From leaf to cup: Hwa Gung Tea’s journey in preserving and transforming a family’s legacy

• Main Authors: THAM, T. Mandy, CHEAH, Sin Mei, CHUNG, Hsi-Mei
• Format: text
• Language: English
• Published: Institutional Knowledge at Singapore Management University 2024
• Subjects: Family businesses; entrepreneurship; sustainable business practices; Environmental sustainability; succession planning; vertical integration; Entrepreneurial and Small Business Operations
• Online Access: https://ink.library.smu.edu.sg/cases_coll_all/491; https://cmp.smu.edu.sg/case/6136
• Institution: Singapore Management University

Hwa Gung Tea (HGT), a premium tea brand founded in Taiwan, has a rich history dating back to 1918. For many decades, the family business has been producing and distributing alpine Oolong tea cultivated at above 2,000 metres on the famous tea-producing Lishan mountains. Having transitioned through four generations, HGT’s unique value proposition was an end-to-end value chain integrator from tea cultivation, harvesting, production, and wholesale distribution to retail, including branding and marketing. Few tea companies in Taiwan managed the entire process chain as HGT did. Johnny Tu, the fifth-generation CEO, led HGT to become ISO 20000 and HACCP-certified, winning several domestic and international awards. Collaborations with prestigious names like China Airlines, Mandarin Oriental Hotel, and Michelin-starred restaurants also enhanced the brand’s visibility. Besides his efforts to grow HGT as a premium brand, Johnny also believed that HGT can lead in creating social impact. He worked assiduously with the indigenous people living in the Lishan mountains and offered them job opportunities, fostered their skill development, and encouraged them to take pride in their vocations. By doing so, he wished to keep the indigenous community together with economic activities and preserve the artisanship of tea cultivation in Taiwan. In 2024, after nearly 20 years of managing the family business, Johnny faced the challenge of expanding globally while preserving HGT’s legacy. Balancing tradition and innovation, he experimented and created new flavours while engaging the younger generation through his lectures about tea. Confronted by regulatory hurdles, food safety scandals, counterfeit teas, and skills crunch in tea-making, he contemplated the future of the family business. How can Johnny navigate these complexities while leveraging his inherited intangible assets as a family business successor, tea-making master, and educator? Students will learn to analyse how a fifth-generation successor transitions the family business from a traditional tea producer and wholesaler to a premium consumer brand. Through a discussion of the case, they will identify key intangible assets unique to the family business, understand the social impact and value creation of sustainable business practices in the family tea business, and suggest recommendations for family and business legacy preservation through managing intangible assets.