BUSINESS BITS

Packaging can spell success
Geraldine Bulaon-Ducusin and Karen Galarpe

For Camela Rejano Reyes, 52, owner of Rejano’s Marinduque Deli, her decision to improve the packaging of her specialty arrowroot cookies- a delicacy made of the root crop locally known as uraro – has made all the difference in the business. Now enjoying a much wider distribution, her product is carried regularly by the snack exchange section of SM Malls nationwide.

Making Arrowroot cookies and those other native delicacies such as banana chips and tamarind candies had actually been a family business of the Rejanos in Marinduque since 1995. However, the business never realized its full potential until Reyes took over the family bakeshop in 1978.

Determined to expand the business, Reyes enrolled in a baking course at the Technology and Livelihood Resource Center and invested P100,000 in the bakeshop. But since the uraro flour used in making arrowroot cookies was in short supply at the time (uraro being a crop that’s harvested only once a year), she initially made baking cakes her priority.

In 201, when the Arrowroot Industry Council of Marinduque was established, the arrowroot flour supply became more abundant. Reyes was then able to produce arrowroot cookies in volume, and two years later, she joined a trade fair in Manila to promote her product.

This was when she discovered how outdated the packaging of her arrowroot cookies was. She had been using the same package design from 1986 to 2002, and she spent P60, 000 for its development.

The problem, however, was that to identify her product, she still was using photocopied strips of her business name for insertion into the plastic packages of her cookies. She was so embarrassed by her old packaging that after the trade fair, she immediately sought the help of the Department of Science and technology to her upgrade it.

Reyes invested P200, 000 for total packaging system designed for her by the DOST, but it was well worth the expense. It made her arrowroot cookies available not only in cans but also in boxes each with an attractive design and label. What’s more, the packaging system lengthened the shelf life of her arrowroot cookies from just three months to a year and a half.

“We used to cater to the C and D market with our arrowroot cookies, but with the new packaging, we were able to reach out to the A and B markets as well,” Reyes said.

Their longer shelf life likewise liberated her arrowroot cookies from their seasonality. The Rejanos used to sell the product only during the Christmas Season and Holy Week as well as during fiestas, but with the new packaging, it began selling all year round. Sales volume thus increased from P30, 000 a month to P70,000.

Today, Reyes is making really good money selling her arrowroot cookies not only in malls but also in the family bakeshop- thanks in great measure to their more attractive and functional packaging.

Indeed, the importance of food packaging is now widely recognized. Not only can packaging help preserve the quality and lengthens the good’s shelf life, it also enhances product handling and transport. In effect, packaging increases the value of the product and its marketability.

Packaging shouldn’t be viewed as cost but as an investment,” says Daisy Tanafranca, program leader of the Packaging Research and Development Center of the Department of Science and Technology. She is also the project manager of a program called “Improvement of Packaging Technology for Philippine Food Products in the Regions,” which is sponsored by the Japan International Cooperation Agency.

Since 1999, the PRDC has been tasked to make local industries and their products globally competitive through world-class, innovative, and sustainable packaging technology. It has been providing small and medium enterprises assistance on packaging technology, particularly to reduce the 20-50 per cent spoilage rate of local packaged food products.

“Packaging is a vehicle of trade and industry,” says Tanafranca. “One can gauge the extent of progress of a country by the degree of sophistication and by the number of packaging that’s available in its market.”

She adds: “Packaging cost is also relative to the cost of product to be packaged, minimum volume of order, and type of packaging, such as, say, metal paper, plastic, glass or composite. The main factors that need to be considered when designing a package for food products are the market destinations, consumer behavior, safety and regulations, shelf life and economic feasibility.

Trust fund investing

Unit Investment trust funds are the sophisticated form of paluwagan, the investment that doubles as a savings plan many Filipinos are familiar with. Ma. Elizabeth Aquino, assistant vice president and trust officer of East West Banking Corp., describes a UITF as “a collective investment scheme that pools the investments of small investors into a larger fund under professional management. It is able to access more superior investment opportunities not normally available to individual retail investors.”

This kind of trust fund comes with a number of advantages. One is the low minimum investment required, which starts at P10,000. Another is that one need not be a finance expert to make an investment because the money is pooled, investors diversify their portfolio minimize their risks. The fund determines the best way to park the money, whether it be commercial paper, bonds, or equities.

Ador Abrogena, executive vice president of the Banco De Oro trust banking group, says UITFs are perfect for people with not time to study securities. Investors can choose from a wide variety of UITFs that suit their risk appetite. UITFs vary depending on the securities these are invested in. some are placed only in bonds, some only in stocks, some only in government securities, while others are in various instruments to be more “balanced.” These funds may either be peso – or dollar-denominated.

Another advantage to investing in UITFs is the ease of joining and leaving the fund. “As it is an open-pooled fund, investors can freely join or withdraw their investment participation as often as allowed under the UITF plan rules,” says Aquino. UITFs are available in participating banks almost every day, with fees ranging from 0.5 to 2.5 percent per annum of the fund. The UITF works much like a mutual fund. “Investors share in the gains or losses proportionate to their respective participation in the pool,” she says.

Investors’ participation is valued using the Net Aset Value Per Unit, which is market-determined and computed using the daily mark-to-market valuation of nets assets divided by the number of outstanding units. Abrogena says the fund’s risk lies in this method, because it causes the NAVPU to fluctuate every day, making investments held by the fund to gain or lose on any given trading day.

A good example of this was the confluence of events last May, when investors, worried about the coup rumors, the dropping share values in the stock market, and the rising interest rates, redeemed their participation in the UITFs. Many were also put off by the fact that the Philippine Deposit Insurance system does not cover this new investment vehicle.

Aquino says the investment run may have been due to product misunderstanding or misperception. East West and other banks tried to stem these withdrawals by informing their clients of market developments; the courses of action fund managers were taking for the UITF portfolio; and by doing an honest market forecasting for the rest of the year.

These efforts paid off as the NAVPUs of East West Bank’s unit investment trust funds recovered lost ground last June. “In fact, our UITF’s performance – where the historical year-on-year-to-date yields are among the highest in the fixed-income UITFs – can attest to this,” she says.

Aquino advises investors who want to fully appreciate the earning potential of these funds to stick to it longer to allow them to ride out market corrections. Abrogena says UITFs are good long-term investments.

“The real value of UITFs is in providing better returns over the long term by allowing investors to take risks according to their own risk tolerance in a vehicle that allows for utmost convenience, safeguarded by sound regulations, and managed by full-time investment professionals.