CEO Conversations Installment V: Andrew Tseng, Chairman and CEO, Grape King Bio (1707 TT)
The biggest fan and endorser of Grape King products
On the day of our interview, we caught Andrew at Grape King’s visitor center purchasing replenishments for his personal inventory of supplements. The variety of supplements that he consumed was surprising. “I basically take 10 different types of supplements on a daily basis, and it can take me up to 5-10 minutes to do so,” says Andrew. “I take Antrodia King for my liver, Slimming Turmeric Complex to enhance my metabolism, PowerBOMB for an energy boost, Super 13 Pro & Prebiotics (N) for gut health…” and the list goes on and on.
“I hope that by the time I am in my 60s or 70s, I will still look like I am in my 40s or 50s,” says Andrew with a glowing, youthful face, which often makes it difficult for people to guess his age. His “secret” to staying young, according to Andrew, is a result of his long-time, sustained consumption of Grape King products. “This is also the reason why many of my friends and acquaintances (including clients & investors) have taken an interest in our products. I have always found it easy to sell Grape King products, as I am simply sharing my personal experience with others, then recommending products based on their needs,” says Andrew with a smile.
Rejuvenation is not only a personal goal, but also a goal that Andrew had for the company when he came back to run the family business 10 years ago. Grape King is a household name in Taiwan, but to many consumers it was long considered as the brand of a previous era.
Bridging the gap between raw materials R&D and product development
“Back in the old days, product development was linked to and mostly limited by the raw materials that our Bio-Engineering Center could offer. We knew that raw materials R&D was our forte, enabling both product efficacy and recurring purchases. However, that mindset resulted in many misses compensated by too few big hit products,” says Andrew. “We didn’t pay enough attention to market demand.” Under Andrew’s leadership, a proper product management team was created with the aim of gaining deeper insights into market trends and consumer behavior. Over time, it created greater interaction and synergy between the company’s raw materials R&D and product development teams. “Making a product ‘work’ may seem like an easy concept, but at Grape King, we strive to produce supplements with proprietary, science-proven raw materials. It takes time to align one’s raw material R&D and processing capabilities, and the capital markets are not always that patient,” says Andrew. “So far though, it looks like the effort is paying off, as our latest weight management and vision protection products were warmly welcomed by the market, helping to drive 25% YoY growth in our own brand business in the first half of 2020.”
Restructuring of Grape King’s distribution channel
In addition to upgrading Grape King’s product development process, Andrew has also restructured the company’s distribution channels. In 2019, the company started working with Uni-President distribution, further extending its beverage products to 1,000+ retail points including convenience stores, drugstores, and hypermarkets in Taiwan. For the digital channel, other than penetrating all of the major e-commerce platforms, Grape King also established its own e-shop website, offering more attractive deals and customized services, such as the subscription model. Consumer response has been robust, and sales from supplement subscriptions now account for 1/3 of the total e-shop revenue.
(Photo credit: Grape King)
Appealing to a younger crowd
“We want to change the public perception of Grape King, particularly among the younger generation,” says Andrew. Hence, in addition to a revamp in product offering and distribution, Grape King is also incorporating new varieties of marketing, such as innovative advertisements, endorsements from young celebrities, and cross-selling with popular mobile games. “We want to make sure we are delivering the right message to attract younger consumers. Moreover, we have launched our supplements in smaller, easy-to-carry packaging that is suitable for first-time buyers or consumers looking for an instant health boost,” says Andrew.
Growing its presence outside of Taiwan
Globalization is another goal that Andrew set for the company, as the international ODM department was created just two years ago. “Despite our long-history in health supplement manufacturing, we are a newcomer in the global ODM space,” says Andrew. “We never really devoted much effort in building the ODM business in the past due to capacity constraints but with the new Longtan Biotech Research Institute that came on line in 2019, we now have the capacities to go after this big piece of the pie,” he adds with confidence.
In March this year, Grape King began shipments of probiotics for a leading global pharmaceutical company. “The orders from this global pharma company are a credit to our capabilities, as their standards for supplements are just as strict as those for medicine. Although the qualification process took a long time, we have proven that we can meet a global pharmaceutical company’s most stringent requirements. I am confident that it will open doors for more business in the future,” says Andrew. The probiotics will first sell in Taiwan and gradually enter other markets in Asia.
The company is also making progress in Southeast Asia, with Malaysia as their priority market. “We have been getting ODM orders from different ASEAN countries but Malaysia is where we believe we have the biggest potential due to its domestic consumption power and its shared historical Chinese cultural influences,” says Andrew. In 2019, Grape King set up a joint venture called GK Bio with All Cosmos, a leading agricultural-biotech company in Malaysia. GK Bio will begin marketing Grape King products into pharmacy chains in the country. Moreover, Pro-Partner, the direct-sales subsidiary of Grape King and also the second-largest direct sales company in Taiwan, is also planning on entering a second market outside of Taiwan.
Nevertheless, China remains the biggest ODM market for Grape King. Although Grape King has been in China since 1997, their business did not really begin to produce material results until Andrew made the decision to shift Grape King Shanghai to a 100% ODM model in 2015. Grape King Shanghai now serves more than 98 customers in China, including TST, the country’s largest WeChat store with 9 million members. “Our relationship with TST began when both of us were still small, and we actually helped them to design and develop their first health supplement in 2015,” Andrew told us. “I would say that our ODM approach is very different from others. Trust is really important for us and we don’t mind if our client is a big company or a small one. It is more important to us that our partners are in the market for the long-term and share our desire to offer quality products. We are not here for quick money,” says Andrew. Earlier this year, TST inked a strategic alliance with Grape King Shanghai to strengthen and accelerate its growth in China.
As far as Andrew is concerned, these strong breakthroughs in its globalization efforts, are a sign of even greater things to come. “There is definitely more room for growth, and I think the market potential is endless! Global consumption of probiotics is on the rise, and it continues to penetrate into new market segments such as food and beverage, skincare, pet food & pet care, and household products. The same goes for mushroom-mycelium, as the benefits of medicinal mushrooms have seen growing adoption in western countries. You wouldn’t believe that mushroom-infused coffee is the best-selling instant coffee on Amazon in the US,” says Andrew.
Managing the succession pressure
Like many of his peers amongst the second-generation children of Taiwanese entrepreneurs, though Andrew felt an obligation to come home and take over Grape King, it wasn’t originally in his plans – especially after having spent over 15 years in the UK. “I never thought I would come back since I was already used to living in the UK and had a promising career,” says Andrew. Yet it was his sense of responsibility and the love he has for his family that brought him back. Andrew admitted that for the first two years he was under a lot of stress and often questioned the decision. Gradually, he learned how to choose one thought over another and has transformed the pressure into positive energy.
Religion also plays a critical role in his life and leadership. As a devoted Buddhist, Andrew believes that one of the essential ingredients is the ability to reflect and forgive, and always stay true to yourself. “Throughout my life, I have always believed that if you set out with the intention to do good things and keep those intentions close to your heart, things will only get better. Holding onto this belief has constantly reminded me why I signed up for this task and has helped me to overcome many challenges,” says Andrew with a calm smile.
Professionalizing the family business
On a more personal note, Andrew said that he enjoys traveling. “When I was studying in the UK, I would often travel to different countries whenever I had a chance as I really enjoy experiencing new things and learning about different cultures. But for now I need to postpone my travel plans until after my retirement,” Andrew laughed. “For me, I believe Grape King doesn’t always need to be run by a family member. If professionalizing the family business is a better option for Grape King’s long-term sustainable growth, I actually don’t mind passing the baton to professional management,” says Andrew.
“When I was in the UK, I’ve seen many successful cases of family businesses being professionalized over the years.” “Ideally, I would hope to gradually step down in another decade. But only under the conditions that I am certain Grape King is in a much stronger position and will be in good hands and that all the employees and stakeholders are properly looked after,” he adds. “To me, professionalizing does not have to mean removing the family from its role in the business, but it does mean making a deliberate choice to define clear roles for the family and for professional managers, while ensuring that Grape King’s distinctive attributes – our spirit and special strengths – continue to thrive.”
Andrew understands that in order to build a professional management culture at Grape King, it is critical that the company has a strong foundation in ESG. Hence, for the past couple years, he has put a great deal of effort into improving its ESG practices, starting from its transparency. According to Bloomberg ESG Disclosure, Grape King ranks No.10 for overall ESG disclosure for companies under US$1bn market cap in Taiwan. For social disclosure, they rank No.3 for companies under US$1bn. In terms of foreign institutional investors holdings, it has grown from a mere 4% when Andrew came back in 2009 to 20% now. “I like to know what institutional investors and other shareholders think of us from their perspective, as I take this into consideration when setting goals and making business decisions,” says Andrew. “This is why I personally try to attend as many investors meetings as possible.”
A childhood dream that keeps him “young” and always close to the market
(Photo credit: Grape King)
As we wrapped up our interview and were on our way out, we were surprised to find that Andrew – who earned a PhD in Marketing while in the UK – was “rushing to a class.” We then learned that he is an Associate Professor at Tunghai University, where he teaches a course in Business Management. Andrew also shared with us that he is a frequent guest lecturer at other schools and businesses in Taiwan. “As a child, I dreamed of teaching one day, as I enjoy interacting and sharing experiences with people. I still remember as a kid, I would write down inspiring sentences from newspapers and – pretending to be a teacher – share them with my classmates,” Andrew laughed. Teaching at Tunghai University has helped Andrew fulfill a childhood dream. However, he adds that it’s also the perfect opportunity to temporarily escape from the corporate mindset and to gain contact with the younger generation, learning from their perspective and preferences. It helps keep him young – perhaps even as much as the many Grape King supplements that he consumes each day. But, importantly, it also helps to ensure that he and Grape King always stay close to the changing needs of the market.
If you would like to arrange a meeting with Andrew Tseng, please contact yvonnehuang@qtumic.com.