewives to prepare more spaghetti meals using its budget brand, Fiesta. It introduced a package that costs only Php59 but is good for up to eight servings. “Through Fiesta Spaghettipid, RFM aims to enable more Filipino families to prepare spaghetti more frequently,” the company said in its annual report.

 

The strategy worked, according to RFM. The company reported that Fiesta led the spaghetti segment with 26 percent of value share as of November 2016. Its spaghetti sauce product commanded 18 percent of volume share in the same period.

 

 

 

2. A New Look to Freshen Up an Established Brand 

On the other hand, RFM took a different approach in promoting Royal, its premium pasta brand. Last year, the company offered a new product called Royal Sweet Tomato Basil Spaghetti Sauce. But instead of marketing it on its own, RFM bundled it with the existing pasta products “to encourage trial.”

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In addition, the company also changed the overall look of Royal’s existing products. “The entire range re-launched with a blue packaging to refresh and differentiate its look in the trade,” said the company.

 

The rebranding seems to be paying off: in November 2016, Royal led the macaroni segment with 22 percent of value share.

 

 

3. Riding the Health Wave 

Apart from its ice cream and pasta products, RFM also makes milk products through the Selecta White brand. With an eye on the growing health awareness of Filipinos, RFM is positioning its ready-to-drink milk segment to appeal to that segment of the market.

 

While not providing specific numbers, RFM revealed that its Selecta White business “continued its double-digit growth performance and gained six percentage points in market share in the recombined milk local market.”

 

One of its products, Selecta White Milk, commanded 24 percent of volume share as of October 2016. “It is the fastest growing ready-to-drink white milk local brand,” the company added, citing competitive pricing and savings promotions as key growth drivers.

 

 

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Lorenzo Kyle Subido is a staff writer of Entrepreneur PH

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