An analysis of the artisanal chili hot sauce production and marketing in the National Capital Region (NCR)

Date

5-2016

Degree

Bachelor of Science in Agribusiness Management

College

College of Economics and Management (CEM)

Adviser/Committee Chair

Nanette A. Aquino

Abstract

The study of the analysis of the artisanal chili hot sauce production and marketing was undertaken to assess the current status and performance of the artisanal chili hot sauce manufacturers in the National Capital Region. This area was chosen to be the area of study because the area abounds with several food establishments that cater to a wide number of food enthusiast as well as artisanal chili hot sauce manufacturers. The study generally intends to describe and analyze the status, practices, problems and prospects of the arsenal chili hot sauce manufacturers in NCR. It specifically aims to: 1) present the profile of the manufacturers in artisanal chili hot sauce 2) discuss the production and marketing practices and identify the problems and issues they encounter. 3) Identify the investment opportunities related to artisanal chili hot sauce and 4) formulate recommendations to address the identified problems and prospects to promote artisanal chili hot sauce. Consumers believe that when something is labelled ?artisan? it means that the product was lovingly and expertly made by hand, and the food item was made or processed using a machine. Hand-made or artisanal, therefore denotes that the product is of high quality. The study used a descriptive research design to illustrate and describe their status and performance. A total of five entrepreneurs engaged in artisanal chili hot sauce manufacturing were interviewed. Michael Porter?s framework was used to analyze the competitive forces and their relative strength at work. In addition, the dominant economic traits, key success factors contributing to the competitive success of the key players and the manufacturers? strength, weaknesses and threats were also identified. The artisanal chili hot sauce manufacturers were found to be relatively young mostly late 20?s to mid-30. The main motivation they engage in the businesses is their personal interest. It was also observed that majority of the businesses were informal in nature (i.e. not registered) since artisanal chili hot sauce manufacturing as still a growing industry is not yet fully developed. The businesses are relatively new with their number of years existence ranging from one to three years. Artisanal chili hot sauce are made in small batches either by hand or by means of traditional methods, The average annual production varied depending on market demand and availability of materials. Being the primary ingredient used in hot sauce making, chilies were sourced fresh from the farm and were selected based on their excellent quality. Artisanal chili hot sauce making did not require the use of large machineries but also a stove and a food processor. The manufacturers of artisanal chili hot sauce priced their product based on the cost of materials used and customer demand. Majority of the respondents sold their products to institutional buyers such as restaurants and retail outlets or specialty stores based on NCR. Products were also sold directly institutional buyers such as restaurants and retail outlets or specialty stores based on NCR products were also sold directly to households or end consumers who made orders online through social networking sites. The internet was found to also play a big part in their promotion and entice the manufacturers to reach a wide market. From Michael Porter?s framework, it was found out that the artisanal chili hot sauce manufacturing sector in NCR was found with threat or new entrants due to the low capital requirement of the business. Bargaining power of supplier was high because the supply of chilies was low. Meanwhile, the bargaining power of buyers was low because the manufacturers decide on the pricing of the product. The threat of new substitutes was high because consumers may easily shifted to commercially make hot sauces that were readily available in the market and were much cheaper. Lastly, the intensity of rivalry was relatively low because the manufacturers catered to a specific area and to particular clients. The key success factors in the business were identified. These were the use of high-quality ingredients and the skill needed in making the hot sauce. It was also observed that consistency in the production was key to the taste of the hot sauce. Cost and return analysis showed the low cost of inputs resulted to high net profit. There was 82.22% return of investment derived which was based on the survey conducted. However, using secondary data, the return on investment was 51.5%. In both cases, the artisanal chili hot sauce business proved to be profitable. The issues and problems were determined and were found to be interrelated with one another. Problems identified in relation to the production aspect were the lack of government support, limited supply of chilies, and low production of hot sauce. On the other hand, the marketing problems were lack of distribution points and of market information. To effectively address the problems, recommendations were formulated for government institution and enterprises. It is recommended for the government institutions to provide a mapping of chili production in the Philippines, conduct technical assistance such as food safety and good manufacturing practices and organize bazaars and trade fairs. Lastly it was recommended that enterprises perform intensive promotional activities to make potential buyers aware of artisanal chili hot sauce, and to collaborate with food establishments so that artisanal chili hot sauce will be a part of their new food offering.

Language

English

Location

UPLB College of Economics and Management (CEM)

Call Number

LG 993 2016 M17 /C37

Document Type

Thesis

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