Colored noodles

The supermarket shelves carrying Chinese or pancit noodles have never been this colorful. Among the egg-colored noodles are those manufactured by Philippine Spice and Flavors Inc.

"The consumer’s initial reaction to our noodles is the price," said PhilSpice founder Fabian Espiritu. "We’re on the high-end at P21 to P22 for an 8-ounce pack while most noodles retail at between P14 and P18. Our production cost is P14, double that of our competitors."

PhilSpice’s packaging alone accounts for P1.50 of the cost per pack. "Because we eventually intend to export, our packaging does not tear in transit. The noodles are sealed until the pack is opened by the consumer," said Espiritu.

Each laminated label contains the nutritional value of the noodles, which PhilSpice developed with the Food and Nutrition Research Institute specifically for children who hate eating vegetables but love to eat noodles. For example, PhilSpice’s best seller, squash noodles, are fortified with the Vitamin C found in natural squash that has been dehydrated by sister company, Farmtec Foods, Inc.

"Although we’ve stopped production of squash powder at Farmtec, there’s enough supply to meet the production requirement of PhilSpice in the short-term," said Espiritu. "In the medium-term, we’re thinking of tying up with seed manufacturers in Nueva Ecija."

Segmentation

Espiritu started Farmtec Foods in 1989 after a typhoon destroyed his poultry business. Recently retired as plant manager in Wise Choice Food, which produces dehydrated food, Espiritu connected one of the ovens of his wife’s bakery to a dryer and set up a dehydrated food production business in his garage.

"I had three assets going for me: one, I knew the technology; two, I knew where to market my products; and three, I knew where to source the raw materials," he said.

With ready credit from suppliers, Farmtec came up with its first product, shrimp powder, which it sold to Wise and to California Manufacturing Co. "For manufacturers, the advantage of using dehydrated food is clear. Powder costs less in terms of transport and puree utilizes raw materials better," he said.

Today, Farmtec is one of the biggest toll manufacturers for dehydrated food, controlling 80% to 90% of the 200-ton tamarind powder market and 70% to 80% of both the shrimp and the chili powders. Through wholesalers, it also exports shrimp powder and, on a trial basis, purple yam or ube powder.

Birth pains

By comparison, PhilSpice, which is geared towards direct export and the local retail market, is a small operation. Operating investment is placed at P1 million, of which P400,000 has gone to equipment. "It took us one year to develop a different kind of noodle and another year to promote it," said Espiritu.

Today, PhilSpice-branded noodles are available in 40 supermarkets. By the end of the year, the number of supermarket outlets is targeted to increase by 50%. To help push the product, PhilSpice extends 20 to 30-day credit to the supermarkets and assigns a merchandiser to push the product in the different supermarkets.

"Unlike the wholesale business, it’s hard to just push one product in the retail business," said Espiritu. "The Chinese noodle market is a very competitive business, where pricing plays an important factor. What we’re giving our customers is something our competitors can’t give – nutritional supplements for both children and adults. We’re also thinking of coming up with bihon, which is faster to produce than pancit, and smaller packs," said Espiritu.

In a business that sees the emergence of between five and 10 new manufacturers every year (as some companies close shop and others merge), PhilSpice’s challenge is clear. It wants to be another Farmtec in the retail market for noodles. – MJGrey