Fostering Sunrise Industries
The ability to identify gaps in and respond to the market is key to any enterprise’s success. Global Organic and Wellness Corporation (GlowCorp)—a marketing company set up by eight farmer groups—leveraged the health benefits of commodities grown in the Philippines to become a social enterprise (SE) competing successfully in the global market for organic products. As a marketing entity, it needs to keep abreast with the market trends of its community produce and position the product well to ensure continuous growth.
Muscovado sugar producers, organic rice growers, and NGOs founded GlowCorp in 2009 and registered it the following year to increase the bargaining power of farmers versus traders who had access to the market and, therefore, controlled commodity prices. GlowCorp provides a steady market for its farmer members, increases market share for organic products, and promotes fair trade practices.
GlowCorp also provides technical assistance in market matching, quality control, organic certification, and packaging. Profits are given back to shareholder-producers through dividends and technical support.
Organic rice and muscovado sugar are sunrise industries. The global appetite for organic food and drinks was estimated at US$40 billion in 2014.12 GlowCorp seeks to take advantage of this market opportunity by helping small farmers upscale their production to develop new and non-traditional markets. GlowCorp posted steady increases in its organic rice and muscovado sugar sales, from P1.3 million in its first year of operation to P32 million in 2013. It took only three years for GlowCorp to become profitable.
GlowCorp’s products are sold in over 300 retail outlets in supermarkets, groceries, and malls in key cities of the Philippines. Its distribution network includes SM Supermalls, the country’s largest chain with 58 shopping malls nationwide. In addition, GlowCorp sells muscovado sugar to South Korea and organic rice to Hong Kong. GlowCorp has participated in international trade fairs in Dubai, Hong Kong, and Germany.
GlowCorp’s structure and presence all over the country are to its advantage. Since its incorporators are producers, it has ready access to the supply of these commodities at competitive prices. In 2014, GlowCorp supported 2,500 farming households, which helped the company generate sales of P47 million and a gross income of P7.6 million.
GlowCorp knows its market very well. Its organic products are sold in high-end markets like Rustan’s and Metro Gaisano. GlowCorp regularly taps experts to maintain high standards for organic production and monitors supply sources to ensure organic standards are met.
One constraint for GlowCorp is some of its suppliers and shareholders do not have organic certification. GlowCorp is teaching them on the importance of the certification process and introducing them to the practice of the Internal Control System for Organic Certification. GlowCorp is still in the process of completing its certification.
Marketing expertise is essential. In its first year of operations, GlowCorp had low sales, but sales eventually picked up with the guidance of marketing experts.
Lack of sufficient financing to support its growth plans remains a challenge. In 2013, GlowCorp secured a credit line of P6 million from the Peace and Equity Foundation (PEF). Its goal then was to realize sales of P50 million, which proved to be too ambitious. GlowCorp has since revised its targets, taking into consideration its capabilities and limitations.
This SE aims to expand its areas of operation to cover 6,500 farming households and double sales from P62.5 million in 2015 to P122 million by 2018. GlowCorp’s target is to increase income by 25 percent yearly. It also aims to increase its market share of natural and organic products from one to five percent. GlowCorp seeks to develop new, non-traditional markets for natural and organic products. With the ASEAN Economic Community now a reality, GlowCorp intends to link with regional networks to cooperate with farmers from other ASEAN countries.
Glowcorp needs to beef up its value chain. In terms of supply, the focus must be on ensuring quality of produce and acquiring certifications. On its operations, Glowcorp should address gaps in efficiency, organizational capacity, and knowledge of its market while looking at the possibility of shifting to a more stable niche market.
This article was originally published in “Attempts At Social Enterprise”. This book narrates the foundation’s strategic shift toward building and scaling up social enterprises. To download a copy, click here…