Pil Andina S.A.

Producing and marketing a primary commodity, such as milk, carries an enormous amount of responsibility, even more so when producing for and distributing to a developing country that lacks the proper information and finances for making healthy food and drink choices. As Bolivia’s leading dairy business, Pil Andina assumes this responsibility armed with modern technology, deep market knowledge, social commitment and forward-thinking.

Pil Andina was formed after Peruvian business Gloria Group Inc. acquired milk plants in Bolivia and gathered over 6,000 small, local producers to form the country’s largest milk supplier. Since then, the organization has seen an exceedingly positive response from its consumers. In 2011, it celebrated 15 years of bringing quality dairy products to Bolivian families, a milestone reached by multiplying its size almost 15 times since its initiation into the country’s market and reaching $270 million in sales last year.

Gloria Group’s 1996 investment in the Bolivian dairy market significantly changed the country’s milk industry. “We went from a deficit country requiring significant volumes of imported milk powder to a country that replaced imports and began generating some surplus for export,” notes Pil Andina CEO Pablo Vallejo. Turning the market around was no easy task, but Vallejo attributes the company’s success to having a deep understanding of the industry, utilizing the latest technology and continuing to make large investments back into the market.

Corporate Challenges
Members of the food and beverage sector carry an especially high level of social responsibility. As providers they directly affect public health, a role Pil Andina embraces wholeheartedly. Nonetheless, the challenges this mega-milk producer faces are extraordinary and one of its biggest battles is implementing a culture change.

“Consumption of milk is a cultural issue, not only because of economic reasons but also because of lack of information,” Vallejo admits. Because many Latin American countries don’t value milk as a nutritional staple and only consider it a necessity for babies and small children, milk is left behind at a very early age. Pil Andina addresses this issue by launching numerous campaigns featuring the benefits of drinking milk, including its Three Cups campaign, which encourages everyone to get the recommended daily dose of calcium by consuming three glasses of milk per day.

“Bolivians don’t know how to eat well, we have no information on what foods are most beneficial and very often we let ourselves be tempted to buy impulse items,” Vallejo says. As Pil Andina works hard to educate the public on nutrition, the country begins to show changes in its consumption habits. Consumers are increasingly health-conscious and are becoming increasingly sophisticated.

The demand for dairy products and products in general is driven by three main factors: their desirability, availability and accessibility. “We are a country with a large territory but small population, which makes distribution costly and difficult, especially in the rural areas where there is great potential,” Vallejo explains. For this reason, the company focuses on finding ways to reduce its production expenses, which helps make up for distribution costs and keeps the purchase price low for its buyers. “We offer high-quality products designed so that Bolivian consumers, who have one of the lowest per capita incomes in Latin America, may have the pleasure of consuming products comparable to those of any developed country,,” he says.

Pil Andina constantly reviews the formulation of its products and the efficiency of its factories to achieve reasonable costs without sacrificing the quality and nutrition of its products. “In many cases we have made vertical integration efforts to maintain competitiveness,” Vallejo notes. The company also has earned a strong financial reputation, which makes it easier for Pil Andina to attain favorable purchasing and financing conditions.

Ongoing Development
Continually searching for ways to reach out to its consumers, the company’s research and development department is a major part of the business. In effect, Pil Andina is known for its innovative products and technology. The company keeps strong relationships with food suppliers and technology experts while constantly monitoring new items in other markets. “We always have a large portfolio of products in development and evaluation,” Vallejo says.

According to Vallejo, Bolivians are becoming more knowledgeable buyers and are exposed to a wider range of food and drink choices. They are becoming more health-conscious and demanding more product information. A significant amount of new consumers who need to be addressed with specific products are emerging and that indicates the need for more marketing, research and development.

One major challenge the business seeks to tackle is the country’s high rate of lactose intolerance. Pil Andina reaches out to this group by offering lactose-free products and soy products, which are presenting interesting growth. The surprising result of the company’s research is that soymilk isn’t just for the lactose intolerant. There is wider market than that, one that can benefit the consumer and present a lucrative opportunity for Pil Andina.

“Success is due, first, to the use of appropriate technology which allows our products to have far superior organoleptic characteristics than the ones already available in the domestic market,” Vallejo notes. “Second, unlike the position traditionally given to soy products in foreign markets by steering them … into very specific niches, at Pil Andina we have observed that soy products present lower material costs than raw milk, and this will allow us to include consumers with lower incomes.” The company’s response was to develop more affordable soy products that would achieve greater market volume. In addition to marketing to the low-income buyer, soy milk is targeted toward the health-conscious as a nutritious option.

Comprehensive Product Line
With over 270 items, the company provides a complete line of dairy products such as ultra-pasteurized whole and fat-free milk (UHT) for longer shelf life, powdered milk, yogurt, cheese, butter, creams, milk-based juice and flavored milk. Along with its extensive milk line, Pil Andina produces non-dairy items that range from candy and flavored drinks to fruit juice and water.

All of the products are processed with 100 percent Bolivian milk, using maximum technology. Through its well-known brand names – Pil, Bonlé Pura Vida and Aruba – Pil Andina promises nutritional value and superior quality. Recently, the company has received several awards, particularly one naming it as “best industry in the country.”

Corporate Network
Pil Andina has more than 1,900 employees, works with 10,000 dairy families and coordinates with thousands of suppliers. The number of people the company touches is an astounding representation of the organization’s influence in this sparsely populated country. Through Pil Andina’s steady growth and local investments, the company has a unique role in helping Bolivia’s development. It is a responsibility the company takes seriously.

“Pil Andina is certainly a demanding company, but also very respectful of the care of human dignity,” Vallejo affirms. “We treat our milk producers and employees as persons.” In addition to respect from the company, farmers also receive an assurance of income. Pil Andina guarantees it purchase each farm’s full production throughout the year, regardless of any market problems the company faces. Pil Andina works closely with dairy farmers to lend support in the areas of financing and material purchases, and partners are offered training opportunities.