Aunt Stella’s: Happiness is a Good Cookie

Aunt Stella's hand-made cookies are positioned as high-end products suitable to be given as gifts on special occasions. Photo: Aunt Stella's

Justin Dunkle didn’t intend to follow in the footsteps of his father, Joseph Dunkle, a former military police officer from New York who founded Aunt Stella’s Cookies and Cakes in Japan in 1983. The younger Dunkle, raised in Japan and educated in Canada and Japan, instead originally chose a career in investment banking.

The fallout of the financial sector crash in 2008-09 and a chance to help a friend revive the fortunes of a struggling café brought him into the food industry, and he eventually joined his dad as director of business development at Aunt Stella’s, the company he now heads as president. It’s a role that offers him a chance to share in the sweet experiences and memories of thousands of people.

“People grew up with Aunt Stella’s – getting our cookies was a reward for doing something good,” he says. Running the company “is much more gratifying than just moving money around,” although he concedes that “this is nowhere near as lucrative as finance.”

From its original base in Japan, Aunt Stella’s came to Taiwan in 1991, and in both markets its handmade cookies and cakes are seen as an affordable luxury and an attractive gift item.

“Our cookies are handmade, so the costs are high,” says Dunkle.  As gifts, they are generally reserved for special occasions such as weddings and births. Dunkle notes that some banks are presenting them to preferred customers on their birthdays.

While Aunt Stella’s has been a cultural touchstone for decades in Taiwan and Japan, the road to success was not straightforward. Founder Joseph Dunkle was stationed in Japan during the Vietnam War as an MP policing U.S. military bases, but with a law degree and a head for business, he recognized that the Japanese economy offered unprecedented opportunities.

“He saw the market in Japan in the late 70s and 80s was booming and he wanted to ride that wave,” says Justin Dunkle.

Dunkle senior’s initial forays into business, first in vending machines and later ice cream, ended in failure, but brought compelling lessons on doing business that his son continues to draw on.

The vending machine business looked easy – buy the machines, stock them with whatever consumers are interested in (which in Japan in those days could be almost anything), and sit back and watch the money roll in. That view turned out to be deceptive.  Japan already had a number of powerful vending machine companies, which deployed their considerable clout to block the budding American entrepreneur.

The experience provided the elder Dunkle with his first lesson: “Don’t go up against giants with billions of dollars – they’ll just crush you,” explains Justin Dunkle. “You have to create a unique brand position.”

Dunkle senior then had the inspiration to get into the ice cream market. At the time, Japanese consumers were increasingly receptive to foreign foods, and he assumed that ice cream would be a hit. Having learned his lesson about facing off against the titans of industry, Dunkle senior – who by then had mastered Japanese and married a Japanese woman – sought to collaborate with one of the large corporations dominating the business scene in post-war Japan.

Catching the eye of Seiji Tsutsumi, chairman of the Seibu department stores and one of the world’s wealthiest persons in the late 1980s, Dunkle eventually became the first foreigner on the board of a Japanese company – though still facing considerable xenophobia. Despite receiving the blessing of Tsutsumi himself, Dunkle was forced by Seibu underlings to open his ice cream shop far in the countryside – and in the middle of December.

Yet Dunkle persisted, and succeeded by introducing Japan to the ice cream cake, which became quite popular. He was driven out of the ice cream business only when he outsourced production to an established ice cream maker – who promptly stole his recipe and went into direct competition with him.

Thus Dunkle learned lesson #2: always control your production.

The third attempt at cracking the Japanese retail market proved to be the charm when Dunkle hit upon cookies as a far easier product to manage. He went to his elderly Aunt Stella, a kindergarten teacher who never had children of her own but had provided her nieces and nephews with a lifetime of cookies and other treats. Much to Stella’s delight, Joseph Dunkle not only used her recipes as the basis for his cookie company but even named the brand after her.

Dunkle modified the baking process and recipes to produce a crispier cookie that Japanese – accustomed to rice-cracker snacks – would enjoy. In line with lesson #1, Dunkle senior aimed Aunt Stella’s at a more affluent niche market. Soon Aunt Stella’s cookies became popular as gifts – and in fact initiated a tradition of men giving cookies to their lovers on White Day.

In line with lesson #2, Dunkle senior came to Taiwan in 1989 searching for a cheaper place to produce cookie dough. But discovering that Taiwan’s burgeoning economy provided not just a source for cheap production but also market opportunities, he registered Aunt Stella’s in Taiwan in 1991. Dunkle senior owned and managed Aunt Stella’s in both Japan and Taiwan until he sold the Japanese side to investors in the mid-2000s to focus exclusively on the Taiwan market. He retired in 2015, paving the way for Justin to take over as president.

New strategies

While Aunt Stella’s has always focused on high-quality, handmade cookies, cakes, and gift sets, the company has gone through a number of evolutions in the Taiwan market. One was the establishment of Aunt Stella’s cafés, which were becoming a significant channel for the brand when Justin joined the company.

“I focused first on developing our line of branded Aunt Stella’s cafés, which accounted for a significant amount of sales,” he says, noting that the cafes are beneficial because “our customers can sit and really experience our brand – from the interior design to the plating service and everything – a captured audience.”

However, a crowded market, rising labor and raw material costs, and a cooling economy eventually caused the brand to exit the coffee shop sector. “We left the cafés to the café experts to refocus our energies on our key business of cookies and gifts, which have huge potential not only in Taiwan but globally,” says Justin.

Aunt Stella’s currently has 18 outlets in high-end department stores, including Sogo, Breeze, and Takashimaya, and one stand-alone shop. The brand is now also planning to open a flagship store in Taipei next year to be the premier location.

“We want to make sure that everything is perfect, with new cookie lines and new packaging,” he says.  “We want everyone to remember Aunt Stella, and for those who don’t know Aunt Stella’s this will be their first experience of something that makes everyone happy.”

Despite the emergence of growing competition in the high-end cookies and cakes market, Justin says he is unworried. “We differ from our competitors in that we don’t make our cookies by machine,” he says. Machine-made cookies “don’t taste as good and there are things that can’t be done by machine.”

Aunt Stella’s also imports many of its ingredients, including a special sugar from Japan that is healthier and ensures that the cookie texture is correct. The brand’s top-selling cookie – an item that can’t be made by machine – uses imported Kellogg’s corn flakes as a coating.

As sales are highly seasonal, the company has only 120 full-time staff, complemented by around 180 part-timers. Unlike many companies that report difficulty finding quality personnel, Aunt Stella’s good reputation is very attractive to prospective employees.

New competition has nevertheless “woken us up to the need to fine-tune our offerings,” says Justin. He notes that he and his team are enjoying being creative and considering out a number of different options, including developing overseas markets and repositioning the brand.

“We’re playing around with the brand and having fun being creative,” he says. “It’s not just business as usual.”