PACKAGING a la Lilliput itself is not an entirely new idea, though, and has been in use for decades in the airline and fast-food businesses. Up until recently, however, it had not been applied to target the individual consumer — with the exception of the homegrown tingi-tingi system, or by-the-piece selling that has long been practiced in this country. Even P&G's Chua admits that the manufacturers are Johnnies-come-lately in selling stuff the tingi way.

All over the Philippines, neighborhood sari-sari stores and stalls at the wet market employ a crude system of repacking items into smaller quantities. Food items are the most popular candidates for micro-repacking, and it is common to see oil, vinegar, pepper, sugar, or achuete sold in tiny, plastic bags. They used to go for as low as five centavos each, but today the price is at P1 to P5.

Steve Villarize, who has run his own sari-sari store for the last 21 years, still sells in tingi. "Even in the past, people were buying in tingi because that's what they could afford," he says. "Cooking oil, soy sauce were measured in cups and then transferred to the bottle or glass brought by the customer." His wife says that hard drinks were also sold in tingi, "paisa-isang shot."

The preponderance of the tingi system is borne out by a consumer preferences survey of Synovate, the market research arm of global communications specialist Aegis Group PLC. Sixty-three percent of the respondents bought items in tingi, with the D and E segments making up the majority. Of those who live by tingi, 17 percent said they bought nonfood items while 94 percent said they bought food, primarily cooking oil, soy sauce, vinegar, salt, and sugar.

Reasons Consumers Buy Sachet/Mini Size and Tingi

REASON	MINI (%)	TINGI (%)
Price (e.g. cheap, affordable, can buy with just P1)	42	32
Economy (e.g. fits the budget, able to save, just the right amount)	39	29
Contents (e.g. many contents, small size, little content)	1	1
Usage (e.g. easy to carry, can control usage, good for 2 persons)	31	17
Purchase (e.g. readily available, to save time in buying)	32	46

Source: Asiabus April 2004, Synovate Philippines

The unique retail structure of the Philippines has also fueled the move toward smallness. Sari-sari stores — often little, wooden huts carrying 50 items or less — account for nearly 90 percent of the country's total retail outlets. TNS's Asiapanel division notes that in 2003 the traditional trade continued to gain share in the market, particularly in poorer rural areas. According to AC Nielsen, these small neighborhood stores have grown to nearly 560,000, making them the top retail outlets in the Philippines. That number is expected to rise to over 900,000 in five years.

In places like Japan, Thailand, and Hong Kong, modern trade retailers remain bullish in the sector where hypermarkets and discount stores continue to grow. But nations like the Philippines and Vietnam have a less developed trade structure, with traditional stores outperforming modern supermarkets. Based on the 2004 results of its Consumer Panel Survey spanning four years from 2001, TNS observes that expenditures at sari-sari stores have grown over time, with 42 percent of all purchases coming from these outlets. Supermarket expenditures, meanwhile, have been flat while consumer spending in grocery stores has been declining.

So strong has been the performance of sari-sari stores, Abad says, that when a manufacturer comes in and first looks at the retail trade structure, he wonders, "How am I going to sell the 400-ml in a small store?"

P&G's Chua says that because a lot of the sari-sari stores in poor neighborhoods have a small rolling capital, products in these stores are "100 percent" sachets or mini-size. In fact, he says, stores in squatter areas would have no products in bottles at all.

Though sari-sari stores may impose uneven markups, consumers find these stores more convenient, especially for emergency purchases. Teresa Deocaresa of TNS says sari-sari stores have evolved into some sort of the Pinoy's extended pantry. The fact that they provide credit gives them another plus in the harried consumer's budget book.

AC Nielsen notes that while the "AB class prefers wide product assortment, the DE would buy on need basis, mostly small-size packs and on credit." And while these consumers buy in smaller volumes, it says, their huge number make up for the slack. For the supermarkets alone, data show that the D and E segments account for more than P61 billion in estimated sales annually while the A and B classes contribute only about P5 billion. Sachets and products in smaller packages enjoy wider reach in rural areas than in urban areas, says AC Nielsen.

Overall, shampoo, detergent, soap, and toothpaste remain the top (and growing) items in the nonfood category, according to TNS. These products, apart from being the most basic necessities of a consumer, all happen to come in sachets or smaller packs. Even favric softeners are now fast becoming sachet-driven, says TNS account executive Omar Carlos.