Message from the Chairman,
and the President and
Chief Executive Officer

To our valued stakeholders,

Through the years, URC has established a rich heritage of success in producing great brands and products that consumers have come to love. The company transformed from a local manufacturer of cornstarch in the Philippines to one of the largest multinational companies in the ASEAN and Oceania regions, offering a wide range of delightful snack foods and beverages to consumers.

Today, URC prides itself in creating a strong portfolio of brands that are household names in the Philippines and the ASEAN markets. Jack ’n Jill is the master umbrella brand for all of URC’s snack food products in the ASEAN region, commanding no. 1 positions in snacks, candies, and chocolates in the Philippines, and in biscuits and wafers in Thailand. Great Taste is an innovator brand that made the modern coffee shop experience accessible to a wider market, and created the shift toward the “white coffee” segment. C2 is the brand for URC’s ready-to-drink (RTD) tea products, which leads the market, commanding an 82% market share in the Philippines and significant presence in Vietnam. Meanwhile, in the Oceania region, Griffin’s is a strong brand of high-quality sweet biscuits, backed by more than 150 years of heritage in New Zealand. Our acquisition of Snack Brands Australia also allowed us to widen our premium salty snacks portfolio by having established brands such as Kettle, Thins, CC’s, Natural Chip Company, and Cheezels.

Our credibility in building solid brands throughout the years has made us the partner of choice of strong international companies, namely ConAgra of the United States, Nissin Foods and Calbee of Japan, Danone of France, and Vitasoy of Hong Kong. Currently, we manufacture and/or distribute innovative products to a total of 13 markets across the ASEAN and Oceania region. Our agro-industrial group, and commodity foods business are also among the largest and most profitable in the Philippines.

It’s now imperative for us to take our business to the next level by embedding a sustainability program that ensures continued growth, and strengthens our competitive advantage as a premier multinational company in Asia and Oceania.

A STRATEGIC PILLAR: SUSTAINABILITY

Being responsive to our stakeholders’ expectations — mainly from investors, consumers, competitors, regulators, and even our employees — means that we will inevitably recalibrate our business to align to global standards. We have been deliberate in committing to sustainability last year, and this led us in forming a sustainability steering committee composed of the top key executives of the company and the conglomerate.

We started with the development of our sustainability strategy in 2016 and this has been further articulated as one of our key strategic pillars during our recent strategy planning meetings. We identified and acknowledged our most material economic, environmental, and social issues as long-term priorities. We intend to report to all our stakeholders our plan in achieving our sustainable goals.

As we undergo this process of integrating sustainability, we will discover that we have existing sustainability programs, and we will also discover gaps that need to be addressed by the Steering Committee, and other champions from different business groups. These gaps will be effectively addressed by creating new programs aligned with the KPIs leading up to 2030.

Moving forward, URC will pursue such activities more strategically, having defined our key focus areas to become a better, more sustainable company in the first five years, namely:

Natural Resources. We affirm our commitment to operate with the future in mind by making our approach proactive to responsible resources management in terms of energy consumption, and we will go beyond environmental compliance. We will be reducing our energy and water consumption until 2030, but within the first two years, we will focus on completing the baselining of our water and energy consumption. Aside from energy and water, we will also conduct profiling and proper disposal methods of our waste and strengthen the policies of our Energy Conservation (ENERCON) Committee in all URC operations.

People. We maintain our commitment to be a fair employer by providing a decent workplace for our people, and enhancing our social impact in the lives of people in the communities where we operate. Cognizant of the value created by our workforce, our primary objectives for our employees are to strengthen employee learning and performance development review, support employee welfare, and ensure 100% workplace safety. Achieving total workplace safety for our employees means complying with all health and safety regulations, and aiming to reduce or eliminate lost time injury. Within our communities, we aim to improve our approaches to community development based on measured social needs in areas where URC operates, and further promote nutrition and livelihood.

Products. Naturally, our Products will be central to our sustainability practice. Providing safe, nutritious, and delightful food entails that we maintain 100% food safety throughout our operations, and provide the best quality from raw to finished products, with an eye to making the product experience fun for everyone. We will continue to address the need for better food choices through a wider range of products, and likewise enhance responsible marketing practices. We will ensure the quality of our products by complying with all applicable product responsibility and labeling legislation.

For the remainder of the sustainability strategy timeline, which is until 2030, URC will be addressing the following material aspects on top of Natural Resources, People, and Product:

Supply Chain. Across our business units, we recognize the risks inherent to a large and diverse food supply chain. Our commitment is to promote responsible supplier relationships throughout our procurement practices and decisions, improving traceability mechanisms for our tier 1 and tier 2 suppliers, risk assessment within our supply chain, and enhanced supplier training.

Economic. All this leads to economic growth that is responsible and inclusive. We reaffirm our commitment to achieving financial viability with integrity, inclusive growth among stakeholders, enterprise risk management, investor transparency and disclosure, innovation through sustainable practices, and other financial benefits from meeting Environment, Social, and Governance (ESG) targets.

Today, we recognize that we operate in an industry where environmentally and socially responsible companies are themselves in high demand, given the importance of issues like climate change, shifting consumer lifestyles, and supply chain responsibility. These five focus areas – Natural Resources, People, Product, Supply Chain, and Economic – are drawn from the broader trends that URC now faces and must address, and they are of utmost materiality to our business as determined through rigorous processes of stakeholder engagement, performance benchmarking, and industry analyses.

This purposeful transformation strategy will enable us to respond to the opportunities that are influencing the future of our business. Across the markets where we operate, lifestyle choices are geared toward wellness, and products are brought under scrutiny, from their origins to even their retrieval. Among the middle-class populations in emerging markets, consumers are looking for healthier and more premium snacking options.

We are perfectly positioned to address consumer trends capitalizing on convenience, on-the-go, ready-to-eat, and ready-to-drink. We must likewise meet the demand to increase the nutritional value of snack foods and beverages, thus maintaining our favorable brand image.

Governments are also much stricter when it comes to the integrity of food and its processing. Regulations may vary depending on the market, but the end goal is the same: to provide safe, good- quality products that will enhance people’s lives. We remain focused on enhancing our operational capabilities according to the highest food safety standards, while working together with our regulators, as we build on each other’s goodwill.

Furthermore, as a publicly listed company with a growing fast-moving consumer goods (FMCG) portfolio, we heed the call of our institutional investors to strengthen our stance and approach to sustainability. Being a multinational player catering to diverse markets, we have a greater responsibility to be transparent with our business practices. We also compete with the best, and indeed recognize the legacy, track record, and the on-going transformation of our global peers in pursuing sustainable and responsible businesses.

The timeline of Our Purposeful Transformation envisions a long-term strategy that will be achieved in a series of milestones that run parallel with the United Nations Sustainable Development Goals (UN SDGs). The first two years will establish our KPIs through baseline audits and the sustainability governance structure that will champion our sustainability initiatives in the long run.

While we have been working hard to keep our business efficient, and ensure we do no harm to our environment and society, those efforts will now be streamlined, and our performance measured and disclosed in a Sustainability Report. In this inaugural Report, structured in reference to the Global Reporting Initiative (GRI) Standards framework, we have emphasized our initial focus areas – Natural Resources, People, and Product – and disclosed current performance on which we will track our improvements. We will be targeting the remaining two focus areas – Supply Chain and Economic – for further review as we progress in the coming years.

THE YEAR 2016 IN REVIEW

We strive to better ourselves every day, to deliver on our promise of a truly fun experience. While the year 2016 has been one of the most challenging for URC, we look back on such challenges with a firm resolve to be on guard, and we look forward to seizing new opportunities and making the necessary investments for our sustainability.

Over the past year, we have met several achievements that maintain our positive outlook on long-term performance. Our modern trade channels, specifically convenience stores, have been growing significantly faster, compared to traditional trade. This almost favors an increase in demand of more affordable premium products driven by the growing middle-class population in emerging markets with higher disposable income.

In 2016, we made two acquisitions. First is the Balayan Mill in Batangas, which made URC the biggest sugar milling company in the Philippines in terms of production capacity. We also strengthened our credibility as a multinational company with the acquisition of Snack Brands Australia (SBA), the second largest producer of salty snacks in Australia. The acquisition of SBA allowed us to consolidate both our Australia and New Zealand operations into one business, under a single management team, serving both markets in a more efficient way.

In addition, we have teamed up with Vitasoy of Hong Kong to address the growing trend in health, wellness, and nutrition in the beverage category, by providing sustainable, plant-based drinks to our consumers. The joint venture was formally sealed in the first quarter of 2017 and launched its first products in June.

The company had its share of setbacks in the past year. We weathered the strengthening of the dollar against the peso, just as the cost of key raw materials increased. There was a slowdown in the home market as a result of tougher price competition on our key categories, like coffee and salty snacks, coming from multinational and regional companies.

On our international business, the unexpected recall in Vietnam of one batch each for our two best-selling beverages – ready-to-drink C2 tea and Rong Do energy drink – caused a decline in our financial results. We have since hurdled this major challenge and received clearance from the Vietnam Ministry of Health last August 2016. We remain hopeful and confident as we re-establish the sales momentum of our Vietnam business through a phased approach, including the relaunch of these two strong brands, as well as our greater focus on sustainability through stakeholder and community engagement.

Quality is vital to our business. We operate with high standards throughout the value chain, supported by the drive for continuous improvement that ensures the safety and integrity of our products – from sourcing the raw materials up until our products are packaged and delivered to our customers. We continue to drive a total quality culture in the company and remain vigilant toward risks assessment and management.

OUR FUTURE PROSPECTS

As we transform with purpose, our main priority is to accelerate our growth momentum and maintain the relevance and competitiveness of our brands. We will introduce sustainability as a core anchor of our overall strategy.

In the medium- to long-term, our ambition is clear – to be the most loved food and beverage company in Asia. We will continue to transform the company (revitalizing both our corporate and consumer brands) into one of the most respected and profitable locally based players in the pan- ASEAN-Oceania region. We envision a company where sustainability is institutionalized with periodic reporting mechanisms in place, and greater stakeholder engagement is embedded. To build on this, we also intend to frontload the resolution of any issues we come across that touch on the Supply Chain and Economic focus areas.

In the process of our continuous growth and evolution, we will continue to face different opportunities and challenges that will require us to collaborate more closely. We will further strengthen our partnerships with our own people, our supplier and distribution networks, the regulatory bodies, and the communities we work in, to renew our social license to operate.

IN CLOSING,

In line with our sustainability commitments, we will gradually build up to more ambitious yet achievable goals. Our values of dynamism, passion to win, integrity, and courage will hold us in good stead. Having adopted best regional practices, we are already off to a good start. Ultimately, our aim is to be great at what we do – more efficient, inclusive, resilient, and sustainable.

Our legacy as a company has always been about transformative innovation. For us, change means progress – we constantly reinvent and adapt to meet new challenges and expectations. While our loyal customers value the nostalgia of URC’s triumphs, they continue to reward us and crave for our innovations, including the embedding of sustainability as a key business pillar well into the future.

Your continued trust in our endeavors inspires us to take this bold step toward a sustainable URC.


“It’s now imperative for us to take our business to the next level by embedding a sustainability program that ensures continued growth, and strengthens our competitive advantage as a premier multinational company in Asia and Oceania.”

Message from the Chairman,
and the President and
Chief Executive Officer

To our valued stakeholders,

Through the years, URC has established a rich heritage of success in producing great brands and products that consumers have come to love. The company transformed from a local manufacturer of cornstarch in the Philippines to one of the largest multinational companies in the ASEAN and Oceania regions, offering a wide range of delightful snack foods and beverages to consumers.

Today, URC prides itself in creating a strong portfolio of brands that are household names in the Philippines and the ASEAN markets. Jack ’n Jill is the master umbrella brand for all of URC’s snack food products in the ASEAN region, commanding no. 1 positions in snacks, candies, and chocolates in the Philippines, and in biscuits and wafers in Thailand. Great Taste is an innovator brand that made the modern coffee shop experience accessible to a wider market, and created the shift toward the "white coffee" segment. C2 is the brand for URC’s ready-to-drink (RTD) tea products, which leads the market, commanding an 82% market share in the Philippines and significant presence in Vietnam. Meanwhile, in the Oceania region, Griffin’s is a strong brand of high-quality sweet biscuits, backed by more than 150 years of heritage in New Zealand. Our acquisition of Snack Brands Australia also allowed us to widen our premium salty snacks portfolio by having established brands such as Kettle, Thins, CC’s, Natural Chip Company, and Cheezels.

HIGHLIGHTS

LOVE OUR PRODUCTS


WE PACK NUTRITION INTO OUR FOOD AND BEVERAGE. Our Cloud 9 Choco Milk Drink contains calcium, zinc, magnesium, phosphorus, potassium, and Vitamins B1, B3, and B6.

WE BUY THE BEST TO MAKE THE BEST. Corn for Jack 'n Jill Chippy is mainly sourced from Sta. Maria in Ilocos Sur - both municipality and province topped the Department of Agriculture's National Quality Corn Achievers in 2016.

WE BRING THE BEST TO THE WORLD. Our multinational presence has positioned us to bring our various brands to key markets in Asia and Oceania. In 2017, we formed the Vitasoy-URC joint venture that brought high-quality, sustainable plant-based beverage products to the Philippines.

UPLIFT LIVES


WE ARE 100% INVESTED IN THE LOCAL COMMUNITY. All of our business units have community engagement and development programs.

WE TEACH WHOM WE HIRE. In 2016 alone, 61 graduates of our Iskolar ni Juan education-to-employment program started working at URC. Every employee at URC has an average of 32 to 40 hours of training per year.

WE UPLIFT THE INDUSTRY THROUGH THE INDIVIDUAL. Hog raising is a profitable business for many backyard farmers in rural areas. Being a true Kabalikat (partner), URC has trained new hog-raisers in partner-farms nationwide. This also means premium-quality meats for the local communities.

SAVE THE PLANET


WE SEEK SUSTAINABLE PRODUCT. We prefer sourcing materials from organizations that undergo regular audits and are certified sustainable. We are also improving our manufacturing processes to minimize our environmental impacts.

WE TURN POO INTO POWER. Our biogas digester plant uses chicken and hog manure to produce electricity for our chicken farm and hog farms, cutting our electricity demand.

WE INNOVATE FOR A CLIMATE-RESILIENT WORLD. We already reduce, reuse, and recycle. This 2017, we started capturing and liquefying our carbon dioxide.

Download the complete Our Purposeful Transformation 2016 URC Sustainability Report

natural resources

Based on years of experience in operating in different markets, we are able to replicate best practices in our operations. We also benchmark with other companies to consider potential investments for water conservation, use of renewable energy, sustainable farming, science-based eco-friendly animal husbandry, and effective waste management through the recycling of waste our business units (BUs).

A Wealth of Uses for URC Waste

As one URC, we have discovered that there is more than one way of tackling our waste disposal problems. Here, we present some of our creative solutions.

Multi-Use Plastics

We've turned scrap plastic into marketable products.

people

URC is committed to enhancing the lives of the people in our workplace and in our communities. We support employee welfare by ensuring workplace safety and providing continuous training, as well as by conducting regular performance conversation and career development programs. We develop our local communities by determining their social needs first, before we implement any program. We also assess the impacts of our projects to make certain that we are able to truly make people's lives better. At URC, we believe that putting people first will be the key to our purposeful transformation.

"Kabalikat sa Pag-Unlad": A Farmer's Partner in Progress

We treat our suppliers as our partners. This ensures that, as we grow together, we also bring up the economy in the process.

Boosting Employee Learning and Development at URC Flour and Pasta

We are a learning company, ensuring that skills and knowledge are cascaded from our most experienced managers to our newest hires.

Changing Lives through Education and Rehabilitation

We will extend a hand to those who need our help, here and abroad. In our experience, a little kindness could make one person’s life a whole lot better.

product

Ensuring food safety is critical to operating responsibly, and with the trust that each URC product is safe, of good quality and value, and, thus, a fun experience to be enjoyed. At every stage of the production process, URC ensures compliance with regulatory requirements. We also strive to become proactive in reaching best-in-class standards wherever we operate, based on our learnings as a multinational company serving diverse markets. We take initiative because we are aware of the changing demands of consumers for food and beverage companies like us to have better transparency on how we operate, from product development and sourcing, to manufacturing and distribution, and finally, communications.

Our Passion for Quality

We follow through on our promise of food safety and quality by maintaining internationally recognized standards of production.

Robina-Raised, Family-Safe

Through "farm to fork" sustainable practices and a "no hormone, no antibiotic residue" policy, we safeguard the health and well- being of our consumers.

© 2017 UNIVERSAL ROBINA CORPORATION. All rights reserved.