Marco Qua is excited about Cold Storage’s growth prospects. —CONTRIBUTED PHOTO
Before Cold Storage started operations on Aug. 8, 1996, the fish selection of groceries and supermarkets was usually limited to local fresh varieties such as bangus, tilapia, lapu-lapu, galunggong and tanguige.
Not so today as imported seafood including salmon from Norway and halibut from the United States are well within reach, alongside other frozen selections such as unagi from Japan as well as squid rings and crab sticks from China, thanks to Cold Storage’s presence inside some 180 groceries and supermarkets across the country.
According to Cold Storage’s 40-year-old president Marco Qua, the growing company was born out of the idea that Filipinos should be able to enjoy the best seafood that the rest of the world can offer, the same way that foreign markets enjoy the best quality shrimp and prawns from the Philippines.
The Qua family knows the shrimp export business well, having been in the industry for some 30 years. At its height in the 1970s to the 1980s, the company had three factories—Cebu, Bacolod and Valenzuela—and was sending out as many as 30 containers of shrimp every month to clients around the world, mainly Japan and the United States.
Indeed, Cold Storage was a mere side business that was inspired by a trip to Singapore in December 1995 of Qua’s parents, who marveled at the supermarkets fully stocked with fresh and frozen seafood from around the world. They thought Filipinos should have access to more choices, too.
And so the first Cold Storage unit was set up in August 1996 on Banawe, Quezon City.
It caught the family by surprise that the small outlet that featured salmon and halibut enjoyed brisk business practically from day one, showing that the local market was indeed hungry for more choices and eager to add new items on their home and restaurant menu.
From there, the second Cold Storage unit was opened in 1998 on Connecticut Street in the Greenhills area and that caught the attention of the Rustan’s chain that invited them to have their own refrigerator space inside its Makati supermarket and from there, other chains quickly followed.
Its pace of expansion accelerated when Marco and his younger brother Morris started taking over more responsibilities in the family businesses, especially Cold Storage that had shown the fastest growth pace and was bringing in increasingly more revenue, unlike the shrimp export business that used to account for 90 percent of the group’s total revenues.
When the brothers formally joined the company in 2008, there were 37 Cold Storage outlets in the supermarkets plus two stand-alone outlets. In just two years, the network grew to 100, primarily because they had more people deployed to find outlets for Cold Storage.
“I already saw the potential,” says Qua, “There was a clamor for it.”
Market demand
And that clamor was not only coming from the supermarkets and grocery chains, but from the hotels and restaurants as well, thus the expansion into food service with Cold Storage reaching out to the institutional clients and offering them just the right cuts as well as the variety that they needed for their operations.
Qua explains that when salmon is brought in, for example, it comes as a whole fish, so it is up to Cold Storage to process them in its facilities in Valenzuela and Cebu to the portions that the hotels, restaurants and caterers require.
To ensure the quality of the seafood, Cold Storage eventually started investing in its own cold storage facilities in key parts of the country. It became a business of its own about five years ago and part of the facilities was rented out to other food companies that also needed to store their produce in climate-controlled facilities to maintain the freshness of their food for an extended period.
The Qua brothers, who started helping in the family-run Sikat Araw Trading business as early as high school, are excited about the group’s growth forecasts and sees revenues growing across the business units, from the logistics operations to the institutional sales and the retail sales, especially now that the economy is fast recovering the pandemic.
Qua is particularly excited about the food service sector that includes the hotels and restaurants, as these are recovering rapidly from the pandemic with Filipinos in a greater mood to travel and eat out. As such, the food service sector has taken over a 45-percent share of the retail sales under Cold Storage Seafood when it used to be just 10 to 20 percent.
He believes that the group is standing on a foundation that has been strengthened by the pandemic that tested the leadership and creativity of the brothers who are determined to take the group to new heights.
For one thing, its accounting system has been revamped, operational and financial controls have been fixed, shipping routes rationalized and freezers upgraded across the system.
Pandemic pivot
Qua still winces at the memory of the stress brought about by the pandemic, when they had to quickly change tactics when the quarantine restrictions were imposed and it became more difficult to bring in products from abroad and then to distribute them locally.
They had to pivot along with their customers to work around the mobility restrictions, from changing the product mix to extending better credit terms to changing the product mix and distribution patterns across the network as people had to contend with working and staying at home.
They also put a lot of credit to their employees, who stuck by the company as it adjusted to the difficult times. Qua returned their faith by getting all employees back as soon as operations returned to normal and even added to the manpower complement in step with the expansion.
“We always told ourselves that we just have to make it through one year; after that we can call it a win,” says Qua.
But as they changed, Qua remained guided by the legacy and the values set by their father while keeping tabs on new sources of inspiration from the fast-changing developments in the food sector.
“My father always said, do not cut corners. Otherwise, we will be ruined. Our brand will be destroyed,” says Qua, “Our customers trust us for our quality, so we have to make sure that we deliver.”
They also consider themselves blessed for having a smooth and close working relationship as they take advantage of their strengths. Marco, for example, is in charge of finance to supply chain while his brother is in charge of quality control and making sure the factories are running smoothly.
“My brother and I have always been in sync and we just execute. We have the same objectives,” says Qua.
They have been nimble enough to upgrade their infrastructure, systems and even delivery fleet and refrigerators in the retail outlets to set the stage for their next growth chapter.
Qua says there were many sleepless nights over the pandemic, with his waking hours consumed by thoughts on how they would survive despite the challenges.
“Looking back, those times of uncertainty made us stronger,” he says.
Indeed, since the company was able to overcome those most challenging times in its history, its confidence is bolstered that it could handle any other challenge that will come its way.
These moves—guided by both strategy and just gut feel born out of experience and much trial and error and keeping their ears close to the ground—have been paying off as by September of 2020, they already started to feel the effects of their change in tactics.
They built on the streamlining of operations the next year that saw its revenues rising by a respectable 20 percent and by another 20 percent in 2022 when mobility restrictions were further loosened as the pandemic started waning.
Today, Cold Storage Seafood, the retail arm of Sikat Araw Trading accounts for 90 percent of its revenue pie, split into the institutional buyers and the retail operations with the balance coming from warehouse rental.
With the second quarter under way, Qua is confident that Cold Storage will meet its revenue and income projections for the year, perhaps even exceed them as it makes further inroads into the provinces and tap the fresh markets there, especially with the rapid revival of the tourism sector. By next year, it hopes to cover the entire country.
But more than the revenues, the fact that the brothers are now fully in charge is their real indication that they have truly come into their own.
“It is a privilege to see our father retire,” Qua says.