September 30, 2024 – D&L’s facility in Batangas started commercial operations in July 2023. Within less than a year of commercial operations, the plant booked its first quarterly profits in the second quarter of 2024 (2Q24). In this 26-ha facility, lies the sustainable integration story of a Philippine company specializing in R&D and product innovation which is ready to bring to the global centerstage innovative ingredients derived from indigenous Philippine coconuts.
Natura Aeropack Corporation (NAC) and D&L Premium Foods Corp (DLPF), the operating companies behind D&L’s Batangas plant, are aggressively pushing high-value added coconut oil-derived ingredients and finished products for the food, personal hygiene, and home care segments in the export market. With the increasing concern on the massive deforestation associated with the use of palm oil and the depletion of non-renewable energy sources and high carbon footprint associated with the extraction and use of petroleum, coconut-derived ingredients offer an excellent natural, organic, and sustainable alternative for many industries and applications.
“I’m quite proud of what we have built here in Batangas both from business and sustainability perspectives,” remarked NAC President and CEO Dean Lao, Jr. “This plant unlocks the next chapter of growth for D&L, at the same time it is a true reflection of our advocacy to model a truly sustainable operation,” Lao added.
Next level of evolution – vertical integration for value creation
D&L Industries is a well-known supplier of key raw materials both locally and internationally. With the Batangas plant coming online, D&L is now able to increase its relevance to customers and consolidate under one roof the various components of the coconut supply chain. With this plant, D&L is able to vertically integrate the sourcing, formulation, packaging, Original Equipment Manufacturing/Original Design Manufacturing(OEM/ODM), and export capabilities, enabling D&L to offer a one stop shop, direct from source manufacturing solutions to customers. This naturally translates into simpler logistics, less wastage, lower costs, higher efficiency that significantly cut down the carbon footprint (C02) of the entire supply chain.
“Batangas plant’s vertical integration of the various components of the coconut supply chain allows D&L to deliver to customers cost-competitive yet innovative products with lower carbon footprint”
The scale and additional capabilities of the new plant opens various opportunities for D&L to do private label manufacturing for many global brand owners and retail chains. This can be a game changer for a company that has traditionally operated only within a narrow portion of the manufacturing value chain.
“From just a specialty ingredients supplier, D&L is moving towards being a one stop shop, supplying finished consumer-facing products to global customers”
“What we are doing here is that we are selling to the world the Philippines’ competitive advantage,” Lao remarked. “The Philippines is so abundantly blessed with coconuts. It is the world’s largest exporter of coconut oil. However, much of what the country exports are low value-added coconut products and much of the higher-value added processing happens elsewhere in the world. With our new plant, we want to bring home this higher value-added processing of coconut oil,” Lao added.
Shared prosperity
D&L is cognizant that one key component to its aspirations of bringing higher-value added coconut products to the global centerstage is a sustainable quality feedstock that can support long-term growth. As such, D&L maintains strong partnerships in upstream coconut sourcing, working closely with farmers and mills that extract coconut oil.
D&L also works closely with local governments and key stakeholders to devise strategies to increase the productivity and yield of coconut farms through various educational programs and assistance in making optimal-yielding coconut varieties available to farmers.
Through the Lao Foundation, Inc. (LFI), D&L’s corporate social responsibility arm, the company engages with the coconut farming communities and implements various programs aimed at values formation and educational assistance. The unique approach towards Building Minds, Forming Hearts, and Changing Lives, ensures that positive impact extends not only to the scholars but also to the entire community. Examples of LFI’s projects for the coconut farming communities include scholarships for the children of coconut farmers, education to employment programs, and food farm projects geared to sustain coconut farms and coconut produce.
“D&L is a moving force in championing the Philippine coconut industry. Through the Lao Foundation, D&L engages with the coconut farming communities to make sure that growth is inclusive”
“As a company, we believe in shared prosperity. We understand that in order to grow sustainably, there must be a symbiotic relationship between all the components of the ecosystem. We ensure that we have programs in place that benefit coconut farmers upstream in the supply chain so that our commercialization of higher-value added coconut products have a positive, long-term impact on our industry,” Lao added.
A truly sustainable operations
D&L’s sustainability commitment runs deep in its operations. With its backward and forward integration, the company stands as an entity in control of the entire value chain which has two distinct benefits. First, D&L can effectively reduce cost inefficiencies throughout a product life cycle. Second, the holistic visibility of the value chain enables D&L to identify potential sources of contamination in virtually all stages of the supply chain. Combined, these result into cost-effective and yet higher quality products for end-consumers.
“D&L’s extensive approach in product life cycle analysis gives it the unique advantage of offering cost-competitive and higher quality products”
In addition to the inherent sustainable characteristics of the products that it promotes in the global scene, the company spent deliberate efforts in planning and building an equally sustainable facility.
The new plant’s key features include sustainability-designed buildings, renewable fuel sources, centralized chilled water system, smart water metering and water recycling programs. The facility is equipped with a LEED Gold-certified Central Hub designed to monitor key parameters such as air emissions quality, wastewater effluent, and noise emissions to ensure compliance with regulatory limits and the lowest carbon footprint possible.
“The Batangas plant is a state of the art facility that incorporates sustainability in every aspect of its operations”
Compared with ASHRAE 90.1-2010 which is the international benchmark used for rating the energy efficiency of buildings, the Central Hub is 20% more efficient than non-green buildings. Meanwhile, the building’s water recycling system alone generates a 67% average savings from the baseline which is equivalent to one Olympic-sized pool in annual water savings.
Path to becoming global
One of D&L’s long-term strategic goals is to have exports account for at least 50% of its total revenues. To date, export sales contribute about 33% to total revenues. D&L’s new plant in Batangas, with its sheer size which more than doubles the existing land footprint of the company’s six older plants, opens a world of opportunities for the company.
Long before D&L started the construction of the new plant, the company was already in talks with several global companies for a potential supply agreement. However, the available capacity at that time, while big in the Philippine context, was relatively small compared to the scale of the requirements of these global companies. The new plant, with its additional capacities and capabilities, now makes D&L a viable supplier for many of these global brand owners and retailers. In addition, D&L’s long track record of R&D success coupled with its proximity to the source, offers a unique combination of innovation and value to global customers.
“With its scale and green advocacy, the Batangas plant strengthens D&L’s status as a global supplier of coconut oleochemicals, promoting the best sustainable, organic, and natural products the Philippines has to offer. Multinational companies are now buying direct from the source. Value-added exports are seen to contribute at least 50% of its total revenues”
“We are very excited about what the next decade will bring. We see it as a transformational period for the company both in terms of relevance in the value chain and geographical presence,” Lao remarked. “What we have built so far, we believe, is one of the few sustainable integration stories in the Philippines. Through the use of R&D and our technical knowhow in green chemistry, it is our advocacy and purpose to better lives through sustainable innovation. And what a better way to do this than doing the groundwork to make sustainable, natural, and organic options derived from indigenous Philippine coconuts available to the global market,” Lao concluded.
-end-
D&L Industries is a Filipino company engaged in product customization and specialization for the food, chemicals, plastics and consumer products ODM industries. The company’s principal business activities include manufacturing of customized food ingredients, specialty raw materials for plastics, and oleochemicals for personal and home care use. Established in 1963, D&L has the largest market share in most of the industries it serves, as well as long-standing customer relationships with the Philippines’ leading consumer and manufacturing companies. It was listed on the Philippine Stock Exchange in December 2012. For more information, please visit https://www.dnl.com.ph/investors/.
This press release may contain some “forward-looking statements” which are subject to a number of risks and uncertainties that could affect D&L’s business and results of operations. Although D&L believes that expectations reflected in any forward-looking statements are reasonable, D&L does not guarantee future performance, action or events.
INVESTOR RELATIONS CONTACT
Crissa Marie U. Bondad
Investor Relations Manager – D&L Industries Inc.
+632 8635 0680
crissabondad@dnl.com.ph / ir@dnl.com.ph