IV. THE MARKET

A. Industry Situation

1. Supply

The supply of seaweeds in terms of volume and value of seaweeds production from 1987 – 1991 is presented in Table 1 below:

Source: Bureau of Agricultural Statistics

The production of cultured seaweeds by region from 1987–1991 is presented in Table 2 below:

Source: Fisheries Statistics of the Philippines, Bureau of Fisheries and Aquatic Resources

The Western Mindanao region is the highest producer of seaweeds. These comes from the provinces of Tawi-Tawi, Sulu, Surigao del Norte and Zamboanga del Sur.

Wild seaweeds production including gozo (Euchuema s.), Gulaman dagat (Graciliaria sp.) and Lato are also grown in Philippine waters, although not in commercial quantities.

2. Demand

Seaweeds Industry Association of the Philippines (SIAP) projects an an increasing demand for seaweeds in the global market due to the discoveries of new use for seaweed extracts for industrial use as well as consume commodities. Statistics show that international demand for phycocolloids (agar, alginate, carageenan and furdellaran) has grown much more rapidly.

Based on BFAR information on Philippine marine algae, the country is already at a stage where it can easily utilize and proceed to industrialize the highly commercial useful seaweeds. Only 1% of the total production is consumed commercially as food. The local market for industrial seaweed producer is practically limited to the producers of the "gulaman" bar.

However, this does not mean that the country need for processed seaweed is negligible. The Philippines imports back an extract of the very seaweed it exports. High quality agar is still imported and crude agar is manufactured partially for food.

B. Target Market

1. Gulaman Bar Processors

The industry is finding a growing use of processed seaweeds as evidenced by the increasing demand in both domestic and international markets. The domestic market is full of unexplored opportunities. Its inception in the 70's had been geared to the world market for survival.

Local seaweed processing is limited only to agar-agar which is utilized purely for food as a substitute for gelatin (animal origin). Local factories which produce gulaman bars are located in Caloocan City, San Juan, Malabon.

2. Refined Agar Users

This are the local pharmaceutical and drug companies, hospitals, research institutions, food and cosmetic manufacturers.

3. Bacteriological Grade Agar Users

Government research agencies of the Department of Science and Technology (DOST) are the main users of the product. These includes: Industrial Technology Development Institute (ITDI) and the Food and Nutrition Research Institute (FNRI); research laboratories of the Insternational Rice Research Institute (IRRI); the Southeast Asian Fisheries Development Center (SEAFDEC); the Biotech Institute; and, the microbiological laboratories of the University of the Philippines (UP) System.

4. Seaweed Processing Plants and Exporters

There are four (4) local producers of semi refined or fully refined seaweed products. These are: Shemberg Marketing Corporation; Marine Colloids Philippines, Inc.; Marcel Trading Corporation; and, Genu Philippines (Copenhagen Pection, Ltd.)

C. Marketing, Pricing and Distribution

The marketing of seaweed is a complex technical process. Prices of seaweeds are havily influenced by the buying policies of every buyer in the marketing chain. Generally, the middlemen rather than the producers, dictate the prices of seaweeds. A Chinese middleman pay P7.50 to P8.00/kg of dried seaweed. Usually, this situation results in price fluctuations.

Dried seaweeds are bought from the farms at a cost of P 5.00 to P 10.00/kg. These are shipped to Zamboanga or Cebu where the buying stations of the four local producers of seaweed products are located and sell for P 10.00 to P 12.00/kg of either semi processed or exported dried seaweed.

There are 2 channels of marketing. These are: (a) farm to independent trader/buyer/middlemen/ for exports to a foreign processing company or its local subsidiary of a foreign based parent company abroad; and, (b) local subsidiary engaged in seaweed farming to a foreign-based parent company.

The geographic distribution of marketing network has midpoint collection centers where seaweeds from various producing areas are collected and sent to exporting centers For example, seaweeds from Sitangkai and Sibutu in Tawi Taw are collected in Bongao or Jolo before being shipped to Zamboanga City, Cebu City and Manila for export.

D. Entry Strategy

1. Product

The product must be at par if not better than the imported brands, in terms of quality, product packaging and brand name. The label should be made more attractive and convincing to the consumers. Imported brands usually come in powder form and are packed in cans.

2. Pricing

A strong market penetration scheme like an introductory low price for the product as compared to existing brands would be a very good start.

3. Promotion

Promotional activities should be heavy on advertising and sales promotion in the long-run while publicity and personal selling could be used in the introductory stage.

4. Distribution System

Most of the local consumer industries import the bacteiological grade agar. To dislodge the established brand, the buyer must be convinced of the equivalence or superiority of the new product which is offered at a lower price.

Industries using bacteriological grade agar should be approached and selling agreements with users and manufacturers should be arranged.

E. Coop Entry Strategy

Since the Federation is still developing the market for the product, production of 4,096 kg/dried seaweeds per hectare/cooperative is targetted for local consumption (Sorsogon and Legaspi only). To be acceptable in the market, the product shall have the following specification:

1. sundried from 1 to 3 days depending on the degree of sunlight or the temperature with an appropriate moisture content of 20 to 25%;
2. free of dirt and sand ( in practice, the seaweeds are shaken before they are weighed); and,
3. free from other vegetation.

Initial selling price is P10.00/kg dried.