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Baking Perspectives Baking in Puerto Rico & the Caribbean. Mario Somoza President and CEO, Pan Pepin . Sponsored by:. Baking Perspectives in Puerto Rico and The Caribbean. Mario Somoza Pan Pepín, Inc. June 27, 2008. Puerto Rico Basic Facts Bread Market Pan Pepín Who we are What we do

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baking perspectives baking in puerto rico the caribbean

Baking PerspectivesBaking in Puerto Rico & the Caribbean

Mario Somoza

President and CEO, Pan Pepin

Sponsored by:

baking perspectives in puerto rico and the caribbean

Baking Perspectives in Puerto Rico and The Caribbean

Mario Somoza

Pan Pepín, Inc.

June 27, 2008

Puerto Rico
    • Basic Facts
    • Bread Market
  • Pan Pepín
    • Who we are
    • What we do
  • Situation and Challenges
  • Q & A
puerto rico facts
Puerto Rico Facts
  • Easternmost of Greater Antilles.
  • PR is 110 miles long X 39 miles wide.
    • Split by a mountain range from east to west.
  • Population of 4 million people.
    • 12% over 65, 29% 19 and under.
    • One-third live within the San Juan Metro Area.
puerto rico facts5
Puerto Rico Facts
  • Commonwealth of the US
    • US citizens since 1917.
    • Currency, banking and postal systems within the US system.
    • Own Internal Revenue system, not subject to US taxes.
    • Participation in all federal programs ($20 billion).
    • Resident Commissioner representation in Congress.
    • No right to vote in general elections.
  • Strong sense of national pridewith a keen awareness of our US citizenship/relationship.
    • Less than 5% support for Independence.
    • National sports teams.
puerto rico facts6
Puerto Rico Facts
  • The local economy is driven by the manufacturing sector, which represents +40% of GDP, followed by Finance, Insurance and Real Estate.
    • 11% Unemployment.
    • 45% of HH on US Food Stamps program.
      • Lower SEL that behaves like mid-SEL.
  • PR culture is a mix of Spanish, Caribbean and American influences.
    • Diet includes a lot of rice, pork, seafood and fried foods.
    • Music reflects this mix with Salsa and, more recently, Reggaeton.
puerto rico bread facts
Puerto Rico Bread Facts
  • Bread is considered a staple of the PR diet with over 97% in-home penetration.
  • 72% of the people have bread at least 4 times weekly, with 56% consuming it daily.
  • Over 80% of bread consumption happens in the AM.
  • The market is evenly split (50/50) between pan bread and “Pan Criollo” (Agua, Sobao, etc.).
puerto rico market
Puerto Rico Market
  • Segmentation
    • Two wholesale bakeries specializing in pan bread and buns: Pan Pepín, Holsum.
      • Market evenly split between them.
    • Two frozen dough companies: Cidrines, Mi Pan.
    • Small, specialty and neighborhood bakeries.
    • Imports from US, Europe and Central America.
  • Channels
    • 55% of volume through chain supermarkets (approx. 300 stores).
  • Volume is relatively stable throughout the year.
    • Slight increase in bun sales during the Summer.
    • In tough economic times the category grows.
  • Small share for private label products at 7%.
    • 16% in US, +30% in Europe.
    • Highest in Latin America (Mexico 1%).
who is pan pep n inc
Who is Pan Pepín, Inc.?
  • Founded in 1970 in Bayamón, PR.
  • 100% locally owned company.
  • Acquired in 1998 by the B. Fernandez Holding group of companies.
  • $60+ Million in annual sales.
  • Employ more than 520 people in five facilities across the Island.
  • Service over 4,500 customers in PR, Virgin Islands and Dominican Republic.
  • Selected three times as one of the 20 Best Companies to work for in Puerto Rico.
who is pan pep n inc10
Who is Pan Pepín, Inc.?
  • Our brand is available at all primary retail and consumption outlets.
    • Primary chains: Wal-Mart, Amigo, Grande, Costco, etc.
    • C-stores, colmados and small supermarkets
    • Cafeterias and restaurants
    • Hotels and cruise ships
    • Schools and corporate cafeterias
  • We also supply 13 of 15 private labels available on the Island.
    • Exclusive bun supplier to QSR customers like Wendy’s and Johnny Rockets, as well as casual dining chains like Denny’s and Ponderosa.
  • Exclusive licensees of Healthy Choice (ConAgra) and Nature’s Own (Flowers Foods) brands in the market.
pan pep n inc
Pan Pepín, Inc.
  • All our baking is done in one primary facility.
    • 2 pan bread lines currently putting out 115,000 units daily.
    • 3 bun lines currently putting out 40,000 units daily.
  • Company’s historical growth has not allowed for optimal equipment and machinery planning.
  • Little consistency in equipment across baking lines which complicates operation.
    • Only cooling systems, bagger, tier, and coding machines are similar in all lines.
pan pep n inc12
Pan Pepín, Inc.
  • Our bakeries are all rated Superior or Excellent by The American Institute of Baking (AIB).
  • Pan Pepín operates 5 distribution centers throughout the island for optimum service.
  • We operate 165 sales routes; 5 days a week for 100% coverage throughout Puerto Rico and the neighboring Islands.
  • Delivery 5 days a week; Merchandising 7 days a week.
pan pep n products
Pan Pepín Products
  • We bake 16 different types of pan bread.
    • Top seller is the Club Sandwich White Bread.
    • Whole Grain White Club Bread has become #2 item in less than 12 months.
    • White bread still dominates market although wheat/whole grain products continue to grow fast.
  • 18 different kinds of buns and rolls.
    • 10-count Hot Dog buns is #1 bun item.
    • Local specialty items
      • Media Noche, Criollo Breakfast Bun, Sweet Dinner Roll
  • Contract packaging by outside suppliers.
    • Crackers, Polvorones, Besitos de Coco.
    • Currently evaluating other categories.
situation and challenges
Situation and Challenges
  • Island Environment
    • Limited space within current facilities and in the surrounding areas (urban sprawl).
    • Planning for growth without a dramatic impact to the operation is extremely challenging.
      • Market concentration – Only 2 players supplying the market, neither can absorb the other’s demand.
  • Raw material supply
    • One flour mill, few options for bulk ingredients.
    • Storage space within facility is at a premium.
  • Technical personnel recruiting
    • No breeding ground for personnel, must be homegrown.
    • Costly to retain when competing with large, multi-national corporations.
situation and challenges15
Situation and Challenges
  • Planning for food trends
    • Tend to lag the US but are quicker to spread once established.
    • Difficult to gauge right timing, risk of being too early or too late.
  • Energy costs
    • Island currently has highest cost for energy in all of Latin America and US.
    • Can equipment companies provide some expertise in managing this area more efficiently?
  • Supplier support
    • Proactiveness of equipment companies vs. ingredient suppliers.
    • Constant and easy accessibility to technical support to effectively and promptly resolve emerging situations.
thank you17

Thank You

Session Sponsor