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Health, Beauty & Fashion

Coffee Bean on a roll

...Leaf chain. The beverage chain is, of course, behind...Coffee Bean at the old Scotts shopping mall in 1996.
The Straits Times - April 10, 2011
By: Francis Chan
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Coffee Bean on a roll

Los Angeles-based Mel Elias flew into town last month, and within days, he was having an ice kacang at a foodcourt.

'My family thought I was crazy but it was so cold and sweet - just great,' said the president and chief executive officer of the Coffee Bean & Tea Leaf chain.

The beverage chain is, of course, behind the original ice-blended coffee which it introduced way back in 1986.

But unbeknown to many, Coffee Bean & Tea Leaf is, like its 42-year-old CEO, as Singaporean as ice kacang.

Sure, neither originated here: Mr Elias was born in Malaysia and the firm was founded in the US.

But he spent most of his youth here, even doing national service in the Singapore Armed Forces, while the American firm is now majority-owned by a Singaporean family.

In fact, it was the Singapore connection that gave the aspiring entrepreneur and underachieving brand a new lease of life some 15 years ago.

It was 1996. Singaporean businessman Victor Sassoon had just bought the Asia franchise rights for Coffee Bean & Tea Leaf and was looking to build his team to grow the new venture.

At the time, Mr Elias was a litigator at Harry Elias Partnership - a top law firm in Singapore founded by and named after his godfather Harry. He was working on the franchise agreement for Mr Sassoon, his brother-in-law, when he decided to take up the latter's offer to join the business.

'I saw the opportunity to enter into a business which I felt at the time could be a real substantial, long-term business that I could be a big part of,' Mr Elias told The Sunday Times in a recent interview.

Coffee Bean & Tea Leaf was founded in southern California by Americans Herbert and Mona Hyman in 1963. Customers, including Hollywood celebrities like Ellen DeGeneres and Justin Bieber, commonly call the chain 'Coffee Bean'.

Mr Sassoon, a regular on the Forbes' rich list in Singapore, gave people here their first taste of Coffee Bean at the old Scotts shopping mall in 1996.

Mr Elias - the younger brother of Mr Sassoon's wife - was put in charge of business development.

The family did not have to wait long for success. By 1998, there were 27 more Coffee Bean outlets in Singapore and two in Malaysia.

That was, in total, as many outlets as the Hymans had opened until then. It was also more than the 21 outlets that rival Starbucks ran in Singapore that year. Coincidentally, the Seattle-based coffee chain also started its Singapore operations in 1996.

In 1998, the Sassoons acquired the Hymans' stake in the firm for an undisclosed sum and took over the entire business.

Mr Sassoon remains Coffee Bean's Asia-Pacific CEO, and his wife Michelle, the chief operating officer. Both are based in Singapore, while their younger brothers Sunny Sassoon - who is executive chairman - and Mr Elias work out of Los Angeles.

Since becoming CEO in 2008, Mr Elias has managed to triple the firm's profits.

Last year, sales exceeded US$400 million (S$500 million) and it now has close to 800 Coffee Bean outlets worldwide, an extraordinary feat considering its main competitor is beverage giant Starbucks.

Last December, Coffee Bean made its debut in the fast-growing single-serve coffee and tea segment of the beverage business, with a new brand extension called CBTL.

The product is a full, single-serve beverage system that allows both coffee and tea drinkers to make their favourite beverage at home or at the workplace with just one easy-to-use machine. Mr Elias guarantees that CBTL products will taste as good as the beverages sold at its outlets.

Mr Elias, who was in town last month to launch CBTL, expects the new product to contribute up to half of Coffee Bean's sales over the next 10 years, taking its revenue to about US$1 billion.

But he would have his work cut out for him if the chain is to seriously challenge Starbucks. After all, the beverage giant, which marked its 40th anniversary last month, has a global network of more than 17,000 outlets and counting.

The David and Goliath showdown between the two is set to continue in the single-serve segment, after Starbucks inked a deal earlier last month with Green Mountain Coffee Roasters to provide coffee and tea for the Nasdaq-listed firm's single-serve machines. The deal could net Starbucks US$200 million in sales within the first year.

But Mr Elias remains unfazed, choosing to believe that the coffee and tea market offers sufficient opportunities for growth 'without taking away any meaningful market share from each other'.

'It is not our goal to be No.1 in size. It is our goal to be No.1 in quality. We have been, as a brand, very selective in product sourcing, location selection and growth opportunities in order to preserve this very important positioning mandate,' he said.

'A store opening target is not something that exclusively drives us,' he said, adding that growth during the last decade was considerable and enabled the company to 'continue to be true to our culture and our mission to quality and exclusivity'.

Mr Elias added that Coffee Bean's strengths lie in its people, product competency, focus on quality - like buying the top 1 per cent of coffee available in the world - and commitment to roasting in small batches and making fresh extract at outlets daily.

'Our strategic plan this year is to focus on our strengths and apply our resources to programmes and products that differentiate us.'

The United States remains its biggest market by revenue, contributing 70 per cent of sales, with the rest coming from Singapore, Malaysia, South Korea and China.

He hopes to further expand its presence in those key markets and venture into new ones like Taiwan and the Middle East while maintaining growth in the US, with East Coast cities like New York - seen as Starbucks strongholds - a key target market.

The law graduate from the London School of Economics is a third- generation entrepreneur. His grandfather Aaron Issac founded Hilda's department store in Middle Road, and his father Elias Elias ran a retail business in Malaysia before returning to Singapore.

'So you can say, business has always been in my blood,' said the bachelor.

A musician at heart - he plays the piano and drums - he is the spitting image of jazz crooner Harry Connick Jr, and plans to integrate 'sonic branding' into his outlets.

Sonic branding broadly involves customising music that complements the Coffee Bean brand with customer groups at different cafe outlets.

Mr Elias said the project is just one of many customer service initiatives aimed at being 'sensitive to their needs and giving them a total sensory experience'.

franchan@sph.com.sg

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