THE “ORIGINAL BUKO PIE” Whenever somebody craves for buko pie, Laguna is the usual place that pops in the mind of Filipinos. As they say, it is incontestable that the best buko pie in the Philippines is indeed found in the Laguna area. However, most people who crave for the said product always ask themselves of which is indeed the first and original buko pie founder and maker because a lot of buko pie makers nowadays address themselves or claim that they are “The Original Buko Pie Shop” if even they’re really not the right one.
“The Original Buko Pie”, as shown in the figure above and which is found in Anos, Los Banos, Laguna is actually the real original founder and maker of buko pies. As one of the owners have said, they really don’t mind to have “The Original Buko Pie” as their business name because they are very confident that they are really indeed the first in the market to produce and sell the said product. However, they had some issues with the Department of Trade & Industry regarding the business name. DTI said that “The Original” is more of an adjective rather than a proper name for a business. At the same time, they were also not able to patent “The Original” brand, that’s why they thought of making the business name as “Original Enterprise.” Thus, they ended up with the business name “Orient” as a shortcut to it (Ori-Ent). Since its birth in the 1950’s until now, The Original Buko Pie Bakeshop has remained as a familyowned business. For 63 years, they were able to survive the food industry by just having one outlet or shop in Los Banos, Laguna. Despite that and with the said strategy as well, the shop has been very popular and this can be supported by the never ending line or queue of customers at their bakeshop along the National Highway. In fact, their popularity is said to be the usual cause of traffic along that area because of the parked cars beside and in front of the store. This store is hardly seen without this long queue of hopeful tourists diligently falling in line despite the heat of the sun or a strong rain just to try out or bring home this delicacy. Ironically, the other buko pie stalls, such as the Lety’s Buko Pie which is just beside their shop, are hardly seen with a customer since almost all customers pile up at The Original’s. However, due to the usual queues, the business has been receiving customer complaints regarding inconvenience that includes the customer’s need to travel to Los Banos, Laguna just to buy their product. Thus, there have been a lot of suggestions for them to expand by opening up other outlets or stores but they did not welcome the idea until 2013. The main reason for not expanding was
more of pride and not service as the owner have said. “We like the idea that they had to go to us if they really want us (our product). We want to be the choice and not just an option” (“…kung gusto talaga nila kami, masarap yung pakiramdam na dadayuhin talaga nila kami at hindi lang dahil wala na silang choice na mabibilhan”). The 3 main owners of the business are also very conservative when it comes to decision-making, and they are very particular with the quality of their products. As they’ve said, “We want our products to remain fresh and this is one of the reasons why we don’t have any branches in Manila. The pies must be fresh. We only use coconut that is harvested the same day. Let’s say one day, we only get 1,000 coconuts, then that’s all the pies we are going to bake. When we run out, we run out.” Moreover and finally, last January 25, 2013, the business has just opened and expanded their new branch along the Sta.Rosa – Tagaytay road in Caltex Gas station. Apparently, the dilemma on buying in Los Banos is also present in the new branch but it’s not that long yet compared to Los Banos. They still employed the same strategy of employing the “when we run out, we run out” strategy in order to maintain the quality of their products in this branch too. They make sure that their branches produce the products freshly at the outlet themselves. Thus, their current 2 branches have the kitchen right at the back of their stores rather than having it produced in the main branch and have it delivered in Tagaytay. This strategy also helps them save on their cost since transportation cost doesn’t need to be included.
Fortunately, the new branch was able to perform well in their new location within 6 months time but the main branch’s performance is 40% higher than the Tagaytay branch. The main branch has always been reaching their sales target while the new branch is currently reaching 70% of their target. Exact figures were not provided for confidentiality purposes. One day, the family had a gathering and out of the blue they thought about the following: a.) Was it really a good decision for them to expand in a new location? Or was it better if they just maintained one outlet and improved their production capacity instead? b.) Would it be a good idea to get 3rd party distributors in other areas, such as Metro Manila, instead of opening up a new branch? c.) If they will still continue to branch out, they’re planning to target Alaminos, Laguna and Laiya, Batangas as their next locations. Are those tourist destinations the right area or
should they expand in other areas, like Manila, instead, considering that their item is just a “pasalubong” item and not a commodity? d.) Their competitors have already used the blast freezing technology in order to cater a bigger market by increasing the shelf-life of the pie products. The bigger market mentioned already includes the international market where most OFW’s are. Would it be a good decision to follow their competitor’s strategy or footstep knowing that they are more popular in the market? e.) What are the other problems that we need to address as we maintain our current 2 branches and in order to benefit us if we continue our expansion plans? INDUSTRY The buko pie is a traditional Filipino baked young-coconut custard pie. Thus, being a part of Philippine tradition, it is assumed to last in the country for a long time. The pie is made with buko meat and it uses sweetened condensed milk, making it denser and healthier. The buko pie industry was originally a delicacy only available in the Philippines. However, due to blast freezing technology, it allowed buko pie makers the ability to export. Thus, the market for buko pie here and abroad is potentially very large. HISTORY Sol Pahud is the current manager of the family business. However, Nanette Pahud, Sol’s sister is known to be the founder of the Original Buko Pie product on March 1965. Nanette actually belonged to a poor family and since they wanted additional income, she worked as a cook in the family of an American visiting professor at the University of the Philippines Los Banos, Laguna Campus. The family taught her how to cook and bake, and she also went to school to learn how to make cakes. One day, she got the idea to bake pies and she tried all kinds. But since apples, which are usually used for the famous apples pies, are not native to the Philippines, she decided to improvise by using buko as the filling instead of apples. It clicked compared to the other pies she made and thus, they started the business in the same year with P2,500 as their capital.
COMPANY BACKGROUND The Original Buko Pie Bakeshop or the Orient (Original Enterprises) is a partnership business between 3 sisters namely Sol Pahud, Purita Pahud & Virginia Pahud- Castilla. Nanette, on the other hand, already lives in the US but, as mentioned in the interview, she still receives honorary income since everything started from her idea. When asked of the current organization structure of the company, they said that Sol Pahud is the general manager of the company and she oversees the whole business in behalf of her 2 sisters. Then, under her, there are 2 secretaries who help her with the administration matters and the remaining part of the company is already composed of the store attendants, bakers and drivers. As mentioned, the business currently has 2 branches, the main branch is located in Anos, Los Banos, Laguna while the other and recently opened branch is located in Tagaytay. Sol is the one who currently manage the operations of the main branch while Ian Lee Castilla, Virginia’s youngest son, manages the new branch. When asked what makes their buko pie so much better than the rest, the answer was, “We only use natural ingredients. No preservatives and we do everything by hand. No mixers. But what people say distinguishes our pies from the rest is the filling. We only use coconut that is harvested the same day. Let’s say one day, we only get 1,000 coconuts, then that’s all the pies we are going to bake. When we run out, we run out.” On the average, their daily pie count ranges between 500 and 1,000. But, they are not all baked at once. At the start, they bake 100 pies first, and when they’re almost sold out, they bake more. That way they are able to make sure that their pies are always hot and fresh. Furthermore, below is a table showing the number of buko pies their branches currently produces and sells: Branch Tagaytay branch Los Banos branch
Sales Target Peak Season Non-peak Season 500 boxes 300 boxes 1000 boxes 500 boxes
Sales Target Reached as of August 2013 70% 100%
Moreover, it was explained that the tender coconut meat comes from 40-day old coconuts harvested in Laguna and Batangas. They have stringent standards regarding the quality of the coconut meat they receive. If it fails the quality control check, because it is either too hard or not cleaned well enough, the vendor gets it back.
The meat of 4 to 5 fresh coconuts goes into one Original Buko Pie. Apart from inspecting every coconut, they only use top quality products such as Baron flour, fresh eggs, sugar, vegetable oil, and Alpine Full Cream Milk. With this, it can be said that they indeed put a premium on their ingredients. Also, they mentioned that they already tried to change the original recipe to improve the shelf-life and for other reasons. However, after doing that, people complained. Thus, they went back to the original recipe and, in effect, no matter what people say, they stick with the original and with the principle: “We can’t cater to everyone’s taste. We’ve learned to stick to our own.” In addition, some of their other flavoured pies and sweets for sales include pineapple pie (the general manager’s favourite), tropical pie ( a mix of pineapple & buko) pie, buko-apple pie and cassava cake mixed with young coconut. Furthermore, it has been sixteen years since they have incorporated banana bread into its array of home-made “pasalubong” list. This food item has added 13% share in revenues for the business and still continues to enjoy a 5-6% increase in demand per year. Present demand is at 90 boxes for the 350-g “pasalubong” item daily. Below is a list of the current products & the prices that the Original Buko Pie Bakeshop offers: PRODUCT NAME
SELLING PRICE
Apas
55
Assorted Pastries)
200
Banana Chips (Jar)
250
Banana Chips (Pouch)
85
Bangkok Tamarind Sweet
110
Barquillos
70
Biscocho (s)
55
Biscocho
85
boat tart
90
Broas (Plate)
45
Cassava Chips (All Flavors) Cheese
30
Marzipan
55
Cashew
200
Champalok
75
Chicha Pop (All Flavors) Sweet Corn
113
Cheese
113
Garlic
113
Barbeque
113
Chichacorn
50
Chichacorn (Big)
100
Dilis (Regular/Spicy) Regular
55
Spicy
55
Dilis Dilis Regular
145
Dried Mango Chips
55
Durian candy
170
Espasol (Original)
50
Honey
135
Fish cracker
45
Garlic Bread Sticks
55
Jacobina
17
Lengua de Gato
140
Garlic chips
195
Macapuno (candy)
50
Mixed Dilis & Squid
65
Nachos
55
Otap
45
Pastillas de Leche (box)
75
Pastillas de Leche
80
Pakwan Small
80
Big
150
Peanut Adobo 250 grams
100
500 grams
155
Peanut Bold 250 grams
100
500 grams
155
Pickled Amplaya
140
Pickled Ubod
140
Pickled papaya
135
Shing aling
30
Sunflower seed
100
sukang iloko
110
Squid (Regular/Spicy) Regular
85
Spicy
85
Tablea
100
Tamarind Roll
40
Toasted Mamon
55
Ube Pastillas (Cubed)
80
Uraro
45
Yema Special
65
Buttered
85
Suikang iloko
80
Tamarind sweet/spicy
36
Leche Flan
140
Pichi Pichi (with Cheese)
90
Silvanas
200
Calamnsi juice
35
Dalandan juice
35
Coke Regular
32
Coke Zero
32
Royal True Orange
32
Sprite
32
Lemon-330ml
28
Wilkins Pure
22
Viva Natures Spring
22 17
Four season
32
Mango juice
32
orange
32
Pineapple
32
Garlic Coated Peanut
65
Bagac roasted Unsalted cashew
170
Pritong Lumpia
75
Shing-a-ling w/ Dips
90
Fish Cracker w/ cane vinegar
90
Camote - Glazed
65
Camote - Garlic
65
Taro chips - BBQ
65
Banana strings - Cheese
70
Banana Strings BBQ
70
Sampalok pilipino - Chili
60
Sampalok pilipino - sweet
60
Argellanas (otap variant)
180
Palillos
130
Lengua - plain, ube etc
300
Barquillos - Cashew
180
Barquillos - peanut
180
Barquiron w/ peanut
90
Piaya w/ muscavado
80
Tsokolate Puro de cebu
95
Balikotsa
90
titay's rosquillos
120
Masterline otap
65
El Tesoro de cebu Torrones
170
Triple R Squid flakes
150
Sitsaron
90
Carp fish chicharon (B)
50
Tofu chips - BBQ, Cheese etc
65
Yema tower
120
Mamon Crunch -Mocha
95
Plain
95
Chocolate
95
Garlic toast
80
Wallnut
115
Ube Balls
55
Polvoron
80
Pinasugbo
50
Pineapple candy
100
Jelly sandwich
100
Jelly roll
100
Mango strips
100
BUKO PIE
170
PINEAPPLE PIE
170
TROPICAL PIE
180
All of the listed products above, except for the pies and banana bread, are all outsourced. However, information regarding the demand for the outsourced products was not provided since it’s not really their main product.
Moreover, their stores operate from Mondays to Sundays, 5:30 am to 8:30 pm. Their bakers, as advised, have 2 shifts. The first shift is from 10pm to 7am while the second shift is from 7:30am to 5:30 pm. The first pies usually emerge from the ovens at 5am. Their branches have 48 bakers who make use of 30 ovens daily.
COMPETITIVE ENVIRONMENT The current competitors of the Orient Original Buko Pie are Colette’s Buko Pie and Pasalubong, Lety’s Buko Pie and El Mare’s Buko Pie. Below is a short description of each competitor:
Colette's Buko Pie and Pasalubong Collete’s Buko Pie is distributed in 36 branches in Metro Manila, Laguna, Cavite, Batangas, Cebu, La Union, and Cagayan de Oro. It is available for franchise, enabling it to open nationwide operations. It is very visible in San Pablo, Laguna where its main branch is for almost every street corner is lined up with a store. Just like Original, it also has a diversified portfolio of products apart from buko pie. The price of its buko pie is PhP155 in Laguna and it seems that for other provinces, the price can vary. Below is the list of branches that Colette’s buko pie has:
Branches
Address
REAL
#89 Real, Calamba City
ROADSIDE
Roadside Kitchenette, Real, Calamba City
BACOOR
Tirona Highway Mabulo, Bacoor, Cavite
SILANG
Aguinaldo Highway, Brgy. Maitim. Tagaytay City
TAG. ROTONDA
Rotonda , Tagaytay City
BUCAL OJI
Brgy. Bucal, Calamba City
STA. ROSA
F. Reyes St. Balibago Rd., Sta. Rosa, Laguna
TURBINA
Turbina, Calamba City
BAGOS
Bagong Kalsada, Calamba City
BUCAL 1
Bucal, Calamba City
MAKILING II
Makiling, Calamba City
BUCAL II
Bucal, Calamba City
MAKILING I
Purok 2 Brgy. Makiling, Calamba City
MAKILING III
52, Makiling, Calamba City,
TAG. 406
Brgy. San Francisco, Silang Cavite
TAG. 407
Purok 28 Brgy. San Francisco, Tagaytay City
TAG. II
Brgy. San Jose, Tagatay City
MAITIM
Brgy. Maitim, Tagaytay City
SUNGAY
Sungay Lane West, Tagaytay City
CITY MARKET I
210 Francisco Road, Tagaytay City
CITY MARKET II
City Market , Tagaytay City
PLANGKA
Pasonglangka, Silang , Cavite
CARMONA I
Bancal, Carmona , Cavite
LIPA II
City Hall Drive, Lipa City
STO. TOMAS
San Rafael, Sto. Tomas, Batangas
LIPA I
Banay-banay, Lipa city
BANAY-BANAY
Brgy. Banay-banay, Lipa City
LA UNION
Camp 1, Rosario, La Union
QC
Visayas Ave., Vazra, Quezon City
Tito Pepe
#8 Visayas Ave., Vazra, Quezon City
ANTIPOLO
Sumulong Highway, Antipolo City
CAGAYAN
Macasandig, Cagayan de Oro City
CEBU
Brgy. Alang-alang Mandaue City, Cebu SM CITY Cebu 298 A.C Cortez Avenue, North Road, Mandaue City
Also, below is the list of products that they offer: Candies Pastillas de Leche Broas Espasol Yema Sampaloc Candy Panocha with Peanuts Uraro cookies Meringue Pili candy Okoy, and more Pies Buko pie Ube macapuno pie Buko-Pandan pie Pineapple Pie
Buko-Langka pie Buko pie supreme Cassava Bibingka Bibingka Classic Pastries Butterscotch bars Chocolate Crinkles Ube Crinkles Rocky road bars Coconut Macaroons
Lety’s Buko Pie Established in 1976, Lety’s currently has 4 branches which all in Laguna and also has other products aside from buko pies. Lety’s buko pies are different from others because they offer a variety of sizes apart from the standard 9-inch buko pies in the market. This is to cater their domestic and export markets. They produce the following proportions: 1. 2. 3. 4.
Regular Size Pie – 850 grams Medium Size Pie – 500 grams Merienda Size Pie – 250 grams Bite-Size Pie – 65 grams
According to some bloggers online, their buko pies “taste perfect with a combination of right buko, perfect filing, and delicious crust” and it costs PhP150. Moreover, below is the list of branches that Lety’s buko pie has and the products that they offer:
Branches
MAIN AGAPITA SHELL PANSOL
Address
LBP Building, Brgy. Anos, Los Banos, Laguna Lopez Avenue, Los Banos Laguna Brgy. Anos, National Hway Los Banos, Laguna Pansol, Calamba Laguna
Special Buko Pie Pineapple Pie Buko Pineapple Pie Buko Pandan Pie Buko Lychee Pie Buko Durian Pie Ube Pie Ube Macapuno Pie Banana Bread Cassava Cake Carrot Cake
El Mare Buko Pie, The People's Choice It only has one store which is located directly in front of Colette’s main branch and their buko pies cost Php150. Address
Maharlika Highway, Bgy. San Rafael, 4000 San Pablo City
Moreover, below is a summary of the number of branches and the number of products that each competitors have. It can be seen that Colette’s is the most competitive when it comes to distribution while Original is far into the pricing of the buko products as well as in the diversification of products. Lety’s however, is making breakthrough developments by subscribing to freezing technology to cater to its export markets. El Mare, on the the hand, remains as a beginner in the buko pie industry.
Number of branches Number of products Buko Pie Price
Original 2 87 170
Colette's 36 22 155
Lety's 4 11 150
El Mare 1 1 150
CHALLENGES 1.) Management. Ian was tasked to manage the main branch. Dante, Purita’s son, took over the management of the Tagaytay branch. According to some employees, he does not complete the 8-hour working hours and yet since he is a family member, he still receives the PhP30,000 monthly compensation of an operations manager. The main owners know this fact, however, since he’s a family member, it shows that they allow such problem to take place until now. 2.) Forecasting. In order to retain the quality of its products, the company only produces a limited number in their stores. Each branch has its own kitchen where products are baked fresh every day. Once these are all sold, they do not make additional products to replenish the supply. The reason is that they do not want to overproduce and stock what is left for the quality will diminish. 3.) Distribution. The management discovered that their buko pies were being resold by their clients in bus terminals. These people buy in bulk from their stores early in the morning and sell them again in other places. This scheme is beneficial to the company for it rakes in additional profits. With this additional channel, they are thinking whether to consider in getting 3rd party distributors of their products in Manila because with it, the expense will be smaller compared to opening up a new branch in the Metro where they’re not yet sure of the market’s behaviour. However, they are also having second thought because the quality of the products can be compromised. In a way, their brand reputation might diminish since they have no control over those distributors. 4.) Growth. Prior to 2012, the company had no expansion plans because they wanted to retain the quality of their products and retain the novelty of their store. They take pride on the fact that clients take efforts to visit their store when on vacation. At present, they are evaluating the possibility of expanding further to Batangas and Alaminos to add to their Tagaytay branch. However, they were also thinking whether or not these are indeed the right places to expand to.
