Goodbye Gong Cha, hello LiHo

Outlets under new home-grown brand to replace those under popular bubble tea chain

The man who introduced Gong Cha to Singapore is now taking the bold step of removing every single outlet of the popular bubble tea brand to replace it with his own made-in- Singapore creation.

Mr Rodney Tang has already converted more than 30 Gong Cha outlets here to sell a new range of bubble tea under the LiHo brand.

The remaining outlets will soon follow and, by June 5, all 80 Gong Cha outlets islandwide will have been replaced by LiHo, which is Hokkien for "how are you?"

To be sure, this was not a decision he made lightly.

When Mr Tang first introduced Gong Cha to Singapore in 2009, he did not think it would be such a success. But today, it rakes in $30 million in revenue annually and is by far the biggest brand that his company, RTG Holdings, manages.

Other brands in its stable include Nene Chicken, Bornga and Paik's Coffee.

Mr Rodney Tang, who first introduced Gong Cha to Singapore in 2009, at his LiHo outlet in the Bugis+ mall. By June 5, all Gong Cha outlets islandwide will be replaced by LiHo.
Mr Rodney Tang, who first introduced Gong Cha to Singapore in 2009, at his LiHo outlet in the Bugis+ mall. By June 5, all Gong Cha outlets islandwide will be replaced by LiHo. ST PHOTO: LIM SIN THAI

In fact, shutting down Gong Cha and introducing LiHo in its place represents a major shift in the company's business strategy, from managing brands as a franchisee to creating and owning one.

NEW CREATIONS

Tea is tea - there is only so much I can do to make it different. But we are introducing drinks such as cheese tea and smoothies.

MR RODNEY TANG, on changes he is making at LiHo to set it apart from Gong Cha.

And Mr Tang was not even planning to take such a big step until very recently, after he discovered that Gong Cha's parent company in Taiwan had itself made a huge change in its business strategy.

"Our agreement to operate Gong Cha in Singapore expired on Dec 31 last year, and they proposed an extension. We were more than happy to do so. I saw no reason not to extend," he said.

"But I was busy and I kept putting off reading and agreeing to it. Anyway, we had been working together for years and I trusted them."

When he was finally ready in January, he decided to pay his Taiwanese business partners a visit to talk about Gong Cha's future.

That was when he found out that they had in fact sold the entire company, Royal Tea Taiwan, to Gong Cha Korea, which in turn is owned by Japanese private equity firm Unison Capital.

"So my friends were no longer in charge of the company and did not even inform me formally. I felt betrayed," Mr Tang said.

He looked through the new terms carefully and found that they were more restrictive, with clauses that would have affected his ability to manage RTG's other brands effectively.

Over the next few months, he managed to renegotiate more favourable terms but, by then, the idea of owning and building a new home-grown brand had already taken root in his mind and became too compelling for him to ignore.

Since then, RTG has tried as much as possible to build LiHo from scratch.

This has meant using completely different suppliers for its tea and other raw ingredients, using different methods of making its drinks, renovating every outlet and designing a new logo, new packaging and a whole new menu.

The whole process, including the cost of renovating all the outlets, will cost the firm about $1 million.

It has been quite a challenging move, Mr Tang noted.

"Tea is tea - there is only so much I can do to make it different. But we are introducing drinks such as cheese tea and smoothies."

Fans of Gong Cha's brew will likely find LiHo's teas to be of a similar quality, if not better, he added, as the firm has learnt a lot about making a good cuppa over the years.

Another thing Mr Tang has learnt is to aim high.

Even as he is in the midst of handling a massive rollout of 80 LiHo outlets within two months, he has already set his sights on taking the brand global.

"I think we have come up with a brand that can expand into Hong Kong, Korea, mainland China and maybe even the United States and Canada," he said.

"We have to build up our brand recognition first and wait for market forces to be more amenable."

Mr Tang admitted that his staff were initially uneasy about the company's new strategy, but have come around and are all now "fighting" with him.

He, too, has had his fair share of nerves over this big move.

"Of course, I had my fears, but we cannot think about failure. This is the time to show my leadership skills and hopefully lead my team in the right direction," he said.

"And at least for the first time in many years, I am excited about having something to achieve. I am confident that we have a chance to succeed in this space."

A version of this article appeared in the print edition of The Straits Times on May 29, 2017, with the headline 'Goodbye Gong Cha, hello LiHo'. Print Edition | Subscribe