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MANILA, Philippines - Higher sales and lower cost of raw and packaging materials bolstered

Uytengsu-led Alaska Milk Corp.s quarterly earnings.

The listed milk company posted a 129.07 percent increase in net income to P197 million during
the first three months from P86 million the same period last year.

Wilfred Steven Uytengsu, Jr., Alaska president and chief operating officer, said first quarter is
encouraging but admitted the year would be challenging" as the full extent of the global
financial crisis unfolds.

Because of the strategies from last year, we are beginning to recognize the fruits of our labor
and application of our strategy. It is a considerable improvement in our bottomline," he said after
the annual stockholders meeting in Makati.

Revenues almost grew by a quarter to P2.66 billion from P2.14 billion with its core milk
businesses staying ahead of the competition.

Following a strong fourth quarter performance, combined sales volume of the liquid canned
milk business surged going into the seasonally strong summer season, posting high double-digit
growth rates versus the same period last year," Alaska said in its quarterly update.

The pricing strategy in the second half of 2008 encouraged consumption


especially among low-income household groups. Trade replenishment due to low stock levels
attendant to strong shelf off-take, pushed sales volume of sweetened condensed milk/condensed
creamers higher year-o-year," it added.

Amid increases in production cost inputs in 2008, Alaska decided not to increase selling prodices
of its products during the year since Filipino consumers were already saddled by high inflation. It
even implemented a price roll-back for some of its products.

We believe in the long-run, encouraging continuous consumption of milk will be beneficial not
only to the consumer but also for the milk industry where we play a major role," Uytengsu said.

The fact we did not raise prices is a strong sign of our commitment to our consumers in keeping
prices affordable. The pricing strategy we have embarked last year has carried on to this year.
Patronage of our products has been good," he added.

Alaskas operating income rose 64 percent during the first quarter to P243 million from P140
million as cost of sales and operating expenses decelerated to P2.4 billion from P2 billion due to
easing costs of raw and packaging materials.

Uytengsu said the company expects to recover this year after a 56.37 percent decline in profits in
2008 at P291 million from P667 million. But financial performance will be dependent on
skimmed milk prices and foreign exchange rate.

Although our results were less than desirable, we believe that our efforts and patience will pay
off in the future. While the company maintains a generally cautious position given the business
environment, we are confident we will sustain our competitiveness in the industry," he told
stockholders.

During the first quarter, skimmed milk powder prices in the international market were firm with
demand slowly picking up as buyers return to the marketplace although supply for the near term
is still adequate to cover milk powder commitments. Prices are currently trading between $1,800
per metric ton and $2,200 per metric ton.

Utengsu said the company will continue to invest in innovation, build new revenue streams and
continuous improvement.

Alaska offers a wide range of milk products beyond the traditional canned evaporated filled and
sweetened condensed filled milk, powdered filled milk and plain and chocolate-flavored UHT
milk in Tetra briks.

In line with its strategy to broaden its revenue based through a portfolio of leading brands,
Alaska also owns rights to exclusively distribute international products in the Philippines such as
Kellogg's line of ready-to-eat cereals, and liquid milk products using the trade marks "Carnation"
and "Milkmaid."

Uytengsu said Alaska is in the process of looking at alternatives and new product development as
another means to create revenue stream.
- See more at: http://www.gmanetwork.com/news/story/160870/money/companies/higher-milk-
consumption-lower-expenses-drive-alaska-earnings#sthash.DIk8PUow.dpuf

Competition
The Companys main competitor is Nestle Philippines, Inc. (Nestle). Nestle, a
leading multinational corporation
,
is one of the top corporations in the
Philippines
.
Nestle is a market leader in a variety of consumer food categories.
It competes in the powdered milk and UHT milk categories. For powdered
milk, Nestles primary brands are Nido and Bear Brand while fo
r the UHT
ready
-
to
-
drink milk, their brands are Nestle and Chuckie.
Nestle remains and
will continue to be a strong competitor in these markets, especially with its
strong brands and global capabilities.
San Miguel Corporation (SMC) has re
-
introduced in
the market the Magnolia ready
-
to
-
drink UHT milk
line
(Magnolia
Fresh Milk, Magnolia Low
-
Fat Milk and Magnolia Chocolait), capitalizing on
the brands heritage in the dairy industry.
Snow Mountain Dairy Corp., a local
company, is also an active participant
in the domestic milk market with products
marketed under the Angel brand (Evaporated Filled Milk
,
Evaporada
and
Condensada
). There are
a
lso a
number of
imported
milk brands available
and
priced competitively
in the market.
Competition among brands rests
first and foremost on product quality, brand
history and recognition
as well as
the ability to distribute products nationwide.
While price has not been a platform for competition among
major
brands, the
difficult economic condition
has driven consumers t
o be more price and value
conscious in their purchase of milk products.
The new entrants have also been
aggressive in their pricing and promotions.
Alaska has competed
effectively in the market despite the presence of
multinational corporations. A natio
nwide distribution network, supported with
innovative and cost
-
effective advertising strategies, enable Alaska to compete
effectively against multinational milk manufacturers. Alaska milk products are
generally priced at parity with that of its major comp
etitor. Alaska milk
products are distributed and sold nationwide through wholesalers, distributors,
supermarkets, groceries and convenience / sari
-
sari stores all over the country.
Alaska holds a formidable position in the liquid canned milk and has stea
dily
grown its market share in the powdered milk category.

Dependence on Major Customers


Alaska is not dependent
upon a single customer or a few customers that a loss of
anyone of them would have a material adverse effect on the Company. The
Company has no single customer that, based upon
existing
sales volume
, will
account for
20% or more of the Companys total sales.

Patents, Trademarks and Licenses


The Com
pany owns the ALASKA, LIBERTY, ALPINE and KREM
-
TOP
brands. All
trade
marks used by the Company in its principal products are either
registered or pending registration in the name of the Company in the
Philippines.
To secure these rights, the Company has fi
led all the necessary
Type of product/service produced
The type of product produced is a differentiated and consumer
product. A product that has a distinction from other similar
products/brands in a market. A product being consumed by a
consumer for his/her satisfaction. Sample products produced in
the dairy industry are the following: milk, buttermilk, yoghurt,
butter, cream, cream cheese and etc

Type of competition existing


In the dairy industry there few sellers. Here are some company
that sell dairy products. Alaska Milk Corporation, Nestle
Philippines, New Zealand Creamery, Selecta, Magnolia Ice Cream
and etc. Among these companys, Alaska has been the top and
leading company in the dairy industry thus being Monopolistic
Competition.

Number of players/competitors in the


Industry
The Philippine market for milk and dairy products describes the
industry best: Nestl Philippines, Alaska Milk Corporation, and
New Zealand Creamery are the top three importers of milk in the
country, according to the National Dairy Authority (NDA), an
attached agency of the Department of Agriculture (DA). There are
still other players/competitors like; Abbott, Wyeth, Mead Johnson
and etc

Company Overview
Alaska Milk Corporation engages in the manufacture, distribution, and sale of liquid, powdered,
and ultra-heat treated milk products primarily in the Philippines. Its products comprise
evaporated and condensed milk, evaporated and condensed creamer, powdered milk, ready-to-
drink milk, all-purpose cream, and coffee creamer products. The company sells its products
under the Alaska, Carnation, Alpine, Liberty, Milkmaid, and Krem-Top brand names to
supermarkets, as well as wholesalers, convenience stores, and regional distributors. Alaska Milk
Corporation was founded in 1972 and is based in Makati, the Philippines. As of March 20, 2012,
Alaska Milk Corp. operates as a subsidiary of Campina Zuive...

16
Competition in the Distribution
of
Fluid
Milk
Competition
Among
Milk
Dealers
Milk
dealers,
like
most
other
businessmen,
compete
with
one
another
in
the
pricing
of
their
products
as
well
as
in
services
offered
and
in
the
variety,
quality
and
packaging
of
products
sold.
They
also
compete
through
advertising,
solici-
tation
and
the
like.
In
general,
however,
milk
dealers
have
tried
to
avoid
out-
right
price
competition.
Prior
to
the
late
1940's,
when
home
delivery
was
dominant
and
price
disci-
pline
among
dealers
strong,
there
was
considerable
stability
and
uniformity
in
retail
milk
prices
in
most
markets.
In
recent
years,
however,
price
stability
and
uniformity
have
been
disrupted
frequently.
The
increased
tendency
towards
price
competition
and
the
greater
variability
in
milk
priceshave
disturbed
many
members
of
the
industry,
and
they
have
sought
legislative
remedies.

Interdependence
of
dealers
in
pricing.
Several
basic
competitive
conditions
exist
in
most
fluid
milk
markets
that
tend
to
cause
a
high
degree
of
interdepend-
ence
in
pricing
policies
among
milk
dealers.
These
conditions
include:
1)
the
relatively
small
number
of
firms
of
appreciable
size
in
most
markets,
2)
the
high
substitutability
of
brands
of
milk,
3)
the
fact
that
total
consumption
in
a
market
changes
less
proportionately
than
price,
and
4)
the
fact
that
dealers'
buying
prices
for
raw
milk
are
largely
fixed
by
federal
or
state
marketing
orders
in
all
of
the
principal
markets
in
the
State.
Under
these
conditions,
most
established
milk
dealers
recognize
the
proba-
bility
that
price
reductions
will
be
met
by
competitors
and
that
a
reduction
in
the
market
price
will
reduce
total
sales
revenues
to
distributors.
Only
a
dis-
tributor
with
a
small
proportion
of
the
business
of
a
market
can
expect
that
his
price
reductions
will
not
be
matched
by
competitors.
Furthermore,
most
milk
distributors
are
aware
of
the
danger
of
retaliatory
price
reductions.
Although
milk
distributors
recognize
that
a
market-wide
increase
in
price
would
increase
total
revenues,
anyone
distributor
is
reluctant
to
raise
his
prices
because
of
fears
that
his
competitors
will
not
follow
.
Enlightened,
established
dealers,
therefore,
normally
practice
a
considerable
amount
of
self-restraint
in
their
pricing
for
fear
of
uncooperative
or
retaliatory
action
by
their
competitors.
There
is
a
strong
tendency
to
follow
a
"live
and
let
live"
policy
in
pricing.
Such
a
tendency
is
observed
in
many
other
parts
of
the
American
economy.

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