Cecilio Pedro: When innovation is key

By Karen Flores, abs-cbnNEWS.com

Posted at Jun 06 2010 02:03 PM | Updated as of Aug 26 2010 08:11 PM

MANILA , Philippines - Twenty years ago, people thought Cecilio Pedro was crazy for competing head-on with global toothpaste brands Colgate and Close Up.

Now, Hapee toothpaste tubes and sachets are selling like hotcakes in the Philippines , making his company, Lamoiyan Corp., the country's first homegrown toothpaste empire.

"Fighting multinationals was very tough. At first, everyone thought I was crazy. They told me, how will I survive this? True enough, it's by the grace of God that I'm still here in the toothpaste industry after 20 years. God is good," Pedro shared with abs-cbnNEWS.com.

As of last year, Pedro said Hapee soared to number 2 in many areas of the Philippines, it is a solid third in Mindanao as Lamoiyan still has to untangle distribution problems, but the toothpaste brand no doubt has penetrated the market and is now a serious threat to its foreign competitors.

"We're giving them a hard time now. We are really hurting them because of our price, promotion, and innovation," he said.

From being a household name in the Philippines , Hapee toothpaste is now being exported to the Middle East, Papua New Guinea , Russia , Vietnam , and Hong Kong .

Pedro is planning to sell more of  his products in China and Southeast Asia .

"We hope to make a dent in China , where 1.35 billion people are brushing their teeth. And markets in Southeast Asia is similar to ours. It has less competition (compared to China )," he said.

His company, which he named after his grandmother, has also expanded to provide dishwashing liquid, lice shampoo, and sports powder, among others.

From tubes to toothpaste

But before he went head-to-head with Colgate and Close Up, the 2 multinational toothpaste brands were Pedro's only customers.

His first company, Aluminum Container Inc., sold aluminum toothpaste tubes to the 2 foreign firms from 1978 to 1985.

"At that time, I was thinking that toothpaste is something that everyone uses. And multinational firms will be here for the long term, so I thought it was a safe business," he said.

All was going well for his company until plastic toothpaste tubes were invented. Both Colgate and Close Up decided to switch to plastic tubes in 1985, forcing Pedro to close shop.

"I never thought that they would switch to plastic tubes. My business got in trouble when they left," he lamented.

Relying on a few customers was Pedro's biggest mistake yet. Money stopped coming in, and he was left with millions of aluminum tubes.

"I learned that in business, you need a mass base to sustain your company. You cannot rely on one or 2 customers. Should they decide not to buy from you, your business is over," he said.

He initially thought of filling his tubes with epoxy and selling it to capitalize on his current resources, but the market for the product is too small.

So, after a year, Pedro decided to try his hand at toothpaste making by getting some help from a Japanese company.

"I was a container manufacturer so I knew nothing about toothpaste. I tied up with a Japanese company that provided toothpaste for hotels in Japan . A friend introduced them to me to do toothpaste for us. They helped us for $20,000," he said.

The next step was to come up with the right product, and that meant testing 200 toothpaste formulas.

"When you brush your teeth, you're not sad. You're happy. But using 'happy' is corny, you don't use that as a brand. 'Hapee' looks Japanese. It could've been 'Hapi,' but 'Hapee' looks better," he explained.

By 1988, Lamoiyan was born.


Pedro may have found a way to use his empty aluminum tubes, but he was faced with another challenge: how to carve a niche in the Philippine toothpaste industry currently dominated by 2 multinational brands.

"It's the same toothpaste: the challenge is how you'll convince people to buy it. But we're competing with the giants, and we're no match for them when it comes to product (recognition) and distribution," he said.

Given that handicap,  Pedro first decided to sell Hapee at half the price of Colgate and Close Up.

Next, he divided the market into segments, offering variants specifically for children as well as low-income and rich families.

Pedro’s newly-formed company also sold toothpaste in packs, bundles, sachets to give his customers more options.

Eventually, Filipinos started to notice the Hapee brand.

"Colgate and Close Up can't come up with such variations immediately since their global companies, but we didn't have any problems. They had a hard time keeping up with our promos, so they were forced to come up with similar offers," he said.

“You have to be innovative in the business. That’s how you survive,” he added.

By 1996, Pedro said Hapee wrestled more than 15% of the market. Sales were going up, and Lamoiyan had enough funds to get celebrity endorsers.

“If people don’t know your brand, nobody would buy. So I got popular people and celebrities to endorse my toothpaste,” he said.

Not giving up

Pedro is winning the battle now, but the toothpaste war is far from over.

He said Colgate and Close Up usually occupy the best grocery shelves in supermarkets, making their products more visible to customers.

Hapee, on the other hand, has to make do with a small spot in the supermarket.

“It’s very expensive to buy shelves, even more expensive than getting gondolas. Back then, grocery shelves were free. At P30,000 for a small space, we cannot afford. So we had to make do with what supermarkets give us,” he lamented.

Despite this, Pedro said he is not giving up, especially now that he has gone this far.

“I know it won’t be easy since they’re now very watchful of us. But that’s (exactly) because they know what we can do,” he shared.

“And besides, I now have millions of customers because of my toothpaste. That’s something to be happy about,” he added.