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How to make a luxury brand from scratch

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IT’S ANOTHER sweltering Saturday evening in Singapore, and the air conditioning at the ION Orchard shopping mall is doing its job. Inside, well-heeled tourists and locals line up behind a velvet rope, eagerly awaiting their entry into a room bursting with hues of orange, blue, and gold.

But this isn’t a trendy nightclub, or even a chance to check out the newest iPhone. Once admitted, these guests will be drinking — coffee.

More specifically, Bacha Coffee, a brand fewer than five years old that has thrived in post-pandemic Singapore thanks to the grandeur of its stores and its positioning in posh locations like ION. It’s a spare-no-expense model that co-founders Taha Bouqdib and Maranda Barnes replicated after building Bacha’s sister brand, TWG Tea, into a status symbol across Asia.

“We are in the affordable luxury business,” Ms. Bouqdib said in a recent interview. “Tea and coffee are kind of necessity products that anyone in the world — when you wake up or in the afternoon — you must have it.”

They’re also products that consumers, especially in Asia, are increasingly able and willing to pay a premium for. Disposable income in the region is set to surge about 60% through 2040 — the fastest globally — and Singapore sits at the heart of tea and coffee supply chains. Those market conditions — plus a lack of import duties for tea and coffee — made the city-state an ideal home base for Mr. Bouqdib, who is French-Moroccan, and Ms. Barnes, an American.   

Over the past 15 years, the married couple has expanded their retail outlets and cafes to more than 20 countries and territories with the backing of deep-pocketed business partners. Mr. Bouqdib, Ms. Barnes, and Singapore tycoon Ron Sim, founder of OSIM massage chairs, announced in January 2022 that their holding company V3 Gourmet Pte. would spend $100 million in investments on TWG, Bacha, and other brands over three years. The expansion includes spending $10 million-plus on a Bacha Coffee outlet in Singapore’s deserted Changi airport during lockdown.

The bold bets are starting to pay off. TWG returned to profit last year, Mr. Bouqdib said, after losses of S$1.19 million ($869,000) in 2021, according to a filing with Singapore’s accounting regulator. Bacha Coffee turned a profit this year, Mr. Bouqdib  said, without disclosing details. The coffee brand’s losses narrowed to S$3.4 million in 2022, according to its corporate filing.

TWG’s start in 2008 and the opening of a Bacha cafe in Morocco in 2019 make the brands relative newcomers in the world of premium beverages when compared with names like Twinings (no relation to TWG), France’s Mariage Frères (Mr. Bouqdib’s former employer) and even Starbucks (now more than 50 years old). But that’s not immediately apparent when walking into a store, and Mr. Bouqdib and Ms. Barnes like it that way. In TWG, wall-to-wall tea cannisters are stamped with the date 1837, a nod to when the Chamber of Commerce was established in Singapore. Bacha Coffee claims roots in Morocco’s Dar el Bacha palace, built in 1910. The present-day Bacha is a relaunch of the coffee house that was located in the palace, according to a 2020 document from The National Foundation of Museums of the Kingdom of Morocco.

The shops’ eye-catching designs buttress these storied narratives. Stepping into the elegant, bright interiors of a Bacha store or the wood-paneled Victorian decôr of a TWG cafe instantly transports customers into a world that feels somehow older — and wealthier. That means customers in Singapore routinely wait in line to pay S$48 for an afternoon coffee set that includes a steak sandwich and a pastry, or as much as S$1,271.50 for a cannister of loose tea to take home. The in-cafe selfie that gets posted to social media? Priceless.

“Based on their communications and positioning, I think many people would believe that TWG and Bacha Coffee were founded in 1837 and 1910,” said Mark Tanner, managing director at marketing agency China Skinny, which has helped Adidas, Nike, and Ikea expand their presence in the country. “They are trading on the inherent trust that Asian consumers place with heritage.”

A look at media reports, social media, and online forums show that many remain in the dark about the origins of TWG. New packaging will remove the 1837 year from its logo because “we don’t want to have kind of misled the communication,” Mr. Bouqdib said.

TWG began as the tea division of The Wellness Group, a company owned by Singapore-based entrepreneur Manoj Mohan Murjani, who met Mr. Bouqdib in 2003 or 2004 during his days with Mariage Frères in Paris, according to a 2019 Singapore High Court ruling stemming from litigation involving TWG and Murjani.  Mr. Bouqdib and Ms. Barnes moved to Singapore in 2007 to begin building TWG as the tea division of Mr. Murjani’s The Wellness Group.

Cracks in TWG’s leadership started to emerge in 2011. Ron Sim, who took a stake in TWG Tea that year, called for a board meeting to consider removing Mr. Murjani as Chief Executive Officer. Mr. Murjani resigned in September 2012 and several legal battles ensued. Mr. Murjani is embroiled in a separate court fight with  his current business partner, restaurateur Violet Oon, according to the Straits Times.  Mr. Murjani declined to comment but denied any wrongdoing during the trial in July.

Since Mr. Murjani’s exit, Mr. Bouqdib Ms. and Barnes built on TWG’s relationship with Mr. Sim. The massage chair tycoon raised his stake to 70% by 2014 and brought it under his V3 Group Ltd. in 2021 as part of V3 Gourmet.

As TWG expanded, competitors took note.
Between 2013 and 2017, TWG was embroiled in several trademark lawsuits with Bouqdib’s ex-employer, Mariage Frères over the use of product names such as “Casablanca,” “Paris Breakfast Tea,” and “Lucky Tea,” according to records from the UK’s Intellectual Property Office.

In 2011, Tsit Wing (Hong Kong) Ltd., a wholesaler of coffee and tea since 1932 that goes by TWG, took TWG to court in a protracted battle over trademark infringement. TWG lost the case and rebranded its Hong Kong website and stores to “Tea WG.” The year 1837 in TWG Tea’s logo “was plainly intended to convey a sense of long establishment” and led people to believe so, the judge said in the 2013 ruling.

Mr. Bouqdib and Ms. Barnes say the legal wrangling is par for the course. “It is inevitable that in the course of our expansion, as we grow, we will face legal challenges and battles. It is the part and parcel of building a global brand,” the couple said in response to follow-up queries.

While they are backing away from TWG’s 1837 labeling, they are all in on Bacha Coffee’s 1910 branding. It represents the year that the Dar el Bacha palace was built as the residence of Thami El Glaoui, then pasha of Marrakech. The palace “united the greatest cultural and political minds of the century over glittering pots of ‘coffee of Arabia’ or Arabica, as it is known today,” but then was closed for more than 60 years, according to Bacha Coffee’s website. Mr. Bouqdib said he flew in architects from Singapore to renovate a part of the palace, now a museum, to open Bacha Coffee there.

“Tea and coffee, it’s not a new element today in the market,” he said. “If you choose to build something that is kind of timeless, you cannot escape this element of grandiose.”

When Mr. Bouqdib and Ms. Barnes set out to launch Bacha, they wanted customers to get a distinct experience from each of the brands.  TWG and Bacha offices are on two different floors at their King’s Centre headquarters in Singapore and they have separate warehouses and staff. Even the staff training sessions have different vibes, with TWG’s more quiet while Bacha’s is often loud and involves games.

“We feel that it’s best to have this mindset completely separated,” Mr. Bouqdib said. The staff for the two brands has grown to about 3,500 by this point, the couple said.

The couple invested in growing Bacha’s operations through the pandemic. They renovated stores that would remain closed for many months and looked for new locations despite Singapore having one of the world’s strictest lockdowns. They also decided to take the step of signing the lease for a two-story high Bacha Coffee store in Terminal 3 of Singapore’s Changi Airport. It was reminiscent of launching TWG during the 2008-2009 financial crisis, Mr. Bouqdib said.

“I said, this is the same story, but we didn’t know whether COVID will go on for three years, five years, 10 or 20,” he said. He requested special permission from the Singapore government to travel during lockdown, regularly donning protective gear and flying on empty commercial planes to scout new potential locations for stores. While risky, “it was kind of exciting because you know that you are only one traveling to do these kind of things,” he said.

The pandemic also forced Ms. Barnes, who is the chief commercial officer at V3 Gourmet, to quickly come up with an e-commerce strategy for the brick-and-mortar businesses. At the height of the pandemic, 15% to 20% of TWG’s total revenue came from online sales and it was “much higher” for Bacha, she said. The percentage has since dropped with customers returning to the stores and restaurants, she said.

The focus now is to keep adding to those physical locations. TWG has more than 100 outlets and kiosks in malls, hotels, and airports from Australia to Canada and Spain. Bacha has most recently opened stores in Hong Kong, Qatar, Kuwait, and Malaysia. V3 Gourmet is also considering options such as an initial public offering or partnerships for TWG and Bacha to boost business, Mr. Bouqdib said, adding that Mr. Sim is “quite happy with the globalization.”

“We are building for the future,” Mr. Bouqdib said. “Building is first, the rest will come into your hands without any issue.” — Bloomberg

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