The Tapping Tapir started out as a popsicle business called Potong. The three co-founders Ivan Lee, Victor Tee and Tee Reei Toh are all from corporate backgrounds, deciding to first introduce their products at an artisanal market in Kuala Lumpur. From the encouragement and feedback they received from the public, they gained the confidence to venture into supplying to cafes.
“There were logistic issues right at the onset because not many people were willing to take on frozen products unless the supplier could supply the cafes with a freezer. It was very hard to scale the business,” Ivan shares with us candidly. “The ideology from our core brand value being all-natural, and already working with the fruits, there are certain flavors that we couldn’t do with ice cream that we could do in a soda, for example, or hibiscus and lime where the flavors are a bit more delicate. So, we then actually stepped back and decided to switch the business model.” Six months later, The Tapping Tapir was launched at the end of 2013.
Nine years on, as The Tapping Tapir is starting its second phase of expansion in their business model, Ivan sits down with us and shares with us about their milestones, and how they switched the business model to suit a 60% local market (they were operating on 60% exports before this).
Table of Contents
- The Tapping Tapir Milestones
- How has COVID shifted your business model?
- Tell us more about your latest series, BAJO
- What about the sugar tax?
- Tell us about your experience in exporting. What do others need to prepare to scale their businesses for export?
- How do you choose which flavors to launch? Is there a process before launching a new flavour?
- Tell us more about the mistakes
- What is the focus of The Tapping Tapir moving forward?
The Tapping Tapir Milestones
2011: Launched Potong with a starting capital of RM30,000 – an ice cream business selling in artisanal markets, eventually facing logistical challenges with entering into the cafe supply chain.
2013: Change of business model and rebranded to The Tapping Tapir – a premium homegrown Malaysian soda brand made of all-natural ingredients and featuring natural local herbs and condiments. (Named after one of Malaysia’s most iconic animals, the tapir is distinctly Malaysian, and so is the The Tapping Tapir).
2015: Closed their first deal with Mandarin Oriental Hotel in Kuala Lumpur. Exported their first container-load to UAE. Exports to Singapore, South Korea, Hong Kong, Macau, Australia and Portugal, total at least 2 containers every month. The business strategy was targeted to the export market.
Launched The Grand Hornbill Light range, 100% naturally brewed sparkling iced tea highlighted with zesty limes with a bouquet of floral notes
2016: Launched The Classic, featuring traditional recipes such as sparkling cream soda and sparkling cola.
2019: Moved to their largest factory premise with RM1 million capital.
2020: COVID-19 hit and the business was impacted greatly with only 2 container-loads exported in the whole of 2020. Tapping Tapir began to focus more on the local market with B2C and online sales.
Launched BAJO, a hydrating infusion of sparkling water, fruit juice, vitamins and antioxidants from green tea. The namesake was inspired by the Orang Bajau, a local nomadic tribe in Sabah, East Malaysia is known to be a people who draw their source of life from the sea.
Launched The Tapping Tapir Light, as the name suggested, this range is made 100% naturally and sweetened with stevia leaf extract. Same great taste with reduced calories.
How has COVID shifted your business model?
Pre-Covid, we were probably doing 60% export, and 40% in hotels and local consumers. Right now, I would say our local sales is around 60-70%. We only sent 2 containers for export in 2020 when compared to sending 2 containers every month. In January 2020, Mandarin Oriental in Macau and Singapore informed us that they were not going to take any more orders until further notice. This was indefinitely, which is unheard of. So, I already knew early on that our main chain of overseas businesses are going to take a big hit.
We needed to have a new channel to get us through during the lockdown. Our platform on Shopify has been there for several years and the reason we couldn’t really scale it or get it to where it is right now was that (previously) our main products were in glass bottles. A lot of logistics companies were not willing to move it for us.
In March 2020, we negotiated a deal with the freight companies. We also launched our canning line and pushed our advertising during MCO. With Facebook advertising, we basically survived or made it through the last few months through our online channels.
The benefit of going to B2C is a higher margin of earning as the products go straight to the end consumer. That’s how we got through this period.
Tell us more about your latest series, BAJO
We wanted to release the BAJO series (canned products) for two reasons:
- We wanted to differentiate our brand between the glass bottle and the can because there was a premium with the glass bottle that’s priced between $10 to $15. That’s why we launched the cans specifically to target a more than niche market and drop the price to be around the $4 to $5 mark.
- The benefit of the canned beverage is that packaging wise, it’s lighter and shipping costs are a lot cheaper. It’s half the price! Plus its durability is a lot better than glass. We’ve also created our own proprietary blend using stevia partly due to the sugar tax imposed by the government.
What about the sugar tax?
The public may not know this but if a product has more than five grams of sugar per 100 ML, the government charges about 30 cents on every liter produced.
We had to switch our formula. Our products are all-natural and the sweetness of fruits varies. So, we still stabilize the sugar levels to keep it to a consistent 9 grams per 100 ML for bottled drinks and 4.9 grams for The Tapping Tapir Light (canned drinks).
When we found out that we hit the sugar tax, we started work with a lot of the local stevia companies, because Malaysia has a sufficient supply of stevia. We worked through the local companies and created our own proprietary blend so you don’t get that metallic aftertaste which you will get from pure (manufactured) sugar. And now our sugar level is at 4.9 while our Bajo range is probably at around three grams of sugar.
Tell us about your experience in exporting. What do others need to prepare to scale their businesses for export?
Dealing with distributors is key.
Five years ago, our first container went out to UAE. Working relationships with your distributors are for the long haul. The ones that we are working with right now, we’ve worked with for several years already. At the start, we did work with distributors that didn’t have the same alignment. A big learning curve is to learn to comply with different food regulations and make sure that you don’t simply just start exporting with a new distributor.
It took us a year to get into Korea. We couldn’t just send the cargo and expect it to clear; job done. We needed to make sure that our labeling was compliant to KFDA, and it needed to be in Korean. When the products finally got in, the distributors also needed to be motivated and willing to push the product because they are the one that knows the market better than you.
So, the distributor will basically take the order but you don’t know when they’ll place the order. And you kind of don’t have any control over the country’s marketing strategies because you’re not there. It’s really a whole different ball game.
Our business model was built predominantly on serving the export market and wholesale to hotels and cafes until 2020. Our business model has totally switched because of COVID-19. I think that has been a game-changer for a lot of SMEs.
How do you choose which flavors to launch? Is there a process before launching a new flavour?
That’s a good question. Let’s take the BAJO series. Coming back to our core value of all-natural flavours, we wanted to have it as a clean, hydration sports range.
We did explore that channel of flavoured water or tinged carbonated water. Based on our research, with a largely Malaysian consumer-base, they are health conscious but they also want the flavor, they’re not to the point where they want zero sugar, zero fat.
With BAJO, we are the first to launch starfruit commercially and watermelon too! Both of these fruits have a lot of juice, a lot of hydration.
Producing the watermelon line was quite difficult to do. You can’t cook the watermelon because it changes the freshness flavours. Our team’s expertise in trying to preserve the drink was really put to work. It took us 6-months to succeed. It’s the dedication of the team at the start and their persistence to keep tweaking and doing the R&D.
To be honest, we made a lot of stupid entrepreneurial mistakes
at the start
Tell us more about the mistakes
Unnecessary Operational movements
We moved our Operations a lot, actually. It wasn’t really necessary. Up till today, we’ve moved 5 times in a span of 7 years, which has cost us quite a bit of money and time. To give you an idea, capital for the latest factory set up and renovations is at least RM 1 million
When your business grows, that capacity just leaves no option but to move out because we grew quite fast, in that sense. But right now, we’re optimistic with the future.
Shifts in the target market
Another oversight would be not focusing on the local market. In the early days, people saw our brands in cafes or bazaars, but in the last couple of years, we haven’t focused on them much until now. Last four years, we were just busy on exports, building our brand on an international scale, and neglecting the local market. The pandemic has pushed us to think harder about who to serve. Now that customers are supporting SMEs and local businesses more than they normally would, we need to think about getting our local presence a lot stronger. It feels like we are going back to where we started.
Now, when switching our business model to be more locally focused on B2C, it’s easier for us to get product feedback. Referencing my good friend and fellow entrepreneur, Christy Ng (a well-known local brand specializing in women’s shoes and accessories that gained momentum through online retail), her strategy with her business model was to stay hyper-focused on serving the local market and targeting online sales.
Ways of funding to scale the business
For SMEs, my advice is to explore other avenues to get capital or funding besides getting investors in,
especially in Malaysia, there are organization grants that don’t require you to get investors in. When external investors do come in, it brings in a lot of opinions and it gets very difficult to manage a business when you’re basically just starting out, wasting a lot of time and energy chasing our beliefs.
I think SMEs can take a better route, depending on your business strategy. Some people do have different games on their strategy. We just want to grow a financially viable business.
What is the focus of The Tapping Tapir moving forward?
Our business strategy has changed quite a bit to focusing more locally and on e-commerce. With online sales, we are still learning every day with the opportunities we are working with now, to network with more entrepreneurs.
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We just got a deal with Petronas and we did a pilot run with them for Makan Mesra – a premium upscale grab n’ go concept. If everything goes well, we’re launching our can series with Petronas. Personally, I am excited about our new partnerships, tapping into new markets. I think there’s a lot of room for us to grow domestically.
Image credit: The Tapping Tapir. This interview has been edited for clarity and length. Interview and written by Theri B. Edited by Lim Aileen.