Magnum ice cream craze gives RFM profits a lift

Posted at 06/27/2012 3:01 PM | Updated as of 06/27/2012 10:36 PM

MANILA, Philippines - Thanks to the Magnum ice cream craze, Concepcion-led RFM Corporation saw its net income grow by 40% to P240.98 million in the fist 5 months of the year.

Total sales for the January to March period grew by 10% to  P4.32 billion. With strong profit and sales figures, the food and beverage company said it is on track to hit its full year target.

RFM President and CEO Jose A. Concepcion III said the company's income growth is gaining momentum due to better margins from production. This was attributed to lower commodity costs in the second half of 2011 and company's efforts to cut processing costs.

Concepcion said the economy has boosted consumer confidence and spending, helping RFM's sales. He noted "practically all the company's brands have been showing growth over last year, led by Selecta, our ice cream joint venture with Unilever, our White King Fiesta pasta, Selecta milk and Sunkist juice."

In particular, Magnum, which was launched in late March, has become an ice cream craze. Concepcion said until now, Selecta has not yet fully caught up with the demand.

"We continue to have to deal with out-of-stock situations, although we have managed to reduce the frequency of shortage in recent weeks. We have already expanded five times the number of outlets where Magnum is made available," he said.

Magnum made a splash when it first launched, thanks to its brand ambassadors, stylist Liz Uy, actress Solenn Heussaff, magazine editor Raymond Gutierrez and designer Rajo Laurel.  The premium ice cream brand comes in three flavors: vanilla, almond and chocolate truffle, and priced between P50 to P60 a piece.

The success of Magnum has even rubbed off on Selecta brands such as Cornetto and Classic. Now, Selecta now dominates the ice cream category with over 70% market share.

"The good thing here is that other Selecta sub-brands like Cornetto and Classic have not been left behind and are also posting over 30% growth, since those brands also launched their respective product innovations like the Selecta Overload, the Selecta super-thick Classics, the Hersheys collection, and the Cornetto disc. Selecta is definitely growing the entire ice cream category with all these innovations increasing the frequency of Selecta ice cream consumption. Selecta now has over 70% market share," Concepcion said.

RFM's White King/ Fiesta division, which includes the fast-growing pasta business, has shown 50% growth over the previous year. This helped expand its leadership position to 29% so far this year.

White King's flour mixes, Arroz Caldo and Champorado have also captured the taste of Filipinos, coupled with good value-for-money positioning.

"We believe that stronger brand equity and product innovations have influenced the shift in buying pattern and frequency in a number of categories we participate in," Concepcion said.

Sales of Selecta milk, Sunkist juice drinks and Swift Corned Beef and Karne Norte in sachets (Swak Pack) also posted double-digit growth, "as the company rationalized further and focused its brand portfolio, supported by more exciting product repackaging, aggressive merchandising, advertising and trade-related programs.

RFM earlier announced it entered into a joint venture with US flour R&D company Engrain. RFM also signed a major distributorship agreement with Dole.