 Aloha, this is Rob Hack with another edition of Exporting from Hawaii. Today my guest is a good friend and one of the busiest people I know is Jimmy Chan. He is general manager of the Hawaiian chip company here in Honolulu. Welcome Jimmy. Aloha. Thanks for having me. Besides being general manager of the Hawaiian chip company, I know you're also on the board of the Hawaii Pacific Export Council. You're on the board of the Chamber of Commerce of Hawaii and you're president of the Hawaii Food Manufacturers Association. Is that correct? Yep. Anything I don't know, any other organization? Not that I'm aware of yet. So with all of that, how do you have time to make chips? You know, it's a little rough. But you know, I think all those organizations provide great support for the food manufacturing industry and even what I do as the Hawaiian chip company. So for me, I feel like it's making time for those organizations is no problem. Okay, great. Now, tell us about the Hawaiian chip company. When did it start and how did it start? So it started almost 20 years ago. I basically was coming out of college to try and figure out what to do with the rest of my life. I had a speech communications degree, not a very good grade point average. So in the future, more academics was looking unlikely and I just needed something to do. And I saw Emeril Lagasse make some sweet potato chips on his Emeril live show where he used to do bam with the garlic and that whole bit. And I saw these Okinawan sweet potatoes on the counter when I went to go grab another beer and I thought, hey, you know what, let's try and make these. So I sliced them up thin, put them in hot oil on a stove, took them out, passed them out to friends, family. Next thing you know, people started asking, hey, can I buy a bag? So we thought, hey, you know what, let's go ahead and build this chip company and let's sell it off in two years and make millions and retire early and this and that. And you know, it was a lot of fun. I got friends together, we invested a little bit of money, extra beer money. And we were just trying to sell them at the swap meets, at the trade shows, trying to get into stores. But the cool thing was owning our own business and having the freedom to come in late after you go try surfing in the morning, then you leave early to go play soccer and hit the bar and that, lo and behold, that led to some dire financial situations which we had to really clean up and we did so and just kind of refocused and added stuff like taro to the line, which by stroke of luck, Brutaleo was making taro chips out of their Halava plant. And as we were kind of refocusing and retooling the company, they closed up that plant. And when we started making taro chips, we filled that void that they left in the market and that's what kind of helped propel us into more stability. When did you move into the facility, your main facility on Nimitz Highway? So that happened, so we started in 2000 officially, that facility was about 2008. So after the first couple of years we ran into trouble, then it was five years of actually building a real company and then by 2008 the banks were finally ready to take us seriously and said, hey, you know what, we'll loan you the money for this factory because we believe you have a good product and now you have a good company. Well that's great and at the facility on Nimitz, you have and you want customers to visit you there. Is that right? Yes. You know, that was the initial concept of the chip company was to set up and do retail, kind of mimicking what Big Island Candies is doing in Hilo and our other location was just poor for that, but by 2008 when we moved to this bigger facility, we started to explore with export, you know, and trying to export to the, not just export internationally but increasing sales to the mainland. So at that point, we didn't really have a retail store or anything set up, but after about three or four years of trying that and getting experience in the export market, we decided, hey, you know what, we need to get the tourists down to our place and give them an experience that they'll take back with them and then create the demand for our product. So now, yes, you can come down to our factory and actually get the chips, not just pre-packaged but made to order, which is what these bags here are. And they're warm. They're hot out of the fire. Right out of the fire and then you get to put your own seasonings. So you choose from 20 different seasonings and make your own combinations and develop your own personalized experience. Oh, that's perfect for the tourist market. Tell us a little bit, what types of chips do you have? So we got, so like I said, we started with the purple chips. You see those darker chips in there? That's the purple, Okinawan potato, you know, those are grown on the big island. We actually just got a shipment from Maui and that's looking pretty viable as far as the source goes. We also use taro. Like I said, we buy everything on the local market that meets spec. If we do need to bring some in, we can to supplement supply. And then we also have these orange sweet potatoes, which really make the bag pop as far as color goes. Oh yeah, definitely. We initially got those from Molokai. We were getting them from Molokai but then the deer that have over on Molokai started interfering with the farm and then eventually we had to shift to a supplier on the big island. Ok, great. And more recently, you were marketing these fantastic sauces, which I've told you about. We use a lot at my house. Tell us about the sauces. When did that start? So the sauces started right about when we were trying to do our initial push to the mainland. It was getting a little frustrating because our chips only have a short shelf life, three months. So by the time you get it shipped up there, you're down to two months and it was becoming a tough sell. And I thought, you know what, nobody actually makes a barbecue sauce that's actually spicy. So we had a chip flavor called Kilauea Fire, which is one of my favorites. It was a blend of habanero cayenne smashed into a garlic base and I took that seasoning and added it to an old family barbecue recipe and we came up with this, the Kilauea Fire barbecue sauce. So that's sort of the flagship sauce right now. Yeah, that's the original. And then in trying to get what we found is that it, like you said, it goes with breakfast, it goes with hot dogs, hamburgers, french fries. So to give it more utility, instead of just waiting till people barbecue, we added more heat, more habanero, more cayenne, and started marketing this hot sauce, which is our number one retail seller on the store shelves. The barbecue is our number one seller on food service to restaurants. Oh, interesting. But it's two complimentary products that the sauce can go on the chips, but yet they're very different products, especially in terms of exporting or shipping, because as you said, the chips have a rather short shelf life of three months-ish, but the sauces have a shelf life of a year or so, so it's much easier to ship those for, especially for exporting. So let's talk about that for a second. Tell us what have you done in terms of selling the chips or the sauces to Japan, for example. I'll just say Japan, because I know you have a lot of Japanese clients that love the products. Yeah, so for the chips, we initially wanted to get into all the Hawaiian stores on the store shelves, like there's spa resorts that mimic Hawaii, and they have huge hula shows there, that kind of stuff. And you know, kind of like what we saw with our attempt to penetrate the market on the West Coast, it was difficult because people were still unfamiliar with the brand and the products, but what we started to find success with was actually just selling in bulk to restaurants, so becoming part of a menu item. And then what we found is that actually even with our sauces, we had even more success, because we didn't have the limitations of the short shelf life. So the distributor there could chip up a bunch, cost effectively, and then distribute as needed. Whereas the chips with that short shelf life, a lot of times it's a rush order air freight. The cost just takes it off of most menus. What kind of restaurants are using the chips? Are they Hawaii themed restaurants or Okinawa themed restaurants? You know, the Hawaii, with the chips, it's generally the Hawaii themed, the Hawaii themed restaurants, or executive chefs in really high end hotels, like the new Otani hotel. Their chef was using it for some kind of a dish, and it's generally either really high end or Hawaiian. And then same with the sauces, although with the sauces, we're actually having success according to my Japanese distributor in restaurants that are just more traditional, not just Hawaiian, but traditional Japanese, they've added it to certain menus. And as a component of a menu item, now it's not hitting that same competition as you would as trying to compete as a katsu sauce on a store shelf, right? We're not going dollar for dollar there. It's just maybe our sauce costs a little more as part of the menu item, but it can be hidden into the cost of the menu item itself. Yeah, there's no way you can compete with just standard bulldog katsu sauce there, right? And it's not even worth trying to compete there, but where you are unique in that Maiden Hawaii, very wholesome, has a great opinion, word association Maiden Hawaii in Japan is just fantastic, it's spicy, which Japan doesn't have a lot, right? It really isn't a strong domestic manufacturer of spicy sauces in Japan, and so this is just fantastic product that you're exporting. So you were telling me before the show started that you have a couple of new products that you're going to start sending to Japan, can you tell us about those? Yeah, so basically we've got our base products. We've also got a raging volcano, this is one of the products that's currently sold in Japan, it's a raging volcano, it's the same kill way of our seasoning just on a vinegar base instead of a tomato base. But now what we're doing with these products is we're adding in a little bit more, you mentioned the strength of the Hawaii brand and tropical fruit is a big part of that brand. And what's more synonyms with Hawaii than lily-coi and mango and pineapples, right? So we've started to incorporate those flavors into these sauces and the first one that we're rolling out and that we're going to introduce into the Japan market this year is our lily-coi versions of the raging volcano and also the lily-coi barbecue sauce. Wow, I'm excited to try that because it's two of my favorite flavors mashed together, lily-coi and spicy sort of habanero type sauce. I can't wait to try that. So on that note, we'll take a quick break and we'll be right back with exporting from Hawaii with Jimmy Chan from the Hawaiian chip company. This is Think Tech Hawaii, raising public awareness. When I was growing up, I was among the one in six American kids who struggled with hunger and hungry mornings make tired days, grumpy days, kind of days. But with the power of breakfast, the kids in your neighborhood can think big and be more. When we're not hungry for breakfast, we're hungry for more, more ideas, more dreams, more fun. When kids aren't hungry for breakfast, they can be hungry for more. Go to hungeris.org and lend your time or your voice to make breakfast happen for kids in your neighborhood. Aloha, I'm Wendy Lowe and I'm coming to you every other Tuesday at two o'clock live from Think Tech Hawaii and on our show, we talk about taking your health back. And what does that mean? It means mind, body and soul. Anything you can do that makes your body healthier and happier is what we're going to be talking about, whether it's spiritual health, mental health, fascia health, beautiful smile health, whatever it means, let's take healthy back. Aloha. Welcome back to Exporting from Hawaii. I'm Rob Hack and our guest today is Jimmy Chan, who is general manager of the Hawaiian ship company, and we're fortunate that he's brought a bunch of his products here to show us before the break we were salivating over the new lily koi hot sauce that will be coming out of the Kilauea Fire brand hot sauce that they're getting ready to ship to Japan. So let's talk about the Japanese market again and stay on that topic for a few minutes. It's no secret that we're fortunate enough in Hawaii to have a lot of Japanese tourists coming here every year, but roughly 2019 should see about 1.8 million. Most of those coming through Oahu, through Honolulu International Airport, a lot of them coming into Waikiki, but certainly in the Honolulu metropolitan area. We have a great opportunity to market to these tourists. So can you share with our audience, how are you marketing to the Japanese tourists and what's the difference between your marketing in Japan to the Japanese market there and is your distributor agent involved in that? And how does that work? So trying to build in a feedback loop between selling in the local market and then driving demand in the homeland market. Well, I think I think a lot of it's just trying to build familiarity. You know, I think in that market, they tend to kind of follow, you know, follow the next guy. And if there's a line, they'll stand in that line to see what's at the end of it. And we're just trying to cultivate an experience that's compelling enough for them to want to stand in a line in front of the Hawaiian chip company. And a lot of that comes from for us. What we're doing is we're trying to mimic basically what we see in Japan. Because, you know, as a speech major, there wasn't a lot I could do with my degree, but one of the things that we learned in that was in interpersonal communication, people tend to project communication the way they want it received. So, you know, we go up to Japan and you see a customer service and you see, you know, them tending you, you know, your money on a tray and presenting you with things to try. First thing you come up to the booth and even just their value on freshness and, you know, hot senbei and araday and that kind of stuff. And that's where this, this attempt at, you know, this way of packaging the chips fresh from the friars kind of speaks to that. And even just getting to season your own chips, people were like, hey, McDonald's is copying you with their season their own fries. And I'm like, well, you know, that's that's great. But I actually stole the idea from McDonald's Japan, you know. And and that's that's kind of what what what we do. And that's actually a big part of, you know, going up to Japan. It's about going with my distributor, seeing what works, what actually is well received by their local culture and then trying to mimic certain aspects of that here while maintaining our identity as a Hawaii company. It's you bring up a very interesting point about going to the target market in your case, Japan, keeping your eyes open and learning and trying to adopt some of what you see not entirely because you need your product to be unique. But at least try to adopt some local packaging standards and what have you. Did you did you have to change anything about your packaging to go to Japan? Um, you know, we we do have we do have labels that we for for certain certain products we have labels that will that are translated into Japanese that my distributor would just stick stick on over the bottles. But what we found is the with our by concentrating on the food service market, we're able to just bypass bypass that. And that's that's been a little little little easier for us. What is your distributor do for you in Japan? Distributors can run the gamut of being very involved or not very involved. And it just depends on what your relationship is with the distributor, what you need from them. So explain to the audience in your case, what does the distributor do? Are they involved in the importation of the product and paperwork? Or are they involved in the marketing aspect of the product? How does it work for you? So for for our company, it's it's pretty much full service. You know, like he's he's out there trying to to secure new accounts. So it's hitting hitting the pavement, introducing product, participating at trade shows, taking orders and then placing orders and then figuring out how for for me how to get my products to Japan, helping me with all the export documents on and then even in Japan, it's about trying to figure out the best mechanism to to promote the products. You know, great. Products like this, especially the the sauces that are heavy, dense, liquids, particularly the products that ship in glass bottles, they're heavy. And so it's much more cost efficient to ship by ocean. Is that what you're doing? Generally speaking, shipping pallets at a time? You know, generally speaking, it's that's probably the best way to ship the sauces. But sometimes we run into good problems. Like, you know, yeah, you know, we're one of our big accounts every year is Kuwaiti birdie in Japan for the for the sauces. And, you know, they based their projections last summer on the prior summer's performance and halfway through the summer, it was outperforming. And they they need a product right away. So we had to ship it to get it to get it over to the air air cargo and get over there as soon as possible. And, you know, of course, that meant smaller margins for somebody. But, you know, I have a good relationship with my distributors who were able to work it out. Well, that's good. So you're shipping mostly by ocean from Hawaii directly to probably Yokosuka a port near there and then inland transportation to wherever the product is needed. You mentioned off camera that it's been difficult for you to make any headway in the Australian market because there's no shipping directly from Hawaii to Australia by ocean. It would have to go to the mainland first, probably Long Beach and then off to Australia. Yeah, that makes it cost prohibitive. Yeah. So yeah, I mean that that I mean that added on an additional, you know, at least 10 to 15 percent on top of the 10 to 15 percent that would have paid anyways to get it to the West Coast or whatever. And it just took us at prices out of out of market. Are there any inbound duties or tariffs involved in bringing the product into Japan? You know, there there are. It's just again, I kind of rely on a distributor to handle that. And with that, he'll bundle it into his price. And at that point, it's just up to the up to the customer. And that's why, again, being part of a menu ingredient is a lot more viable for at least for my company, because we're not going to be able to scale up and save on costs, you know, immediately. So it's it kind of it kind of works well that we're targeting that food service food service category first as we grow our infrastructure in Hawaii. There's a big trade show every year in March called FoodX in Makuhari in Japan. I assume you're going to that. Yes. And the Hawaiian chip company products are you exhibit there? Are you in a Hawaii booth? Pavilion, I should say. Yep. So generally, we've we've partnered up with our distributor. He takes an active part in helping us set up and we'll we'll we'll take part in in part of the generally the Department of Agriculture of Hawaii Department of Agriculture will set up a pavilion and within that pavilion will either find space as a part of their seal of quality program or even sometimes part of their pavilion will be partitioned off for Hawaii Food Manufacturers Association participation, which was actually how I first got my introduction into Japan. It was taking part as part of Hawaii Food Manufacturers booth within the Department of Ag Pavilion. And that helps offset a lot of costs, too, because otherwise, I mean, if we were to participate on our own, you're looking at six thousand dollars for just the booth. And let alone travel and what have you. No, I absolutely agree with you that these Hawaii pavilions, either through debuts, pavilions or Department of Agriculture pavilions are a great way for the Hawaii companies to get into these markets cost-effectively. And you were saying that you use FoodX or some other trade shows as a way to test products in Japan and see what the market feedback is. Can you talk about that for a second? Yeah, so so we'll go up and we'll we'll actually we'll actually assist our distributor in passing out samples and seeing just seeing just seeing what resonates, just seeing the reaction. I mean, like, you know, there's FoodX show and then another one that we participate in was is the DBET sponsored pavilion at the Tokyo International Gift Show, and that thing gets almost 200,000 people through that thing. So there's really no other opportunity, no better opportunity to get that volume of of people to try your products and give you an honest assessment. And so from there, that's how we've kind of shrunk our product line. Because, you know, if you look at our entire product line, we've probably got, you know, 20 to 25 different items and this and that. But these are really the ones that have resonated at those shows and resulted in orders. So with that, that's what we push into the market. And that's why we're going to test out this lily-coy to see if it is as well-received as it's being received here. Oh, I hope so. I hope it does well. We're going to wrap up soon. Can we bring up a slide on the contact info for the Hawaiian chip company? And while this slide is up, I just put here some shops that I know on Oahu where people can buy your products. But tell us, where can people get these products? You had mentioned sometimes available on Hawaiian Airlines. Are there others? Yeah, so yeah, Hawaiian Airlines has been a tremendous account for us. We actually just got into Sam's Club. OK, great. So you can get the tarot chips in Sam's Club. A lot of people do get our chips at Costco. And then also, let's see. I've seen it at times. Yeah, so at times, longs and of course KTA on the Big Island, you know, they're kind of kind of from the Big Island. So they I don't know if it's just as a favor to me or what, but they're one of the first guys to pick up any of the products that I that I offer. And if people would like to visit the facility, what's the address on Nimitz or behind it's behind Nimitz? Yeah, so it's actually you can see the building on from Nimitz, but you have to enter on Republican Street, which is parallel to Nimitz. One nine two eight Republican Street. Great, and your hours of operation? On nine to five, Monday through Friday and then Saturdays, 10 to three. Well, great, Jimmy Mahalo for being here. We greatly appreciate your time. We're a very busy person and thank you for showing off these fantastic products and telling us about your exporting activities at the Hawaiian chip company. Mahalo, this is Rob Hack from exporting from Hawaii. Thank you. Thank you.