Founder’s Story: Ivan Lee, Co-Founder of The Tapping Tapir

From starting their entrepreneurial journey with the Potong ice cream and pivoting into the premium home-grown Malaysian soda brand — The Tapping Tapir. The three co-founders are committed to advocating all natural ingredients to provide some freshness and authenticity to the thirst quenchers.

Here is the Founder’s Stories Night session with Ivan Lee. Enjoy!

Q&A
 
Why did you use a tapir and not other animals as a brand?

Good question. When we first started our brand, we wanted to use an animal to represent our brand because we felt like it is more relatable. Of all the Malaysian animals that we archived and dug up, we felt that the most iconic one is the tapir because other animals were already used (e.g. tiger for Tiger beer). With the tapir, we felt it was a clean slate and as mentioned it was endangered so we are bringing a bit more awareness to this specific animal that is uniquely Malaysian. The Malaysian tapir breed has a certain distinct shape and pattern as a baby. Hence, that was how the name tapir came for us. We also used the word “tapping” as a metaphor for dancing to make the brand name more nostalgic.


What was the trigger point that led you to make the decision to become a businessman in the soda industry?

I am actually one-third of our company and there are actually the three of us in it. I came from Australia because my family migrated to Australia early on. I actually did my education from kindergarten to university there (Australia).

I met one of the co-founders, Victor who was the mastermind of creating the actual flavors for the product back when we were at Melbourne University. Coincidently I wanted to just come back to Malaysia for holiday and back to the roots because I was born here. I did not intend to start a company here or work on anything here but it ends up us forming the new business during the holidays here in Malaysia. The three of us came from corporate backgrounds, I actually studied HR and Marketing, Victor was in finance and my other partner had a design agency background. The passion for all of us came from food, we actually did a lot of foodie trips in Malaysia and how we stumbled across our first business venture was the Potong.

The Potong came about when we went for our food trip in Ipoh and we met the old school guy selling ice cream. Back then we thought:” What a good idea!” and we started that business at Jaya One. We did not know anything about making ice cream but we just tried and actually our booth was probably the busiest. Our ice cream were sold out within 2–3 hours and that was how we all started. Based on that, we got a lot of hype and a lot of media coverage because a lot of people wanted to know about our brand and how we started the Potong.

So with the Potong, we ventured full time in our business but I was heading out and doing more of the sales at the start. After one year, we actually wholesale to a lot of independent cafes but back then logistics for frozen products were not very available and we had to do all the transportation ourselves so we could not see how the business could scale any further. Given that we’re creating our own syrup and we wanted to have our own brand so we decided why not go into beverages. Back then when I was an intern in Australia, I learned that beverages have the highest margins in the F & B line and that was why we decided to really focus on the beverage line as there was also a gap in the Malaysian market. There was no more than the typical soda in the market besides Coca-Cola or foreign overseas products. We actually just took the formula from the ice cream and put it into a beverage with a sparkling element.


Can you tell us a bit about yourself? (Victor, Co-Founder of The Tapping Tapir which got invited to go on stage at the later part of the event).

I run the majority of the production and operation of the factory. My background is in food science, I worked in a food factory but coming from a typical Asian family, they (family members) were all like:” Do accounting, accounting is big”, so I spent about 5 years in the accounting and finance industry. And then we started the Potong, that was when I went back into food again.


How did you market your product when you first started?
 

We basically started with events because we did not have a physical store. We did a lot of events just to get ourselves up with some profit and advertising for our brand. We also started working with all the independent cafes to really just to get the word out.


Tapping Tapir is not deemed as a typical soda as it can normally be found in hotels and cafes, how did you venture into a niche market like yours?

A typical soda can be sold to anyone but where we found our niche was slightly at the premium end of the market because of price. We actually wholesale at a very affordable rate but because of our wholesalers. We recommended retail but our bottles can go in Kuala Lumpur averaging from RM10 up to RM30 in specific hotels. As in Malaysia, even we sold our sodas at an affordable price, the price sort of dictated us as more of a premium product whereby we did have a few clients to begin with. I guess we were also lucky as our business started with the “Cafe Boom” that happened just a couple of years back. So with that, we really got a lot of traffic and word of mouth through the cafes then only from there we build our reputation and work with the product to get the hotels. We did not approach the hotels right from the beginning but they came knocking on our doors later on in that sense.


Was it difficult to get Tapping Tapir halal-certified?
 

Our product actually got halal-certified relatively easy in the process because we do not deal with any animal byproduct (even though we have the tapir in the brand). In our ingredients, we only have fruits, herbs, spices, water and a bit of pure cane sugar, that’s it. We did get our products tested with the labs for any alcohol. In halal sense, there is a specific alcohol content amount that they do allow but it is very minimal and we stop our fermentation to ensure our product does not contain any alcohol byproduct.

How large is Tapping Tapir’s operation?

In production-wise, we produce our products in glass bottles, amounting to an average of 5–10 thousand bottles per day. So for us, we create our products one flavor for each day and we only focus on that product. When we started, we only had a handful of flavors, currently we have 13 of them. So now we have to allocate our time to our flavors to make sure there is sufficient stock because we are not only looking after Malaysia but we are exporting as well. For example, for Mandarin Oriental alone, we look after three of their outlets and if you come to any of these outlets, you will get two complimentary bottles for guest arrival. There are several other hotels who are also under them. So for us, our volume has to be quite high because we have to make sure that they have standby stock not only in our warehouse here but in Macau, Singapore, and also we are starting now in Hong Kong.

What is it that excel you to go outside of Malaysia?
 

We started with the local market because Malaysia is a very nice place to be with all the traffic. We didn’t have the capital to do a lot of fairs or any of those expos to promote our product when we first started but I guess working with our clients and hotels got us a lot of exposure to overseas clientele. We have found our distributors not only in Asia but also in UAE and Australia as well. Malaysia is very near to Singapore so we get a lot of international traffic with our hotels which I guess we have put our product in the right place to get that certain leverage of clientele.


Tell us about Korea market that you have recently ventured into given that the market has all the while been challenging for external parties to enter due to language and their nationalistic culture. Why would they choose to consume a drink that is not from their country with an animal that they know nothing about and was it profitable?
 

Korea is probably one of the toughest countries that we have to get it. It probably took us a year to a year and a half of communicating with our distributor. Surprisingly, we had a lot of queries from various Korea distributors but we were lucky to find the current distributor that was very keen on the product. I guess that was also a two-way communication because they didn’t give up on the product despite the strict FDA approvals and regulations needed when the product arrives in Korea. It is profitable now because we have successfully gotten the product in. If you see the product in Korea it will have a customized label with Korean on it and every word down to the barcode are customized for the specific market there.


Your products are also available online for the Malaysian market at the moment, tell us more about it.

We started our online distribution nationwide this year because we finally found the right logistics partner. We actually have the online platform for a couple of years since day one but what really hindered was that we couldn’t find the right logistics partner to work with us because our products are quite heavy as they are in glass bottles. We have since put in a lot more effort in online advertising e.g. Facebook and Google ad and we have seen the sales gone up at least 10 times from whatever we were doing last year because we are now able to bring the product to the rural parts of Malaysia.


What advice would you give to those who are looking into online distribution of their products or services?

Previously we could only market the product in the KL region due to the logistics issue but now since that was solved we are able to sell to nationwide. We have increased our reach with online advertising and our sales have gone up to areas that couldn’t get our product previously. Online advertising is definitely worthwhile for us and we would have gone online earlier if it weren’t for the logistics issue of people not wanting to move our product because it’s a fragile item.


What is one advice to the branding strategies for startups?

For us, you have to have a blueprint of what you want in your brand. Most importantly, we developed our brand from scratch from day one and we have evolved our brand overtime from the label to the backing of the fruits. As long as you are still true to the core brand, you can change the brand and give it a try just to see what works and what doesn’t. We usually do a little survey to see if the product brand is liked before we do release it.


As a business, having the right partners is very important, do you agree?

When you choose a business partner, make sure that it’s not only for one day, you are really going to be sticking with them in the long haul. You are going to see them basically every day, we speak probably every minute, so it’s not just a one-night-stand, it’s really a long term relationship with that said. We probably know our partners more than our own parents. We were lucky that we choose our partners from different backgrounds so holistically we are quite strong in different departments. Three of us are quite rounded and not boring in that sense. Like any good relationships, fights will happen and there will be ups and downs but after 6 years of working with each other, we know how each of us works.

You guys have won the Taste Award by the Asia Pacific Anti Additive Association, tell us more about this award.

For us, we never really went looking for awards. This one actually just came and landed on our lap and we won. There were a lot of paid awards that we were being offered but for this one, we were just shot an email and they said someone submitted our product and we actually won. It is a great recognition because we are probably one of the last few companies that started from scratch. Truly whatever that we put on the label, that is what we put in the product. We don’t put any flavorings, colorings, preservatives or anything. Not only that the branding but the core product itself has helped us scale and partner with very strong 5-star hotels and cafes. We also did blind testing with our product and because it is an all-natural product. If you leave out the soda uncapped and just let the product oxidize, the flavor will be more full and aroma from day one. That is how our product is very different from what other mass sodas are doing in that sense. We have created a soda that is basically natural and we still have a shelf life of 12 months.


Do you have a big production team and how did you come up with the combinations?
 

No, we don’t, it only boils down to the 3 of us, the co-founders. We started with 3 flavors but because of our other co-founder who has a food science background, when we have a flavor, we not only have to break it down to what the pairing is but if it can actually be kept in a bottle and have a shelf life of 12 months. The seasonality of the fruits and ingredients comes into play as well because when we make a flavor, we have to produce 5–10 thousand per production run, we can’t just have a few very scarce products. So there is a lot of flavors that we want to produce but we can’t release the flavors because of the limitations with the farmers and suppliers.


Have you guys have moments where you feel like you want to give up?

Probably all the time. I guess with any business or as all entrepreneurs, you definitely have very tough days but you also have very good days. So you really have to work together and help each other out on the bad days.


What is your most satisfying moment so far for Tapping Tapir?
 

When the consumer sees the product and enjoys the feedback from what they say. Now we don’t do events a lot anymore because I guess the food industry seems to be different from back then. When we started back in 2013, the food events were really fun and we could see the revenue from doing those events so as owners, we get to see how the consumer interacts with the product and also the feedback from the consumer. A lot of effort has been put into the product, we personally buy the fruits, juice it and put it into the bottles even now. Sometimes we still go down to Johor just to meet the farmers to get to know good suppliers for fruits.


So what do you guys do for fun?

The 3 of us handle our stress differently. I am the one that is extroverted so I’ll probably have the most fun out of everyone because Christy (Ng) always says that I’m not working as I’m always out for sales while Victor is in the factory. For me, I do a lot of meditation to make sure my mind is in place and also having fun going to the gym and doing sports. All these are outlets for me to release my stress.


Are you married?
 

No I’m currently single but I’m married to the business. Basically we are fully with the business so we don’t really have time to really do more.


Why glass bottle and not plastic?
 

Glass is considered a bit more premium so we have chosen that over plastic. However, glass has its limitations with transport and also with how fragile it is, so for our next product we are going into canning our products. In certain industries such as airlines will not take glass so we already got the canning machines ready for our next packaging for our new flavors and our existing products. We will still keep some of our products in glass because it will still be used at the premium hotels as they will never forego glass and the cans will be more for the off-trade market such as supermarkets and convenience stores.


How long did it take for your business to breakeven and start seeing profit?
 

Why we started the business was because it made us money from the first day. So for breakeven point, from day one we have already achieved that already. One of the reasons why we do everything in-house is not just that we can control but we can control the cost really well. We can buy fruits at a certain rate, we know the cost of each and every item. We also started at the premium segment because we knew what our products can be priced at and what we can achieve from there.


Are you looking at moving into the alcohol segment?

Currently no because we are halal in that sense. We felt like the non-alcoholic segment is still very large in Malaysia so our direction in our business moving forward will be more of the “on-tray” segment meaning in restaurants where they consume on the spot. Our next business strive will be going off-tray such as our online channel and our slightly more premium supermarkets where we want to go the mass and the canning will help to put us in the KK marts to your 7–11s.


Can you share how you tried to penetrate into the health and wellness segment as a lot of people perceive organic premium product is all imported and how you overcame this perception?
 

We never ever catered for organic certified product from day one because sadly the landscape in Malaysia with the farmers, they don’t have the certification (organic) so if we went for organic, there would only be a handful of suppliers. We wanted to make sure that our suppliers for our ingredients are readily available so we just focus more on the flavor. As a soda element itself, we never advocated if you drink our drink, you will get whitening or vitamin C benefits or anything like that as there will be a lot of paperwork and testing to be done in order to advocate for all these elements.


As you are perceived as a premium product, how do you choose your partners or vendors to work with?

We don’t really discriminate, business is business at the end of the day. We work with local vendors to your 5-star hotels. We were just lucky that the 5-star hotels and restaurants came knocking on our doors. For the hotels, we actually did a lot of customization for them. Not only did we supplied the product but for certain hotels, they will have their own branding on the product while keeping our brand.


Given that you have been distributing your products to many places every day, so have you been collecting back the bottles for sustainability purposes?

At the start, we didn’t have the manpower or resources to do so but now locally in Malaysia, we are recycling our bottles with the hotels so we do have a recycling initiative. For the last 2 years, we have been recycling our bottles especially the glass ones. We had to remove the packaging in order to put on a new one and we had also communicated to the hotels that we need to reduce the packaging for recycling purposes and they have been really helpful. Even with the tray, the welcome notes, the paper that we use are all certified recyclable paper in all the hotels that we work with.

 
Do you do OEM for other companies?



We are very selective with our OEM because our machines run on a purely natural basis so we don’t put any preservatives or anything. We do have OEMs for Singapore and Australia and their version of their product is very similar to ours. However, the majority of the OEM that we do is not local as we don’t want to interfere with our local markets.


What about the distribution of the product? Do you go straight to the consumer or do you have a distributor for that?
 

We do everything. We do have distributors for certain countries but right now we look after distribution here in Malaysia, mainly Klang Valley. We do have a nationwide distributor as well because they can get our products initially to restaurants and into states that we couldn’t have so we don’t really limit our distribution. As for Singapore, we formed our own company there and we also do shipments to get our cargo into Singapore within 24 hours and we distribute over there too.


Did you get financing from the bank or did you bootstrap the whole business?
 

We self finance for the first 2 years and we joined the Alliance Bank Bizsmart Competition. We didn’t win but they look at our business and they offered to finance us because we are a profitable business. So instead of winning the RM250,000 grand prize, they loaned us the RM250,000 for our machinery.


Since you mentioned that you are moving towards targeting the mass instead of just the premium segment so the price will have to be lowered to cater for that market. Would that affect your premium market due to this change?

Yes, the product will be more price-conscious and definitely a bit cheaper than what it is right now but the product is going to be targeted in a different way to the mass. It will be a different product in a sense. It will still be Tapping Tapir but we might use a different brand name for it and it will still adhere to the core values of Tapping Tapir which is all-natural ingredients.


How would you handle the huge production issue since you mentioned that you will be going for the mass market?

The packing capacity of the canning machine is probably double the speed of our current production. So with the canning and the product that we have in store, the labor cost is also about less in that sense.


Are you guys worried about competition from big players such as F&N when you get to a certain point that they find that your product is doing well and they want to do the same thing as well?

That is what we are scared of as well but as of the industry right now, we don’t think F&N would want to do what we are doing now because we are actually targeting a niche market. The big players would come into the picture in the next stage of our business which is the off-tray sector. At the moment, there are no local brands that are coming into our market but there is currently a UK fruit soda company that switched their branding to look very similar to ours in the last couple of years.


How do you convince your consumers to repeatedly buy your product over other soda brands when you hit the mass?

We look at what type of marketing is trending. So when we identify the trending style of marketing, we will leech off the brand, that style to market the product. That how we keep relevance with the brand. We ourselves are also consumers so we will normally brainstorm and ask ourself what would we want to buy when we go to the supermarket.

You have quite a large customer base, considering the number of staff you have, how do you manage the customer service?

I guess it is work-life balance. Making sure we relieve our stress regularly. We do work with the hotels but we work with one person in charge of the hotel, normally it would be housekeeping because they are the ones that will be putting the bottles in each room every day. We also try to work with well-established distributors who are experienced in the F&B sector so they can better deal with the clients rather than calling us all the time and not knowing how to answer the questions by clients.


Do you guys bootstrap all the way to scaling or do you get finance from other parties?

We would rather grow slowly than try to get somebody else in because you don’t want somebody to dictate how you grow. You wanna know how you want to grow and you want to be ready for the growth as well.


To learn more about The Tapping Tapir, visit their website

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