The Man Who Dreams

Life dealt him a cruel hand early on, but Alfredo Yao held on to his dreams, played his cards masterfully and ended up with a winning hand–and then some.

His face and his name may not be familiar to most, but look in your kitchen cupboard or refrigerator and chances are you’ll find his products among your daily fare. Say "juice" and you think of Zesto, the ubiquitous doy pack drink that now comes in a dozen flavors, or think "soda" and it’s calamansi and dalandan that have become all the rage. So iconic has the Zesto juice pack become it has found new life as a fashion item, made into bags by a women’s NGO and sold locally and abroad, even on the internet, for as much as $28 a piece.

Zesto’s phenomenal success has even Fred Yao a bit surprised. In fact, all the successful turns his life has taken still seems to be somewhat of a surprise to this 62-year-old businessman who did not let go of his dreams.

His father Chun Yao, a first generation Chinese immigrant, died when he was twelve; his mother Soledad Macam–whom he characterizes as a "strong and formidable mother"–supported her six children by selling goods on the sidewalk. The young Fred was taken in by the family association so he could continue schooling at the Philippine Yorklin School and later at the Philippine Cultural High School. He earned his board by cleaning and doing odd jobs at the association headquarters in Binondo where he lived, and the balato (tips) he got from the mahjong players there went into the family coffers when he went home to Blumentritt every weekend.

"Those four years changed my outlook in life," he says. "I saw other kids being fed by their yayas even though they were already big, and I thought life was unfair. But I always asked myself, ‘Why am I here?’ I was sure there must be a purpose."

He enrolled in chemical engineering at the Mapua, working days to help his mother raise his five younger siblings. He worked in a bodega for three months and then, with a P3,000 loan that his mother took out from the Rizal Financing Corp., forerunner of the Development Bank of the Philippines, Yao bought a press to print cellophane wrappers for bisquits and candy. He was all of 17 years old, and grew a moustache to look old enough to be in business.

He dropped out of school after two years to work full time. The printing business, which he named Solemar in honor of his mother, did well, and by 1966 he switched to plastic packaging.

At an exhibit in Germany in 1979 he saw machines for doy packs, and felt there would be a market here with the juice products that were then using tetrapaks. But the existing juice manufacturers thought otherwise and so, stuck with the machines which he had already imported, he was forced to come up with his own juice products–which were formulated literally in his kitchen sink.

In March 1980, on the Monday of Holy Week, Zesto was launched. The new juice drink in the new packaging started with three flavors–orange, grape and mango–and was sold at P1 each at PX outlets like Cash and Carry and Dau in Pampanga.

"Akala ng mga tao imported," he chuckles. With that "black market" aura Zesto sold so well that production could not keep up with demand. "When the stores would order and we could not deliver, sinasabi namin nasa customs pa!"

The plant in Caloocan experienced unprecedented expansion for the next ten years. For the first three years additional machines were airfreighted in to cope with the demand. New flavors were added to the original three, and today there are twelve flavors, from orange to guayabano to apple. All the flavor concentrates, Yao reveals, are sourced locally, except for orange, which is still imported.

"We are the second biggest consumer of doy packs in the world," Yao says. Additional plant facilities have been put up in Bulacan, Quezon City, Cebu and Cagayan de Oro.

Soda in cans came on the market, from root beer to cola, but it was with fruit sodas that Zesto made its mark. Calamansi Soda started out as a purely export product, formulated by his youngest daughter Grace, a food technologist. Exported to the US, the Middle East, Europe and Singapore, the local market responded positively to the new drink.

Next came dalandan (native orange), which proved not only to be a market favorite but also a boon to dalandan growers in Laguna and Batangas, who faced a dwindling market for local oranges in the face of the flood of cheap imported oranges. Now practically all of them are contract growers for Zesto. A third flavor, pomelo, has been added to the line-up, and the sodas now also come in PET bottles.

Although it is a happy ending to what seemed to be a business misadventure, the story–and the dream–doesn’t end there.

The last two decades proved to be an extremely busy time for Fred Yao, not just with expansion but also with the setting up of other ventures. The printing and packaging businesses were consolidated into Solmac Marketing. Harman Foods was set up in 1979 for the export of fruit juices, purees and even ketchup. Amchem Marketing and American Brand (Ambrand) handled personal care and beauty products (Beam toothpaste is one of them). SMI Development is into middle class housing like townhouse complexes.

Then there are the banks: Philippine Business Bank of which he is chairman, and Export & Industry Bank where he is a director.

His only unsuccessful venture was I-mart, a convenience and drugstore chain that had over 60 branches before it was sold off. "My strategy was wrong on this one," he admits.

In 2003 Yao’s group won the local franchise for RC Cola over other larger corporations bidding for it. From bottling plants in Antipolo, Novaliches and soon Canlubang (set to begin operations later this year), RC Cola currently has about six percent of the local market, which is a phenomenal 550 million cases a year. Our per capita consumption of bottled soft drinks is over 200 bottles, the second highest in Asia (next to Japan) and the seventh highest in the world.

Last year, they successfully won the bid for China over a local company, Royal Crown Cola obviously impressed with their track record here in the Philippines. They are rehabilitating an existing soft drink plant in Shandong province, and will put up another one in Sichuan province. Yao shares that the per capita consumption in China is a relatively low 19 bottles, but with a population of 1.2 billion people, that adds up to a formidable number of bottles of soft drinks.

Hailed as one of the next generation taipans, Alfredo Yao manages to keep a relatively low profile. He goes about unobtrusively, usually in a short sleeved white barong, the only conspicuous sign of his financial success a gem-studded Rolex.

He has eased up on his corporate duties, having put in a place a professional corporate structure to handle the operations of the various companies. In addition, his three children have joined the business: Carolyn in finance, Jeffrey in marketing and Grace in research and development. A younger brother is likewise involved in the business.

Yao is a director of the Federation of Filipino Chinese Chambers of Commerce and Industry, and as chairman of its Trade and Industry Committee is spearheading the revival of the Buy Pinoy movement. He was recently named by President Arroyo as special envoy for tourism, with the rank of ambassador.

But his heart is really in education."If I will be given the chance I want to set up a school," he shares. The deprivations of his early years, having to rely on the generosity of strangers to get an education, have made him more than sympathetic to the situation of students in need.

Thus he set up the AMY Foundation two years ago to formalize what he had been doing in a personal capacity for many years: to give scholarships to needy students. The foundation currently has over 30 scholars in partner schools nationwide. And, he points out, "I don’t want to make it hard for these students to get their scholarships. I know what it does to the self-confidence of a child. I experienced that trauma first hand."

Earlier this month, he was conferred an honorary doctorate degree in business administration by the Polytechnic University of the Philippines (PUP). In his address to the graduating class, Yao told the young audience that education is "the greatest wealth that anyone can hope to acquire...(and)...the greatest equalizing instrument in society".

"It is not impossible to transcend poverty," he told the graduates. He should know: he is living proof of the possibility of dreams coming true.