Food R&D

For 27-year-old CDO Foodsphere, Inc., having a nutritionist for a leader is a distinct advantage.

"Because of the educational background of our founder, Cora Dairo-Ong, we invest heavily on research and development," said vice-president for market Ed Reataza.

At one time, R&D brought up the company’s SKUs or stock keeping units to 400. Today, the number of SKUs have been reduced by half, making it easier to monitor inventories and to keep tabs of what products are moving fast and what are not.

"If we are not redesigning our packaging to cater to the needs of the time, we are innovating in terms of nutritional values and product content," he said.

A recent example of the company’s nutritional innovation is the inclusion of inulin fiber in its Bibbo-branded hotdog. Inulin, which is made from chicory roots and pulp by the Orafti Group of Belgium, improves digestion by increasing the number of beneficial bacteria in the intestines.

Broad range

CDO’s food products range from hams and cold cuts to canned goods such as squid balls and canned bangus. Each product comes in different sizes to appeal to a broad range of income structures.

Last Christmas, for example, the company came out with 50-gram cooked hams for its biggest market, the lower-income family. The smaller-sized hams were completely sold out while industry inventory of the higher-priced pear-shaped and muscle continue to sit on the shelf, forcing meat processors to cut prices or to offer a buy-one-take-one promotion at the supermarket level.

"Before, people allotted a budget for hams in their Christmas shopping list. Purchases were made as early as November. Last year, purchases began to pick up only on Dec. 20," said Reataza.

Hard figures

Despite such innovations, CDO sales for the year barely hit 10%. Its target growth for 2002 was 15%.

Close to 70% of revenues comes from frozen processed meats, with canned goods accounting for the balance. In the hotdog business, CDO does not even have a fourth of the market share of market leader, SMC-Purefoods.

CDO intends to increase the revenue contribution of canned goods to 40% in the next three to four years and to 50% by the fifth year.

"Having a balanced revenue sharing or being able to sell more canned goods will be beneficial to the company. Canned goods have longer shelf life of up to three years while the shelf life of frozen meats ranges from one month for variable temperature storage to one year for deeply frozen meats," he said.