International Ice Cream Headache - Global Trade Magazine
  January 17th, 2014 | Written by

International Ice Cream Headache

Michael Strange can’t recall whether it was through an email, text or Skype session that he learned his worst fears had been realized. He is sure the news came from his customer in China James Sun, who had pushed hardest for Strange’s Philadelphia-based company, Bassetts Ice Cream, to launch its first true export program.

Strange had been challenging to convince. Though Bassetts is America’s oldest ice cream brand—founder L.D. Bassett began making the frozen treat during a little dust up called the Civil War—it has been a decidedly eastern U.S. concern. It seemed a bit far-fetched to Strange that a brand not shipped so far as the West Coast would suddenly make its way to the Far East. Foremost among his misgivings was how his product would be maintained at the proper temperature critical for optimum freshness, flavor and consistency.

In other words, he worried it would melt.

“I know it sounds obvious that ice cream has to be kept at a very cold temperature,” Strange says, “but it has to be kept much colder than other frozen foods. For example, frozen French fries are kept at 20 degrees. Ice cream has to be at a consistent minus-20 Fahrenheit.”

But Sun, whose love of Bassetts is such that he’s fond of calling it “the best flavor in the world,” was persistent. Strange eventually agreed to send him nine pallets of ice cream, all the while being fairly certain this was a one-time, one-off kind of thing, not unlike 1935, when the company shipped 10 quarts—packed in dry ice—to the American embassy in Tokyo. That shipment arrived in perfect condition and so did the nine pallets, prompting a second shipment of 20 pallets, then a third.

And then came the email or text or Skype session.

“Basically, I found out something had happened on the other end,” Strange says, “and it wasn’t pretty.”

The ice cream had been shipped to Shenzhen, one of China’s busiest container ports, and after spending an unusually long time clearing customs, was sent along to a warehouse where Sun opened the container door to find product oozing from its packaging.

“It spilled out and looked like it was bubbling,” Sun says.

Each bubble, each gurgle of sweet ooze spoke of a lost shipment, the sum of all Strange’s exporting fears—an ice-cream headache that figured to derail Bassetts’ Chinese venture.

Only it didn’t.

Today, five years later, Bassetts’ Chinese operation generates 20 percent of the company’s total revenue. Sun opened three more Bassetts parlor locations last year and plans to continue expansion in China and beyond. The experience has been such a positive one for Strange that he produced a video paean to the company’s China experience, an effort so convincing that it took first prize in the Small Business Administration’s Visa Export Video Contest earlier this year.

The video, narrated by the raspy-voiced Strange, contains requisite shots of him hoisting his ice cream all over China—including, yes, the Great Wall—while lauding the SBA for providing a “roadmap” for international success. He credits his district international trade officer and the U.S. Commercial Service’s Export Assistance Center with providing advice, referrals and introductions to business representatives in China, and praises the Export-Import bank for providing low-cost credit insurance and Food Export USA’s Branded program, funded by the USDA, for providing matching funds for qualifying overseas marketing expenses. This after he allows that if someone had told him he’d be selling his ice cream in China he’d have recommended they get their head examined.

So, how did it all happen?

While it is tempting to assume that anyone heading a 150-year-old company that has sold its product from Philadelphia’s Reading Terminal Market since it opened in 1892—two centuries back—may be stuck in old practices, it’s important to note that Bassetts has a history of innovation dating to its inception, when L.D. used a mule to turn his ice cream churn. It’s also important to know that Michael Strange’s mother, Ann Bassett, presided over a huge company expansion that began in the mid-’70s and included offering the brand in new forms (prepackaged) and locations such as fine-dining establishments. The China venture represented an acceptable risk that seemed worth Bassetts’ commitment, especially since the customer on the other end, Sun, was just as committed.

“To have a partner who is dedicated to the high quality of our brand is so important to our success [in China],” says Bassetts’ executive vice president, Chris Fandozzi.

Of course, equally important was being reasonably assured that their product would arrive intact and in a non-soup-like state. Fandozzi says he was at first frustrated to find that many shipping companies would not guarantee getting their ice cream to China, non-melted.

“To be honest, it was hard to find a company that wanted to ship ice cream,” Fandozzi says. “No one would guarantee the shipping. Frankly we were surprised, and not too happy about it.”

Given that, Strange invested in temperature tags, computer chips that monitor and audit temperatures on pallets placed high, low and in the middle. There are about a dozen such tags on each Bassetts container, tracking the temperature and monitoring any spikes. In the intervening five years, there has not been a single repeat of the melting incident, and technology and logistical services have improved to the point that Strange says he is much more confident about the safety of his product during its 40-day voyage from the Port of New York than when it is transported domestically in trucks. After all, he says, containers are now designed to specifically transport cold storage at extremely low temperatures.

As effective as new technology and service providers have been for Bassetts, Strange says the best exporting investment he ever made was in something that has been around nearly as long as there have been ships.

Two words: cargo insurance.

He says that when people ask him about doing business overseas, it’s one of the first recommendations he makes. “It’s cheap and if you don’t have it the ramifications could be disastrous,” he notes. Consider that without cargo insurance, Bassetts would have had to replace its entire melted shipment—not only a good chunk of change, but a chunk of change that Strange may have deemed prohibitive and enough to consider shutting down his China operation. Instead, he says, “I didn’t freak out when I got the news. I knew we had cargo insurance. As long as we could demonstrate that it wasn’t our fault, we’d get our payoff.”

The fault for the melted ice cream, it turned out, was not technological but human.

“Someone forgot to plug the container in,” Strange says. “So, we were in the clear and since our insurance pays off 110 percent of the invoice amount, in a weird way, we did all right.”

Of course, it doesn’t do a business much good to get its product to market without buyers. Despite ice cream being one of few things we can all agree on in the U.S.—Americans consume about 1,650 million gallons of it, annually—the fact is the Chinese haven’t traditionally screamed for it.

Rhonda Parkinson, author of The Everything Chinese Cookbook, has noted that though the Chinese are reputed to have invented the first frozen confection around 2000 B.C., “ice cream never caught on in China, both because of a lack of refrigeration in Chinese homes and because the Chinese believe it is unhealthy to eat completely frozen foods.”

Parkinson says those conditions and attitudes are changing, especially in big cities such as Shanghai where Bassetts is sold.

Sun has worked hard on his end to bridge the gap, but Strange still felt he needed someone near him who could provide cultural context and practical skills such as translation and keeping current on local Chinese food and label regulations. He hired Melissa Meng, a Chinese native earning her MBA at Drexel University’s LeBow College of Business in Philadelphia, who would prove invaluable in helping with those tasks and others, such as assisting overseas marketing and promotion. As part of her job, she translates government regulations and then formats and designs new Bassetts’ labels, being sure to keep up with any regulatory changes or modifications.

“In China, they may require less in one area and more in another,” she says. “It’s just a matter of keeping up with things.”

Meng has been able to keep Strange up to date with Chinese likes, dislikes and customs. She told him that the Chinese view ice cream as a sort of extravagance as opposed to how it is viewed in the states as something you get after your kid’s soccer game.

ice-cream--second“It’s kind of seen as a luxury item there,” she says. “The cost can be really high because of all the logistics required to get it there. It’s like a symbol of social status, especially since it tends to be sold in shopping malls where there are a lot of expensive things.”

Meng’s description seemed to mesh with Bassetts’ fine-dining background and, indeed, when it has gone up against other luxury ice cream brands such as Haagen Dazs in blind taste tests, it’s more than held its own. Of course, taste is a notoriously local thing. Bassetts has gradually introduced flavors tailored for the Chinese pallet.

Some, such as green tea, are to be expected. But others are more exotic and less known in the States, such as the black sesame flavor Sun suggested would do very well in China. It was not the first time the company created a flavor specifically for a country: in 1959, at the height of the Cold War, Bassetts did what it could to cool tensions by presenting then-Soviet Premier Nikita Khrushchev with 50 tubs of borscht ice cream. Strange set about making a sample batch of black sesame and served it to Sun as a surprise while they dined at a local Philadelphia restaurant.

“Whenever I go to China, James is always such an unbelievable host,” Strange says. “I love Chinese food, of which there are eight cuisines, and he always makes sure that I have one of each while I’m there. I wanted to reciprocate. So we had a couple sample tubs of the black sesame made and then, while out to dinner, surprised him with the black sesame ice cream for dessert. He was enormously appreciative that we had gone to that extent. Then he took one spoonful of it, looked at me and said, ‘Not strong enough.’”

It would take several versions of black sesame, each stronger than the one preceding it, before Bassetts got it right. Meng has tasted the black sesame, and likes it, though not as much as green tea ice cream. Having been born and raised in China, she has adapted quite nicely to U.S. customs and tastes, including ice cream and other treats. Asked what her favorite American treat has been she does not hesitate. “Steak,” she says, immediately launching into an explanation of her favorite cut—“Ribeye, medium rare”—and cooking styles, ending the reverie for just a moment before adding, “Maybe I can convince Michael to do a steak-flavored ice cream.”

Rest assured, if Strange thought there would be a market, he’d set his people to liquefying some New York cuts. The China experience has given the energetic Strange an additional hop in his step. He’s the first to tell you that he loves his job. When he told a reporter that he would be out of town for a few days attending an ice cream convention, the reporter shot back an email saying he couldn’t imagine a better work destination.

“The ice cream convention is in Las Vegas,” he wrote, rubbing it in.

Strange is optimistic about Bassetts’ overseas expansion. Taiwan could go from possibility to a reality fairly soon and there are other countries he and his team are presently considering and restudying. As he has done for the past five years, he’s planning to visit China and James Sun to get updated and eat a lot of very good Chinese food. He’s also likely to get a heaping spoonful of Sun’s seemingly limitless supply of Bassetts cheer.

Meng, who has worked with Sun quite a lot in the performance of her duties, finally met the man in person last year, calling him “enthusiastic.”

Think so?

Ask James Sun where he sees Bassetts in five years and he’ll tell you, “We will have 50 to 70 Bassetts stores on the Chinese mainland. Bassetts will have 10 to 15 percent market share in China.”

Do you know how much 15 percent market share in China is? A lot.

Strange doesn’t make any such pronouncements. But it’s clear he and Bassetts are in this for the long haul, all made possible because he refused to cry over 20 pallets of milk spilt in Shenzhen. And now, here he is, according to Sun, on the threshold of great things and great market share in China.

“I have to admit,” he says, “this is not a bad gig.”

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