Drink †Coffee Essay

A. Overview of the Industry The beverage industry in the Philippines has increased its market volume in the recent years as the fruit of gaining popularity and support from majority of the Philippine population. According to Euromonitor. com, after reporting a total volume drop of 2% in the previous year, juice recovered to be among the most vibrant soft drinks categories in 2013. Total juice volume ballooned by 8% supported by the products’ popularity among schoolchildren and the increasing health-consciousness in the country. Manufacturers continue to cash in on the local perception that juice is healthier than other popular soft drinks products like carbonates. It should be noted that, in 2013, the Department of Education banned the selling of carbonated drinks in school premises. Juice benefits from this development as it is among the beverages geared at children. B. Market Profile The target market of Zest-O in general are the kids and moms. These consumers can afford consumption for such beverages and therefore, better chances of high sales volume. Simultaneously, they also have the tendency to be more aware of health and wellness needs basically due to unlimited access to the diverse forms of media for advertising and promotions as carriers of information. As mentioned earlier, the Philippines, having a warm climate, is not such a comfortable place to be in especially during the peak of heat waves. For the local consumer, it’s all natural to look for a thirst-quenching treat in compensation for the discomforts of the heat. In line with this, demand for refreshing beverages significantly boosts during the months of March, April and May, while the rest of the year, the demand lessens partially yet remains constant. C. Market Size Based on the preliminary results of the 2012 Census of Philippine and Industry (CPBI) conducted nationwide, the Philippines had a total of 173,900 Value of Production of Key Manufacturing Enterprises by Beverage Industry for the year 2012. Table 1 shows that Beverage Industry for the year 2009 garnered the lowest number of value of production of key manufacturing enterprises at 123,300 (71.9%) followed by the year 2010 with 141,700 value of production of key manufacturing enterprises. Table 1 Link: http://www. nscb. gov. ph/secstat/d_estab. asp Industry cost structure A value chain is a model used to disaggregate a firm into its strategically relevant value generating activities, in order to evaluate each activity’s contribution to the firm’s performance (Terms V 2006). Through the analysis of this model we can gain insight as to how a firm creates their competitive advantage and shareholder value. The value chain of the nonalcoholic beverage industry contains five main activities. These include inbound logistics (suppliers), operations, outbound logistics (buyers/ customers), marketing and sales, and service. Inbound Logistics (Suppliers) Zest-O’s suppliers provide them with materials such as ingredients, packaging and machinery. In order to ensure that these materials are in satisfactory condition, Zest-O has put certain standards in place which these suppliers must adhere to (The Supplier Guiding Principles). These include: compliance with laws and standards, laws and regulations, freedom of association and collective bargaining, forced and child labor, abuse of labor, discrimination, wages and benefits, work hours and overtime, health and safety, environment, and demonstration of compliance (Zest-O 2006). From time to time, Zest-O uses third parties to assess their suppliers by having interviews with employers and contract workers. If a supplier has issues about the supplier guiding principles, they are usually given a certain amount of time to take corrective measures; if not, Zest-O has the right to terminate their contract with these suppliers. Operations Zest-O’s core operations consist of Company-owned concentrate and syrup production. According to their website, some of the main environmental impacts of their business occur further along the value chain through system’s bottling operations, distribution networks, and sales and marketing activities. Management of these operations across the business value chain tends to be more challenging outside of the core operations. According to Zest-O, they continue to address this by working with their partners to reduce the effects at every level of the manufacturing process by enlarging their comprehension of the complete environmental impact of their business through the entire lifecycle of their products from ingredient procurement to production, delivery, sales and marketing, and post-consumer recycling. Outbound Logistics (Buyers/ Customers). The activities required to get finished products to customers include warehousing, order fulfillment, transportation, and distribution management. Zesto products are sometimes transported by four-legged power. Across much of provinces, bottlers deliver to thousands of family-run kiosks and home-based stores. Marketing and Sales The Company pioneered the first-ready-to-drink juice drink in flexible foil pouch (Doy Pack System). With its flair for innovation, Zest-O juice drinks won the consumers’ patronage and wide acceptance. Over the past 25 years, Zest-O has earned itself a place in the Filipino culture. Zest-O Corporation has posted enormous growth over the years. With total assets of only Php 10M when it started, it continued to grow reaching annual gross sales of 280M in 1987 after 6 ? years of operation. As the company continued to venture into different products, sales continued to MULTIPLY reaching a total annual gross sales of Php 2. 6 B for the year 2004 with a total asset of 450 M. Service Activities that maintain and enhance a product’s value include customer support, repair services, installation and training. Zest-o’s customers range from large international retailers to smaller independent businesses and vendors. As a result, they provide services tailored to meet their customer’s needs. Market Trends Zest-O’s target markets are increasingly growing towards recognizing the difference between poor quality brews and those of high quality. This development is an important trend for the company as it represent its target market. Zest-O now are having an increasing number of people who appreciate the traditional brews whilst living in the urban areas. With this in mind Zest-O intend to ensure that our packaging is respectable and attractive. Today’s extremely stressful work environment dictates that individuals consume healthy drinks especially in the summer season, this presents an opportunity that Zest-O may exploit, marketing the health aspect of its beverages. Market Growth Juice will continue to capitalize on its health positioning to sustain growth in the forecast period. The total volume CAGR from 2013 to 2018 in this category is 2% while constant value sales will reach Ps45. 6 billion in 2018. The demand for juice is supported by the health-consciousness of consumers in the Philippines, and will be stimulated further by the expected influx of new product developments by manufacturers in 2013-2018. Recognizing consumers’ increasing demand for products, which are positioned to improve the wellbeing of patrons, industry players will largely invest in the development of health and wellness juice products. Fortification will remain a key strategy employed by companies to differentiate themselves from competition and target specific consumers. Source: http://www. euromonitor. com/juice-in-the-philippines/report Market Needs Drinks in the Philippines are not only a necessary complement to meals, but also help beat the tropical heat. As with their food, Filipinos often incorporate local produce into beverages to create tasty and refreshing concoctions. A few examples include blended mango shakes, coconut juice and pandan leaf iced tea. Filipinos also enjoy the coconut-infused hard liquor known as lambing and gin cocktails mixed with pineapple juice or citrus fruit juice. Zest-o will set out to provide good quality products that will help instill a jovial environment. Zest-o intends to provide the customer with more than a drink to quench one’s thirst. The company intend to provide a quality beverage that not only quenches one’s thirst but enables one to enjoy themselves and be proud of it. The quality of raw materials and assembly technology evident in their products will serve to enhance the appearance of the customers, in turn adding to their status.