The Garden Company Ltd. Business Information, Profile, and History

Company Perspectives

Our goal is to make Garden a leading brand in the Greater China market, and to become famous all over the world. To achieve this goal, QBE provides management focus and is the foundation of the business philosophy of our company over the years. QBE stands for "Quality, Brand, Efficiency" and refers to our pursuit of high quality, establishing honourable brands, and enhancing efficiency in order to be more competitive.

History of The Garden Company Ltd.

The Garden Company Ltd. is Hong Kong's leading manufacturer of packaged breads and baked goods, supplying the retail, and restaurant and catering market. Garden's product range includes ready-to-eat packaged breads, biscuits and cookies, snacks, pastries, hamburger buns, rolls, candy and cakes. In the mid-2000s, Garden continued developing a new line of "healthy" foods, including calcium-enriched and other breads. The company also manufactures partly baked frozen products, as well as frozen dough products.

Garden operates from a 70,000-square-meter factory in Sham Tseng, Hong Kong, which includes eight automated biscuit production lines, three cake production lines and four continuous baking bread lines. The company's bread brands include the flagship Life brand, the Better Sandwich snack bread line, the Sweet Home brand, including raisin scones and oatmeal buns, and other specialty breads, such as the Satellite bun, pita bread, and sweet round rolls. Garden is Hong Kong's leading producer of packaged cake, primarily marketed under the Garden brand, as well as the Be Be cake mix line. Biscuit, cracker, and cookie brands include Gala, Vincenzi, Sisisic, Eggo, Zonee, and Pop Pan. The company's snacks line include Wizard oriental snacks and potato chips and Wow snacks. Lastly, the group's candy and confectionery range is marketed under various brand names, including Lucky, Hi G and Pernigotti, among others. Garden has made an effort to expand outside of Hong Kong--the company set up its first sales operations in mainland China in the 1980s--and markets a wide range of products for the international market. The company has also established a manufacturing presence in China through two joint venture subsidiaries in Dongguan and Yang Zhou. With an approximate 64 percent share of the Hong Kong bread market, Garden generates sales estimated at close to HKD 6.5 billion ($825 million). The company remains privately held and controlled by the founding Cheung family.

Baked Bread Pioneer in 1926

The beginning of British domination of China and Hong Kong introduced many new types of food to the region, including Western-styled breads, biscuits and other baked goods. Traditional Chinese breads, often eaten for breakfast, generally took the form of steamed buns. The development of the British colonial administration and the growing taste for European style foods in Hong Kong encouraged the development of local production of a number of products, including breads.

In the early 1920s, two cousins, T. F. Cheung and W. O. Wong, launched plans to open their own bakery business. In 1926, the pair opened a shop in Kowloon. Cheung and Wong named their bakery The Garden Company, after the famed Hong Kong Botanic Garden. The new company met with quick success, and by 1927, demand for their baked goods led Garden to open its first bakery branch, in the Central area of Hong Kong island.

Demand continued to rise, and in 1931 the company moved to a larger facility, in Sham Shui Po, in the northwestern area of Kowloon. The company operated from a three-story building and had already launched a 24-hour production schedule. By then, Garden's range had expanded to include bread and biscuits. Yet, just a year later, the company was hit by a major setback, when its factory burned down. Uninsured, the company nonetheless managed to arrange the financing to buy new equipment and construct a new factory.

Garden was back in business by 1935, operating from a 475-square-meter plant on Kowloon's Castle Peak Road. The beginning of the Sino-Japanese war just two years later proved a boon for Garden, as it launched production of the so-called "Army Cracker" to support the Chinese war effort. Garden met the challenge: in one week, working round-the-clock for seven days, Garden produced some 200,000 pounds of army crackers. The experience convinced the company of the importance of investing in new equipment and machinery. The company promptly installed a new generation of mechanical baking equipment imported from Britain, becoming the first in Hong Kong to develop industrialized bakery facilities. By 1938, the company had opened a new 1,400-square-meter plant on Castle Peak Road. The investment played a major role in Garden being appointed by the Hong Kong government to be the primary producer of baked goods for the army.

Tragedy struck the company again, however, after the Japanese army occupied Hong Kong in 1941. The Garden factory was taken over by the Japanese occupational force, ending the company's production for the duration. By the end of the war, the factory and its equipment had been destroyed.

Overcoming Adversity Again and Again

The restoration of British control of Hong Kong enabled the Cheung family to restart their bakery business in 1945. By 1947, the company had once again returned to its position as one of the leading food manufacturers in Hong Kong, and in that year the company formally registered as a limited liability company under the name The Garden Company Limited.

The destruction of its factory during the war worked in the company's favor, as it was able to build a larger and more modern facility. The company also placed an order for its first fully automated biscuit production in 1949. Two years later, after receiving a supply contract for the Hong Kong military, the company completed the expansion of its factory, to 7,000 square meters, in anticipation of the new equipment. Finally installed in 1952, the new production line made Garden the first Asian company to launch automated biscuit production. The new equipment enabled the company to achieve production levels of some 5,000 kilograms per day. In 1954, Garden extended its automated production facilities to include bakery and confectionery as well.

Yet the peaceful times for Garden once again proved short-lived. When Hong Kong pro-nationalists began rioting in 1956, they attacked a number of factories in Kowloon, including The Garden Company. As a result, the company's equipment was once again destroyed. Nonetheless, Garden once again found triumph in adversity; by 1958, the company had not only rebuilt the factory, but had extended its total floor space to 10,000 square meters.

The rising affluence of Hong Kong during the 1960s provided new opportunity for the company. In 1960, Garden launched its famous Life brand white bread. The new bread brand claimed to provide a higher nutritional value than typical industrially produced breads, while also boasting a longer shelf life. Life quickly grew into one of Garden's flagship brands. The launch also enabled the company to dedicate the Castle Peak Road factory to bread production. In 1962, the company began construction of a new factory in Sham Tseng, on a 13,000-square-meter site. The company then transferred its biscuit production to the new purpose-built facility, which launched production in 1963. The facility also enabled the group to expand its range of biscuits, crackers and related snacks, leading to the launch of a new brand success, Pop Pan, launched in 1967.

By 1969, Garden had completed a new confectionery plant on the Sham Tseng site as well. At the same time, the company launched construction of a new dedicated facility for the production of the group's Life bread brand. That plant launched production in 1970. The Sham Tseng location continued to develop its role as Garden's main facility, and in 1974, the completion of a new production facility on the site enabled Garden to launch production of a new range of buns and other sandwich breads.

Feeding Hong Kong--and the World--in a New Era

Garden continued to seek new areas for its expansion. In 1979, the company launched a diversification effort, extending its range to include the production of ice cream. The company then entered the snack food category, launching the production of the Si-Si-Sic brand of snack foods, including sandwiches and convenience packs.

Into the 1980s, the company added to its production capacity, building a third bakery plant in 1982. Garden expanded its confectionery factory at the same time. Meanwhile, Garden began targeting further growth. The economic reform policies in mainland China and that country's new openness to foreign investment gave Garden a natural market for expansion. The company became one of the first foreign food companies to invest in the mainland, establishing a joint-venture, called Hua Jia Foodstuff Company, in Dongguan, Guangdong Province in 1985.

The prospect of serving the vast Chinese market prompted Garden to step up its interests in the mainland. In 1987, the company added a new subsidiary, LiHua Biscuit, again in Dongguan. By the mid-1990s, with the unification of Hong Kong with the Chinese mainland pending, Garden moved to expand its mainland operations again, reaching an agreement with Gong Yang Foodstuff Co. to form a new joint venture in Jiangsu. By then, too, Garden had carried out a massive expansion of its Sham Tseng operations. In the early 1990s, the company rebuilt its bakery factory, which was extended to 50,000 square meters and outfitted with new equipment in 1992.

The company's newest production facility, built as part of its joint venture with Gong Yang Foodstuff, was completed in 2000, with manufacturing of biscuits launched that year. The new facility enabled the company to begin developing a new range of products, such as a line of Garden-branded crackers launched in 2002, tailored to the tastes of mainland consumers. In this way, Garden positioned itself to reap the benefits of the rapid growth of the Chinese economy, and the growing affluence of its population, which in turn were expected to influence the country's eating habits.

At the same time Garden capitalized on another growing trend in Hong Kong and China. The appearance of the bird flu virus, and the panic surrounding the SARS epidemic, helped stimulate demand for a new category of "healthy" foods. Garden joined in this trend, launching its own line of healthy foods, such as calcium-enriched breads and the like. By the mid-2000s, the company looked back on 80 years as a family-owned Hong Kong bakery leader--and looked forward to gaining a strong position in the mainland Chinese market as well.

Principal Subsidiaries

Gong Yang Foodstuff Co. Ltd. (50%; China); Hui Jia Foodstuff Co. (50%; China); Li Hua Biscuit Factory (China).

Principal Competitors

Cadbury Four Seas Company Ltd.; Cadbury Food Company Ltd.; Trebor Wuxi Confectionery Company Ltd.; Taiwan Sugar Corp.; Katokichi Company Ltd.; Chu Shui Che Foods Manufacturing Company Ltd.

Chronology

• Key Dates
• 1926 T. F. Cheung and W. O. Wong open a bakery business in Kowloon named after the Hong Kong Botanical Garden.
• 1931 Garden moves to a larger factory in Sham Shui Po and launches 24-hour daily production.
• 1938 The company moves to a new, 1,400-square-meter factory on Castle Peak Road.
• 1941 The factory is taken over by Japanese occupation force and production is stopped.
• 1947 The company registers as The Garden Company Limited.
• 1952 The company installs its first automated baking equipment, capable of producing 5,000 kilograms of biscuits per day.
• 1960 Launch of Life bread brand takes place.
• 1962 A 13,000-square-meter site is acquired in Sham Tseng for biscuit and confectionery production.
• 1969 A confectionery plant is completed at the Sham Tseng site.
• 1970 A dedicated production plant for Life bread is added at the Sham Tseng site.
• 1979 The company launches production of ice cream and snack foods.
• 1985 The first operation in mainland China is established through a joint venture.
• 1987 A factory in Dongguan, China is added.
• 1992 The company expands the Sham Tseng site to 50,000 square meters.
• 2000 Production at a new biscuit joint venture in Jiangsu begins, in partnership with Gong Yang Foodstuff.
• 2006 Garden is the largest baked goods company in Hong Kong with sales estimated at nearly HKD 6.5 billion