Zest-O one of ASEAN’s most admired firms

BY FELIPE F. SALVOSA II, BusinessWorld Sub-Editor SINGAPORE — For innovations such as the introduction of dalandan juice to a discriminating beverage market, family-owned Zest-O Corp. was named one of Southeast Asia’s most admired enterprises at the close of an annual gathering of businessmen in the region. Alfredo M. Yao, Zest-O chairman, also announced that his group had successfully acquired a 60% stake in budget carrier Southeast Asian Airlines, Inc. or Seair, sealing his family’s entry into the booming air transport business. The original owners will remain business partners. Mr. Yao accepted the "Most Admired ASEAN Enterprise" award in the innovation category. Another Filipino firm, Ayala-led Integrated Microelectronics Inc., was a finalist in the employment category. The two Filipino multinationals were among 12 finalists out of 63 companies nominated, and were chosen by a nine-man panel based on criteria set by Ernst & Young. The ASEAN Business Awards were presented for the first time Sunday night during the 2007 ASEAN Business and Investment Summit organized by the Singapore Business Federation. Mr. Yao said the award represented "47 years of hard work" and should give Zest-O more confidence in expanding within the region. He said Zest-O’s initial public offering was scheduled for next year, with a minimum 20% of outstanding shares to be sold to finance expansion plans. Zest-O wants to concentrate on its core beverage business, although the company is not sure whether its success in eating up the market share of cola companies by marketing "healthy" drinks could be duplicated elsewhere, he said. "There are a lot of places that you can still call ’Third World’ that would stick to carbonated drinks," Mr. Yao said in an interview. The Yao family has diversified into instant noodles with its "Quick Chow" brand, personal care products such as "Beam" toothpaste, and other sectors such as banking and air transport. The family also owns Philippine Business Bank which has 15 branches in Metro Manila. The new acquisition, Seair, reported close to P1 billion in revenues last year from P600 million in 2005 and P300 million in 2004. It flies 18 routes to 14 local tourist destinations: Manila, Caticlan, Cebu, Clark, Busuanga, Cuyo, El Nido, Puerto Princesa and Rodriguez in Palawan, Camiguin, Cotabato, Zamboanga, Jolo and Tawi-tawi. Zest-O, which controls 90% of the market for juice drinks in doy packs, has invested P500 million to put up new plants in Pampanga and Davao. Aside from the Zest-O brand, it markets Sunglo juice drinks and Big 250 fruit drinks as well as carbonated drinks and fruit sodas under the Zest-O-Cola, Rootbeer, Twist, and Squiz brands. Health drinks are marketed under the One brand. Its noodles portfolio includes Quikie, Tekki Yakiudon and Asian Classic, aside from Quick Chow. Mr. Yao took credit for making a marketable beverage from the "poor man’s orange." "We introduced the dalandan juice in cans and bottles, and now in five-star hotels you can order dalandan juice," he said. He said Zest-O wants to expand to Dubai, Indonesia, Cambodia, and China. Zest-O, originally Semexco Marketing Corp., has sales of around P3 billion annually and more than P450 million in assets. To qualify for the ASEAN Business Awards, companies must have at least 40% ASEAN equity and must have been incorporated in the region. It must have presence in at least two ASEAN countries and five years of operations. Annual revenues must be at least $20 million. Integrated Microelectronics chief Arthur R. Tan, meanwhile, accepted a trophy as finalist for the employment category. The electronics firm was recognized for its handling of a 20,000-strong workforce spread in the Philippines, Singapore, China, and the United States. Singapore Telecommunications Ltd., which owns 45% of number two Filipino carrier Globe Telecom, received the most admired enterprise award for the growth category. Chua Sock Koong, Singtel Group CEO, said the recognition was due to the spectacular performances of overseas subsidiaries, which are either number one or two in their respective markets. Globe, an Ayala family joint venture with Singtel, recently declared a record P50 in dividends per share. "Ayala is a very good partner. The dividend payment is a good reflection of capital management by Globe. Globe has led the innovation that has kept the industry growing, such as [payment transactions through mobile phones]," Ms. Chua said.