Friday Jun 22, 2012

The ROCA Brand - Winning in China

John Melin

Chief Operating Officer Brown & Haley

Scribe: Jenny Andrews Editor: Jim Kindsvater

IN THIS ISSUE

John Melin reviewed the history and initiatives that have led ALMOND ROCA®, made by Brown and Haley in Tacoma, to its position as a leading imported confection brand in the rapidly growing Chinese market. Tom Leonidas thanked the BBRC members for their support after the shooting death of his wife Gloria. John Martinka summarized the highlights of his successful year as President of the BBRC. Dick Brown presented seven pins to members for their contributions to the Rotary Foundation.

THIS WEEK’S SPEAKER PROGRAM

Rourke O’Brien introduced John Melin, the Chief Operating Officer of Brown & Haley. His presentation centered around “The ROCA Brand – Winning in China”. John reviewed the history and initiatives that have led ALMOND ROCA®, made by Brown and Haley in Tacoma, to its position as a leading imported confection brand in the rapidly growing Chinese market. This is the story of how Brown & Haley has woven together a winning strategy while competing head-to-head with companies 100 times its size.

John commented that the most important year in his life was as an exchange student to Stockholm. From this, he learned to be adaptable to different cultures, and understand the significance of the differences. He comments that the work that Rotary does has big impact. John started out as a civil engineer, which focuses on building houses and other buildings. Consider how great it would have been to be a civil engineer in England during the Victorian period when so many Victorian houses and businesses were being built. Now, China is the place to be for civil engineers because things are growing so rapidly there. China is such a huge economy that they will be developing every 5 years in the same manner as London during the Victorian period or the U.S. during our great periods of growth.

Brown & Haley has continued to be very conscious of how and why China has been growing so as to be aligned with them into their growth into prosperity. China is very conscious of Western Aspirations, and to give a gift of ALMOND ROCA® is meant as an indication that the giver is doing well economically. Such things as the color of the packaging mean a great deal to the Chinese, where red is equated to good fortune and gold is equated to wealth. The two Mandarin Chinese characters for “ROCA” translates phonetically into “Happy Family”, and this perception is key to their success. In other words, there was a lot more than luck involved with ALMOND ROCA® being one of the leading confectionery products in China. It is no secret how significant the Chinese New Year is, and in that four week period Brown & Haley accounts for 80 percent of its sales. It is fascinating to see how Brown & Haley extended the trade name ALMOND ROCA® from a local company to a World-recognized brand.

The history of Brown & Haley is as follows. Harry L. Brown owned a small confectionery store and enjoyed experimenting with chocolate and sugar candies. J. C. Haley worked for Shilling and Company, a spice company, and had a flair for sales and advertising. They met in church in Tacoma, Washington in 1908, after J. C. Haley moved from West Virginia seeking his fortune. After beginning to work together in 1912, they incorporated their candy manufacturing business in 1914. By 1916, Brown & Haley was marketing a full line of candy products, including a chocolate and nut confection with a vanilla-cream center called Mt. Tacoma Bar, later known as MOUNTAIN® Bar.

With the emergence of World War I in Europe, nearby Camp Lewis (now Fort Lewis) swelled with doughboys training to fight “over there.” The soldiers had a collective sweet tooth that yearned to be satisfied, and Brown & Haley happily supplied them with everything from taffy chews to butterscotch balls. The young company’s sales soared, but then fell with the Armistice and the return of Camp Lewis to its pre-war population. J.C. and Harry then decided that the key to success was to innovate, and so began several years of experimentation.

In 1923, the company hit the jackpot with a crunchy, log-shaped candy piece suffused inside with butter and coated with chocolate and diced almonds. This delicious buttercrunch confection was dubbed ALMOND ROCA® by a local librarian. The same librarian also suggested the ancient Sicilian coat of arms that inspired an early Brown & Haley logo.

Word spread quickly about this foil-wrapped luxury confection. In 1927, the company decided to seal it in the now-famous pink tin, extending the product’s shelf life threefold. This ability to travel, and the candy’s exquisite taste, spurred worldwide sales of ALMOND ROCA® buttercrunch toffee.

ALMOND ROCA® confection traveled with U.S. troops to Europe, the Middle East and the Pacific during World War II, then to Korea and Vietnam. It continues to be a favorite of our troops around the world. Over time, overseas troops introduced it to locals in foreign markets, which fueled company exports. “The candy that travels” has been found in 63 countries including Europe, Africa, South America, Australia and Asia.

Brown & Haley’s heritage of creating premium, high-quality confections persists today. J.C. and Harry were committed to using the finest fresh ingredients, and experimenting to create wonderful new products. The company continues to innovate, developing and producing outstanding food products that delight their consumers. They are still headquartered in the factory where ALMOND ROCA® buttercrunch toffee was invented, but they have expanded five times since 1919. They continue to develop and implement new technological advances, including quality assurance processes, proprietary production capabilities, and state-of-the-art packaging equipment.

By balancing tradition and innovation, Brown & Haley continues to be proud to offer a wide range of products in addition to its flagship ALMOND ROCA®.

Expanding into China

My Almond Roca, the mainstay of Brown & Haley, has to do with dreams, illusion, and perception. As John Melin commented, My ALMOND ROCA® has to do with the perceptions of suits, fashionable styles, perfume, and making people feel fantastic. My ALMOND ROCA® grew to international recognition during the World War I period, continued through the World War II period, and is closely associated with family togetherness and being sold as a fundraiser. Aspirations of ALMOND ROCA® have always been high and closely tied to families, success, and entrepreneurs.

The first sales for Brown & Haley to China occurred in 1989. John Melin first traveled to China representing Brown & Haley in 1992. From the beginning, it was evident that China represented an enormous challenge and opportunity. There will be 300 million people in Chinese cities in 3-5 years. There is an enormous opportunity to sell, but an enormous complexity in logistics and dealing with cultural distinctions. China is a pressure cooker of opportunities. Recessions hit hard in China based largely in its original agrarian background (and the Country does not have much accumulated wealth). A recession in the U.S. might represent when the growth drops from 8% to 6%. In China, a recession is reflected by a drop in growth from 8% to negative 2%. As such, China is very volatile, and represents a sink or swim situation for any foreign company trying to get a foot-hold in China.

China should not be viewed as a homogenous whole, but instead as many different regions with distinct customs and preferences. While something might work in one region, it might be disastrous in another, and each region might have its own business leaders or bureaucrats to deal with. John said as with most foreign companies, Brown and Haley initially viewed China as China; but Brown & Haley only differentiated themselves and became successful in marketing when they started viewing China as its many regions with different cultural backgrounds.

Brown & Haley initially gave out astronomical amounts of ALMOND ROCA®. One benefit of ALMOND ROCA® as compared to other confectionery is that it comes in a tin to provide a very long shelf-life (provided it does not see too much temperature variation). Its value in the tin is enough to make it suitable to give as a gift. In addition, recently, ALMOND ROCA® has “taken over one of the largest subway stations in China, with fashionable and stylized advertisements.” Because of the Brand recognition in China that Brown & Haley has worked so hard and purposefully to obtain, there are vast sales and they are effectively competing with much larger brands.

John Melin often uses his Civil Engineering terms such as “innovation”, “vision”, and “growth” in describing how Brown and Haley very effectively and efficiently positioned themselves in the Chinese confectionery pressure cooker, and has done remarkably well. The tins and contents of ALMOND ROCA® are structurally similar to those that were enjoyed by the Doughboys in WWI and the GI’s of WWII, as well as the generations of fundraisers since. Now, the connotation and marketing of ALMOND ROCA® both in the U.S. and now in China is strikingly similar: to provide the perception of success with entrepreneurial connotations, to allow a feel-good gift that is worth something in the business or personal sense, and to make one feel like a million bucks. This sounds like a personal, a business, as well as a confectionery recipe for success.

CLUB BUSINESS

John Swager gave our invocation and Lee Smith introduced Guests and Visitors.

Tom Leonidas thanked BBRC for their support following the shooting death of his wife, Gloria Leonidas, in Seattle. Tom said at times like this, you find out who your friends are. He is glad to be in Rotary, and comments that there are no roadmaps in life. Tom hopes something good has to come from this tragedy. Talking to police, he came to understand that there are a number of unhealthy people walking around with problems that have been developing over many years. Such unhealthy people need help, psychiatrically or other. With decreases in funding, much of this help has stopped.

Tom hopes the more we can help kids have positive outlook on life, the better. Gloria was all about helping other people and making things better. Tom said he and Gloria were happy to be in the Rotary family, and the feelings are more than reciprocated.

BBRC President John Martinka spoke about our accomplishments for the BBRC during 2011 and 2012:

Fundraising the year before gave us a record amount for our projects. This year, we achieved a District Simplified Matching Grant, which was a first ever for our club.

A leadership development program was put in place. BBRC had 100% contribution to the Rotary Foundation. We had solid participation in our projects and events. We increased the internal public relations and education on projects and activities. A three-year budget was created.

Good fellowship continues through the club including good outreach to past members and presidents and healthy development of new members.

We will be at Break Even on the club side after three years of losing money. Al Forney did a great job on:

Getting books in shape; getting a proper accounting system in place that can and will be followed in future years
Getting accounting in compliance with new IRS tax regulations for non-profits
Getting taxes filed on time

BBRC signed a 4.5-year contract with Glendale Country Club.

We made it through the process of getting a new club administrator. We are all sorry to see Sayoko resign, but now she can now be a more active member.

Interact club is now up and (slowly) running. Rotaract club is moving forward.

The Satellite BBRC club up and running. Four current BBRC members have transferred over to the Satellite Club, and a couple former members are returning. The Satellite Club is attracting some pretty enthusiastic new BBRC members.

Internationally, three projects were approved for Rotary matching grants, and we will have at least one BBRC member traveling with each project (Antigua plus one each in Columbia and Nicaragua that will use this year’s funds for a 2012-13 grant).

Community Service had too many projects to list. Jane Kuechle has done a great job. We have created and implemented the Ambassador program to retain long-time members and past presidents, and it is generating interest around the district.

Membership retention is always a club concern. At the start of the year and during our budget process we stated that our club has a history of going up one year and down the next and that 2011-12 was one of those down cycle years. It has proven to be so. The board also made a business decision to terminate five members who were not active.

A number of members were “saved” by the Ambassador program and the Satellite club. It is still a concern and affects projects, fundraising, revenues and dues.

Dick Brown introduced the recipients for the Rotary Foundation. He commented that this is the first time in the 27 year BBRC history that we had 100% contribution to the Rotary Foundation. Among the recipients, for a total of $37,000 lifetime contribution, are: