Filipino Food at Tesco: The Real Cost
The real cost of selling Filipino food in Tesco is not price related. It relates to the cost to businesses and ultimately the consumer
“The success of the partnership between Manning Impex and Tesco in promoting Philippine food products in the UK is a very clear reflection of dynamic, active and expanding Philippine-British trade and investment relations, ” stated the Honourable Enrique Manalo, Philippine Ambassador to the UK. He was referring to the recent introduction of Filipino food products in Tesco stores in the UK.
Local Filipino owned businesses in the UK are being contacted about how the introduction of Filipino products in Tesco, will affect them. Charles Baldwin, of CB Oriental Foods and “Mother Lily” of Mother Lily’s Filipino Grocery, had this to say: “How ironic that the Government of the Philippines and in particular the Commercial Attaché of the PTIC, Ms. Anne Marie Kristine Umali, end up only helping out non-Filipino owned companies. By introducing Manning Impex to Tesco, they have brought Filipino products to the mainstream UK market, but at what cost?”
“The local Filipino consumer will benefit, from the easy availability. After all, there seems to always be a Tesco around! But let’s examine that more closely. Tesco is everywhere, but does this mean that every Tesco will have a supply of Filipino food…no it doesn’t.”
Mother Lily, went on to say: "Tesco is starting out in selected areas only, with a selected stock. Filipino foods do not cross sell well, meaning that the majority of sales will only be from Filipinos. Since the number of Filipino families in this country is limited, this will limit the number of sales.”
“Another issue is the product lines. They only have 50 product lines and although these would be staples, like vinegar, soy sauce, sarsa, etc., the more exotic items eaten by Filipinos, and the beauty products, will not be available, as they are now in the smaller Filipino shops.”
Charles Baldwin continued: “Within a year, Tesco will find out what lines sell enough to make a profit for them and they will discontinue the rest. Just check out their World Food section to see how many different Chinese and Thai products they have. Both of these food types do cross sell into the British mainstream, yet the range is limited.”
“What this means, is that in a year’s time the product line is likely to be less and the prices higher. In the meantime, the real cost becomes apparent. The small Filipino owned businesses in the UK, currently selling Filipino products, like ours, will close down, because their customers no longer visit and their best selling products are now being sold cheaper than they can buy them. After all, none of us can compete with Tesco.”
“We believe that the mandate of the PTIC is to promote trade between the Philippines and the UK. They have managed to do the opposite. Although the manufacturers in the Philippines will gain sales in the near future, this will not last. The product lines that Tesco decides not to keep buying after a year, will cause a drop in sales with those manufacturers.”
“Due to the fact that Tesco is now selling the mainstream products, Filipino consumers will no longer go to the local shops. This becomes a “snowball” effect,” claims Mother Lily.
She continued on: “Since the consumer is not buying from the local Filipino shops, these shops close. The suppliers of products from the Philippines, other than Manning Impex, buy less from the manufacturers.
Unless these suppliers find other outlets that can compete against Tesco pricing, they quit ordering from the manufacturers and they go out of business or just quit ordering Filipino products.”
“In a year’s time, with the local shops like ours, out of business and the importers either out of business or not buying Filipino products, the manufacturer’s revenue is cut. Although they have Tesco, the product range is limited, the profit margins are smaller and they no longer have their customer base that they once had in the UK,” said Charles Baldwin.
He continued: “The consumer is then affected by the fact that they can only buy a small range of Filipino products and the prices will probably be raised as Tesco has now eliminated any competition. As far as Manning Impex goes, we think that they have gained Tesco at the expense of all of their other customers. Why would we or anyone else buy from them, when they have effectively helped put their customers like us, out of business?”
“That aside, once Tesco knows which products sell for them, they will approach the manufacturers directly and cut out the middleman. After all, they are Tesco! So who gets the benefit of this great deal that the Philippine Government has brokered?”
“Although the consumer will benefit in some instances, at first, we don’t believe this will prove to be a real benefit as their choices will be limited and eventually they will be paying higher prices.”
Not the small, Filipino shops, like ours, as they will be forced out of business because they cannot compete with Tesco. Even if Tesco only sells the staples, it is these same items that all of our shops rely on for the majority of sales"
Mother Lily went on: “Not the importers and suppliers, as their customer base, the small Filipino shops, order less or go out of business. The manufacturers? Not really. While they will experience some near term growth in sales, their customer base will erode, as the importers buy less, so their “growth” will soon become stagnant.”
“Once Tesco cuts out the products that do not sell well, and goes to the manufacturer directly, they will negotiate a discount that will cut into the profit margin of the manufacturer. The manufacturer that they quit using will no longer have a base of sales in the UK. We believe that the only winner is TESCO!,” Baldwin concluded.
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- Charles Baldwin
- CB Oriental Foods Limited
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