Developing a galip market chain

Nari, Normal

The National, Tuesday May 12th, 2015

 By Tio Nevenimo

 One of the biggest issues facing the Galip industry is that the product is virtually unknown outside Melanesia. 

Creating sufficient demand for Galip in export markets to match projected production volumes will therefore be a major industry challenge. 

However, Galip potentially has significant commercial advantages within the domestic market. 

From 2004 to 2005 a consumer study was carried out by the National Agricultural Research Institute (NARI) and its collaborators. 

This study, which assessed the future potential of Galip as a commercial product in the PNG domestic market, was found to be positive and another follow-up study was conducted from 2008 to 2010 which discussed the potential of galip products with retailers, wholesalers, im­porters, merchandisers and dis­tributors. 

There was limited published data available, therefore the primary research method used in the study involved interviews with key people in the retail and food service industries. 

Both studies showed a high degree of consistency in views expressed among the persons interviewed. 

The results indicated that consumers were willing to pay an average of K40 to K70 per kg for packaged galip kernels depending on their location, socio-economic situation and ethnic background and were willing to buy commercially processed and packaged galip nuts. 

The studies demonstrated that there was a large consumer demand and acceptance of galip nuts locally and highlighted the potential for the industry to grow fresh kernels and process and package products for sale in the local markets. 

Imported nuts attracted minuscule demand and achieved minimal sales due to the high price and subsequent consumer resistance among the nationals and expatriates. 

Packaged peanuts from China were the only imported nut that achieved significant retail sales and would likely be the major competitor to Galip. 

Quality merits or otherwise of the Chinese peanut products compared to Galip was irrelevant. 

The fact that consumers could buy a very popular, branded nut snack for an acceptable price (about K3) was a critical factor from a retail sales perspective. 

All interviewees expressed that a Galip snack food product must match the retail price of the Chinese peanuts. 

Consumers were less concerned with ‘value for money’ in terms of the volume of nuts per pack. 

Interestingly, about K3 for a 50 gram pack had been found to be the price threshold for Galip in these studies. 

The PNG market was described as very brand conscious and brand loyal, with significant brand loyalty given to national and multinational companies with processing operations in PNG. 

It was recommended that one dominant domestic Galip brand had to be developed and promoted, obviously “PNG Made”.  

It was felt that once the brand had became  established in the market it would be difficult for other competitors to capture its market share due to consumer brand loyalty.

For business feasibility purposes it is impossible to accurately predict domestic market demand. 

Nut consumption in developed markets varies widely, but a per capita annual consumption rate of 1kg can be considered very achievable. 

Assuming 20 per cent of the 6.6 million people consumed 1kg of product per annum this would equate to a domestic market demand of 1320 tonnes. 

If retail snack products made up the vast majority of nut consumption and Galip was able to capture 75 per cent of this market (which may be feasible if the product can be marketed competitively against Chinese peanuts, the only manufactured nut snack product of commercial significance), then this would equate to a potential market for Galip of 990 tonnes per annum. 

The food service and food manufacturing sectors prefer to test and evaluate actual product samples before offering any definitive comment. 

Therefore, Galip product samples of an acceptable standard will need to be developed for circulation and testing in these sectors in order to stimulate demand.  

Expatriates and tourists would expect premiums to be charged at specialist venues such as resorts, hotels, airport lounges and duty free shops. 

Given the current size of the expatriate and tourist markets in PNG these should not form the major component of the Galip domestic market strategy. 

However, expatriates and tourists in PNG and the venues they frequent offer opportunities to test products, packaging and branding ‘on-shore’ as part of a broader export market strategy. 

NARI Keravat is currently developing various galip products and will be testing these in the various sectors identified in the studies.