A Spicy Market : Business Is Booming in Asian Food

The Chinese characters are back on the labels of Lee Kum Kee sauces and condiments on supermarket shelves in Southern California.

The Hong Kong-based manufacturer’s traditional label disappeared briefly in the late 1980s when the U.S. importer tried to Westernize the image of the product in a bid to win shelf space in big supermarkets. The new label prominently displayed an all-American steak dabbed with brown oyster sauce and the Lee Kum Kee brand named was replaced with the “House of Lee.”

The importers decided to go back to the original packaging because Americans increasingly prefer Chinese food products that are more genuinely Asian in appearance and taste, said David Lee, managing director and founder of Alhambra-based Lee Kum Kee U.S.A., an independent importer that takes its name from the Hong Kong manufacturer, Lee Kum Kee Ltd.

Indeed, Lee Kum Kee is prospering in the United States, as evidence by the opening last week of a sauce manufacturing plant in the City of Industry to keep up with rising U.S. demand. Lee Kum Kee sauces can now be found in big supermarket chains in all 50 states--including California’s Vons, Hughes and Lucky markets--compared to about 20 when it switched to a Westernized label.

Importers, Asian food markets and financiers of such operations are finding growing opportunities because of changing U.S. demographics and a more sophisticated American palate. “We were trying to move toward the mainstream, but the mainstream has been moving toward us,” Lee said in explaining the labeling switch.

For one, the mainstream is becoming more diverse. Boosted by a higher level of immigration, the population of Americans of Asian and Pacific Island descent has more than doubled in the past decade--up 108% from an estimated 3.5 million in 1980 to about 7.3 million in 1990, according to the U.S. Census Bureau. California leads the nation with about 2.8 million people of Asian and Pacific Island descent--up 127% since 1980.

Immigrants have provided the biggest boost for authentic Asian foods in the United States, but Lee notes that increasingly, Asian-style cooking can be found at all-American venues. In his travels across the country, Lee, the immigrant son of the chairman of the Hong Kong-based Lee Kum Kee Ltd., said he has been pleasantly surprised to find Asian cuisine offered as daily specials at more and more restaurants that serve American-style fare and even at some baseball stadiums.

With its first U.S. production plant coming on line, Lee Kum Kee--like Kikkoman Foods, a San Francisco-based subsidiary of Japan’s leading soy sauce brewer-- could be poised to climb to lofty financial heights.

Kikkoman, which still imports a small part of its product line, has averaged a 10% annual increase in sales since it expanded distribution by opening its first production plant in Wisconsin in the mid-1970s. By completing the $7-million City of Industry plant, Lee hopes to increase the supply of Lee Kum Kee sauces by 50% by 1996 and reduce his company’s dependence on imports that carry import duties as high as 20%. Sales last year exceeded $15 million--a fivefold increase since 1986, he said.

Lee Kum Kee U.S.A. imports about 40 different products--most of them condiments and sauce products used for cooking. There are marinades and curries and sauces--from chili to garlic to sweet-and-sour.

Lee estimates that most of those products--distributed by a network of independents--are sold to Asian-style restaurants and other food-service operations. Most of the balance is sold to the growing number of Asian-American-owned markets that stock food imported from various parts of Asia.

A small but growing segment of sales is attributed to mainstream supermarkets.

Throughout California, the popularity of authentic Asian cuisine has been a boon to a growing number of Asian-American grocery owners looking to expand and diversify their operations. Most of the thousands of groceries owned by Asians in California are stores offering foodstuffs favored by residents of their business locale. However, an increasing number of these stores are tapping the Asian market specifically.

Danny Wu, vice president of Hoa Binh Inc., a Monterey Park-based chain that operates three stores in largely Asian east Los Angeles County communities, said there are more than 20 stores in Southern California catering to those who want Asian food specialties.

Many of these stores specialize their stock by national origin. The Hoa Binh store in Monterey Park is among those offering a Pan-Asian variety--goods prized in Singapore, Malaysia, China, Japan and Korea, such as delicacies from the deep such as squid, sea cucumber, octopus and pompano.

A number of local banks profit by providing loans to retailers who sell Asian food and financing for importers such as Lee Kum Kee, including the Indonesian-owned Lippo Bank. About 25% of Lippo’s loan portfolio--about $100 million--is now commited to such financing, said Jim Alexander, chief executive of the Los Angeles-based bank.

“The business . . . of importing and selling Asian food has grown rapidly, and considering immigration and other trends, it will continue to grow,” Alexander said.

U.S. Food Imports from Pacific Rim The value of U.S. food imports from around the world increased only 5% between 1986 and 1990--to $21.9 billion from $20.9 billion. But the value of imports from Pacific Rim nations grew more than 58%, due in part to the dramatic rise in U.S. residents of Asian ancestry who hanker for a taste of food from their homelands.

1986 1989 1990 Country (millions) (millions) (millions) Australia $42.0 $903.6 $1,100 China 191.8 488.8 540.7 Hong Kong 91.7 105.3 111.3 Indonesia 334.0 298.0 315.3 Japan 445.7 290.4 269.1 S. Korea 179.4 188.3 176.1 Malaysia 61.3 114.0 120.4 New Zealand 559.5 777.8 763.7 Philippines 361.6 406.6 363.7 Singapore 72.8 101.8 113.3 Taiwan 431.0 341.1 310.4 Thailand 470.4 803.7 950.7

Source: U.S. Census Bureau trade division