By Victoria Hurley-Schubert, Staff Writer
Life in China is about to get a lot sweeter, thanks to a new deal Thomas Sweet has for distribution in the Asian country.
”China is an emerging market,” said Marco Cucci, owner of the Princeton-based company who got his start in the ice cream business when he was a teen scooping ice cream. “Ice cream is just beginning to get popular over there and people are paying premium prices for premium brands.”
A scoop of Thomas Sweet ice cream could go for as much as $12 in China, said Mr. Cucci. The target market will be the moderate-income market.
The Asian nation has been so focused on getting milk to the people, that it has not developed a taste for dairy products.
”They’re more concerned with getting out as much product as they can as opposed to separating cream from skim and developing great (ice cream) mixes. It’s just not a market for them tight now,” said Mr. Cucci. “What they do with milk is dilute it down so they can feed more people milk because they have that much demand for it.”
Despite this obstacle, China is gradually developing a taste for ice cream, particularly American brands.
”One of my scoopers just got back from China and she was talking about how incredible and how long the lines are in the Haagen Daz stores and the way people view American and European ice cream,” said Mr. Cucci.
The deal came about from a customer who knew someone who was looking for a premium American brand to bring to China.
”We spoke to a couple of brands along the way, none of which seemed to work well,” said David Newfeld, an attorney in Princeton Junction. “Then it sort of hit me. I was looking for something that told a great story and traveled well. The Chinese love anything associated with Princeton and anything associated with Princeton has a panache over there.”
”To me Thomas Sweet was a perfect fit,” continued Mr. Newfeld, a Thomas Sweet customer.
He said “there is an allure to all things American over there.”
John Leagh, a New York-based attorney for the Chinese investor, Wen Tao, agrees.
”If you look at today’s China, you will see ‘things American’ are becoming an integral party of their lives sports, entertainment, fast food, luxury brands, ice cream,” he said.
”When I learned of the Chinese partner’s interest, I was pleased to be a part of (the transaction),” he said. “The Chinese majority partner is a long-term friend of mine, and he has talked to me for quite a while about his love for certain high quality American products and desire to bring them into China.”
The two biggest brands in China now are Haagen Daz and Dairy Queen.
”(Mr. Tao) sees an opportunity and a gap in the marketplace,” said Mr. Newfeld. “I think he’s going to do great with it; he’s a great businessman.”
The Thomas Sweet business will be headquartered in Wuhan, where the first location will be built. Expansion will have stores spread out into other major cities, and then smaller cities, said Mr. Leagh.
Expanding domestically has been an internal struggle and a battle against the past for Mr. Cucci.
”I don’t want to do it in a way that’s foolish or we loose our hometown appeal,” he said. “I think one of the things that makes us successful is that we are a hometown store.”
In the 1980s Thomas Sweet did have franchise locations throughout the nation under different owners.
”The stores were so geographically dispersed that it was very hard to manage the growth and be there,” said Mr. Cucci, who bought out the last partner in 2008. “By and large all the stores except the Washington, D.C., and New Brunswick stores failed for one reason or another.”
The management structure then was not set up to manage growth.
”Before I looked to grow again, I wanted to have a whole store opening under my belt,” he said. “I wouldn’t be valuable to somebody if I hadn’t gone through it myself. That’s where Montgomery came into play.”
Thomas Sweet’s Montgomery location opened in 2009.
Capital generated from the deal with China will be invested in the business here without looking at outside funding such as a bank.
”What international allowed us to do is have a good amount of capital, which I can use as seed money to grow the brand here,” said Mr. Cucci. “When China came up as an opportunity it allowed me to forgo those other sources where I’d have to answer to other people.”
Mr. Cucci will give the Chinese investors intellectual capital, recipes, branding and marketing.
”I don’t have the responsibility of oversight like you would with a typical franchise arrangement,” he said.
Mr. Cucci will be compensated monthly for each store opened in Asia. He was also compensated for allowing the Asian investors to license the Thomas Sweet brand in China. He declined to say how much the deal was worth, just that when all stores are open, it is well into the six figures.
American recipes will be adapted to the Chinese palate.
”If you look at other multi-national brands who are successful in China, they’ve tailored their product to the market they go in,” said Mr. Cucci. “They’ve paid to use our brand, they’re not going to want to do something stupid.”
As far as giving up control over his product, Mr. Cucci isn’t too worried.
”We found someone who believes in our brand and the importance of quality and who believes in doing things right,” he said.
To get quality product that is up to Thomas Sweet standards, ice cream will be manufactured in the United States and shipped to China. Thomas Sweet ice cream is currently made in-house in Princeton and a few flavors are made at Arctic Ice Cream in Ewing. Arctic produces ice cream for the Washington, D.C., store as well.
The production location has not been ironed out yet, said Mr. Cucci. West Coast production options are also being explored.
The first Chinese store is slated to open in August.
