By Bernie Cahiles-Magkilat
Big things come from small beginnings. This is especially true for Fruitas Holdings, Inc. (FHI) not just because the company started as a cart in a big store, but because its founder and CEO Lester C. Yu has the passion and addiction to grow a business that is being fueled by a growing health conscious population.
As the name suggests, Fruitas Holdings seeks to provide only the best food, fresh pressed fruit and vegetable beverages for all market segments at the most affordable price.
With tremendous growth and an appetite to become bigger, FHI seeks to conduct an initial public offering in what could be the first healthy drink and beverages company to list in the local stock market.
But beyond a company’s normal drive for profit is FHI’s bigger purpose: To help others with integrity.
According to Lester, Fruitas started with a mere 2-square meter cart in SM Manila in February 2002.
Since its establishment, FHI has expanded its brand portfolio to include Buko Loco, De Original Jamaican Pattie Ship and Juice Bar, Juice Avenue, Johnn Lemon, Black Pearl, Buko Ni Fruitas, Fruitas Ice Candy to name a few.
The company continues to make a name in the industry in terms of number of outlets, acquisitions, and development of new business concepts and formats, such as food parks and wine cellars.
Now, it has close to 900 stores for all of its 20 brands and concepts located in prime commercial establishments and institutions.
They have a 1,000 square meter plant in Quezon City for the Buko juice drink alone and a license to operate from the Food and Drugs Administration.
FHI is now the biggest supplier of fresh buko juice in pet bottles in the country. Their product is always served fresh because it is using cold press, not ultra-heat temperature, making its products all natural and fresh. Most of all, their products are affordable.
They have also 13 different exclusive suppliers of buko alone from multiple geographies to insulate them from supply constraints.
“We will be the first conglomerate in food and drinks business that manufacture straight from our own commissary,” says Lester. They have three commissaries in Metro Manila, and one in Cebu. On top of that, FHI will be expanding its R & D facilities and kitchen.
They have a total of 100 in-house delivery vehicles, half of are motorcycles, and counting. The company has also plunged into Lifestyle Food Parks and into the in-line store format or the full sitting store in 2016-2017.
At the rate of their expansion, they are opening one store in every two to three days. They have one franchise already in the UAE.
According to Lester, his fresh fruit diet pushed him to venture into the healthy drink business using his savings from a previous corporate job. He does not eat solid food in the morning, but fresh buko juice, tomato, apple or carrot juice. He would concoct a vegetable shake like celery, apple and grape fruit at night.
Lester also believes that a healthy diet business is a sustainable venture. True enough, after a few years from the launch of his first Fruitas stand, Filipinos were beginning to be conscious of their health. Now, aside from observing healthier diet, Filipinos participate in fun run and wellness activities in an effort to lead healthier lifestyle.
Fruitas Holdings is set to conduct an initial public offering (IPO) in the first half of next year in what could be the first all-natural juice drink company to list in the local bourse. Their underwriters are First Metro Investments and BDO Capital.
Lester said they are looking at unloading 20-25 percent of total shareholdings to the public for a price of P3-P4 per share. That will ensure them of up to P2 billion in IPO proceeds.
Proceeds from the IPO will be set aside for further expansion of its close to 900-store network for all the 20 brands. This is to keep up with the annual expansion of 150-200 stores per year. Part of the proceeds will be used to modernize its commissaries.
Lester, an industrial management engineering graduate from De La Salle University with an MBA from the University of the Philippines, is also planning to further acquire other food companies.
FHI has been acquiring small food companies and is the most active among small companies in gobbling up other concepts with good potential.
Last year, the company posted P1.2 billion in net revenues and P172 million in net income after taxes. It posted tremendous success in the past three years, hitting P500 million in 2016 and P310 million the year before.
With that, Fruitas is no longer considered small in its league.
From the looks of it, Lester has a taste for the premium. This could be one reason he has been very careful in granting franchises. He trusts only a select few partners, who can really keep the standards of the company.
For instance, as much as 85 percent of its brands are still company-owned and managed. This means, its growth has largely been organic. Other companies have more franchisees than their own outlets, thus they rely their growth on the number of franchisees.
“It’s because we believe in our products, we have a good business model, and we have the best among food and beverage drink companies’ financial performances, if not one with the healthiest financial statements,” he adds.
“If you have a healthy financial statement meaning your business model is healthy so we don’t need other people’s money.”
In fact, its stores or even the franchisees are enjoying a short payback period of 18 months or in less than one year. That is why, FHI would like to maintain an 80-20 ratio in favor of company-owned and managed outlets although this is a not a fast and hard rule.
FHI is already present in all regions in the country, except the Autonomous Region of Muslim Mindanao, but with the rebuilding of Marawi, Lester would like to participate in this effort by introducing its brands to the Marawi people.
Lester, however, clarified that he is not against franchising but admitted that giving out franchises means losing a bit of control.
“We would just like to be the captain to control our own ships and we cannot be enticed with easy money, we are here for the long term,” adds Lester stressing that what is important is they keep their quality and standards.
“We are not in a hurry. We are here to serve nothing less but the best in the world. We are also just picky, we cannot just give franchises to any Tom Dick and Harry.”
“We have confidence in our own brand and our hearts are here that no matter what, we hold our own,” says Lester adding that they designed and developed their own franchise system.
Fruitas is the money-making flagship of the company where Lester gets sentimental because that is where he started.
Lester is bullish on the economy, too. “We cannot go wrong with our over 100 million population,” he adds.
He explained that the four-year old kid who started drinking their fruit shakes would be more likely be drinking fresh fruit juices as he grows older. In fact, their healthy drinks have become a treat for kids and also for the older guys.
To promote its products, FHI has celebrity endorsers. They have TV and radio commercials. Now, they have a dedicated social media team promoting their products online.
As the organization becomes more professionalized, so as the strengthening of the company values.
Lester is proud of their being a good corporate citizen as he strictly imposes the value of integrity on himself and his staff.
“We have an honor code: We do not lie, cheat, steal and we do not tolerate those who do so,” he adds.
“Poverty is not a reason to steal,” stresses Lester, proud of his yaya (nanny) who has been with the family since 1952 and never taken a single centavo from the family.
Lester may strike to others as tough, but he can also be very sentimental. He has a soft spot for people even to those who repeatedly commit infractions against company rules and values.
“I am a very sentimental person and am very loyal,” he adds.
Focus and sacrifice
Some businesses do not prosper because of the lack of focus by its owners. In the case of FHI, Lester remained focus in the fruit beverage sector with Fruitas as the flagship brand.
“Number one rule in business is focus and sacrifice. When I wake up in the morning, I think of my business and that occupies my mind the whole day until I go to bed at night. It is a sacrifice, no disco, no nightlife,” says Lester citing that all the most successful entrepreneurs like Bill Gates made sacrifices in their lives.
His life has been like that from Mondays to Sundays as he endured all those hardships.
“We stick to our core competence,” he says.
As a result, FHI has more leader brands in specific product categories. Their buko juice is number one as well as their Original Jamaican Pattie Shop. Fruitas is leading in the fruit drinks category.
As the company has established its footing, he is now more relaxed being surrounded by managers as he professionalizes the organization.
A very hands-on manager, Lester said they are a very liquid company. To demonstrate that, he said, there is only one more liquid company than them – Manila Water.
“We are in the liquid business literally,” he adds.
For the past three years, FHI has been growing 100 percent reaching P500 million revenues in 2016 in combination with revenues from expanding stores network. Prior to that, the company made 300 million.
“We still expect considerable growth this year, a double-digit one,” he adds.
While Lester serves only the best, natural, fresh beverages, he also stressed that their products cover all segments of society from A to D classes. They have a P40 fruit shake concoction.
This is because one cannot be number one in a business he is in if he limits his business to the A and B crowd only.
“If you want to be the biggest, you have to be like Jollibee and Shoemart with multi-pronged approaches,” he adds.
Lester is addicted to business that his accumulation of wealth has snowballed into something bigger. This bigger power he now uses to help other people and contribute to the country’s economic development because that is the higher purpose for FHI.
A closer look into FHI would reveal a very inclusive labor hiring policy. It does not discriminate, but in fact encourages the hiring of people from all walks of life. Lester has a soft spot for PWDs, deaf and mute and stroke and cancer survivors. They also employ illiterate individuals, who are paid based on the mandated Labor Laws. They have directly employed about 2,000 people across stores, including PWDs.
“We house them and pay them according to the law,” he adds noting that they prepare more than a thousand meals every single day and they share the same food in the office. The food is subsidized.
They have no formal CSR program, but Lester said they have scholars, the children of their loyal employees. He focuses on education because it is the key to a better future. Combined with good values, he believes success is not far behind to those who work harder. FHI has also a tie-up with a church organization to provide food for students.
When he was younger, he looked up to Taipan Lucio Tan. Now, at 44 years old, he looks up to all successful businessmen. He discovered that all of them have the same stories and lessons about the value of honesty and hardwork, which all basic and universal.
“Lucio Tan, Emilio Yap and Henry Sy all worked hard and now we have Jollibee’s Tony Tan Caktiong. They are all humble people, soft-spoken, I am more of a braggart compared to them,” he adds, but just like them, Lester looks at the bigger picture and beyond.
Five years from now, Lester sees FHI with the same stature as Jollibee and San Miguel Corp., two of the country’s largest food and beverages companies.
“That is the kind of people I would like to be at par with,” he says.
But success has not really gotten into his head. Lester remains grounded. He prefers his personal vehicle to be the versatile Innova than the more-flashy cars that he can afford.
Lester is a low-key businessman. He does not rub elbows with the high and mighty, does not socialize much. As a company, FHI knows that their purpose and goals do not depend on connections.
Instead, he prefers the company of books, his three kids and family. He loves to read non-fiction books, particularly biographies as he learned common values of honesty, mutual respect and fairness in doing business.
These are the same values that he learned from his father, who used to run a jewelry store in Ongpin, who told him: “As long as you are not cheating or stealing, there is nothing to be ashamed of. Don’t take shortcuts because no one can claim all the wealth of this world.”
That is how Lester grows his business by pursuing FHI’s higher purpose.