Gano Excel Enterprise Sdn. Bhd.

Level 6, Menara BDB
88, Lebuhraya Darul Aman
Alor Setar, Kedah 05100
Malaysia
Telephone: (+604) 733 9168
Fax: (+604) 733 1540
Web site: http://www.ganoexcel.com

Private Company
Incorporated: 1995
Sales: $500 million (2007 est.)
NAIC: 311920 Coffee and Tea Manufacturing; 111411 Mushroom Farming

4,000-YEAR-OLD MIRACLE MUSHROOM

COFFEE COMBINATION IN 1996

SETTING UP SHOP IN NORTH AMERICA IN 2004

PRINCIPAL SUBSIDIARIES

PRINCIPAL COMPETITORS

FURTHER READING

Gano Excel Enterprise Sdn. Bhd. is a Malaysia-based company that develops and markets nutritional products incorporating ganoderma lucidum. A fungus known more popularly as lingzhi in China, reishi in Japan, youngchi in Korea, and as “red mushrooms” elsewhere, is considered one of the oldest and most powerful traditional Chinese medicines. Gano Excel is one of the world’s largest producers of ganoderma, operating a state-of-the-art organic plantation in Alor Setar, Malaysia. The company has developed a range of products incorporating ganoderma. Gano Excel’s flagship product is its line of coffees, marketed under the Ganocafé brand as “healthy coffee.” The company’s coffee line includes Classic, Mocha, and 3-in-1, as well as Ginseng Tongkat Ali, combining ganoderma with two other popular herbal medicines. Other beverages in the company’s catalog include tea, cocoa, and spirulina. In addition to these lines, Gano Excel packages ganoderma as supplements in capsule form.

The company also markets its own line of ganoderma-containing personal care products, including facial and body creams, lotions, soaps, and toothpaste. Instead of developing its sales through traditional distribution networks, Gano Excel has instead opted for a multilevel marketing system. The company has established subsidiaries in 21 countries, with a goal of entering 100 countries by 2010, where it develops its network of independent sales “affiliates” and “members.” The company provides marketing and logistical support to its representatives, which numbered more than 17,000 at the midpoint of the first decade of the 2000s. The company, which remains privately held and controlled by founder and Chairman Leow Soon Seng, claims sales of nearly $500 million.

4,000-YEAR-OLD MIRACLE MUSHROOM

References to the medicinal use of ganoderma lucidum, which itself encompasses more than 300 species found worldwide, reach back more than 4,000 years. Lingzhi, as the fungus is known in China, was classified among the “superior” medicines in Sheng Nong’s Pharmacopeia, the earliest known compendium of Chinese medicines produced more than 2,000 years ago.

Among those studying lingzhi and its properties was noted naturalist Li Shi Zhen, who conducted his research during the Ming dynasty in the middle of the 16th century. Li was among the first to classify the many species of ganoderma, which, according to their color and shape were said to affect different parts of the body, and with greater or lesser potency. The discovery of the body of Li’s research in 1956 helped stimulate new research to explore the purported health benefits and identify the active ingredients in ganoderma lucidum. Over the next decades, numerous studies in China, Japan, Korea, the United States, and elsewhere were conducted in order to investigate many of the long-standing health claims attributed to ganoderma; many of these studies have provided support to claims that ganoderma may strengthen the immune and respiratory systems, and act as a cancer control agent. Other health claims were that the mushroom helped boost energy levels and reduce fatigue, as well as acting as a sleeping aid. At the same time, ingestion of ganoderma produced little or no harmful side effects.

Ganoderma remained extremely rare. Wild ganoderma was typically found growing on the stumps of fallen and older trees, and then only under certain conditions—fewer than one in 1,000 trees were likely to support the growth of ganoderma. As such, the mushroom remained highly prized and extremely expensive.

This situation began to change in 1971, when a team of Japanese researchers developed the first method for cultivating the ganoderma mushroom. The use of a tissue-based medium permitted growers to produce ganoderma on a consistent and larger scale for the first time.

In 1983, another researcher, Leow Soon Seng, a mycologist with experience developing orchid plantations, took an interest in ganoderma. Over the next decade, Leow began studying various species in the ganoderma family, identifying six varieties said to possess the most active properties. Leow also conducted research into growing conditions required by the mushrooms, including optimum temperature and humidity levels. By 1995, Leow had perfected his own technique for growing ganoderma, developing a new type of organic medium, based on scraps from rubber trees, rice husks, and flour made from brown rice, to serve as the humus for the mushroom’s cultivation.

Leow had in the meantime identified Malaysia, with its consistently high temperatures and humidity, as an optimum environment for establishing the world’s first and largest ganoderma plantation. Leow began acquiring land in Alor Setar, in Malaysia’s Ketah region. In 1995, Leow established Gano Excel Enterprises, and launched production of ganoderma. Leow sought to market the ganoderma as a nutritional supplement. However, he faced a hurdle in that the prepared ganoderma was extremely bitter to the taste.

COFFEE COMBINATION IN 1996

Leow and his team of researchers began looking for a means of delivering ganoderma without the bitterness. In 1996, Gano Excel hit upon the idea of combining ganoderma with coffee, masking the mushroom’s bitterness with coffee’s own flavor. Over the next year, the company worked to perfect its recipe, and in 1997 launched Gano Café 3-in-1, a blend, which in addition to coffee and ganoderma, also contained nondairy coffee creamer, claimed to be the world’s first “healthy coffee.” The company also developed other coffee blends, including its Classic, containing only coffee and ganoderma; Mocha, which included powdered milk; and a variety blending ginseng with another popular herbal medicine, Tongkat Ali.

Gano Excel’s choice of coffee also took advantage of coffee’s position as one of the world’s most important commodities, and one of the world’s most consumed beverages. Indeed, coffee was second only to petroleum in the volumes traded each year, and second only to water in terms of consumption. The company hoped to take advantage of the rising demand for coffee, and particularly the trend toward high-end coffee. At the same time, the company’s “healthy coffee” also targeted the fast-growing market for nutritional foods and supplements.

In order to market and distribute its coffee, Gano Excel turned to a multilevel marketing model. In this way the company was able to avoid the expense of developing its own dedicated sales and distribution staff, instead creating a multitiered system based on independent sales “affiliates” and “members.” While multilevel marketing had inspired a certain level distrust in the West, it remained a popular sales tool in the Asian region.

COMPANY PERSPECTIVES

Gano Excel has one of the most enduring mission statements “To Bring Health and Wealth to Every Family.”

From the start, Gano Excel’s ambitions turned toward the international market. By the dawn of the 21st century, the company had begun to extend its operational network to neighboring markets in the Asia Pacific region. As such, the company established subsidiaries in Singapore, Thailand, and elsewhere. The long-standing reputation of ganoderma in the Asian world enabled the company to achieve a rapid penetration of these markets, as its list of subsidiaries extended to include Vietnam, Hong Kong, Laos, Nepal, Mongolia, and the Philippines.

The early 2000s saw the company expand into an ever widening array of markets. By the end of 2002, the company had established subsidiaries in Australia and New Zealand, as well as India and Pakistan. New markets for 2003 included Bangladesh, Myanmar, and Brunei, among others. The company also extended its network into the Middle East and Persian Gulf, adding subsidiaries and sales in Saudi Arabia, Kuwait, and the United Arab Emirates. Along the way, Gano Excel continued to develop new products, adding teas, cocoas, and other beverages, as well as a line of personal care products, including creams, soaps, and toothpaste containing ganoderma.

SETTING UP SHOP IN NORTH AMERICA IN 2004

Gano Excel adopted a strategic goal of extending its markets to 100 countries by 2010. The company turned its attention to establishing operations in the United States, which remained the world’s largest economy and one of the largest single markets for coffee. If the West had long viewed traditional medicines with some skepticism, these markets, particularly the United States, had far less reticence in their consumption of nutritional supplements.

The United States also represented a fertile market for Gano Excel’s multilevel marketing model. In 2003, Gano Excel sent Bernardo Chua, who had led the company’s entry into the Philippines and Hong Kong, to establish its U.S. subsidiary. Chua set up shop in California, yet at first struggled to get the U.S. operation off the ground.

This changed when Chua brought in Joven Cabasag, who had built up more than 15 years of experience in multilevel marketing. Cabasag brought new energy to the company, helping to create its “healthy coffee” model, and put into place a five-level deep marketing structure specifically tailored to the U.S. market. By October 2003, Gano Excel USA was in business, and by the end of the year had attracted its first wave of independent distributors.

Sales of Gano Café built steadily, and by June 2004 the company had moved into a new 42,000-square-foot warehouse in Irwindale, California. This facility also became the company’s U.S. headquarters. The company also quickly expanded its sales force, and by the middle of the decade claimed more than 17,000 affiliates. The corresponding rise in sales volume led Gano Excel USA to invest in developing a new state-of-the-art logistics system at its warehouse site. The company also opened a showroom, featuring displays from each of the company’s growing network of subsidiaries.

The success in the United States led Gano Excel to launch plans to establish a dedicated subsidiary for Canada in 2005 as well. The company also extended its reach into the Central and South American markets. Among the fastest-growing of these was Gano Excel’s Thai operation, which inaugurated a new eight-story headquarters building in Bangkok in 2006.

By 2007, Gano Excel Enterprise claimed sales of nearly $500 million, with subsidiaries present in 21 countries, extending its total sales reach to more than two million customers and 35 markets worldwide. With the total markets for coffee and nutritional supplements each extending in the tens of billions of dollars, Gano Excel Enterprise was able to look forward to continued growth, and stood a good chance of achieving its goal of 100 countries by 2010.

M. L. Cohen

KEY DATES

1983:

Mycologist Leow Soon Seng begins researching the ganoderma lucidum mushroom, identifying the six most active varieties and developing his own organic cultivation method.

1995:

Leow establishes Gano Excel Enterprise in Malaysia in order to found ganoderma plantations and begin marketing ganoderma supplements.

1997:

Company launches Gano Café, a coffee blend containing ganoderma, as the first “healthy coffee,” then begins distribution via multilevel marketing model.

2004:

Gano establishes subsidiary in the United States as part of plan to reach 100 countries by 2010.

2007:

With sales approaching $500 million, Gano Excel claims more than two million customers in 35 markets worldwide.

PRINCIPAL SUBSIDIARIES

Cong Ty TNHH Linh Duoc Thao (Vietnam); Ganex Bangladesh; Ganex India Marketing Pvt Ltd; Gano Excel (Brunei); Gano Excel (Hong Kong), Ltd; Gano Excel (Phils), Inc. (Philippines); Gano Excel Australia; Gano Excel Dominican Republic; Gano Excel Enterprise (Thailand) Co. Ltd.; Gano Excel Enterprise Sdn. Bhd.; Gano Excel GCC (Saudi Arabia); Gano Excel International (Canada) Inc.; Gano Excel Mongolia Co. Ltd.; Gano Excel Myanmar; Gano Excel Nepal; Gano Excel New Zealand Limited; Gano Excel Puerto Rico; Gano Excel S.R.L. (Romania); Gano Excel Singapore Pte. Ltd.; Gano Excel USA Inc.; Gano Excel Pakistan; Ganoexcelbiz Korea; PT. GANO EXCEL NUSANTARA (Indonesia).

PRINCIPAL COMPETITORS

Procter & Gamble Inc.; Starbucks Inc.

FURTHER READING

Kearney, Keith, “Gano Excel Launches Healthcare Products,” Hindu Business Line, January 28, 2003.

“The Most Dynamic Global Business Today,” Franchise International, Spring 2005.