RFM decides to stick to building brands

After selling crown jewel Cosmos Bottling Corp. and tinkering with the idea of entering the broadcasting business, publicly listed RFM Corp. has finally decided to stick to what it does best: building brands.

In an interview, RFM president Jose Concepcion III said that after considering various new business models for the 45-year-old company, they have decided to either be as big as San Miguel Corp. in the food and beverage business or a small and extremely focused but highly profitable company like Nissin Monde.

RFM earlier made a pitch for ABC-5 as the company was looking at a business model focusing on the entertainment business. "But it was difficult to change our business model. If it is something totally unrelated to what we had been doing, chances of error are much higher. Now, we have decided to grow our dairy and juice businesses and develop new products," he said.

RFM’s branded food group has shown indications of tremendous potentials, Concepcion noted. From P1.5 billion last year, sales are expected to double to P3 billion this year. The group includes Swift, Selecta Moo, Fiesta pasta and sauces, Sunkist, and White King.

Export earnings have also been promising for the company. Concepcion revealed that from $1 million last year, earnings are projected to grow to $3 million this year and $5 million last year. "But we are not building factories abroad. We would rather export products out of the Philippines," he said.

Concepcion expects next year to be a very good one, not only for RFM, but for most food companies as well, being an election year.

The strategy of building brands through massive advertising, marketing and distribution support has paid off. When it acquired Cosmos in 1989, Pop Cola had a meager eight percent share of the market. After eight years, it controlled 28 percent and overtook Pepsi Cola. RFM later sold Cosmos to San Miguel Corp., which according to Concepcion, has promised to maintain it as an affordable softdrinks brand.

Selecta was another model of success for RFM. From a one percent share of the market in 1990 when RFM acquired it, its market share grew to 37 percent after 10 years. Unilever acquired 50 percent of Selecta in 1999 and in 2000, Selecta-Walls already gained market leadership. Selecta is now under joint venture management.

According to Concepcion, they had to sell Cosmos to strengthen the corporation. The proceeds were used to invest in the other brands. RFM is spending around P200 million a year in advertising.

Concepcion also revealed that RFM is looking at expanding its Igloo cold storage business and has invested between P200 to P300 million to double the present capacity. RFM invested about P400 million for the initial plant. Concepcion revealed that they have received an invitation from Food Terminal Inc. to locate a new cold storage and distribution facility in Taguig.

He also disclosed that RFM plans to spin off real estate subsidiary Philtown Inc. into a separate entity a year from now. Philtown’s initial high-rise condominium project One McKinley located inside Fort Bonifacio has just a few units remaining while its newest project Fairways Tower is almost sold out. RFM has around 200 hectares of still undeveloped land mostly in the provinces.