Interwiew with Javier Palomino

1. Introduce yourself and introduce your Company. My name is Javier Palomino, I come from Barcelona and I´ve been here in the Philippines for 5 years with the company AB Pascual (formerly Pascual milk). It was in 2013 when we consolidated a joint venture together with Asia Brewery, which was the market leader and we both benefited from the synergies; AB Pascual provides product knowledge, technology and experience in dairy products and Asia Brewery provides its sales network and distribution channel.

2. What made you / your company come to the Philippines?

There were two reasons that prompted my company to come to the Philippines. On the one hand, an existing need in the market and on the other hand, a growing country with greater purchasing power. It remains a problem with the fact that the population remains highly segmented and that 28% of it lives below the poverty line. And the funny thing is that nobody dies of hunger and yet it is the country with one of the worst malnutrition in the world. They eat badly. And this is serious because if a child does not eat properly until the age of 5 years old, they can suffer irreversible damage to the brain. Many children, generally those that come from poor families, fall asleep in the classroom or are not active at school due to the lack of energy caused by an unhealthy lifestyle and the lack of calcium in the bones. Our goal in the Philippines is to target the middle class, which constitutes 40%, since, unfortunately, dairy products are still products of a high purchasing level. If we only focused our products in the upper class, it would be imported products, from which there are already a lot in the Philippines. However, there are not many foreign food companies that are willing to reach that segment of the population.

And, what made me come? The company suggested it and without much thought, I came. It wasn´t my first experience abroad. I had already been to London, USA, Canada, but there is no doubt, that the Philippines is the country that offers the greatest possibilities in the future. There are so many things to be done.. not like in other countries where almost everything is done. In addition to this, the market helps us economically and socio-demographically as the average age is low and almost 50% of the population is 24 years old. It is undoubtedly an economic determining factor that cannot be a touch on a political level.

3. What year did you arrive and how has the country changed since then?

I arrived 5 years ago. Above all, I would say that the greater change was at the infrastructure level. There has also been a greater evolution in the purchasing power during these years. If the latter keeps increasing and the companies that come, offer something different, the market could change little by little. During these last 5 years, we have noticed a noticeable change in our category of dairy products, yogurts. Previously, the Philippines had a market penetration of 9% (9 out of 100 houses consumed yogurt). Given that the Philippines has 105 million inhabitants and taking an average of 5 people per house, we would be talking about 21 million houses. 9% of 21 million houses, consumed yogurt. It was a pretty low percentage. Currently, the penetration is 16%, almost twice than five years ago. It is still very low but has increased significantly. We have created a new market with an existing need. We still have a wide margin of growth ahead of us since dairy products make up less than 1 liter per capita – while the average in Europe is 50 liters, Holland being the highest, reaching 80 liters per capita.

4. How has your professional career or your company´s career developed since you have been in the Philippines?

I could say that as a company, we have learned from our mistakes. When we came in 2013, our approach was to market the products in all possible places. In the Philippines, there is the “modern distribution”, which is made up of supermarkets, convenience stores, 7 elevens… and then, there are the sari saris. There are 8,000 points of sale of modern distribution and 1 million of the sari sari stores. When we arrived in the country, we were obsessed with selling our products there, but these types of stores sell high-turnover products (mostly alcohol, water and tobacco). We made a mistake since Filipino consumers were not used to the products and did not consume it. That distribution channel was not adequate. It wasn´t a good place to “push” or to “launch” a “new” product to the market. In 2015 we decided to start with supermarkets. It was a success. That together with the investment in marketing campaigns, changed the track of the company. Thanks to that, we realized how to approach the consumer. By entering the supermarkets, we started to give more product visibility by making marketing campaigns. However, these would not fit the Filipino consumer, as we were selling the idea of having a yogurt where one wants. That was another mistake we made as the consumer did not have yet the habit of consuming yogurt, so it did not matter where. They did not eat it. Then we started to spread the benefits of dairy, as there was unawareness. To do so, we did a TV marketing campaign with celebrities, Kramer´s family, which has 9 million followers on Facebook. Thanks to the influencers of marketing we got that this family would spread the benefits of the yogurt, most of all of those their children had experienced its benefits.

5. Do you think that doing business is nowadays easier or more complicated than before?

I believe that it has neither improved nor worsened. I´d say that the determining factors are two: the legal one –a foreign company cannot have the main capital- and the other is to have a company established in the Philippines in which the consumer believes. We were willing to create that in a short time and we could not achieve it even putting all our money. That hasn´t changed in the last 5 years. Not because it is an emerging country, things are different nor are they little evolved in entrepreneurship. They are tremendously prepared. It is in the economic level that the country changed. They had inflation of 15-20% with a growth of 30%, so there is more purchasing power. It has neither worsened nor improved the situation. If someone wants to settle in the Philippines must take into account the importance of their partner. I mean that the partner is established, has credibility and has the same goals aligned with your company. Currently, the growth that offers the Philippines is not offered by other countries. Not even in the Southeast. China is an example. When they have learned from you, they do not need you anymore. The Philippines doesn’t have that mindset. They are loyal.

6. How has the Filipino consumer changed during all the years that passed by? I could tell you about the yogurt consumer. It was only 5 years ago that not all Filipinos knew what yogurt was. Nowadays, everyone knows what it is. So, companies do not have to continue investing money in making the products known, because they already know it. They know its benefits. Thanks to companies like ours and Nestlé there is brand awareness as we have invested in advertising campaigns. Pascual has currently a penetration of 72%. That means that 72 out of every 100 Filipinos know what Pascual is. This is because, during these 5 years, we have dedicated ourselves to gaining brand awareness through the correct distribution channels, advertisements, and digital campaigns.

7. What has been your most difficult challenge since you are here?

The most difficult thing to change is the mindset if you are coming from Europe. With that, I mean that we have the mindset of “achieving a lot in a short time”. Greater immediacy of wanting everything in the very moment. And things require time and patience. Moreover, in this country, where the pace is slower. In the beginning, the timing we settled wasn´t realistic. 8. Of all these years, what are you most proud of? [I’m most proud] Of my child. I came in April. My wife came two months later and my son was born on September 24. When he grows up, he will realize how lucky he is to have a passport from the Philippines. Also, to have had the opportunity to have this experience. We would like to stay here for good. I truly believe that one of the best things from the Philippines is the Filipinos. That´s what makes you stay. 9. To finish, could you please tell us an anecdote that you will never forget from the Philippines? AB Pascual as well as Asia Brewery, as family businesses, we have in the DNA Corporate Responsibility. There is a project in the north which is being led by sister Alejandra. It is called one glass of milk a day. She worked in an asylum with handicapped living below the poverty line, malnourished and in cooperation with a school of 1000 children. This project consists of giving the children one glass of milk per day every day of the week. That has led to great benefits in the health of the little ones. This has boosted their energy at school. Three years ago, I met her and I suggested changing the milk for the yogurt… the kids did not even know how to eat it nor how to open it. The development has been great. Nowadays, they even ask for a flavor. We had been for three years with this project and we are happy.

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