Brand Story
Business Weekly No.1492 (2016.6.20-2016.6.26)
35-year-old engineer starting his own business in a night market with an annual sale NTD200 million!
Taiwanese popcorn
Battle log of the conqueror of 11 countries
Producer: Liu Pei-Hsiu Article: Lin Chun-Shao Researcher: Chao Wei-Hsiao Photographer: Lai Chien-Hung
Popcorn is usually regarded as cheap junk food.
However, he has transformed it into a high-end product selling in top shopping malls in Southeast Asia.
With his first business starting in the night market, this Taiwanese engineer has combined E-commerce to have conquered eleven countries within five years.
He says, “If Taiwan can produce a tech giant like HTC, why can’t it produce a food giant like Starbucks?”
When the very popular Korean actor Kim Soo Hyun starring in “My Love from the Star” arrived at Gandaria City, a very trendy shopping mall in Jakarta, all his Indonesian fans went crazy! Two thousand people crowded the one thousand-ping event location. They were busy stuffing their mouths with popcorn from Taiwan, besides screaming. Half of those VIP seats in the front row closest to Kim belonged to the Taiwanese brand.
The brand is Magi Planet (formerly Planet Popcorn), sold at IDR67000 per little bucket in Indonesian department stores. The price equals about NTD180, a half-day's salary of local workers. This popcorn is a high-end brand in Southeast Asia. It is like Ferrero Rocher's in the chocolate sector. It started five years ago in Taiwan, and has entered markets in Malaysia, Indonesia, Singapore, Brunei, Hong Kong, Macau, China, India, and Australia. This year, it will be sold in South Korea, Thailand and Abu Dhabi. This popcorn is the first Taiwanese snack brand that combines physical and online stores to have penetrated so many countries.
Magi Planet (formerly Planet Popcorn) was already deployed in these Southeastern countries before the new government's active promotion of “The New Southbound Policy” and before the ASEAN E-commerce trend.
What is so special about this popcorn that it has successfully won new middle class's heart in Asia? The answer is more than forty original flavors from different countries local food.
Magi Planet's (formerly Planet Popcorn) menu includes flavors like Malaysian Kaya Toast, Singaporean Laksa, Korean Kimchi, Sichuan Sizzling Mala, Japanese Matcha, French Onion Soup, and so on. All these special flavors originate from featured local food in different regions.
The promoter of this brand is not an old food manufacturer but a 35-year-old cell phone engineer.
“I want to make Magi Planet (formerly Planet Popcorn) the top brand in the world,” says the founder and CEO Lee Chia-Yu (Ben Lee). “If Taiwan can produce a tech giant like HTC, why can’t it produce a food giant like McDonald's or Starbucks?” “I am determined to become the world's food giant from Taiwan.”
After Ben graduated from Taipei Municipal Daan Vocational High School and National Kaohsiung First University of Science and Technology, he got his first job with CCI, a big cell phone manufacturer. However, he noticed the life cycle of hi-tech industry early on, “It's not easy to come up with a new product. Once you do, the first year is profitable. The second, all competitors rush in the market, so all companies make only a little profit. The third everyone starves.”
Moreover, in the hi-tech industry, there were so many people who graduated from top universities in Taiwan. By comparison, his academic background was not at all impressive. Although his annual salary came close to NTD1 million, he did not expect a bright future. After a year or so, his idea of starting a business emerged.
What kind of business should he do? His logic was that the hi-tech industry has its ebbs and flows, but food is indispensable in daily life. Before he joined the military service, he once opened a franchise drink store with friends. The sale of a single store per month was as much as NTD500,000. “Then the income of three stores per month would be higher than a mid-level manager's annual salary in the hi-tech industry.”
About Lee Chia-Yu (Ben Lee)
Birth year: 1981
Academic background:
Department of Electrical Technique , Taipei Municipal Daan Vocational High School
Master's Degree of Department of Computer and Communication Engineering, National Kaohsiung First University of Science and Technology
Work Experience: Wireless Communications Engineer with CCI
Current Position: Founder and CEO of Magi Planet (formerly Planet Popcorn)
Performance: First snack brand of Taiwan to successfully sell products in both physical and online stores in eleven Asian countries
2010
1. Taiwan: the R&D headquarters
Special flavors: Three-cup Chicken, Matcha Latte
Ratio of physical to online sales: 70:30 (%)
Annual sale: NTD60 million
2011
2. Malaysia: the base to enter other ASEAN countries. Received Halal Certification in 8 months.
Special flavor: Kaya
Ratio of physical to online sales: 0:100 (%)
Annual sale: about NTD10 million
2012
3. Indonesia: the manufacturing center in Southeast Asia. Using local people's favorite Korean actor as spokesperson.
Special flavor: Mexican Chili
Ratio of physical to online sales: 95:5 (%)
Annual Sale: about NTD40 million
*Rosalyu Widynanta (girl in the center in white) used to work for the OCBC Bank. She was very impressed when she first ate Planet Popcorn. Seeing the developing potential, she went to Taiwan and got the popcorn's dealership in Indonesia. She opened 13 stores within one and a half years, which is the embodiment of great business opportunities.*
Go!
Learning how to make popcorn by watching YouTube videos, and selling it online.
However, running a franchise store would be subject to many restrictions from the franchisor. He wanted to be in full control. He once thought about opening a restaurant or BBQ & grill, but gave up on those ideas due to the high capital. One time, his coworkers bought some popcorn together online. The popcorn got his attention because it looked totally innocuous, but created an annual sale of more than NTD100 million.
He began to do research online and experiment as instructed by YouTube videos. He found it easy to use a machine to make cheap popcorn like that sold in movie theaters. The difficult part was how to evenly pop each piece of popcorn.
The most important thing was about the stove. In order to make crispy and savory popcorn that was not burnt, the heat had to instantly reach 200 Celsius and shoot up as tall as an average adult at a speed like an F-16 jet. He looked all over Taiwan to find an old master who handcrafted the core of the stove for him. He even obtained two patents for it.
He transformed from an engineer to a cook, from studying chips to learning about corn kernels. He stepped out of the AC office and into the scorching hot kitchen filled with smoke, working hard in sweat with seasoning every day. After testing more than twenty species of corns, he finally found one non-GMO corn that popped well. However, this species was expensive, and the cost of handmade products was also high. As a result, he had to sell the popcorn in the high-end market.
In 2010, at the age of twenty-nine, he left Neihu Technology Park in Taipei. He started his popcorn business with a saving of NTD1.5 million and some capital raised from his elders.
At the beginning, he assumed these quality products could easily sell online. However, in the first few months, sales were low because nobody knew about this brand. What's worse, he did not know how to promote products, negotiate with E-commerce platforms about selling schedules, or buy PPC ads. Subsequently, he could only go back to his old hood Neihu Technology Park to hand out fliers and ask old coworkers to launch group buying for him.
Marketing
From department stores to night markets, “sampling” being key to sell.
However, this way of selling was not always dependable. Since the average price of his popcorn was higher than those of other brands, it had to be sold in high-end stores. The location of his first store was not ideal, under an escalator in Eslite Xinyi Store, but it was just right for small snacks like popcorn. After trying out some samples, consumers were very likely to buy some. The monthly sale was as much as NTD400,000. It then suddenly dawned on him that “sampling” was essential to attract high-end customers.
After he learned the tip, he opened more stores within a short period of time in Breeze Taipei Station and Q Square. “This brand changed the cheap image of regular popcorn,” says Tu Yueh-Peng, the former business department manager of Breeze Taipei Station. He thinks Magi Planet (formerly Planet Popcorn) looks more like a gift than a snack.
Ben thought his business would finally take off, but it immediately ran into some financial problems. He, as a former engineer, was good at R&D and manufacturing process but not familiar with finances. When he first started his business, his cash in hand was only enough to last ten days. However, department stores usually wrote checks that can be cashed in more than thirty days, and they collect a commission as high as 18%. Without a careful calculation, he bluntly opened so many stores and closed them fast too. At that point, he decided to resort to Raohe Street and Shilin night markets.
He demonstrated the making of his popcorn on the spot, frying, seasoning, and so on. The sizzling sound and the buttery smell attracted many people. Although the cash shortage was mitigated, sales were still far less than in department stores because people in night markets did not spend as much money.
Positioning
World leading brand being his imaginative major competitor, and establishing overseas department.
Moreover, as his brand got more popular, similar products started to emerge. “You sell at NTD100, and he sells at NTD80. Taiwan is too small for this kind of competition. In the end, everyone dies.” Then he began to consider developing abroad.
The 67-year-old, world-renowned popcorn brand Garrett was a major competitor in Ben's mind. At that time, with fewer than twenty employees and being only a domestic brand, Magi Planet (formerly Planet Popcorn) already had an overseas department, which demonstrated his ambition to challenge the world.
Four Asian Dragons were so ancient.
At present, the whole of Southeast Asia is stronger economically, why not go and learn from them?
2012
4. Singapore: experimenting market for high-end products.
Special flavor: Laksa
Ratio of physical to online sales: 0:100 (%)
Annual sale: NTD15 million
2013
5. Hong Kong: entrance for the Chinese market. Working together with the boutique brand agnes b.
Special flavor: French Onion Soup
Ratio of physical to online sales: 98:2 (%)
Annual sale (Macau’s sale included): NTD40 million
2014
6. China: biggest Chinese market
Special flavor: Sizzling Mala
Ratio of physical to online sales: 80:20 (%)
Annual sale: NTD15 million
2014
7. Brunei: second richest country in ASEAN. Targeting consumers with high spending.
Ratio of physical to online sales: 0:100 (%)
Annual sale: about NTD10 million
2014
8. India: focus of the South Asia market. Adopting B2B marketing and working with airlines companies.
Special flavor: Chili Lemon
Ratio of physical to online sales: 95:5 (%)
Annual sale: NTD10 million
2015
9. Macau: a major tourist destination. Focusing on physical channels and tourist market.
Ratio of physical to online sales: 100:0 (%)
Annual sale (Hong Kong’s sale included): NTD40 million
How does Magi Planet (formerly Planet Popcorn) get to customers in Indonesia?
Picture 1.Kim Soo Hyun as spokesperson: The right partners had connections to work with the Korean star to promote the brand.
Picture 2. Providing service in local language: All services are provided by local people, such as taking orders, running social media, and answering questions.
Picture 3. Following rules of Halal Certification: Magi Planet (formerly Planet Popcorn) makes Halal certified food based on local needs. Muslims can also enjoy it.
Picture 4. Flexible logistics: Delivery methods for physical stores and online customers are different. Trucks deliver to physical stores, and scooters deliver to customers to avoid traffic.
Picture 5. Traffic in Indonesia is bad. In order to speed up deliveries, a fleet of delivery scooters, called “Go Jack”, was established. Consumers place orders online, and their orders will be delivered to them by scooter.
However, most big shareholders objected to this move, “You haven’t even developed very well in Taiwan, isn’t it risky to explore foreign markets?” The only support Ben got was from an experienced manager who used to work in investment banking in Singapore and Hong Kong. He saw the developing potential of Southeast Asia and gave Ben a lot of advice on managing a business. In 2011, Ben opened his first store abroad in Sunway Pyramid in Kuala Lumpur.
Why Southeast Asia? “Because it is close to Taiwan. The flight is only three or four hours. The cultural difference is not as big as with western countries, so the cost to start or money to lose won't be too terrifying.” Ben believes, “If you don’t understand your neighbors, you’re not ready to become an international enterprise, let alone world number one.”
Because of his ambition to win the world's markets, he became more humble. He started from night markets and group buying to understand the scene, and learned to take the market mechanism seriously. “Stop talking about the Four Asian Dragons. This is ancient news. At present, the whole of Southeast Asia is economically stronger and developing faster than Taiwan. Why not go and learn from them?”
He hired a tutor to improve his English ability, studied Indonesian and Malay on his own, and tried to adapt to local life. He does not have the sense of superiority many Taiwanese do against Southeast Asian people. “It's you who want to enter their markets, so it's you who should learn from them, not the other way around.”
R&D
Developing popcorn like cell phones. Products advancing in each generation.
Unfortunately, less than six months after he entered the Southeast Asian market, a series of food safety incidents occurred in Taiwan. The plasticizer scandal caught international attention. The Malaysian government launched a full-scale inspection of food from Taiwan. Although his products were all safe, it still cost him a lot to handle this crisis. Then he realized the serious damage food safety problems could cause to a brand.
As a result, he spent eight months inspecting everything in his manufacturing process, from raw materials to distribution. He also managed to obtain the most strict Halal Certification, which granted him future access to markets in Indonesia and Abu Dhabi, whose Muslims accounted for 80% of the population.
Food safety is only the basic. The key to open the door leading to the world is localization.
Secretary General of TeSA Chen Hung-Hsin points out, currently, 90% of the industries doing international E-commerce are clothing and cosmetics related. Food companies are rare because so many details are involved, such as food safety, government regulations, religions as well as local customs and tastes. Market entering standards are high.
According to Ben, whether a business will succeed or fail abroad depends on the team's flexibility to start anew and accept new culture. “To enter a new market, chances of success are only 30% if a business merely relies on experience from other countries.” Therefore, everything including products, channels and marketing has to change.
His tip is to find nostalgic local flavors. Every time he goes to a new country, he will go to local supermarkets, and buy snacks and instant noodles local people ate growing up. Then he will sample and discuss all of them and with his R&D team in Taiwan, trying to find inspirations for new flavors of popcorn.
He used to be an engineer, so he applies the cell phone manufacturing process on popcorn, and keeps innovating, like iPhone does. His first generation products were simple, sprinkling seasoning powder on top of popcorn to create classic flavors such as Original and Cheese. Second generation products were named “single coating.” They had flavors like Caramel and Classic Toffee with popcorn wrapped in a coating of syrup.
The third generation products are “double coated”, which is complex to produce. Popcorn are covered in syrup and sprinkled with seasoning powder made from secret recipes. The flavors must cater to local people's tastes. In addition, the proportion of ingredients must be precise, and syrup and seasoning powder must apply evenly to create a consistent taste for each piece of popcorn.
The true spirit of MIT is to conquer foreign markets with a product invented by foreigners.
*Halal Certification: Halal means “legal” in Arabic language, which refers to food prepared according Islamic law. From the way animals are butchered to packaging, all companies along the food supply chain must meet these strict requirements. This certification is a proof of qualified food Muslims can eat without a care. It is also a guarantee of food safety. Huge business opportunities will be opened for a company if it is able to acquire this certification.*
2015
10. Australia: a springboard for entering markets in Europe and the US. High cost of physical stores, so only focusing on E-commerce.
Special flavor: Mocha Coffee
Ratio of physical to online sales: 0:100 (%)
Annual sale: NTD30 million
Three more countries in third quarter of 2016
11. Korea: promoting to all Asia with the help of this current Korean craze.
12. Abu Dhabi: first stop in the Middle East. A high-end market.
13. Thailand: most competitive food market in Asia. Releasing Tom Yum flavor
Information from Magi Planet (formerly Planet Popcorn)
Compiling: Chao Wei-Hsiao, Lin Chun-Shao
This is the key for Magi Planet (formerly Planet Popcorn) to have surpassed Garrett in Asia. In order to develop this manufacturing process, Ben spent seven months in experimenting a total of more than four hundred kilos of corn. After some ten thousand tries, he finally came up with the most popular Matcha Latte flavor in Southeast Asia. Then agnes b. Hong Kong came to him, proposing to jointly create the French Onion Soup flavor and Truffle Toffee flavor, whose average cost is as high as NT2-3 per piece of popcorn. This July, Ben will launch the fourth generation process, which adds almond chips, hazelnut, and other ingredients to his popcorn.
This process will increase his cost greatly. Generally, more than 5% of ingredient cost for snacks is considered high. His is 30%. “This is a necessary evil. If I don’t keep innovating, I will go out of business within one or two years,” he says.
Distribution
Physical stores for experiencing, and online stores increasing repurchase rate.
After creating the right product, the next step is finding the right distribution channel.
According to, Benjamin Ou, the former senior product marketing manager at HP Taiwan and CEO of iWine and 514.com.tw, ASEAN is a general concept. Each country in ASEAN is different. Therefore, distributing strategies need to be flexible in terms of the ratio of physical to online stores.
For example: There are many tourists and businessmen in Malaysia, Indonesia, and Hong Kong. They have high spending abilities. As a result, physical stores in big high-end malls should be established so that customers can go and try out products. In Taiwan, Ben opened stores in Eslite Xinyi, Breeze Center, Shinkong Mitsukoshi, and Sogo. In Hong Kong, he chose Queensway Plaza and Man Yee building Central. In Indonesia, his store entered Taman Anggrek Mall, one of the most high-end local malls.
There is a huge wealth gap in India, and shopping malls are not as popular. Then he focuses on B2B there, working together with airlines, movie theaters, and five-star hotel.
In Australia, Singapore, Brunei, and Korea, only multinational enterprises can afford the exorbitant rent and labor cost for physical stores. However, infrastructure in these countries for the broadband Internet, logistics, and credit card payment is comprehensive, so E-commerce is the smart way to go. Customers place orders online, and products will be shipped from Taiwan or Indonesia.
After five years, he understands that physical stores allow customers to try out products. It is online stores that actually sell products because they are not restricted by space and distance. He wants customers to repurchase online after their experience in physical stores. By combining the two can Ben maximize his profits. It is like the idea of “the army” going into the battlefield first, and then “the air” force dropping bombs to finish the battle.
Partners
Using institution of management to control human greed. Videoconferencing every evening.
In order to open more stores, it is very important to find the right partners. In Southeast Asia, he mostly franchises his business. In countries like India and Australia, he raises funds and opens stores with others due to local regulations.
Feel excited about your success for just one day. The next morning you get up and keep working hard. Otherwise, your success won't last long.
Picture: Lee Chia-Yu (right) flies to Indonesia every three months to discuss strategies to open new stores with his dealer (left) there.
About E-commerce
- There are B2C, B2B2C, and C2C
- B2C refers to selling products to customers online such as Magi Planet (formerly Planet Popcorn) and lativ.
- B2B2C refers to E-commerce vendors allowing providers to sell goods on their websites, and serving as middlemen to move goods and money between providers and customers. For example: Rakuten Japan and Pchome Store Taiwan.
- C2C refers to direct transactions between customers like ShopeeTW.
Ben has a set of standards for his dealers. In addition to money, connections and experienced work teams are also prerequisites. Qualified dealers need to have enough capital to open at least three stores. This is to avoid damaging the brand's image if the only one closes down too fast. Connections are essential for stores to enter shopping malls and get marketing resources. Work teams need to have managerial and financial experience. It is even better if they know about young people.
Instead of cash cows, he considers dealers his partners. He promises them a higher than 20% net profit of the total local sale, which is twice as much as the general practice. By doing so, he expects dealers to create cash flow fast, build up their confidence, and open as many stores as possible in a short time period.
Most Taiwanese franchisors care only about how much money they receive from dealers, and rarely get involved in their management. Ben has a different approach. He works closely with dealers. Every evening, he conducts a video conference with dealers around the world discussing marketing strategies and examining financial reports. The idea of sponsoring the Korean actor Kim Soo Hyun's fan meeting, which helped Ben's brand achieve overnight fame, came up in the video conference with his Indonesia dealer.
He learned the hard way about the necessity of close cooperation. He once had a lot of trust in his dealer in Malaysia, where Ben opened his first foreign franchise store. He established the R& D center and factories there. This Malaysian dealer also impressed him by gaining the biggest market share within one year. Because of this, he wrongly believed he could trust the dealer with the whole Southeast Asian market. Ben never would have thought that this guy would steal his resources, look for other suppliers behind his back, and open stores similar to Planet Popcorn to compete with him. As a result, he was forced to close down factories and all physical stores there to cut the guy off.
“He was betrayed by a friend, which hurt him a great deal,” says Ben's wife and business partner Monica Lin. At one time, he was too depressed to trust anyone. Fortunately, his wife suggested that he establish an institution of management to avoid risks and human greed. He then came around, relocated his R&D center back to Taiwan, and hired lawyers to help with drafting new overseas contracts.
After cleaning up the mess, he reentered Malaysia but focused on E-commerce. He set up a Facebook page, and surprisingly attracted more than ten thousand fans within ten days. Online sales quickly recovered, so he realized brand promotion and sales could depend on E-commerce although physical stores offered opportunities for customers to try out products.
He is busy traveling around Asia, but he never stops learning. In his office in Nan Gang, Taipei, there are Business Weekly and Harvard Business Review, and other magazines on a small bookshelf near the R&D lab. These are his nutrition sources.
Battlefield continuing to expand…
Connected to local markets to maintain competitiveness, two books a week to learn more.
His company has only forty-something employees, but he organizes book groups every month. He reads at least two books every week, and even gives employees free books. The last book he bought for them was Good Service VS Bad Service“This book is NTD400. It will only cost me NTD40,000 to buy a hundred copies for my employees. By doing so, I might be able to cultivate many internal talents, which is more worth it than hiring someone from the outside and offering the same amount for salary.”
