Leadership Lessons November 30, 2022

Carmen’s Best Founder Paco Magsaysay on Crafting Ice Cream and a Winning Strategy

Paco Magsaysay shares the inspiration behind Carmen’s Best and how his creativity and sharp business acumen made it a worthy contender against big-name ice cream brands.

When Francisco “Paco” Magsaysay started Carmen’s Best, he did not expect it to grow into one of the leading premium artisan ice cream brands today. He also did not expect billionaire businessman Manny “MVP” Pangilinan’s investment company Metro Pacific Investments Corporation to buy 51% of the business for PHP198 million. And yet, both happened.

Taking a nostalgic trip down memory lane will tell you that the origin of Carmen’s Best was a happy accident. “The story of Carmen’s Best started in 2007 when my father, Jun Magsaysay, together with his friends, acquired land in Bay, Laguna. The initial plan in putting up a dairy farm was to participate in the Department of Education’s Milk Feeding program to school kids and offer 100% fresh cow’s milk,” Paco Magsaysay begins.

“At first, we had trouble selling the fresh milk, as it only had a 7 to 10-day shelf life. So my dad said, ‘Paco, can you help me sell the milk or do something with it?'”

The fate of unsold milk was bleak. It would spoil and be thrown away—a waste of product and profit. With that in mind, Magsaysay set to work doing the latter. But despite playing around with flavored milk, cheese, pastillas, and other possible products you can make with milk, he still felt something was lacking.

Soon after, the entrepreneur had his eureka moment—turning excess milk into ice cream. And that was how Carmen’s Best came to be.

A Full-fledged Passion Project

But why ice cream? “It was only about a year after that I realized the potential of creating the product that I truly love,” Paco explains. “I remember how during all my travels growing up, there was one thing that I always have to try—ice cream.”

For Paco, the business needed to be founded on passion. Thus inspired by his travels, and the many ice cream flavors he’s had, he soon curated an extensive flavor selection for Carmen’s Best, which at that time, was still foreign to the country.

But this strong influence of Western flavors served him well, given that bestselling flavors like Salted Caramel, Brazilian Coffee, Butter Pecan, and Malted Milk have put the brand on the epicurean radar. “We make it a point to use only the best ingredients when we create the flavors. We never make shortcuts. And each one of them is made with a distinct character and inspiration,” he shares.

“[My daughter] Carmen was born in 1997 [and] she’s the name of the brand, Carmen’s Best,” he adds. “The fact that it is Carmen’s name I will never shortchange the quality of the ice cream. I will not cut back on ingredients to save or to earn even a bit of money because that means I am not being true to Carmen.”

Quality Over Quantity

Like most businesses, starting from the ground up came with its share of growing pains. For one thing, many big ice cream players were in the market, and artisan ice cream was a fairly new game at that time. But Paco had a strategy in mind, and that was to focus on its brand ethos: serving premium quality products.

“Our quality is what sets us apart,” he reveals. “Having said that, I already knew I was catering to a certain market. If someone was giving me a difficult time with my price, I simply told them to buy another ice cream brand.”

In fact, he doesn’t mince his words. “As far as I knew, I was not short-changing my customers. In fact, the profit margin of my competitors was much larger than my profit margin. It costs a lot to make specialty ice cream and buy authentic ingredients at a low volume quantity.”

This business model has served him well, given that Carmen’s Best has quickly become the top-of-mind choice of ice cream connoisseurs who seek artisan ice cream. What’s more, artisan ice cream in itself has grown in popularity, with many following in his footsteps.

If anything, Carmen’s Best was a trailblazer in its own right. “From the start, we never really had a company we could ‘follow’. We are the first local company that has produced premium ice cream for the A & B market segment. There has been no other company to do this besides us. We have always had to blaze our own trail as we had no one we could emulate.”

“Even when we exported our ice cream, we did not target Filipinos as our primary market when selling in a different country,” he continues. “We marketed to the locals of the country we were exporting to. Name me a local company that targets the locals of a foreign country as their target market.”

Of Missed Opportunities and Learning Lessons

With success comes its share of failures. While many prefer to cover it up, the entrepreneur takes it as a learning lesson—one he isn’t afraid to reveal. “The most recent failure I remember was when we launched our natural cheese line. This was developed about the same time last year [on] September 2021.”

“We started a Viber group and used it to sell our natural cheese. When it reached a certain level, I decided to ‘migrate’ the ordering of the product to our e-commerce website. This was a critical mistake for me as the client base of the natural cheese was used to ordering through Viber, not from an e-commerce site,” he adds.

“By the time I realized this, it was too late to save the natural cheese business [that] we were growing. But we hope to launch it again soon.”

Unfortunately, there was a missed opportunity to capitalize on the volume-based orders from the food service industry. “Another failure was not launching Arctic Ice Cream—our value-line brand—sooner, as we already had the equipment in our warehouse in 2017. Since the sales of Carmen’s Best were going great, I decided to postpone launching Arctic ice cream developed for the food service sector.”

Speed is of the essence in launching a project and capitalizing on the popularity of online groups. These are speed bumps for Paco, but despite all that, he maintains a positive mindset and plans to relaunch both projects in due time.

Surviving the Pandemic

Amid many storms and successes navigated, Carmen’s Best was sadly not spared from the pandemic. “There were more than a few times I thought of quitting. During the pandemic, I was even thinking of closing the company,” Paco recalls. “There were so many ups and downs, I can’t even remember most of it anymore.”

“The lockdown just proved that anything can happen. It was so difficult to imagine and just about impossible to prepare for. [But] what the New Normal did was show me how important it is for small companies to take advantage of their ability to move fast and adjust to the situation,” he adds.

But with challenges come learnings. Now that the new normal has become the norm, Paco sets his sights on the many possibilities borne from the pandemic instead of looking at the past. “There are so many opportunities I see in this New Normal. The question is, which business do you want to get into? Logistics, real estate, e-commerce, or others?”

“[But] whatever it is, make sure you enjoy what you are doing as it will take a tremendous amount of work to make your company survive the first couple of years.”

Referencing Carmen’s Best, he stresses the importance of staying true to his principles despite the many changes that have taken place. “There have been other opportunities that have come across my path in my Carmen’s Best journey. I just decided NOT to pursue them, as they were going to consume valuable time from my main goal of growing my ice cream business.”

The Future of Carmen’s Best

Years after, Carmen’s Best caught the eye of investment holding company, Metro Pacific Investments, Corp, which wanted to buy out a portion of the business—an offer that Paco says “simply came out of the blue.”

“We were not actively looking for investors. We were looking to grow our business by taking loans and using our cash flow. The idea of taking an investor was not really on the horizon. But when Sir MVP reached out to us, we were happy to listen to his proposal,” he reveals.

As for the reason why Paco acquiesced to the sale, he explains that “I’m not so sure I have the stamina to work the way I did when I was growing Carmen’s Best. I was forty-three years old then; I’m fifty-four now So my body and physical stamina are not the same. My mind is still very active with ideas and plans, but my body is just not the same.”

Negotiations and further talks led to Metro Pacific Investments, Corp taking a 51% stake in Carmen’s Best for a whopping PHP198 million. Despite the buyout, Paco still has a hand in the day-to-day operations. But he does stress that, “No, I don’t want to put up another ice cream company.”

Secrets to Success

“Good morning! Remember: A person can succeed at almost anything for which they have unlimited enthusiasm.”
– Charles M. Schwab

Being noticed by one of the largest investment companies in the Philippines is what most startups aspire for themselves, but it has a one-in-a-million chance of happening. While success cannot be attributed to luck alone, Paco shares the strategy that worked for him. “You have to be laser-focused on your goal and work so hard that you are out-working your competition—keeping in mind that your competition is much more established, has name recall, has more capital, more people, and so on. You need a steady and collected attitude in enhancing the business.”

Being hands-on in this business is just as important for the entrepreneur. “I think the more involved you are in your business, the better it is for the company. This way, the company will have its own character unlike some of the larger companies, which just want to turn a profit,” he adds. “We were out to prove our ice cream was second to none… that we could come up with a world-class product.”

And just as the product is important for the business, so are the people behind the company’s operations and the people outside it. “We also treated our distributors as partners, not as customers. Treating them in this manner shows them that we sincerely want them to succeed. We wanted them to be happy. We were in this together, not just for our profit. This way, we had more people helping us sell and grow.”

Fostering an Entrepreneurial Mindset

The road to becoming an entrepreneur, however, was not in Paco’s plan. Neither was becoming the owner of an ice cream brand. “I never really grew up thinking I was going to be an entrepreneur,” he confesses. “When I was in high school in the US, I worked in the stockroom of a stationary company for over two years. In college, I worked for UPS for four straight years as a part-time employee, while also clocking up an average of twenty hours a week with a load of classes in the morning.

“But mind you, I still finished college in four years,” he adds gleefully.

Being exposed to the many facets of a business has taught him many insights before becoming a boss himself. “Working as an employee in my early years taught me how it was to have a boss, how important it was to interact with your co-workers, and how to deal with difficult people. Working for different companies made me a much better entrepreneur.”

While Paco used what he learned in managing his business, being a family man himself meant running the business the same way he raised his kids. “I wanted [Carmen’s Best], as with my kids, to have my DNA. This is what will set your company apart from the rest. This is why Carmen’s Best is nothing like the other ice cream companies.”

As a father would, he imparts his wisdom to aspiring entrepreneurs by saying, “In anything you do, attitude accounts for everything. It’s what keeps you going when you are constantly getting turned down. It’s getting up every morning when you are so tired from the night before and just want to sleep in, then you remember that your competition has already started working before you.”

“[Either] you’re born with that kind of mindset, you develop it, or it’s just not part of you,” he ends.