BABI International: a Taiwan-grown Success

Tree Top fruit juices are among the American food products that BABI has introduced to the Taiwan market. Photo: BABI

Not long after coming to Taiwan to study Chinese, Brett Aaron started to dabble in business – opening the market here for Snapple beverages – as a way to help hone his language skills. Now, some three decades later, he is still based in Taipei, and the company he founded in 1994, BABI International Corp., has developed into one of Asia’s fastest growing food and beverage companies, with over 200 employees at its Taipei headquarters, and a market presence around the world.

Photo: BABI

A native of Long Island, New York, Aaron says the original goal for BABI was to introduce great U.S. products, including Snapple teas and Pepperidge Farms cookies, to the Taiwan market. The name BABI, in fact, was chosen to signify “Bringing American Brands International.” In recent years, however, the company has expanded by also offering its own array of proprietary brands that bring outstanding ingredients and flavors from Taiwan and elsewhere in Asia to the world. These include Bessie Byer teas, Koh Coconut coconut water and coconut milk, Vivaloe health beverages, Noyu samurai functional teas, Heartfelt Organic cookies, and Capo Caffee.

“Our products are fast-moving, premium consumer goods with a focus on nutritional goodness,” Aaron says. “Our mission is clear: keep it premium and keep it simple.”

Taiwan in the early 1990s was the place to be in East Asia: the economy was booming, martial law had been lifted, and market and political liberalizations were well underway. With a flair for languages and a penchant for adventure, Aaron quickly fell in love with the Taiwanese people and culture. When an opportunity arose to get more deeply involved in local society through business, he latched onto it.

The opportunity came in the form of a proposal from neighbors in his hometown who were co-founders of the then-popular beverage Snapple. During the 1990s, Snapple’s fruit-flavored iced teas were the epitome of cool, edgy beverages, promoted through irreverent marketing campaigns, and the company was looking to expand overseas. Aaron took on the challenge of getting sales started in Taiwan.

The Snapple Beverage Corp. ran a lean shop, however, and wasn’t interested in maintaining a simple distribution relationship with the young man, family friendship notwithstanding. Instead, as per its corporate strategy, it began requiring distributors to produce the teas in their territories under license from the parent company.

Despite still being in his early twenties, Aaron took the leap and began figuring out how to set up a food factory in Taiwan. The government then was not nearly as accommodating to foreign entrepreneurs as it has since become, and Aaron was forced to jump through a series of regulatory hoops to get his business operational.

But a gift for schmoozing in English, Chinese, and even Taiwanese, and a clear-eyed vision of the potential of the Snapple brand in Taiwan, enabled Aaron to meet the right people, including executives at some of Taiwan’s largest food companies. These relationships enabled him to gain access not only to production facilities that could meet Snapple’s strict standards but also to retail channels willing to give the relatively unknown brand a chance.

But while Aaron was gaining access to the upper echelons of Taiwan’s domestic market, he wasn’t above rolling up his sleeves and getting down to work in the trenches of market competition. Longtime expat residents of Taipei recall seeing Aaron and his partner, Dan Machanik, along with another charismatic young American, Kevin Rambke, hawking Snapple out of pushcarts by the side of the road.

“We’d show up at the beach on a weekend afternoon and just start yelling out ‘NT$10 teas here, come and check them out!’” Aaron recalls. “We were just trying to build brand awareness – but we were having a great time while we were doing it!”

As the Snapple business blossomed, BABI began establishing relationships with other leading brands, including Pepperidge Farms in 1995, Tree Top juices from 1997, and Walker’s biscuits and Stash tea from the early 2000s.

The experience with Snapple provided some important lessons for the nascent company on the value of long-term commitment and going deep into the market. “When we enter into a relationship with a brand, we want to treat it as if it were our own,” Aaron says. He contrasts BABI’s approach to that of a trading company, which may handle “many, many different brands and just throw them into the market and see what happens.” On the contrary, “whenever we pick a brand we are thinking in terms of 20 or 30 years, not five years,” he observes.

Like many a love affair, however, BABI’s relationship with Snapple ultimately soured. In 1994, Snapple was acquired by Quaker Foods, which saw Snapple’s distribution strategy of coolers placed in pizza joints and delis as an excellent way to piggy-back its Gatorade product onto Snapple’s success. The strategy did indeed drive Gatorade but at the expense of Snapple, whose sales diminished proportionately. While the Snapple brand proved a hit in the Taiwan market, it otherwise never expanded much beyond its presence on the U.S. east and west coasts.

Quaker offloaded the brand at a massive loss little more than a year later in a deal that has been cited as a major corporate error. Snapple drifted through a variety of acquisitions, its brand value slowly diminishing, though BABI continued to sell Snapple products until 2003, when Aaron felt he could no longer support the brand.

“The company wanted to go into plastic (bottles) and I was against it,” he says, citing his personal adherence to quality and freshness that could only be ensured by glass containers. BABI was doing well with the Pepperidge Farms and Tree Top brands, and already had a substantial production and distribution infrastructure in place for tea production. “So when we decided to part ways with Snapple, I decided to create our own brand, Bessie Byer.”

Bessie Byer and beyond

Bessie Byer emerged “from our desire to make a simple, all-natural product that tastes great on its own” while offering a “culture-of-origin” story to Taiwanese consumers, says Aaron. Bessie Byer was actually the name of Aaron’s aunt who lived on a fruit farm in Pennsylvania and wrote a memoir containing her thoughts on simple living. Many of the teas that BABI makes are based on her recipes. Bessie Byer is brewed from real tea leaves grown in Taiwan, rather than tea powder as are its many competitors, and uses pure cane sugar instead of high fructose corn syrup.

“I’m a firm believer that a lot of the public health problems of chronic disease that we’re seeing are due to the massive overconsumption of simple sugars,” Aaron says. “One of the goals of the company is to reduce sugar as much as possible by experimenting with natural Stevia and different natural sugars that don’t spike the glycemic levels.”

Bessie Byer products are currently being sold in Taiwan, Thailand, and several other countries, including a limited distribution in China. “We’ve been very conservative with the China market,” Aaron says, noting that high tariffs there on Taiwanese products lead to prices that are too high for many consumers.

Photo: BABI

Inauguration of the Bessie Byer brand was soon followed by Koh Coconut coconut water, which likewise is a “culture-of-origin” brand that celebrates Thailand and contains nothing but pure coconut water. “We had to go upstream in Thailand by buying our own coconut farms and production sites to ensure purity and freshness,” Aaron says. Koh Coconut has become a hit around the world, with strong sales in diverse markets from the U.S. west coast to Slovenia.

Noyu Samurai functional teas are another culture-of-origin brand that has found considerable success. The Japanese tradition of functional teas, which carry various benefits for health and wellness, is catching on in the West. Brewed from teas grown in Taiwan’s Nantou County, the Noyu brand has been a hit with hip young millennials in the United States. Aaron says his single biggest customer is the Google headquarters in Silicon Valley. “Those programmers stay up all night and as they get everything for free, they can’t get enough of it,” he says. “They buy it by the containerful.”

Aaron dispenses with market research in this age of rapid change, noting that by the time a report is finished, it’s already obsolete. Instead, he bases new strategies and product offerings on his own observations as well as those of knowledgeable friends. BABI’s latest product line of supplements – primarily probiotics, which are aimed at promoting intestinal health and digestion – grew out of his personal experience.

“I was traveling a lot and often didn’t feel well, so I saw a gastroenterologist in New York who gave me some probiotics,” he says. “It helped, so now I’m a big proponent of probiotics.” Seeing a market opportunity, he joined forces with a Canadian producer of probiotics to come up with a product appropriate for the Chinese diet.

“Our fastest-growing area is our supplement businesses, and Essential Probiotic is now the fastest-selling product that we have in Costco here,” he says.