The New Bread Kings: SM, San Miguel, Gokongwei, Gardenia, Salim

The year 2018, soon to be the “Year of the Dog” after Chinese lunar New Year next month, is a year of unprecedented fast economic growth and progress for the Philippines.

Philippine Veterans Bank chairman Dr. Bobby de Ocampo, at the recent launching of his bank’s annual non-profit CSR project the “Bataan Freedom Run” from March 24 to 25, said: “Business people here and abroad are bullish about Philippine economic growth and progress, because President Duterte has proven to be an action-oriented and decisive leader who implements.”

This booming Philippine economy of rapid change and growth offers both great opportunities and many daunting, competitive challenges for the country’s micro-, small- and medium-scale entrepreneurs, because the big business groups locally and huge foreign investors are coming in and investing a lot.

We SME entrepreneurs should wake up, be agile, innovative, resilient, resourceful, hardworking, optimistic, bold, always studying, and not be too complacent. Let us work hard and work smarter to seek more success in this fast-changing, high-growth era.

Last Jan. 18 at a board meeting of the newly elected officers of the Filipino Chinese Bakery Association, Inc. (FCBAI) led by new president Peter Fung and chairman emeritus Henry Ah, just before that night’s formal induction ceremony dinner celebration, it was the consensus that 2018 will be a continuously prosperous new year for the Philippine economy. However, it will be a year of more challenges for the mostly small- and medium-scale family enterprises that comprise most FBAI members.

Outside of the official agenda about the organization’s official matters focusing on philanthropy and industry improvement, part of the topics casually discussed were the new, daunting challenges in the Philippine bakery industry due to the entry of new, really big players. Here is some news on the fast-growing, increasingly competitive baking industry:

The SM Group purchased Goldilocks. One of the leaders of FCBAI said that the Henry Sy and Tessie Sy Coson-managed purchase of leading bakery giant Goldilocks, with its 500 outlets, is “a very smart and wise strategic move by the Sy family” because there’s a synergy there with their SM supermarkets, of which there are over 100 branches. This FCBAI leader also added that in America, the Safeway retail chain also has its own bakeries.

Even though I am new in the bakery industry after I accidentally entered the field by acquiring an old bakery that was losing money (and was invited to open a small retail outlet in SM North Edsa), I admire the way the SM Group has strategically acquired the highly respected Goldilocks chain, which was founded by the talented Leelin sisters and well-managed by their Yee and Go children for years. This multibillion-peso deal is an unmistakable sign of and a big vote of confidence in the robust Philippine economy.

Will a Taiwanese bread factory supply 7-Eleven soon? Another FCBAI leader shared news that the Taiwanese bakery tycoon Mr. Sia, whose ultra-modern bread factory we visited last year (I have been elected a director of the FCBAI), has already acquired land in the Philippines and will soon start production to supply the country’s 7-Eleven convenience store chain.

Apart from this billionaire bread-factory tycoon being modern and efficient in the mass production of clean and delicious bread products, he’s also Taiwanese-Chinese, like the owners of the Philippines’ over 2,000 7-Eleven outlets.

In 2000, President Chain Store Corporation (PCSC) of Taiwan, also a licensee of 7-Eleven, bought majority shares in the Philippine Seven Corp. (PSC). PCSC is owned by Taiwan’s biggest food conglomerate, Uni-President Enterprises Corp., which also has huge subsidiaries all over China and Thailand. Alex Lo Chih-Hsieh is the boss of this conglomerate, which last year sold its 50-percent share in its joint venture with America’s Starbucks chain in China.

Monde Nissin acquired Walter Bread. Ever since 2017, the buzz among FCBAI officers was that one of our member companies with the brand “Walter Bread” had been acquired in late 2016 by the quiet yet leading food conglomerate Monde Nissin Corporation via its joint-venture firm with Indonesia’s largest bread manufacturer, Nippon Indosari Corpindo. The new firm, which bought entrepreneur Walter Co’s brand Walter Bread was Sarimonde Foods Corporation. Mode Nissin is well managed by a dynamic and progressive Indonesian-Chinese entrepreneurial family.

Sarimonde made its first major move in the packaged bread market when it bought Walter Bread, a local brand known for its healthy bread products. Its portfolio includes Walter Sugar-Free Bread and Walter Double Fiber Wheat Bread, both the first of their kind in the market. Monde Nissin toppled the Gokongwei group’s leading position in the Philippines’ massive instant-noodle business with its innovative product Monde instant Pancit Canton, which became a runaway bestseller in the mass market.

Gardenia is going into the local bakery business. The huge Singapore-listed Gardenia bread factory conglomerate is among the big business groups that have recently entered the unpackaged category of the Philippine bakery industry.

Led by former De La Salle University marketing professor and  corporate whiz Simplicio “Jun” P. Umali Jr. in its phenomenal Philippine expansion, Gardenia Philippines has started its local community bakery  brand called “Big Smile Bread Station” and its higher-end bakery brand “Bakers Maison,” which has a branch in SM North Edsa.

The ASEAN multinational Gardenia is owned by the second son of the late “rags-to-riches” Indonesian-Chinese tycoon and philanthropist Soedono Salim (Liem Sioe Liong), named Andree Halim through his Singapore-listed bread maker, QAF. The very low-key Halim earned a diploma in Business Studies from the South East London Technical College in the United Kingdom. He has diverse businesses all over Asia.

San Miguel has gone into local bakeries and biscuit manufacturing. San Miguel Corporation, led by the visionary CEO Ramon S. Ang, has its mass-market retail brand “Kambal Pandesal.” His San Miguel Purefoods, Inc. has also bought biscuit and snack business “La Pacita,” formerly owned by Felicisimo Martinez & Co., Inc.

Gokongwei has Baker John. In the Mini Stop convenience stores and Robinsons supermarkets of John Gokongwei Jr.’s JG Summit Holdings, Inc., I also noticed the delicious Baker John brand of baked goods recently.  I researched that his Universal Robina Corp. (URC) produces the “Baker John” brand of loaf breads and other baked goods, which is a very smart and logical strategic move because their food conglomerate owns the Philippines’ fourth largest flour mill after the No. 1 biggest, San Miguel; the No. 2 biggest, Philippine Foremost Milling Corp. of Iloilo tycoon Dr. Alfonso Uy of La Filipina Uygongco Corp.; and No. 3 biggest Pilmico of the Aboitiz conglomerate.

More flourmills are being opened and old flourmills are expanding. At the FCBAI Jan. 18 induction ceremony dinner, Philippine Association of Flour Millers, Inc. executive director Pic M. Pinca told me that due to the fast-growing and booming Philippine economy, there are now a total of 20 flourmills in the country, up from only eight during the 1960s to 1980s. He said the newest to open is Mabuhay Interflour Mill, Inc., with its huge, modern plant based in Subic.

Interflour is a flourmill giant based in Singapore owned by the Indonesian-Chinese Salim family (whose Chinese surname is spelled “Liem,” the equivalent of the Philippine spelling “Lim” and pronounced “Lin” in Mandarin).  Anthoni Salim, the talented son of the late Indonesian tycoon and philanthropist Liem Sioe Liong, now heads the Salim Group.

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