The Rewards and Challenges of Premium F&B Importing

Photo: IEAT

Local food and alcohol importers have developed an attractive market in Taiwan, but must navigate the island’s complex bureaucracy, high tariffs on certain goods, and strict customs requirements.

A pleasant Friday evening for many people includes a tender steak accompanied by a glass of wine or a cocktail. As a European, I never thought much about the intricate details of producing such a dinner. In Europe, the glass of French wine or Scotch whisky you enjoy with your Jamón Iberico is the result of a relatively pain-free process that takes place inside an economic union with no tolls and low import thresholds.

But for Taiwan, the process is more complex. Although the island is a significant market for imported meat and alcohol, complicated paperwork and meticulous customs procedures can thwart importers’ ambitions of providing residents with premium overseas products. Despite the obstacles, thousands of locals and foreigners have decided to become food and alcohol importers in Taiwan.

Among them is Swedish entrepreneur Robin Johansson, who moved to Taipei with his wife in 2016 and, after spending a year working for a local company, decided to pursue his entrepreneurial aspirations. He started his own business, Vana Candles, in 2017 and built up his brand before looking into importing Swedish whiskey a year later.

Entrepreneur and importer Robin Johansson says he appreciates Taiwanese consumers’ interest in and enthusiasm for high-quality products. Photo: Vana Candles

Johansson is a retailer for Mackmyra, a premium whisky that uses only Swedish ingredients – from the water, yeast, and malt to the cask that the whisky is aged in. His main target customers are seasoned whisky drinkers looking to expand their horizons. The company has initiated several collaborations to create unique flavors, including one with Microsoft that resulted in a whisky made from an AI-generated recipe.

Business is booming after just a couple of years, and Johansson has increased his portfolio to include Swedish gin and vodka. But his first batch of whisky took almost eight months to arrive in Taiwan. Johansson faced numerous challenges at first, including finding a third-party lab in Germany that could do the necessary testing, as well as producing the required documentation.

The very first challenge was to convince the whisky company that Taiwan was a worthwhile export destination. “Mackmyra already had an expansion strategy and no ambitions to get to Asia at that point,” he says. “They had sent people to Asia before and hired people locally, and it ended up being an expensive and unfruitful experience for them. But I guess I was the right person at the right time, so they agreed to let me try.”

French national Yohan Morel, a sommelier, consultant, and importer with over 15 years of experience, moved to Taipei with his wife in 2017 and combined their industry and cultural knowledge to import wine from France. Since then, their company, Somm Spirit’d, has expanded its portfolio to include a range of wines and spirits from several other countries.

Morel notes that setting up an import company in Taiwan is a quick and straightforward process, adding that “basically anyone can become an alcohol importer as long as they pay for the license, which isn’t very expensive.” He avoided the initial trial-and-error process by finding the right experts to help him.

“If I were to give advice to someone who wants to set up a food or wine import company in Taiwan, it would be to find the right CPA (certified public accountant) and customs broker, or to go through your chamber of commerce in the beginning,” he says, with the caveat that finding the right people can be a time-consuming process. “I have a good CPA, but I had to change three or four times before I found one that fit my needs.”

Local Taiwanese importers often start their businesses with a different set of skills and motivations. One example is Keigo Hsu, who runs Hung Chang Meats Co., a family business that has operated in Taiwan for more than 100 years. A few years back, Hsu decided to expand the business to include Australian beef.

“Australia is well-known for its animal welfare, and Australian meat is famous all around the world,” he says, adding that he only trusts a product he has seen with his own eyes. “Since I used to live in Australia, I thought I could go there and check the meat to make sure I feel it’s okay to bring back to Taiwan.”

Since Hsu specializes in premium beef, his products are not imported in large enough quantities to be sold in large retail chains. Instead, he works with restaurants, hotels, and butcher shops to create memorable dining experiences. Similarly, Johansson and Morel choose not to sell their products in Taiwan’s hypermarkets, instead collaborating with hotels and restaurants, participating in expos, and organizing events.

“We sell a lot of whisky at expos,” says Johansson. “We also collaborate with My9 Group’s select whisky stores. They have very knowledgeable staff, so if a person who wants something new comes in, the staff can introduce them to Swedish whisky or gin. A customer walking into a big chain is more likely to just grab a brand they know.”

Morel’s Somm Spirit’d focuses on sustainable, biodynamic, and organic spirits and wines. Because of his background as a sommelier, he prefers to collaborate with niche boutique wineries and focus on educational events. Morel stresses that although Taiwanese consumers are traditionally label drinkers – those who purchase the priciest or most famous wines – high-quality wine does not need to be expensive.

“There are two different markets for alcohol here,” he says. “There’s the old generation that drinks red wine and likes whisky, and the new generation, which is much more open-minded, curious, and open to drinking white, sparkling, and even some rosé. But in general, the alcohol category in Taiwan is really booming.”

Photo: Somm Spirit’d

Howard Chen, president of Chateau Wine & Spirit Co., has also noticed drastic changes in Taiwanese wine consumption during his 24 years in the industry. In the beginning, Chateau focused solely on French wine, but today it imports wine and spirits from all over the world.

Meanwhile, prominent players such as Diageo, which has operated in Taiwan for over 25 years and whose portfolio includes brands like Buchanan, Captain Morgan, Baileys, Guinness, and its signature Johnnie Walker Scotch, can utilize brand recognition to sell through every imaginable channel, including large retailers and convenience stores. 

“We got the ticket; we can enter retailers with basically any new product,” says Barbara Liang, corporate relations director at Diageo Taiwan, Hong Kong, and Macau. “The challenge for us is to remain on top. For that, we need to listen carefully to our customers’ needs and support them with extraordinary displays and promotional activities.”

Import obstacles

Large companies that import their own brands face a number of challenges in Taiwan. For Diageo, the biggest headache relates to parallel imports. Taiwan is one of the economic regions that allows parallel imports – non-counterfeit products imported without the intellectual property owner’s permission and considered to be in the gray market. Liang stresses that while Diageo takes no issue with parallel imports as such, the company has for years been urging the government to take steps to protect consumer safety connected to these products.

Packaged alcoholic products for sale must be marked with a lot code, a number indicating the quantity of a particular product manufactured at a particular time on a specific production line. These codes enable manufacturers to trace and recall products if any issues that might compromise consumer safety arise. Many parallel importers scratch off or remove the original lot codes and replace them with their own serial numbers.

“You can imagine the issue when a consumer gets a bottle of unknown Johnnie Walker and tries to call our hotline for questions, and the lot code – the number they see on their bottle – is not the original number,” says Liang, stressing that this makes it nearly impossible to trace the product. “It compromises the safety of our consumers.”

For smaller-sized brokers, complex bureaucracy is the biggest time thief. Importers need to provide third-party lab analyses, certificates of origin, invoices, and the Chinese-language back labels – and everything needs to be stamped appropriately.

“When you only import one or two wines it’s fine, but if you work with more than 20 different wineries, it’s pretty complicated,” says Morel. “Later, you’ll also have to wait up to 10 days to clear your stuff from a bonded warehouse to a regular warehouse, even though it’s all under the same roof.”

Johansson says that a digital database where customs authorities could check whether products are tested and approved would significantly accelerate the bureaucratic process. He also notes that the thresholds for importing food products are much higher than for alcohol. Food suppliers are required to reveal the exact proportions of each product’s ingredients, and certain food colorings or components that are allowed in the U.S. and EU are banned in Taiwan.

“The original price of Swedish food products is already steep, and when you add the tariffs and sales taxes, basically only the premium range of food products works for the Taiwan market,” he adds.

Morel, who also imports cheese, adds that although the importing process for food is faster than for liquor, food importers face several unique challenges. For example, when a shipment is stalled until past the product’s expiration date due to customs inspections or supply chain disruptions, the stock is destroyed, resulting in lost revenue.

“For food, they will also do random testing,” says Morel. “When you’re selected, they’ll take some samples. In the beginning, we wanted to import truffles, but when I saw that they sometimes take 300 grams of truffle for samples – and for white truffle, 300 grams can be worth NT$80,000 – I decided that it’s not really worth it.”

Thomas Tseng, chairman of Thomas Meat and a seasoned importer with over 40 years’ experience, agrees that while random testing is important and necessary, it would benefit importers if the authorities were to adjust the frequency and sample sizes required for testing.

“Random testing can get both expensive and time-consuming,” he says. “The Taiwan government is rigorous on imports, and rightly so, but there should at least be a set standard for the sample sizes they take.”

During the pandemic, importers have additionally suffered from supply chain disruptions. Tseng notes that apart from the recent global supply chain crisis, Taiwan faces another pressing issue: a lack of cold storage space. Although turnover has increased, meat importers face a longer waiting time for meat to arrive and a limited storage capacity.

Chateau’s Chen stresses the importance of close collaboration with the government to solve these types of import-related issues. The best approach, he suggests, is collective action through a chamber of commerce or industry organization, such as the Importers and Exporters Association of Taipei (IEAT), of which both he and Tseng are directors.

“IEAT has over 6,200 members,” says Chen. “With that sort of size, we can function as a bridge and gather our most pressing concerns to approach the government for solutions. The government also cooperates with and supports us regarding how to adjust requests, so we’ve been able to solve many important issues together.”

When asked about what changes would improve their businesses, importers’ top-of-mind answer was decreased tariffs and taxes. Chen and Tseng agree that most IEAT members would benefit from free trade agreements (FTAs), particularly with the U.S. and Japan, or through Taiwan’s accession to the Comprehensive and Progressive Agreement for Trans-Pacific Partnership (CPTPP).

“An FTA is an obvious win-win solution for all involved parties that would solidify Taiwan’s commitment to free trade and internationalization,” says Tseng. “An agreement between Taiwan and the U.S., in particular, should be an obvious step to take. We trade heavily with one another, so signing an FTA would benefit us all.”