(Photo credit: Grape King)
“When the nationwide COVID alert was raised to Level 3 in Taiwan, many investors worried if Pro-Partner (Grape King’s direct selling business) would be negatively affected, but Pro-Partner's May 2021 revenue reached a historical high for the month of May,” says Andrew Tseng, Chairman of Grape King Bio. "Our three main business units all delivered high YoY revenue growth in May, for the third month in a row! We’ve been able to deliver these positive results due to our persistent investment in digital transformation, proactive expansion of our channels, precise product alignment and dynamic & flexible marketing strategy, as well as growth in our ODM business. The past few years have been tough for us, but during this period, we have kept our feet firmly on the ground. In 2021, the fruits of our labor have begun to pay off, leaving us poised for even greater growth moving forward.” Andrew continued with excitement.
Poised for higher growth in 2021 and beyond
Andrew draws a high arc with his finger and continues, “Grape King Taiwan’s revenue grew by over 20% YoY in both 2019 & 2020; and in January to May of this year, growth accelerated to 46% YoY, including 30% growth in Grape King’s own brand products and 119% growth in our global ODM business. With the gradual recovery of the Chinese market, Grape King Shanghai’s January to May revenue grew 25% YoY, while Pro-Partner achieved 0.3% annual growth from January to May 2021 against a high base last year when customers stocked up on probiotics in 1Q20 during the early stages of the COVID-19 pandemic. I am increasingly optimistic about our future prospects for growth given Grape King’s successful digital transformation, our strategic alliance in fast-moving consumer products with Uni-President (as detailed in CEO Conversations XVII)
Grape King’s digital transformation is laying the groundwork for sustainable growth
“In fact, our digital transformation began a long time ago, and because of this, we have been able to continue our growth in the midst of the pandemic in Taiwan. In the past few years, online purchases of our products in our Grape King E-shop and on other e-commerce platforms have grown rapidly. For example, we now have 120,000 E-Shop members compared to only 10,000 members five years ago. In 2020, 44% of our marketing outlay was spent on digital channels, and from January to May this year, more than half of Grape King Bio own-brand revenue came from virtual channels,” says Andrew as he proudly shows us the attractive new home page for Grape King’s E-shop. He then adds, “Every image, text, and webpage combine to form an online ‘kingdom’ that I have worked closely with our IT, sales and marketing teams to build over the past few years.” “
It’s the same situation with Pro-Partner. Although many people have the impression that direct sales must be done in person, we have increasingly been moving our membership activities from offline to online, hosting partner gatherings, educational training, and live streaming events online. Meanwhile we are utilizing software and the cloud to shift membership applications, order placement, logistics, fulfillment and bonus management online, breaking the traditional direct sales business model. Eighty percent of Pro-Partner members now place their orders directly online, compared to only 9% in 2018, so you can see that this transformation has occurred with breathtaking speed. We do not intend to rest on our laurels, however. We recently began working with an e-commerce app development company to create a more complete online ecosystem to help our members run their businesses with greater ease,” Andrew says with excitement; “but, that is only half of the story, we are also using advanced digital technologies to further improve our operational efficiency. We are using a digitized system to optimize our raw material fermentation process and are integrating AI machine-learning technology into our supply chain to improve overall efficiency. These efforts have made continuous digital transformation a part of our DNA, and we’ve introduced digital technology into all aspects of our operations. I believe we are well-positioned to adapt and prosper as technologies continue to advance and evolve.”
Expanding our customer reach
“The ongoing expansion of our ODM business is also proceeding well. In fact, we will soon shift to a 24-hour, three-shift work schedule to meet growing customer demand. Our working relationship with international pharmaceutical companies is improving by the day, and we recently received the honor of being nominated by one of our clients to be promoted to a qualified international supplier from regional supplier status. To meet the expected increase in demand, we will add an additional powder granule production line this year, with mass production projected to commence by February or March of 2022. On top of that, we’ve received requests from several local celebrities who want to develop their own health supplement brands. In response to this demand, we plan to launch a new brand, GK Life Shine, in the fourth quarter this year, to provide more personalized products and products targeting young adults in partnership with celebrities.
Andrew continues, "We promote our products through multiple channels and are always looking for new ways to reach the end consumer. For instance, we started doing telemarketing three years ago, and the results have been good so far, leading us to double the size of the team. I aim to achieve NT$1bn in annual revenue solely from telemarketing in the future.”
I believe our expertise will be needed more than ever
“Grape King's mission has always been to ‘cultivate and manufacture health-food supplements of the highest quality that are affordable to everyone.’ We keep close track of market developments and have observed that there are several megatrends that are likely to propel continued growth in consumer demand for health supplements and functional foods. These include urbanization, increased attention to pro-active healthy living amongst the general public and the rise of aging societies. The COVID-19 pandemic has served to amplify these trends, further increasing demand for health supplements. Probiotic and mushroom mycelium have always been our forte, with the cultivation of microbiomes being our key area of know-how. Leveraging on these core competencies and with an eye to the megatrends described above, we have chosen several very specific focus areas for future product development, such as products which promote respiratory health, reduce the risk of disease and/or improve sleep quality.”
When asked about what the future holds for Grape King, Andrew breaks into a smile, and it is immediately apparent that he likes what he sees on the near and long-term horizon. He answers, “The modern consumer has a more holistic view of their own health, with an increasing bias towards preventive medicine and self-care. As a result, they are now more open to – and even excited about – trying the new and improved functional foods and functional beverages that are being introduced into the market. We recently launched our first joint products with Uni-President – Grape King Kombucha and Grape King Probiotics Water. We believe we can establish a strong presence in these two product categories with our two new beverages. So far, the products have been well-received by consumers, and are prominently displayed at all 7-Eleven stores nation-wide. This, in itself, is a symbol of the synergies inherent in Grape King and Uni-President’s strategic alliance. We want to let the market know that Grape King is no stranger to the functional beverages market. We were once the No. 1 player in energy drinks in Taiwan, and we aim to reclaim our place as a multi-product category leader in the future.”
If you would like to arrange a meeting with Grape King’s Chairman and CEO Andrew Tseng, please contact yvonnehuang@qtumic.com.
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