Q&A with Fly Ace President Lucio Cochanco, Jr. on Growth Strategy

Lucio Cochanco, Jr. is the President of Fly Ace Corporation, marketer of Jolly canned vegetables, canned fruits, Doña Elena Mediterranean products (olive oil, olives & capers, pasta & pesto sauces, canned tomatoes, anchovy, bottles sardines & canned tuna) , Good Life oriental products (sotanghon, egg noodle, bihon, bread crumbs, sesame oil, oyster sauce) and other food products, many of which are leaders in their respective categories. He shares his insights on how they transitioned from a humble trading company in Divisoria to a major player in the canned vegetable and cooking oil industry.

Q1: You were a PX trading company in Divisoria. What made you shift to launch your own brands in 1997?

A1: Our parents Lucio S. Cochanco Sr and Ederlina Cochanco started our business The Jolly General Merchandise in 1972 at Elcano Street, heart of wholesale trading in Divisoria, they migrated from Cabanatuan City, N.E. where my grandfather used to have a rice mill. They started trading rice and eventually include other agricultural products. In 1986, under the administration of Cory Aquino, the government adopted import liberalization. Imported food products only available at PX stores in US bases (Clark Airbase/Subic Port) and shops at Cartimar can now be imported commercially. Since rice is a political commodity, prices are monitored by government, margin is very small. We slowly traded imported household brands such as Del Monte Fruit Cocktail, Pringles, Mars, Hershey, Nestle, Hormel Spam, Dove, Ivory, Jergens Soap, Downy Fabric Softener, Secret Deodorant and more… we have more than 1,000 sku in our price list. All these brands have principal presence in the Philippines. When these brands gained popularity in the local supermarkets and started building sales volume in the mid 90’s, their local principal slowly took over the business from importer/trader like us. By that time, The Jolly General Merchandise have already transitioned to Fly Ace Corporation to include the Cochanco children in the business. With popular household brands slowly slipping away from our selling portfolio, in mid 1990’s we made the decision to develop our own house brands. Jolly brand for canned veg/canned fruit products, Dona Elena brand for Mediterranean products, Good Life brand for oriental products.

Q2: You have three major brands in Jolly, Doña Elena, and Good Life. How did you decide what brand to use for which products?

A2: When we decided to develop our own house brands back then, we have two things in our mind. First, the brand should look and sound relevant to the product portfolio it represent while it easily attract the attention of it’s target consumers. Second, brands developed should have their own growth direction and appeal to different target market.

Q3: Jolly is now the leader in canned mushrooms and whole kernel corn., while Doña Elena is the leader in olive oil, Jolly Heartmate in Canola Oil and Good Life in sesame oil. What is your formula for leadership?

A3: When we launched these brands, we started at zero base, zero sales number and zero brand equity. One of our corporate value is INTEGRITY, we applied integrity in all the quality of our brands.

First, you really have to understand your market. We made sure we offer consistent high quality at reasonable price. It also helps if you have good relation with the trade and they supported you. We also made sure the products are consistently available in the market. Lastly, we consistently try to understand our consumers and give value to the brand. When I say value, I do not mean extending price off or discount. We continuously develop recipes to expand usage for our consumers, share the health benefits for using our brands. From time to time we inject creativity and innovation in our packaging design/format, new sizes, flavor offering. Consistently repeat this for twenty years.

Q4: You have discouraged multinational competitors from entering your market because of lower margins, but a local canned sardines company entered the canned vegetable space 3 years ago because the margin and supply stability is much better than their industry. What is the competitive edge of Jolly?

A4: Because the products Jolly offer are near commodity products , there is not much margin to play around. This have discouraged multinationals and big companies to join these near commodity product categories. Competition is inherent in any business, during the 20 years Jolly is present in the market, different brands has come and go. If there is one edge Jolly have vs competition, other than being #1, having a bigger distribution foot print and volume, it is our understanding of consumers who use Jolly and our continued effort to provide value to them.

Q5: What are your proudest achievements, and why?

A5: Fly Ace Corporation started as a traditional Chinoy family owned business in Divisoria, where all family members except in- laws and relatives are involved, all decisions are centralized within the family. I am a proud product of Divisoria where cost control, efficiency and fast decision making is a norm. As a company, we are proud of our transition from a trading business to brand owner and brand builder. We can now plot the growth and future of our company with our own brands.

Other than brands we developed and grew to category leadership over the years, we are able to attract and invite talents and professionals to help run our business. We are now professionally run, only two members of the family are executives in the company. I believe outside talent add creativity and contribute growth for the company. Without auntie, uncle and relatives, this make the company attractive for the next generation if they are interested to join in the future.

(Josiah Go is chairman of Mansmith and Fielders Inc.)

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