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Hiang Kie develops coffee bars for Singapore market.

If you stop for a cup of coffee these days in one of Singapore's chic new shopping centers, chances are you'll find yourself in a "temple" dedicated to the art of latte, cappuccino, and espresso.

It takes a while for many American trends to filter their way into Asia, and the advent of the 1980s coffee culture in the U.S. is only really beginning to make its way eastwards as the 1990s draw to a close. Among the sophisticated coffee establishments in Singapore is the Coffee Club, an innovative home-grown enterprise that can trace its beginning back to before World War II.

Coffee has been around in Southeast Asia for centuries and names like Java have become associated as much with the product as with any geographical region. Thailand and the Philippines have long been major producers and, for a while, the fortunes of the British in Malaysia rested with coffee until rubber became a more sought after cash crop. Singapore, with its strategic position, had, by the time of World War II, established itself as a major transshipment center for coffee. Today, Singapore's coffee exchange is one of the three biggest in the world.

Hiang Kie, the Singapore-based company that owns Coffee Club, was established in 1936 by Ong Wai Soeij, a merchant from Pelambang in Indonesia. Utilizing his expertise in commodities trading, Soeij soon parlayed Hiang Kie - which means "fragrance" - into one of the city's most important trading houses.

Business has flourished over the last six decades in what is seen as a tough industry. Run along traditional Chinese commercial lines with a strong emphasis on developing relationships with business partners, Hiang Kie has always remained a private company; this has allowed it a certain latitude in setting its own goals and objectives.

Ong Siong Kai, the founder's son and current chairman, says, "Hiang Kie's business philosophy stems from the pioneering spirit of our founder." He cites his father's "passion for innovation" as a key to the firm's success.

Hiang Kie has been quick to adapt to changing markets. In the early 1950s, the directors took what was considered a radical step when they developed a warehouse complex for green beans in McPherson, a district which was considered remote. Today, McPherson and surrounding areas are considered prime industrial land.

Then, in 1961, Hiang Kie introduced Asia's first electronic coffee sorting equipment - a move that gave it a significant competitive edge and helped the company become a firm which is represented all over the world. No longer just a dealer in green beans, the company is a major trader on the New York, London, and Singapore coffee exchanges and has contacts with producers and buyers all over the world. Among Hiang Kie's clients for coffee and spices are household names such as McCormick and Nestle.

Kai, who took over from his father in 1981, has taken the philosophy of his father one step further. Determined not to lose sight of Hiang Kie's origins in coffee, Kai says that his goal is to "focus on our core businesses as we evolve and seek new opportunities in areas where we can develop our full potential."

In particular, the company has worked in two strategic areas: product improvement and the retailing of coffee. Newer, high-tech warehouses have been built and Hiang Kie Industries (a wholly owned subsidiary) was set up recently to operate Asia's only decaffeination plant. The plant is located at a 17,000 sq. m. site in Senoko, an area set aside by the Singapore government as a special food processing zone.

The acclaimed decaffeination plant uses a process developed in Europe that extracts caffeine using methylene chloride and delivers a final product that not only exceeds customer expectations, but also meets the strict standards set by the USDA.

The spice side of the business has also benefited from the firm's determination to improve product quality. A high quality spice processing plant was inaugurated in 1995 that uses state-of-the-art steam methods to remove bacteria from raw materials. Hiang Kie has become a market leader in the cleaning and sterilization of all dry spices - in particular, chili, pepper, and paprika.

In step with both the increasing worldwide demand for quality coffee and the advent of the coffee bar, Hiang Kie's approach has been on two fronts. For the general market, the company is developing its Coffeeong brand; with a view to the more discerning drinker, Coffee Club is leading the market in Singapore as a retailer of its own label, the "Kaffa Kaldi" brand. Produced using proprietary roasting and packaging techniques, Kaffa Kaldi is a superior range of coffees that are targeted not only at the retail market but also form the basis for the company's own Coffee Club outlets.

With outlets in first-class shopping and entertainment areas, Coffee Club has established a loyal following. Well-designed shops, an appealing corporate image, and reasonable prices have all combined to make the concept popular with people from all walks of life.

Special attention is paid to all aspects of the coffee that is eventually served - from sourcing the right beans to roasting, blending, and brewing. This is important as other specialty coffee establishments have opened in beautifully designed premises in Singapore ... only to fail as a result of erratic quality.

So far, Hiang Kie's venture has met with critical acclaim. Sahilah Hamid, a Kuala Lumpur-based journalist who specializes in food and beverage issues, rates Coffee Club as "one of the best in the region." The outlets, she says, are "well designed, uncluttered, and provide an excellent venue for business meetings as well as casual get-togethers."

Kaffa Kaldi is considered to be among the better brands available in Singapore. Geoff Siddle, a local restaurateur, suggests that its contemporary packaging and competitive pricing mean that it is poised to become a leading brand.

This, of course, is very much part of Hiang Kie's overall strategy. The brand is now available for retail, not only in Coffee Club outlets but also in supermarkets, where it has had significant impact. The firm also markets a range of coffee brewing apparatus and markets its expertise in this field to institutional users such as hotels and restaurants.

But, as the company is aware, the only way to become a major player in the competitive coffee shop market is to expand. To this end, Hiang Kie has embarked upon an ambitious franchising plan.

Hiang Kie has also set up a Hong Kong subsidiary which will not only set up Coffee Club stores but also assist in marketing the company's products in China. Selling coffee to the Chinese, a nation of entrenched tea drinkers, may at first seem something of a tall order. But, Hiang Kie directors remain supremely confident. "Potentially," they say, "China could change from a tea drinking nation to a nation of coffee drinkers as well."

This may be optimistic. But one thing is for sure: Coffee connoisseurs will soon be drinking Kaffa Kaldi in Shanghai or Beijing as well as in Singapore, Hong Kong, and other cities in Southeast Asia.

The name Kaffa Kaldi is appropriate. It is derived from the legendary Ethiopian goat herder, Kaldi, who hundreds of years ago is said to have discovered the red berry which now gives regular pleasure in the form of coffee to an estimated three quarters of the world's population. With its development plans in China, Hiang Kie has its eye firmly on the remaining quarter.
COPYRIGHT 1998 Lockwood Trade Journal Co., Inc.
No portion of this article can be reproduced without the express written permission from the copyright holder.
Copyright 1998 Gale, Cengage Learning. All rights reserved.

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Author:Lindh, John Walker
Publication:Tea & Coffee Trade Journal
Date:Apr 1, 1998
Words:1238
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