Local ready-to-drink juice manufacturer Zest-O Corp. is set to acquire a US beverage brand, according to company founder and former Ambassador Alfredo Yao.
Yao, who is also the chairman of listed Macay Holdings Inc., said a formal announcement of the major acquisition would be filed with the Philippine Stock Exchange next week.
“This [transaction] was with an outside company. We will make an official announcement next week,” Yao said at the sidelines of the 45th Philippine Business Conference and Expo 2019 at Manila Hotel.
Established in 1981, Zest-O became popular in the local market with ready-to-drink juice in foil pouches. Among its brands are Zest-O juice drinks, Choc-O, Zesto fruit soda and Zest-O Slice fruit drink.
Macay Holdings, on the other hand, is the parent company of ARC Refreshments, the licensed Philippine bottler of RC Cola carbonated drinks.
Zest-O was one of the companies affected by the sugar-sweetened beverage tax imposed under the first tranche of the Tax Reform for Acceleration and Inclusion law.
The acquisition of a US beverage brand is expected to bolster Zesto’s ranking as the market leader in RTD beverages.
Yao said the industry continued to suffer from increased taxes following the implementation of TRAIN 1 and it could take another two years for the industry to recover.
“The industry was down 30 percent in sales volume in 2019. I hope it will start recovery this year,” Yao said.
He said Zest-O slightly recovered from slower sales beginning the fourth quarter of 2019.
Yao said despite the sales slump, the company had not resorted to lay-offs but many employees had to contend with reduced overtime which is now a company policy.
“But it’s just a matter of time before we streamline our labor pool, once a pressing need [for it] arises,” Yao said.
Zest-O employs about 4,000 individuals in its four factories in the Philippines.
The company has recently ventured overseas, putting up manufacturing plants in China, Indonesia and Vietnam. An expansion in China was in the offing despite an infringement issue over branding, according to the company.
Zest-O planned to hold an initial public offering in 2017, following the successful listing of sister company Macay Holdings.
Macay posted a net income of P479 million on P11-billion revenues in 2018. ARC Refreshments Corp., its subsidiary has a licensing agreement with Royal Crown Cola International of the US.