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RFM Summary

RFM Corporation is a major food and beverage company in the Philippines operating in various industries including flour, bread, sauces, milk, juice, and ice cream. In 2014, RFM acquired the Royal pasta brand and saw revenue growth to P11.01 billion, though net income grew slightly slower to P833.7 million. While current assets decreased, non-current assets increased due to the Royal acquisition. The company remains focused on growing its core brands such as Fiesta, Royal, and White King. Selecta ice cream maintained its leading market share of 76% through new product innovations.
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100% found this document useful (1 vote)
404 views4 pages

RFM Summary

RFM Corporation is a major food and beverage company in the Philippines operating in various industries including flour, bread, sauces, milk, juice, and ice cream. In 2014, RFM acquired the Royal pasta brand and saw revenue growth to P11.01 billion, though net income grew slightly slower to P833.7 million. While current assets decreased, non-current assets increased due to the Royal acquisition. The company remains focused on growing its core brands such as Fiesta, Royal, and White King. Selecta ice cream maintained its leading market share of 76% through new product innovations.
Copyright
© © All Rights Reserved
We take content rights seriously. If you suspect this is your content, claim it here.
Available Formats
Download as DOCX, PDF, TXT or read online on Scribd

SUMMARY

RFM Corporation is a major player in the food and beverage industry in


the Philippines, specifically in the processing and manufacture of flour, bread,
flour-based products like pasta and cake mixes, sauces, milk and juice drinks,
and ice cream.
The Company also operates non-food businesses, which include
barging services (Rizal Lighterage Corporation) and leasing of
commercial/office spaces (Invest Asia Corporation) that serves the internal
requirement of the various operating divisions.
RFM mainly operates through two business segments: Institutional
segment and Consumer segment. The Institutional segment, manufactures and
sells flour, pasta, bakery and other bakery products to institutional customers.
The Consumer segment, that manufactures and sells ice cream, meat, milk and
juices, pasta products and flour and rice based mixes.
RFM Corporation was incorporated on August 16, 1957 as Republic
Flour Mills, Inc. to manufacture flour in the Philippines, a country which does not
grow wheat, in order to contribute to the countrys greater self-reliance in basic
food.
RFM envisioned itself to become a truly diversified Food Company
catering to the Filipino taste. This goal was and continues to be implemented
through two approaches: strategic acquisition of Filipino companies with strong
local brands, and partnerships with internationally-renowned food institutions.
According to its income statement, food and beverage company RFM
Corporation finished the year 2014 with P833,744 net income, or a 7.6%
income growth over the previous years P785,925 net income.
RFM managed to still post profitability despite operational bottlenecks
by focusing its efforts the on higher margin core businesses. The company
remains bullish on the market leadership strength of its core brands. Selecta
and Fiesta, and now with the Royal pasta brand which has put in greater value
to the RFM business portfolio.
As of December 31, 2014, according to the analysis of RFMs balance
sheet, the RFMs total assets increased to P13,958,666 from P13,481,607 last
year. The total non-current assets rose to P8.35 billion due mainly to the
acquisition of the Royal Trademark.
Total current assets of the RFM decreased by P1, 386, 993 to P5,608,
510, mainly due to the decrease in interest income earned from cash in banks
and cash equivalents amounted to P8.37 million, P10.57 million and P15.41
million in 2014, 2013 and 2012 respectively.

The total non-current assets also rose to P1, 864, 052 due mainly to
acquisition of the Royal pasta trademark from the Unilever Group for P2.1
billion.
The total liabilities decreased by P66, 008 to P4, 991,678.
According to analysis of income statement and financial ratio, these are
the three key performance indicator of the company.
Revenues

December 2014
11,010,421

December 2013
10,239,958

Net Income
Current Ratio

833,744
1.38

785,925
1.82

For revenue, these indicate external performance of the Company and its
subsidiaries in relation to the movement of consumer demand and the
competitors action to the market behavior. These also express markets
acceptability and room for development and innovations. These are being
monitored and compared as a basis for further study and development.
For net income, this represents the outcome or results of operations. This
measures the over-all performance of the team, the consequence of all the
contributory factors affecting supply, demand, utilization and decisions.
For current ratio, this determines the companys ability to meet its maturing
obligations using its current resources. It indicates the possible tolerable
shrinkage in current resources without threat to the claims of current creditors.
The Food and Beverage industry, in which RFM Corporation belongs to,
is generally a fast-growing but competitive consumer industry. This year RFM
acquires ROYAL from Unilever and together with FIESTA, RFM becomes the
dominant market leader in Pasta.
RFM didnt only excel in the Pasta segment but also in its Flour and
Flour Mixes business. White Kings Baking Mixes added two new products to its
Premium Baking Mixes line. The new products are WHITE KING Moist
Chocolate Cake Mix and Belgian Chocolate Chip Cookie Mix. These new
additions to the baking mixes line of WHITE KING posted stellar growth for the
brand with 51% growth in sales. This year, WHITE KING also became
aggressive in its support for its Bowl Mixes line, launching the new WHITE
KING Champ-O-Rado TVC and gained 46% growth in sales during the
campaign period. Another highlight for WHITE KING this year is the 15% growth
of WHITE KING All-Purpose Flour versus last year. These excellent products,
new innovations, and campaigns further strengthened RFMs stature as one of
the pioneer flour millers in the Philippines.
Fiesta, Royal, and White King are brands gaining strength in equity and

are starting to become powerhouse brands through more awareness and trial
among its consumers.
For the Milk products, Selecta Moos re-launch campaign in 2014 was a
crucial business builder for the brand. Currently, the brand is faring well in North
Luzon and Southern Tagalog areas. And as RFM continues to rebuild its GMA
distribution operations, it is expected that this new product will soon become a
strong challenger to low priced chocolate milk drink brands, like Moby, Goya XBlast, and even Zest-Os Choc-O.
The White Milk business of RFM has shown phenomenal growth this
year at +21%, despite the logistical and operational challenges that the brand
faced similar to Flavored Milk. Its highly competitive pricing (up to 20% lower vs.
the leading brand), revitalized premium packaging design last June, and
continued strong modern trade presence, were the notable drivers that lead to
its strong finish this year. A considerable achievement, considering the lack of
above the line advertising support provided to the brand.
Combined Flavored and Milk business of RFM garnered a total of 11%
growth in value this year, 3% shy of its previous years growth.
The Beverage business showcased a more challenging scenario for
RFM, as most of its products posted lackluster performances this year.
On the Tetra Juice business, the biggest segment in RFMs beverage
portfolio, its latest relaunch drive which featured the new Minions packaging
from the previous Angry Birds, managed to help recover its decline in June to
December.
On the other hand, one of the biggest gainers for the beverage business
is the Doy Pack Pouch SKU, wherein total sales achieved an astounding 31%
increase in volume and value performance this year.
Overall, despite the decline on RFM Beverage business, outlook for the
category is expected to grow in the next coming months as it aggressively
pushes for its new product developments for the brand, moving toward the
premium juice market and innovative functional fruit juices that are currently
dominating the beverage juice drink industry.
The Selecta Ice Cream business, under the joint venture with Unilever
Philippines, continued to dominate the ice cream category with 76% market
share. It has launched various ice cream innovations both in the bulk ice cream
category (in containers) and the impulse (single-served) category. For the bulk
ice cream, it launched several exciting Chocolate and Pinoy flavors for both
summer and Christmas seasons under the Supreme platform. The Value
platform through the new flavor for Birthday 3in1 (three flavors in one pack)
packs attracted the mass based buyers into the category. On impulse, Selecta
Cornetto launched new flavors for both the core and premium line. Ice cream

sticks, another mass based line is also growing double digit, benefitting from the
extension of Supreme new flavors.

Common questions

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RFM Corporation's approach to managing operational challenges in 2014 while seeking growth opportunities involved a strategic focus on higher-margin segments such as pasta and flour, alongside enhancing brand strength through acquisitions like the Royal trademark . Despite declines in beverage sales and logistical difficulties, RFM pushed new product developments and capitalized on its dominant Selecta ice cream brand's market position . Their emphasis on brand expansion, new product introductions, and innovative marketing campaigns helped counteract operational bottlenecks and facilitated growth .

RFM Corporation leveraged its brand portfolio to strengthen market leadership by expanding and promoting its existing brands while introducing new products. The acquisition of the Royal pasta brand reinforced its leadership in the pasta segment alongside Fiesta . RFM's White King brand launched new baking and bowl mix products that achieved significant sales growth, and their marketing campaigns boosted consumer awareness and sales . In the ice cream market, the Selecta brand, under a joint venture with Unilever, maintained a 76% market share, further cementing RFM's position through new product innovations in both bulk and impulse categories .

RFM Corporation's marketing initiatives significantly impacted consumer acceptance and sales growth for its milk and juice products. The re-launch campaign of Selecta Moo in 2014 was a crucial business builder for the brand, bolstering its market presence in North Luzon and Southern Tagalog regions . Additionally, RFM leveraged competitive pricing and revamped packaging for its white milk products, resulting in a notable 21% growth despite logistical challenges . For juices, the change to Minions packaging helped recover from previous declines, indicating effective branding strategies .

RFM Corporation's 2014 financial performance, showcasing a net income increase to P833,744 and a total assets increase to P13,958,666, reflects its strategic focus on higher-margin businesses and market leadership in core brands such as Selecta and Royal . Despite operational bottlenecks, their strategic acquisitions, including the Royal Trademark, contributed to a 7.6% net income growth . Their significant asset increase and successful brand strategies highlight their strong market position and capacity for targeted operational excellence . However, the decline in current assets indicates areas needing attention for sustained liquidity .

Focusing on high-margin core businesses allowed RFM Corporation to enhance its competitive advantage by concentrating resources on the most profitable segments, such as pasta, ice cream, and flour mixes, where it was already a market leader . This strategic focus provided RFM with better financial resilience, as seen in the 7.6% net income growth despite market challenges . The emphasis on high-margin products like Royal and Selecta bolstered their brand equity and market share, reinforcing their position against competitors in the Filipino food industry .

RFM Corporation faced challenges in the beverage sector with lackluster product performances in 2014. The Tetra Juice business struggled initially but managed to recover with a relaunch featuring new Minions packaging . Despite overall declines, the Doy Pack Pouch SKU stood out with a 31% increase in sales volume and value . These efforts were part of RFM's strategy to counteract the decline and capitalize on new product developments, as they aimed to shift towards the premium juice market and innovative functional fruit juices .

RFM Corporation employed strategic acquisitions and partnerships to achieve growth, as evidenced by their acquisition of the Royal trademark from Unilever, which helped them become a dominant market leader in pasta alongside their Fiesta brand . They also introduced new products like the White King Moist Chocolate Cake Mix and Belgian Chocolate Chip Cookie Mix, which contributed to a 51% growth in sales, and launched aggressive marketing campaigns, such as the White King Champ-O-Rado TV commercial, leading to a 46% growth in sales during the campaign period . Additionally, the re-launch of Selecta Moo's campaign significantly contributed to brand building in North Luzon and Southern Tagalog areas .

The key factors contributing to the 2014 growth of RFM Corporation's Selecta ice cream brand include strategic product innovations and effective market segmentation under its joint venture with Unilever Philippines . Selecta launched several new flavors in both the bulk ice cream category and impulse single-served categories, such as seasonal Chocolate and Pinoy flavors for the Supreme platform, and mass-based 3in1 packs aimed at attracting budget-conscious consumers . The expansion of ice cream sticks also saw double-digit growth, benefitting from the Supreme new flavor extensions .

RFM Corporation's acquisition of the Royal trademark from Unilever significantly reinforced its product offerings and cemented its leadership in the pasta market . The acquisition aligned with RFM’s strategy of strategic brand expansion, allowing it to leverage Royal’s brand equity alongside its Fiesta products to dominate the category . This strategic move expanded their product portfolio, provided competitive advantage, and supported RFM’s ambition to deep-root itself as a key player in the local food industry .

RFM Corporation's non-food business segments, including barging services through Rizal Lighterage Corporation and leasing of commercial spaces via Invest Asia Corporation, serve the internal requirements of its operating divisions and support its overall business model by providing infrastructural and logistical support essential for its food and beverage operations . This diversification into non-food sectors allows RFM to stabilize revenue streams and maintain operational efficiency across its divisions, enhancing its resilience in a competitive consumer industry .

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