 Aloha. This is Rob Hack with another edition of Exporting from Hawaii. Today I'm doing another exporter profile of a qualified exporter from Hawaii to Japan, and that is Diamond Bakery. Kali, his own Diamond Bakery. Today with me is Maggie Lee, the Director of Sales and Marketing for Diamond Bakery. Welcome. Thank you. Thank you very much for being here. You told me Diamond Bakery is almost 100 years old, is that right? Almost. 97 years. 97 years, that's remarkable. I mean, that predates statehood, certainly colonial days that goes way, way back. We're using the background today of Diamond Head. That's where Diamond Bakery gets the name from, is that right? Yes. And you weren't always in Kalihi? No, we moved to Kalihi in 1970s. 1970s. When a company near Mosspace, it's like a major expansion of Diamond Bakery. Wow. And so before that, it was on King Street? On the King Street, Cross Street from Times, Mauritania. That's where the current zippy is located. The company actually is still on the land. Wow. Oh, that's interesting. Okay, so the main products of Diamond Bakery are what? Crackers. Everybody know, you think about Diamond Bakery, say, oh, crackers, that's my favorite. Yeah, here's some examples of crackers and cookies, shortbread cookies. These are fantastic. Thank you. The coconut. Anything that says Lily Koyan, I always take, but these are really excellent products. Everybody in Hawaii knows these, and what I love about it is you guys are very open about having the Made in Hawaii logo on here, which I think our companies need to do much more of. Appreciate very much that the products are made in Hawaii. You said you have a couple of new products that aren't yet on the market, which are those? Guava. So guava, macadamia nuts, and a regular guava. So the reason we have both is some people allergic to nuts. So we have like without nuts and with nuts. So you know, everybody can enjoy. One of the things I find very interesting about your company is that you have been working in Japan for how long, exporting to Japan? Over 10 years. Over 10 years. And when you started selling your products in Japan, you had to make some changes to the products so that number one, they would adjust the Japanese market taste. But number two, they have to conform to Japanese regulatory issues and what have you. So we'll talk about some of those issues in a minute. But what I think is really interesting is that your company took the recipes that were needed to be successful in the Japan market, turned them around and started using them as your main recipes for the US market. So which of the products now are originated as the Japanese recipe that you're using in the US market? Actually, all our new products that we developed in the last three to five years. That's fantastic. I think that a lot of our companies here should start thinking about such a philosophy and such a strategy because the Japanese market, as you know, is concerned with shelf life. Very strict on the shelf life, on the ingredient, on the labels, and packaging basically everything. Yeah, packaging is really fantastic too. But shelf life is critical. The preservatives that are allowed in Japan are very limited. So that's why shelf life is critical. Interesting. Very, very interesting. Your packaging, I know in the past couple of years you've redone your packaging and I think your packaging looks great. The other thing I would say, we have a bag, which the bags are extremely important for the Japanese market because Japanese consumers are not going to buy these boxes as gifts and give them to somebody else without being in a bag. Right. And so I think that this is just great. In terms of your marketing strategy in Japan, you're spending quite a bit of time at trade shows there. Right. So you recently went to FoodEx? Yeah, I just came back from FoodEx. Tell us about FoodEx. What was there and what did you learn? FoodEx, you know, there are like many, many shows in Japan, but there's only a few that we chose to participate. First month of the year was FoodEx. It's part of the DOA sponsor event. They subsidized some of the costs. DOA's Department of Agriculture? Yes. So the show itself is skewered to business buyers from institutes, from food service, restaurant, colleges and hotels, hospitality. So it's different from another show that was in February, that supermarket show. So there's shows, the invitation to the buyers is very specific. So it depends on who you want to target and where you want to go. You need to study and be chosen which show you go. So pay off is totally different. Are you part of the Hawaii Pavilion at FoodEx? Yes. Okay. And that's also done by Department of Agriculture. Yeah, they're the sponsor of the event. Yeah, they're very good at that. So mostly FoodEx is B2B. B2B, I'm sorry. Yeah. Who do you feel is coming up to sample the cookie? At the show? Yeah. Mostly the buyers, there's a couple, you know, there's just supermarket buyers coming too, because it's not exclusive. But mostly we see a lot of people from hotels, especially the hotels, they want to target attract people from U.S., mostly from Hawaii. If a hotel buys a product, like let's just say they buy the original bread product, will they use the cookies individually or will they give a whole box to a box? We have options of gift pack also for service pack. So for the hotels, they have both gift shops. They also have for service. But like us, because our product is more on the premium high end, so we're more targeting to their gift shop. Do you have any idea of what is the price of this box in Japan if somebody went into a gift shop? What would that cost? Around 10 to $12. What is the street price in Hawaii? $199, depending on where you go. So a lot of that, the markup though is shipping and tax, tariff, shipping. Obviously, you know, the distribution company has to make money too. So a lot of markup. What is the tariff? Do you remember this? I think it's around 10 to 15%. That's what I would say. Yeah. Okay. And usually when Diamond Baker is shipping to Japan, you ship by air or by ocean? Combination of both. Sometimes, you know, sales cat of unpredictable from time to time. Sometimes they get a rush orders and we'll have to fly them out. But if it's in a plan, then we do it by ocean. Okay. Let's stay on the subject of trade shows for a minute because I think trade shows are an important outlet for Hawaii companies to find out what's going on in the foreign market, but particularly in Japan. So you just got back from FoodX, that's about a week long, right? And the supermarket show, how was that? Actually, I was there last year. It's similar to the FoodX. The traffic is somewhat even. It's not like crazy, do a lot of sampling. A lot of business people. FoodX is in Makuhari. The supermarket show is where? I think it's in Makuhari too. Tokyo Bigside or Makuhari, one of the two. And there's thousands of potential buyers come through there. Thousands, yes. Tens of thousands. Not only from Japan, because the show, the market to the whole Asian, actually internationally. So you see the buyers from China, you see the buyers from Vietnam, from Korea. Have you made any contacts at these shows from other markets in Japan? Like have you, has Diamond Bakery sold anything to Korea because you went to FoodX in Japan? We haven't, but we get a lot of interest from Korea. Okay. And I know you've also been to Hongqiu. Hongqiu, Hawaiian Fair. How did that go? Totally different event. Hongqiu is B2C. A lot of shoppers, you see the live actions, which is more exciting. So I do a lot of heavy sampling, so I can see the response from people when they eat cookies. They'll say, oh, it's delicious. It's like, okay, happy. Yeah. And Hongqiu, they buy. Yeah. I mean, you have to ship a lot of product there ahead of time. Yeah. So I'm curious, how do you determine which inventory you're going to ship to something like that? That's the benefit of having an agent. So we have an agent that will be working with them for over 10 years. They're very experienced of what product sells the most and what flavor sells most. Especially in the beginning, they guide us. I will have a discussion with them a month before the show. We talk about which product we should sell more and which product we should bring less. And then your product will emphasize on the new flavors too. How do you ship product to a show that you're going to use as a sample? That's not like a normal shipment of product that's for sale? Depending on the timing, if we plan well, we piggyback our samples to their regular orders. If it's a new product, we don't have a lot of lead time, I just FedEx them out to our agent. Do you pay inbound duty on the samples too? No, because it's commercial inverse. You mark the zero dollar value. It seems like you're very happy with your agent. What is the name of the agent? Because some of our viewers are probably looking for an agent as well. It's called CFC Japan. Are there any other shows you've done besides Food X, Hong Q, Hawaii Fair, the supermarket show, and Tokyo Gif show? And how's that? It's very good. It's also another B2B show. So it's totally different from Hong Q. It's manageable, traffic. You do some board sampling. But you can't sell anything? You cannot sell anything? Okay. Of all of the products you're sending, let's say products that are available in Hawaii for sale, and then the products that are available in Japan, what do you think is the difference in the tastes of the consumers? What do the Japanese customers prefer? Specifically for Diamond Bakery, the Hawaii market is very different from Japan. Local people, they consume crackers daily. Our crackers in their pantry are readily available in Japan. People don't have that kind of habit to eat crackers every day. We have to educate them on how to eat crackers. On the other hand, cookies are like universal snacks. People understand the product. It's easy to accept, especially Shobra cookies. They understand, and it doesn't take a lot of effort to teach them how to eat, because everybody knows how to eat cookies. So different strategy for crackers. We have to educate our agent on how to sell. Like the Graham crackers, we have to teach them, okay, when it's summertime, you got to use Graham crackers to make s'more, which is not in Japanese habits. We're breaking into the soup or we're loaded with jams and jellies, which they don't eat like that. So we have to teach them, adapt to their culture too. They like cheese, so we teach them to use Soda Cracker with cheese. Tea, drinking tea? Tea and the cream crackers. But they like coffee too, so we always do the coffee and the cream. Okay, with that, we'll take a short break and we'll be back after the break with Maggie Lee of Diamond Bakery. You soon. Aloha, I'm Yukari Kunisue, the host of Konnichiwa Hawaii, Japanese talk show on Think Tech Hawaii. Konnichiwa Hawaii is all Japanese broadcast show and is streamed live on Think Tech at 2 p.m. every other Monday. Thank you so much for watching our show. We look forward to seeing you then. I'm Yukari Kunisue. Mahalo. Hi, this is Rob Hack, back again exporting from Hawaii. Our exporter profile today is Diamond Bakery here in Honolulu in Kalihi and we have Maggie Lee, the director of sales and marketing of Diamond Bakery. Before the break, we were going through talking about the difference in the taste of the Japanese market versus the Hawaii market and then educating your agent but also the consumers in Japan about how to actually eat the crackers. As you said, cookies are pretty universal. I would agree with that. Crackers probably come originally to the US palette from Europe or the English are still quite popular with soda crackers. But you're correct. To me, it's not a common thing in Japan but I would think that the Japanese consumer would like it once they tried it. It seems to be the kind of thing that would be very successful. Definitely. First of all, they like everything from Hawaii and on top of that, we offer a good quality product and make sure they understand what the product is and how they can consume. Your facility now in Kalihi, it's a pretty big operation. You're making lots of cookies and crackers there. Are you able to get much, what traffic from tourists that are coming there or do you have any retail outlet plans to be able to do that? We actually haven't set up any outlet yet but it has been a topic for the company for years. I think I mentioned to you before we've been in discussion with other companies and potentially have a Kalihi tour of Made in Hawaii products, including Hawaii Chip Company, Line Coffee, Manihuni Mac, Chocolate. We're kind of all in one blog but a lot of challenges I'll say before we can even offer a tour we need to address. Parking, the timing, the translator. You're basically interrupting the production if you give the tour. So like Diamond Bakery, there's a lot of steps to go through before we can even offer a quality enjoyable tour for Japanese. Of course. I just noticed there's so many tourists now that are not just Japanese but this is an exporting show so we'll talk about the Japanese tourists but I noticed that there's so many tourists in Kakaako and Kalihi and they're walking around taking photos of the murals. Yeah I know I just noticed that too. And I notice from reading the Japanese tourism brochures from the tour companies that they're actively marketing those walking tours and the Segway tours and the biking tours so that people can get out of the Waikiki area and explore a little bit but it's kind of nice these little hidden murals that people think and I do think that our local companies in that have a footprint down there in Kakaako, Kalihi, what have you that they could capitalize on that by sort of some Japanese signage and bringing tourists in and what have you not just Japanese of course Canadian tourists but of course Japanese eyes are going to gravitate towards Japanese language that's sort of natural right so if we had some Japanese signage out there we would probably get more Japanese foot traffic coming in right so one of the guests we've had on here before Jimmy Chan they're doing as you mentioned the Hawaiian chip company they have a quite an exciting program over there where they are trying to get foot traffic coming in. So back to Diamond Baker, where do you see your growth in the next few years? You know we started with only one product now we have over 10-15 items in Japan so in the future obviously growth from the new product and a growth from the new market of the existing product and also one of the key things I want to learn for the company will be the e-commerce. That's an incredibly hot topic right and then from the seminar you just had early you know you're talking about shoppers doing the online shopping the rate has grown from like 70% to 90% so that's to me that's the future. Okay as you know we're out here in the middle of the Pacific Ocean on some small islands and shipping is an issue right however you have a very good agent in Japan who's able to handle local stock and so a customer in Japan could order online and receive the product domestically. Is that going on now? Not quite about worrying discussion. Okay that would be a great step forward I think at some point. In Japan are all of the products available or is it just a limited set? It's very limited limited to cookies and field crackers. And is there a favorite flavor? Lillikoi. Oh actually Kona coffee I didn't bring the samples but Kona coffee became a new favorite in Japan. Oh I could imagine it would be very popular. But they like macadamia nuts so anything with macadamia nuts is quite popular. Very interesting. I don't know the data on nut allergies in Japan but I assume it's the same as anywhere else in the world. Do you find that you have to deal with that? We do that's why we offer two versions of the same flavor. Japanese people especially the younger generations almost similar to US consumers they're very sophisticated. They read the labels very carefully. They're really into organic all natural kind of food especially when they make them cook themselves. So every time we go we talk about you know how we can make the label more clean. Stay away from preservatives, stay away from artificial flavors, artificial colors because Japanese shoppers are very sensitive. We'll come down to that. Do you feel that Japanese shoppers like seeing made in Hawaii does that help them buy? Oh yes definitely. I would think so. Yeah everybody love Hawaii. Made with aloha. Yes. Great let's stay on this topic though. We were talking earlier about using the Japanese recipes here. Right. When did your company decide that that was important? I would imagine there's some cost savings by just having one general recipe. That's one of the main drive. Because companies like us were still growing in Japan even though we've been there for a few years but the market size is not big enough to demand huge production around. So by using one recipe we don't have to carry two sets of inventory and we can keep the product fresh for both markets. That's really a fantastic strategy. As I said I hope that more companies will adopt that philosophy. I'm sure a lot of companies you know you have that's a part of the steps you have to go through when you export to Japan. Now you're the director of sales and marketing for Diamond Bakery. That includes marketing in Hawaii, includes marketing in the mainland. What is different for you? What's different about marketing outside of the United States compared to marketing inside there? I'll say one of the biggest challenges is language and learning the market, learning the shoppers, their philosophy, lifestyle. Where do they go to shop? What do they talk about on social media? In the U.S. easy you can do some research you get a lot of reports. In Japan it's going to be a learning process for Diamond Bakery to learn how to reach out, how to build your fan base, how to grow your Instagram followers, how to grow your Facebook. It's easy for people to say you can post on Facebook, post on Instagram. How do you reach out to Japanese? That's my biggest question and I have to learn. So you originally came from China and you were a microbiologist and you went to UH to study microbiology but then you changed to sales and marketing. So Diamond Bakery is lucky to have somebody like you to change the sales and marketing from microbiology. Then with your Chinese capability, Chinese language capability, have you tried marketing to China or Taiwan or Singapore or Hong Kong? Actually we had a discussion even when I go to Japan, you know, you see buyers from China. There's definitely interest in the product but the hurdle, I wouldn't say the hurdle, the challenge is the price point. Japanese people, shoppers are waiting to pay for the premium product. They pay for the product from Hawaii, they're waiting to pay versus in China or Korea or even VNN. I actually got a buyer that's super interested in bringing the product to VNN so but I have to be upfront. I think this is kind of price point. Yeah, I don't think the shoppers are ready for that kind of price point. You know, especially for cookies or crackers, it's a very competitive market. Okay, we're almost out of time but before we go, let's make sure the audience knows how to contact Diamond Bakery. Where could they buy the product? Just in Hawaii, where could they buy the product? Anywhere, any supermarket you go, you should be able to see Diamond Bakery product. Okay and your website is DiamondBakery.com. DiamondBakery.com. I suggest people sign up because we do promotions all the time. You can get a good deal. Oh, okay, great, great, great. Okay, so with that, I'd like to say thank you She-She to Maggie Lee. He is the sales and marketing director for Diamond Bakery which is producing some wonderful products here in Hawaii and having success in exporting them to Japan and hopefully beyond soon. So thanks again to Maggie, Diamond Bakery and with that, I'm Rob Hack. I'll say Mahalo from another episode of Exporting from Hawaii. Thank you.