The internal and external factor that occurring in Tealive is main problem to tackle it.

The business will

be sustainable or closed down depends on this effect. Now, we discuss the external factor that contributed to

this entity. Over the last 18 months, you may have heard about a legal battle between two of Malaysia’s most

popular bubble tea brands: Chatime and Tealive. The standoff between the brands’ owners, La Kaffa

International Co Ltd and Loob Holding Sdn Bhd respectively, have left some people thoroughly confused. After

all, weren’t there rumours of Tealive shutting down before? Or was that Chatime? Wait, didn’t Chatime rebrand

as Tealive? Are they not the same thing? If you have only heard of this legal drama in passing, or would like a

refresher on what actually happened between the two companies, here’s a timeline of what took place since

2017.

January 2017: The initial fallout between La Kaffa and Loob Holding

The dispute began in January 2017 when La Kaffa, the Taiwan-based company behind Chatime, terminated

Loob Holding’s contract as the franchise holder for Chatime in Malaysia based on an alleged breach of contract

on Loob’s part. Despite having more than 20 years to go in the contract, La Kaffa alleged that Loob had begun

sourcing unapproved raw material, which violated the terms of the master franchisor contract, prompting the

company to act. Loob accepted the termination, but here’s where things took a remarkable twist: it “rebranded”

virtually all Chatime outlets in Malaysia into its own brand, Tealive, and ran the outlets as usual. Naturally, La

Kaffa sued Loob in the Malaysian courts, seeking an injunction to stop the Tealive outlets from operating.

February 2017: Loob Holding and Tealive

What Loob Holding did to rebrand Chatime into Tealive almost literally overnight was honestly a remarkable

feat, masterminded by CEO Bryan Loo. When news of the franchise termination broke in January 2017, Bryan

Loo went on a series of charm offensives, delivering interviews, engaging social media, and releasing

statements to make Loob Holding’s side of the termination public knowledge in Malaysia. Here’s an excerpt

of an interview Loo did with Inside Retail Asia in February 2017:

“We want to be the brand that protects the weak and isn’t afraid of the strong; but also the brand that embraces

changes. On the other side, with our hands untied, I believe that over the next quarters there is going to be a lot

of innovation in terms of products, which we couldn’t do before.

something we don’t have to worry about, so we can be innovative. I would also like to establish a regional R&D

centre to come up with more creative drinks that will excite the market. Also, we’re looking to carry on with our

aggressive expansion and move into other regions. We were already planning to do that with the previous

brand, but now we get to do it with Tealive.” Meanwhile, Taiwan-based La Kaffa did poorly in this respect,

failing to communicate their narrative to their Malaysian customers. Loo didn’t stop there. By the end of the

month, he announced that now that the master contract with Chatime was ended, 161 of the existing Chatime

outlets (or 95% of all Chatime outlets in Malaysia) would be rebranded and operating under Tealive. Overnight,

the familiar Chatime brand changed face – but Tealive’s menu was virtually identical.

La Kaffa, clearly outraged, immediately began proceedings to seek a court injunction to stop Tealive from

selling similar products to Chatime. These proceedings were heard in the High Court on 28 March 2017.

March 2017: Chatime takes Tealive to court… and loses

What Loob Holding CEO Bryan Loo basically did was to set up Tealive as a rival to Chatime, which is against

both the terms of the master franchise agreement as well as the Franchise Act 1998. When La Kaffa brought this

case to the High Court, it sought a mandatory injunction and a prohibitory injunction against Loob Holding.

 The mandatory injunction was for Loob to return all the confidential information and documents related
to Chatime back to La Kaffa.
 The prohibitory injunction was to restrain Loob from continuing its trade as a competitor of La Kaffa for
two years, as agreed in the post-termination terms of the franchise and in accordance with the law.

La Kaffa was successfully granted the mandatory injunction, but failed in obtaining the prohibitory injunction.

The judge said that forcing Tealive to shut down its business would negatively affect the livelihood of over 800

employees of Loob, as well as the suppliers, landlords, and families of the employees. The judge also believed

the damages that Tealive would have to pay Chatime in compensation would make up for any loss Tealive has

inflicted on Chatime’s business. Thus, at this point of the legal battle, Tealive triumphed over Chatime.

Tealive continued to operate in competition with Chatime, which was still running what was left of its

remaining operations in Malaysia, having found a new franchise holder to run the outlets that had not been

taken over by Tealive, and slowly regrow the brand.

Taking advantage of the lull in the courtroom, Loob Holding begins expanding into international

markets. Vietnam was first, marking Tealive’s international expansion before the brand was even a year old. It

soon made moves to enter Australia, and announced an ambitious goal of entering 15 markets by 2020.

Part of the reason behind this aggressive international push appears to stem from economic conditions in

Malaysia. In an interview with The Edge, CEO Bryan Loo said:

“Rents are rising, the currency is going down and the cost of raw materials is going up ... we want to grow the

local market, but the situation is not encouraging at all. It becomes a motivation for us to go abroad. We will

continue to strengthen our local market, but half our effort will be on getting into other markets.”

June 2018: Court of Appeal decides on Chatime win

A year has passed since the High Court ruling on Tealive’s legality. The media and online chatter about the

matter have died down since, and Malaysians have now accepted both Tealive and Chatime as established

players in the bubble tea market. In the meantime, more and more bubble tea brands from the region make their

entry into Malaysia – after all, with no dominant brand in the market, the industry was ripe for anyone to grab

market share.

However, La Kaffa didn’t just roll over after their loss in the High Court. It made full use of the Malaysian legal

system by applying for leave to appeal to a higher court, in the hopes that the higher court will find in its favour

and reverse the previous ruling. La Kaffa appealed to Court of Appeal, and its effort paid off when the court

decided that the previous judgment was wrong – and granted Chatime the prohibitory injunction it sought for.

On 27 June 2018, the Court of Appeal said that it was clear that Loob Holding was in breach of its legal

obligations in the franchise agreement as well as franchise law. It did not agree with the High Court’s view that

shutting down the Tealive business would affect the livelihood of Tealive’s employees, saying that the reason

was not justifiable given Tealive had, “in crude terms”, changed Chatime to Tealive overnight against its legal

obligations to the contract and to the Franchise Act.

The conclusion of the prohibitory injunction is that Tealive is no longer legally allowed to continue its business.

News of this quickly spread online, reigniting interest among curious Malaysians.
July 2018: Tealive struggles to regain upper hand

Following Chatime’s success in the Court of Appeal, Tealive was quick to release a statement saying that it

would file for a stay of execution and leave to appeal to the Federal Court, the highest court of the nation. As

explained earlier, a higher court can reverse the decision of a lower court. A stay of execution would give Loob

Holding the clearance to continue its operations while the company appeals to the Federal Court.

However, on 5 July 2018, the Court of Appeal rejected Tealive’s stay of execution. The Court of Appeal said

that despite Loob applying for a stay that would be in effect while it makes an appeal to the Federal Court, there

are no records of there actually being a pending appeal made by Loob at the time of the decision for the stay.

The judge also said that “courts should not lend its hand to persons who on the face of record are seen to be

cheats.” Yes, he actually said that.

Snarky official comments aside, Loob can still hang tight and take the last resort of appeal to the Federal Court,

if they are given leave to do so. According to the company, it has already filed for this leave to appeal to the

Federal Court on the morning of 5 July 2018. However, until anything else changes, the legal outcome is that

Tealive is still bound under the injunction to cease operating its business.

Meanwhile, Chatime has offered to re-employ staff who may be affected by the injunction to close the Tealive

outlets. Aliza Ali, group managing director of Chatime Malaysia, has said that Chatime was mindful of the

repercussions the court decision would have on the livelihood of employees, outlet owners, and customers.

“Within the scope allowed by the relevant laws, we would welcome former Chatime franchisees and employee,

who have been affected by the whole ordeal, to contact us should they require assistance from us,” she said.

Later in July 2018: Tealive still alive and kicking

After its rejection by the Court of Appeal, Tealive took to the higher avenue of the Federal Court and has met

with initial success. Although no official word has been released about the status of Loob Holding’s actual

appeal to the Federal Court, Tealive said in a statement on 16 July that the Federal Court has granted its

application for a stay of execution, something the lower Court of Appeal had rejected a mere two weeks ago.

As a result of the stay, Tealive has the okay to carry out business as usual until there are any further final

developments in the Federal Court.

The ruling in favour of La Kaffa at the Court of Appeal definitely swings a huge hammer into Loob Holding in

this battle, but the war isn't won just yet. If Loob is granted leave to appeal to the Federal Court, it has one last

chance to fight its case - and this time, a ruling for either party will be final with the Federal Court being the

highest court in the nation.

Should the Federal Court judge rule in La Kaffa’s favour, it will be fascinating just how the outcome would

impact the Tealive brand especially considering its presence in other markets. A victory for La Kaffa essentially

means Tealive is illegal from day one, so will it be required to cease operations entirely?

Meanwhile, a Loob Holding victory will likely see the Tealive brand grow even stronger. CEO Byran Loo is a

hugely ambitious entrepreneur, and the end of this legal distraction will likely see him double down on

establishing Tealive as a global brand.

Now that the Federal Court has granted Loob the legal all-clear to continue operating until a final decision is

reached, the only thing to do now is hang tight and watch the Federal Court for any further developments. Until

then, thanks to the Federal Court and the valiant efforts of Tealive and its lawyers, you can still get your regular

bubble tea fix from any neighbouring Tealive outlet.

This external factor will ease once the court decided that Tealive is free from any commitment or guilty in order

to move forward with so many innovation ahead. The customer will happy and continue to support this

business.

By now, anyone who cares knows it already: Tealive was born under difficult circumstances.

Previously operating under the name Chatime, the switch came when parent company La Kaffa suddenly

terminated the deal due to “breach of contract“. Loob Holding and La Kaffa are now embroiled in an ongoing

court case to resolve the issue.

While that goes on, players such as KOI began entering the market, and Chatime has even come back to our

shores sporting a new master franchiser, and a new rapid expansion plan. They’re here among the many

existing players in Malaysia—Gong Cha, Each-A-Cup, Latte Me, Blackball, and that’s just naming a few.

Despite that, Tealive seems to be having a good year.

Now, we look at internal factor that contributed to excellent of Tealive business nowadays.

Tealive would have never achieve the milestones without the support from its great team. With a group of

forward-thinkers, and food and beverage passionate entrepreneurs, armed with the knowledge and expertise in

the industry, the strong foundation has been made possible to be built. The brand thrives on the great values of

honesty in managing its cash flow, the teamwork in delegating the roles, as well as empowering the mind-set of

its employees with the mission and vision to be focused in ensuring operational excellence. Its operation is also

supported by the 10% of foreign employees, who are experts in their roles and are committed in what they do.

Known as the parachute team, the foreign employees can commit, and cover work areas during the peak, or

festive seasons. Their positions in the company has helped to solve the shortage of manpower during the peak

seasons, and to run Tealive outlets all year, with no closure during the peak, or festive seasons.

For the foundation to stay firm in times of challenges, the value of Service Excellence is emphasised for the

customer experience to be impactful, as well as to generate returning customers in the future. The involvement

of youth as part of its team is also in the plan to ensure that its employees practice openness, and experience

enjoyable working culture and environment.

a complete overview of the current operations. The e-learning system, such as the LOOBies mobile learning

application, has also been made available to educate the employees in different locations. The videos on how to

brew the tea based on the standard operation procedures are also available in the learning app. The learning app,

which is available on the Google Play Store and on the Apple App Store, facilitates to speed up the learning

process among the employees, as well as to reduce logistic costs of training for employees that are based

outside of Klang Valley.

As a reward to its determined and successful employees, an incentive of 10% from the highest sales is awarded

to the outlet with the highest accumulative sales during the annual conference. This eventually helps to boost

motivation among the employees to work hard to increase the revenue of the company.

As newcomer in food and beverage industry, LOOB decided to started out by bringing out tea in a hotspot
location. The location was an ideal launch pad as it had the right target audience for the business, as well as to

introduce the modern tea-drinking culture. Additionally, the purchasing power and the influence of the visitors

that frequent the shopping centre helped publicise the products to the masses, and were well received by the

public. While still green in its business segment, financing business expansion required the selling of the direct

business model as licensees as funds were limited. As a result, two licensees were sold, and the funds were used

as capital to obtain a direct store.

Further, 10 licensees were later traded for five direct stores, and at this point, only 16 outlets were left,

including the first outlet that was opened. Via this strategy, the company had sufficient funds and had decided to

stop trading their licensees. At that juncture, around 10 licensees were managed by close friends of Bryan Loo,

as well as his relatives, while he was looking for ways and ideas to scale up the teahouse business and making

its presence known to the market and industry players.

Through its introduction of the bubble tea drinks to the locals, which received an overwhelming response, the

menu had also been further extended to serving food. The breakdown of its menu of 70% of tea drinks, and 30%

of food, had assisted in the optimisation of its rental cost by offering multiple products that are hard for

competitors to compete with. To bear the continuously rising rental cost, the offering of multiple products

works to cover the increase in expenses. Tealive is in the belief that the rental cost can be reduced by offering

multiple products under its brand, as the rental cost can become a critical matter in the business operations if the

product innovation and extension could not be optimised.

In the effort to increase its customer base, the company has launched a unique loyalty program, which is now

subscribed by over 900,000 members, with the age range of 18 to 35 years old. By means of its creative and

innovative initiatives to connect people through a modern food and beverage lifestyle leveraging on technology,

a collaboration with a telco company, XOX, has been established. The collaboration provides members with a

free data worth 6GB for music and videos, via the streaming of Universal Music playlist, as well as Dim Sum

videos.

Apart from that, the loyalty program assists to identify the buying behaviour of the customers. The company
analyses the information gathered via the loyalty program to forecast their sales and revenue, as well as to
develop robust marketing strategies. By utilising big data analytics, the company can make a more accurate
decision, especially when introducing new products to the market.

Next, strategies that implement in this business for sharing the market in fact becoming leader in this
industry. Established in 2010, LOOB Holding Sdn Bhd. (LOOB), which is short for ‘Looking Out Of the Box’,

has successfully introduced the modern tea-drinking culture in Malaysia through Tealive.

With the aim to make every tea experience extraordinary, the journey to expand and sustain the business has

also been an extraordinary adventure for the home-grown brand. Having started as a franchise of the Taiwanese

Chatime, Tealive has now grown in its business segment as a household favourite with over 170 outlets

nationwide and a menu of 70 delicious drinks.

Beginning in 2010, the first Tealive (previously operating as a Chatime franchise) outlet was opened in
the award-winning shopping centre in the Bukit Bintang district. The outlet served 100 cups of bubble tea daily
and was manned by only two workers, Bryan Loo, LOOB’s current CEO, as the cashier and social media
manager, and a tearista, who prepared all the orders. Through the limited manpower, the business had managed
to take off and was ready for the second outlet in just six months since its first operating outlet.
After receiving positive feedback for its introduction of the modern tea-drinking culture to the locals, the

number of bubble tea orders had risen from 100 cups per day to 300 cups daily. In 2011, Bryan Loo, with his

determination to look outside of the box, and driven by his life’s motto to “think big, start small, scale fast”,
had submitted a business proposal to 98 shopping malls all over the country. The idea of scaling up the number

of outlets had become his focus at that time, as the two outlets were handed over to friends to manage the

operations. Within a year, the bubble tea craze in Malaysia had witnessed the revolutionary expansion of the

quick-service tea outlets, which had grown to 40 outlets and with each outlet serving 500 cups daily.

As one of the efforts to constantly challenge its status quo, LOOB had made the decision to rebrand all its

Chatime licensees to the current Tealive in 2017, following its dispute with the Taiwanese franchisor. With

differing business principles, as well as no longer sharing the same vision in running the business, Tealive was

conceived to continue the journey in taking the modern tea-drinking culture to the next level, especially to its

customer base of 2.5 million tea drinkers monthly.

Currently, Tealive operating with over 1,000 employees. It is the exponential growth in the making for the

leading local teahouse chain which aims to increase its number of outlets to 250 and its customer base to five

million monthly in 2018.

With differing business principles, as well as no longer sharing the same vision in running the business,
Tealive was conceived to continue the journey in taking the modern tea-drinking culture to the next level,
especially to its customer base of 2.5 million tea drinkers monthly.

1. It all began with a centre / developing innovative products

Specifically, a Global Product R&D centre, which is completely focused on curating new drink flavours, both

foreign and local. According to Bryan, “we are constantly evolving and looking for ways to innovate and

improve”. To build the centre, Tealive has invested a great deal of their assets and resources into setting it up,

which now also serves as a retail technology research development to ensure that business operations remain in

good shape, for all the Tealives worldwide. In fact, the centre will still see more development and funds

pumped into it moving forward. This is in a bid to “surpass customer’s expectations by delighting them”.

Through the centre, Tealive has already produced new flavours to complement its existing array of drinks; an

example is the Durian King Smoothie which sold out in just two weeks.

They have since introduced Vietnamese coffee into their Malaysian stores, and there are also the drinks that

come as a result of their partnership with Horlicks.

On top of these new drinks, Tealive has also introduced the “Mighty Mam Mam”—a variety of snacks such as

popcorn chicken, pies, and other bite-sized food that can be eaten on the go. “Our aim is to offer an experience

and not just a drink. Our goal is for our customers to experience the new and unknown.” Some of these are

indeed elements carried over from their roots, and on Tealive’s side, there seems to be internal considerations to

keep what worked before while still changing things up. Even recently, Tealive is on a marketing blitz for the

new Frog Bang drink, which Bryan Loo described as “a fun drink we came across during one of our travels and

thought it to be interesting. Frog Bang is something which is increasingly popular in Taiwan and felt it will

work with the Malaysian market.” Bryan thinks that the hybrid of hot and cold is an adventurous sensation

exactly what he thinks Malaysians are. And it’s also down to their partnerships. To develop innovative products

that will be in demand, the research and development comprising four members work diligently to create new

products to be introduced five times a year. Newly R&D formulated drinks are pilot tested at selected outlets to

determine whether the products will be a part of the menu, or further improvements need to be made to the

quality, logistics, and management of the products. For example, the Nasi lemak in a cup has been pilot tested at

the light rail transit and mass rapid transit stations, and petrol station outlets, with 50 cups available during the
early commute time. The new products were introduced based on the trend analysis and customer preferences

that were provided by the big data analytics of the loyalty program. The precision of the analysis has assisted

their products to be well received through their many promotional efforts. The collaborative efforts with well-

known brands, such as Cadbury and Horlicks, are also carried out to introduce new products. Ideas from the

global market has been applied to the local market, for example, in offering the booster drinks in the menu, and

opening an outlet based on the Starbucks concept in Sungai Long.

2. Besides partnering with food brands—an expected venture—Tealive’s made a slew of strategic partners.

“Ever since the transformation, we have evolved from laymen to corporates running the organisation, from a 6-

year-old brand to 1 year of owning our own brand, going from domestic to international.” One of those efforts

include out-of-the-box campaigns. With a startup called Monsta, Tealive did a Universitea program that offers

its participants opportunities to a project development with Loob Holding, fulfilling both Monsta’s bid to

provide opportunities for university students, and Tealive’s bid for their campaigns. Partnering with Moola,

netizens were tasked with snapping pictures of Tealive branded cars in the wild for a chance at drinks and

discounts. Meanwhile with GoGet, Tealive introduced a “Teabreak Takeover” Facebook campaign that offered

50 cups of Tealive for 10 winners who posted a picture of themselves drinking or declaring their “love for tea”.

“We are also working on humanising the business model and putting human experience at the heart of what we

do. Our aim is to always seek ways to intersect our business model with a desire to make our customers lives

better.”
Doubling down on their homegrown brand status in ads and banners helped humanise them too / Image Credit:

Chatime Besides that, there are other seemingly unorthodox partnerships—with the ongoing TV3 series Aku &

Dia, a movie starring Chris Evans called Gifted, and many others.

3. Most of their resources next year will be going into their international expansions.

“We used to be very much focused on the domestic expansion but moving forward most of our investment will

be allocated towards local and international expansion,” said Bryan. In fact, their expansion has been put in the

front and center for the brand for the next three years. By 2020, the brand hopes to “unlock” 15 countries. One

of Bryan’s oft-quote phrases is “born in Malaysia and raised for the world”, but the fruit of that sentiment is

coming true—by using their expansion map as a mood board to inspire more drinks in Malaysia.

When asked about introducing Vietnamese Coffee drinks in Malaysia right after launching in Vietnam, Bryan

stated that: “What we wanted to do was to pay tribute to our new addition to the family by showcasing their

popular beverage. This will happen more in future as our objective is to introduce foreign favourites, allowing

customers to be involved in the brand building journey.”

The rest, according to Bryan, simply lies in delivering a good cup to consumers. “We never compromise on

quality or take shortcuts, and our tea is of the best quality and brewed freshly daily,” said Bryan.

Perhaps an expected answer, but the success or failure of the brand lies in the most visible result: once a drink

touches a customer’s lips. And in the end, that’s the only thing that matters. With Tealive’s current position in

the market, it’s easy to forget that they could easily have crashed and burned after Loob Holding’s fallout with

Chatime. We think that it is a testament to the company’s experience in growing brands that they are able to

make the transition to Tealive seem smooth. It will certainly be interesting to see how the bubble tea wars rages

on in this nation, between the existing players and other that may come into the fray.

Tapping Into Global Market

On the global front, the Tealive brand has tapped the Australian, Vietnamese and Indonesian markets. As the

regions are different in tastes preferences, market intelligence surveys are carried out from time to time to

remain aligned with the demands and tastes of Tealive’s overseas customer base. The menu and the range of
products introduced also varies for each region. For Tealive, before tapping into the foreign markets, available

competitor products are tested and a thorough research done with a sample size of about 100 people. This helps

to identify the future customer profile, and to formulate the optimal pricing strategy. The ingredients that will be

offered in its menu will be customised based on the findings of the research, and the design of its outlets will be

based on the preferences suggested by the respondents.

In addition to that, Tealive global success are a result of the company able to work with synergistic business

partners for Tealive’s expansion across the Asia Pacific region. In Vietnam, the partnership with a conglomerate

food company has been established, whereas Australia is the global brand and marketing agency for Tealive.

The benefits gained from such global partnerships is Tealive’s ability to correctly identify the range of product

offerings, for example the health-conscious Australian market, with drinks that are rich in multivitamins and

protein boosters. For the Vietnamese market, the size of the outlets matters to the locals as they prefer a cosy

and spacious ambience. Consequently, the large-sized outlets are offered to the northern Vietnamese market.

Both approaches did not exist in the local market, and through this platform, Tealive has successfully

introduced these new concepts to the local market.

Strengthening Brand Name via Breakthrough Campaigns

As part of Tealive’s corporate social responsibility program, breakthrough campaigns have been
introduced to instil the involvement of emotion in its brand. Apart from that, Bryan Loo wishes to see his brand
appear in all kinds of events, such as weddings, birthdays and other social events. Every month, the campaign
also offers opportunities to experience extraordinary moments to the participating winners, such as helicopter
rides, piloting an aeroplane for three hours, tickets to the World Cup in Russia, enjoying breakfast in the hot air
balloon, and dining in the sky. The campaign is aimed to offer people an once-in-a-lifetime experiences and
special moments that are hard to come by. As Tealive has experienced many breakthroughs since its inception
in 2010, the brand now shares and extends its success by helping people experiencing breakthroughs in their
lives through its campaign