URC's Success Story
URC's Success Story
URC's Success Story
Universal Robina Corporation (URC) traced its beginnings all the way back to 1954. John
Gokongwei, Jr. was doing very well then as a trader/importer. He had learned the trade when his
father died before the war, and had worked hard through the war and postwar years to prosper.
However, while he thrived, he took a long hard look at his company, and correctly predicted that
trading would remain a low-margin business.
On the other hand, a successful manufacturer controlling its own production and distribution
would command more profitable margins. Mr. John decided to construct a corn milling plant to
produce glucose and corn starch, Universal Corn Products (UCP), the first building block of the
company that would become URC.
For a time, business was good. However, Mr. John was still looking ahead, working with an eye
towards the future. While the business was doing very well, it was producing essentially a commodity,
which a customer could easily access elsewhere. To stay ahead in the game, Mr. John had to diversify
by producing and marketing his own branded consumer foods, similar to the multinational companies
in the Philippines like Nestle and Procter & Gamble. In a sense, he wanted to put up the first ‘local’
MNC, borne out of their best practices.
Thus, in 1961, Consolidated Food Corporation was born. Their first ‘home run’ product was
Blend 45, the first locally-manufactured coffee blend, dubbed as the “Pinoy coffee”. This became the
largest-selling coffee brand in the market, even beating market leaders Café Puro and Nescafe. After
coffee came chocolates. Nips, a panned chocolate similar to M&Ms, was a staple of Filipino childhood.
In 1963, Robina Farms started operations, beginning with poultry products. This was also the
beginning of the vertical integration of the Gokongwei businesses, as the farms would be able to
purchase feeds from UCP in the future. Later that decade, Robichem Laboratories would be put up, to
cater to the veterinary needs of the farms businesses. Robina Farms expanded as it entered the hogs
business in the latter part of the 70s.
1966 saw the establishment of Universal Robina Corporation, which pioneered the savoury
snacks industry in the Philippines through its Chiz Curls, Chippy, and PotatoChips, under the “Jack ‘n
Jill” brand. Other snack products would follow over the years, as the company successfully introduced
market leaders like Jack 'n Jill Pretzels (pretzels), Piattos (fabricated potato chips), and Maxx (hard
candy).
The coming decades saw more acquisitions and expansion. In the early 1970s, the Gokongwei
family entered the commodities business through the formation of Continental Milling Corporation,
for flour milling and production. The late 1980s brought the acquisition of three sugar mills and
refineries, under URC Sugar. These two businesses provided stable cash flows, and allowed for further
vertical integration in the supply chain, to help URC weather any volatility in the cyclical commodities
markets. In line with this strategy, the late 1990s saw the entry of URC into the plastics business,
through URC Packaging.
As the businesses became more diversified, the companies were slowly integrated in order to
streamline operations and minimize costs. In 2005, the present structure of the group was completed.
All the different companies are now organized under Universal Robina Corporation, divided into three
focused groups:
the Branded Consumer Foods Group, composed of BCFG Domestic (including packaging)
and URC International, for the production and sale of snacks, beverage, and grocery
products,
the Agro-Industrial Group, composed of Universal Corn Products, Robina Farms, and
Robichem, for the production and sale of animal feeds, day-old chicks, hogs,and veterinary
medicine, And the Commodity Foods Group, with the Sugar and Flour divisions, for
the production of flour and sugar, and for sugar milling and refining services.
URC is a core subsidiary of JG Summit Holdings, Inc. (JGSHI) which is one of the largest business
conglomerates listed in the Philippine Stock Exchange. URC owned the Philippine Basketball
Association franchise Great Taste Coffee Makers which played from the inaugural 1975 season to
1992 when the company sold the team to Sta. Lucia Realty. The Coffee Makers won 6 PBA
championships
1. What financial management function can be identified in the story? Enumerate and explain
2. What are the factors that contributed to the success of URC?
3. Identify Gokongwei’s entrepreneurial traits which made him successful.
4. If you are one of the finance managers of URC, how can you contribute to its success?