Huge chunk of VFI's capex goes to cold storage facility

CEBU, Philippines – Virginia Foods Inc. (VFI) will start spending part of its P80 million capital expenditure budget this year with the aim of boosting its ranking in the country’s meat processing market.

VFI vice president for sales Stanley Go said the capex budget will be consumed in a span of two years, wherein a huge chunk will be allocated for the building of a cold storage facility in the company’s eight-hectare processing plant in Compostela, Cebu.

The cold storage facility will have a capacity of 1,000 metric tons, he said. At present, VFI is renting a cold storage facility from a third party firm.

Go further said that although the meat processing industry has no official ranking of the different brands in the Philippine market, VFI’s brands hovered from number four to number five, competing closely against Argentina and Purefoods, among others.

Meanwhile, a portion of the capex budget will be spent on the brand’s entry to the Luzon market, which holds the largest consumer base in terms of corned-beef consumption.

Despite the tough competition in the industry considering the entry of more brands from other countries, VFI finds it timely to penetrate the Luzon market now as it has not taken advantage of the area.

While it has successfully established its name in the Visayas and Mindanao market, it has yet to test the huge Luzon market and at this point, the Virginia brand only has a one percent share of the entire Luzon area.

Go said the company targets to improve its Luzon market share to two or three percent in the next two years.

He however said that they remain cautious in this attempt to penetrate the Luzon market despite the fact that if they do succeed in capturing the Luzon market, it will definitely become the company’s major growth driver.

Go said product improvements and technology advancement must be put in place first as the brand will be competing with other established brands in the industry, especially those that have allocated a huge budget for promotions.

With Cebu as its base, VFI products are shipped daily to Luzon and in other neighboring regions in the Visayas and all throughout Mindanao.      

VFI is closely competing with Purefoods, CDO, Pacific Meat and a growing number of meat processors in the Philippines.     

VFI was started by the Chiongbian family in 1977 in Cebu. In 2002, Manila-based Avalon Holdings Inc. acquired the company.

The company has developed several product brands under the Virginia Foods banner to cater to different market segments, especially in its hotdog and corned beef products.

VFI is the maker of the Virginia, El Rancho, Winner, Champion, and Australian Brands of canned goods and frozen processed meat. (THE FREEMAN)