A DAN-D ROAD TO SUCCESS
Packaged food mogul honours roots
Dan On, founder and owner of Vancouver’s Dan-D Food group, glides with a dancer’s debonair grace as he works the room.
Tonight, he is playing host to 180 small and family-owned grocery store owners. The people gathered at Sun Sui Wah, one of Vancouver’s top Chinese restaurants, are among On’s most loyal friends and clients.
On could have invited heavyweights of the grocery world to dinner — the Sobeys (Safeway, Thrifty), Loblaws (Real Canadian Superstore, T&T) and the Over-waiteas (Save- On Foods). After all, On’s gross sales reached $110 million last year, and most major players display his nuts, grains, seasonings and dried fruit by the pallet. That, too, might have been good for business.
But 56-year-old On, at the height of his entrepreneurial success, has invited a cast of mom-and-pop owners of stores like Dong Thanh on Kingsway and Killarney Market on 49th Street.
The lavish dinner is a thank you to people who have stood by him from the start. He’s acknowledging a two-way relationship in which friendship and loyalty count for as much as price and product.
Many guests will arrive and leave in shifts throughout the evening. They can’t all be out eating lobster at Sun Siu Wah on a Saturday night. Who will mind the store?
Both of On’s moms are here too. His birth mom, Lulu Luc, and another, different kind of mother.
Irene Kavanagh and her husband George took On in as an 18-yearold Vietnamese boat refugee when he arrived in Vancouver alone on a cold, cloudy day in October 1979. She has brought her photo album. The first photo shows a heartbreakingly young, slim boy in a cotton shirt.
Tonight, On appears relaxed and completely at home in a satin lapelled tuxedo jacket and bold lavender tie.
Dan-D Pak products are ubiquitous on Vancouver grocery store shelves, but few in this city realize the bulk of On’s empire is abroad. Dan-D Foods group produces 2,000 products, has up to 1,000 employees and sends 15 shipping containers of cereals to Asia each month. On’s gross revenue in Vancouver was $35 million last year, but his total gross is triple that number. His Dan-D Pak, Dan-D Bulk and Dan-D Organic brands operate in six countries with sales offices in Hong Kong, Taiwan and Shanghai. On’s Richmond, B.C. and Fresno, Calif., plants are dwarfed by two large Vietnamese facilities that employ up to 600 people.
But tonight, On is more dutiful son than hard-driving businessman. He solicitously visits Irene at her table several times to ensure her comfort. It’s been decades since Irene and George were his lifeline, but On speaks often of his debt to the couple.
COMING TO CANADA
On quit school at age 15 to sell sandals on the streets of Ho Chi Minh City. His father, an ethnic Chinese living in Vietnam, worked three jobs to feed his family of seven who lived in one bedroom of a small two-storey house — 45 people jammed into one house with two toilets.
“Anyway, story short, hunger determined me,” On said. “I determined when I grew up, ‘Hell, I’m not going to live in such conditions.’”
On left Vietnam in 1979 on a 16-foot wooden boat with a ticket bought by his parents. Four days later, the boat was attacked by pirates, rescued by a passing German freighter, and On was deposited in a Malaysian refugee camp before being brought to Canada by the Hope Lutheran Church months later.
“I arrived at Vancouver International Airport on Oct 27, 1979, and was picked up by a couple (that) looked like farmers to me,” On said.
He hopped into Irene and George Kavanagh’s small Honda hatchback. “They drove over an hour to get to a wilderness town call Port Coquitlam, the couple trying hard to explain to me there is no port at Port Coquitlam. The next thing I remember was they put me in the basement and they left, gone to work.”
Irene had left him a bowl of porridge — a cold and astonishingly tasteless experience On remembers to this day.
Irene and George, entrepreneurs with two young children and a recently acquired, almost bankrupt granola business, had responded to their church’s call for refugee sponsors.
“We understood because we were struggling ourselves,” Irene said. The couple had previously owned a trucking firm and a mushroom farm. “We had a roof over our heads. Why not help?”
When the Kavanaghs asked On if he wanted to go to school or work, he chose work. He was 18. He was to live with the Kavanaghs for five years. If George, the mentor, was tough and outspoken, On, the mentored, had grit and moxie behind his obedient demeanour.
On found a job in a restaurant kitchen and George started the boy as a two-day-a-week janitor. George was demanding. “If you do the toilet make sure you hug the toilet and see your face,” On recalled George saying. If
I devoted 200 per cent to the Kavanaghs. They saved me and helped me, so I will be loyal to them. DAN ON, founder and owner, Dan-D Food group
the young man felt any resentment he converted that into an entrepreneurial lesson. “That’s discipline,” On said.
Neither Irene nor Leslie Joe, an early acquaintance and founder of Vancouver’s flourishing Sunrise Market and Sunrise Soya Foods, foresaw the future tycoon. No, they both say simply, before laughing, but they do remember a boy who, like them, worked very, very hard.
“I devoted 200 per cent to the Kavanaghs,” On said. “They saved me and helped me, so I will be loyal to them.”
EARLY DAYS
On became George’s sidekick.
“We weren’t making enough money selling granola so we started to sell the ingredients,” Irene said. Health food stores and supermarkets bought their grains and trail mixes for the latest hot trend — bulk food bins.
As a Kavanagh Foods junior buyer, young On bought peanuts from a Richmond importer, Western Rice Mills.
“He was shrewd but he was fair,” said owner John Chiang, who first met On 35 years ago. “He was a fast learner.”
George and On made a good team. They were soon travelling to Asia together to source nuts and grains. George had experience, but On spoke Cantonese.
“If something was wrong with the product, he knew … he would have to claim on subsequent orders,” Chiang said. “He had the culture, but George had the money.”
By the time George sold Kavanagh Foods in 1989, the company had 55 employees. The purchaser focused on granola, so On took the opportunity to start his own bulk foods distribution business.
“That was his break,” Chiang said. Lacking capital and credit but wanting access to Western’s suppliers, On asked Chiang’s father to order product for him at a small premium but with longer payment terms.
It was George who suggested On open a cashew factory in Vietnam, the world’s largest cashew exporter. Competition in granola was fierce, with deep-pocketed multinational players, but the field was wide open in cashews. George urged On to name himself the “Cashew King.” On did. “Took me 10, 15, 30 years to penetrate. Now we’re the leading brand of cashews in all of Canada,” On said.
Strong Asian sourcing is one key to On’s success, but he was also quick to see opportunity in selling small packages to time-crunched consumers. Inspired by church communities buying and redistributing his bulk foods, On introduced Dan-D Pak around 2000.
Jenny Joe, Leslie’s daughter, has been buying beans, spices, nuts and dried fruit from On since his earliest days in business. The inexpensive, plastic Dan-D Pak packages with simple stickers were innovative back then, she said, and shoppers liked paying close-to-bulk prices for small, sealed portions with visible product. At 20 to 30 per cent below his competitors, “his prices were very good and still are to this day,” said Jenny, who stocks 400 Dan-D products in the 60-year-old store.
On was “very aggressive,” Chiang said. “He knew if he came in with packaging, he couldn’t come with just a few. He invested heavily and came into the market with a family of 20 or 30 products, which gave him exposure on the shelf.”
Ask On, though, and he’ll talk vertical integration. Dan-D Foods controls every step from harvesting cashews to store delivery. On even manufactures all components of his jars and labels.
“We are the only one in the industry to achieve this,” On said. “That’s how we can control market share.”
MANAGEMENT STYLE
Control may be a key word in On’s lexicon. He models Dan-D Foods on the city-state of Singapore, and his own leadership on the late Lee Kuan Yew, the much-lauded Singaporean prime minister often called a benevolent dictator.
On’s two adult children will have to earn the right to run the company. His preferred style is a “meritocracy.”
“I give you one minute to Google the word,” he said briskly at his Richmond plant one morning. “I run my company like Lee Kuan Yew run Singapore. People complain about dictatorship, but he’s not a dictator, he just wanted to do things right.
“We do everything perfectly. I send my staff to Germany and Japan. When it comes to machinery, learn from the Germans. When it comes to discipline, punctual, you learn from the Japanese.”
The company holds ISO, California Certified Organic Farmers, B.C. Kosher and Orthodox Union certifications.
“To me, running a business same as running an army base or fighting a war,” On said. “Business is no different than a war zone. So I am very disciplined and take it very seriously.
“You face a challenge and you fight. You want to squeeze your competition off the shelf and you want your product display right outside the entrance.”
On can be both charming and very blunt. He won’t hesitate to ream out an employee in public, a trait learned from George.
“He’s not afraid to offend people or to say the rudest thing in the world sometimes,” said his right hand, Soo Teng, who these days doesn’t hesitate to challenge her boss.
He cares about his employees’ nutrition and provides free cooked breakfasts and lunches at his Richmond and Vietnamese plants.
“He makes us brush our teeth after lunch,” Teng confided. She has worked for On for 23 years. “He helped me pick my boyfriend.”
On’s management style doesn’t always meet the legal test.
“I’ve fired lots of people,” On said, and tells a story about a manager who watched On sweep garbage without lifting a finger, merely asking, “Can I help?” “I fired him.” On lost $7,000 in a wrongful dismissal claim — janitorial work wasn’t in the man’s job description — but On is unrepentant. “It was worth it.”
“I disallow my employees smoke, drinking, fat. I say sue me if you want. I don’t allow anybody 300, 250 pounds working for me. You become my liability. I had an employee die on me. Pancreatic cancer,” he said, challenge in his voice. “Cost me money.”
For all the tough talk, what On doesn’t say is when this sick employee quietly left for China without telling him, he immediately put Teng on a plane to Beijing with money for the family’s many expenses.
On inspires deep loyalty from employees who meet his demands.
When Dan-D Foods had tight cash flow one year, On’s vicepresident of sales and marketing, Harry Petersen, refused to cash his own paycheque for three months. On later rewarded him with a $130,000 vacation home.
Retiring staff’s children automatically get first crack at a job if they show interest. Of On’s 100 Richmond employees, 30 have been with him for 10 years. Ten have been with him 20 years.
Nevertheless, On’s daily battles take a personal toll.
“I am a lonely soldier,” he wrote in a pensive late night email to this reporter during one of his many trips abroad. On is constantly on the move, rarely at home in Vancouver for more than a few weeks at a time.
At his Richmond plant, On starts to talk about his divorce and slips in something about an “affair” before Teng quickly shushes him.
On is a keen ballroom dancer and often slips out during the day to dance. He’s also an ardent cook, a yoga enthusiast and golfer.
But what he does most is work.
MARKETING
On is a born marketer. At Kin’s Farm Market, Kin Wah Leung, president of the 29-store produce chain, found himself coaxed into stocking On’s peanuts for three years despite peanuts being incompatible with his store concept.
“I didn’t know how to reject him. He brought such nice stuff to me,” Leung said with a good-natured laugh.
Although Dan-D products are ubiquitous in Canada, his future profit centre is Asia. China is hungry for food, On said. “I’m so proud to sell Canadian oats to China, Japan, Philippines, Hong Kong, Taiwan, Korea.”
It was George who told On to put a Canadian flag on his products, a tactic that spurs sales among Chinese consumers distrustful of their own country’s products. George died in 2012.
“We pretty much run behind the national brands like Quaker Oats, Kellogg. We are the little dragon and we get on the bandwagon,” On said of how he piggybacks on multinationals’ advertising campaigns, and strives to sell his product with better prices, quality and packaging.
He’s clearly succeeding. Dan-D products are stocked by Japanese retail giant AEON, Hong Kong’s leading Parkn-Shop supermarket chain, Walmart and 7-Eleven in China as well as “almost every” supermarket chain in that country.
“This is our secret. A country opened up, craving food. You should give them the best food. You don’t give them the secondbest. You lock them in, give them the best, then they cannot turn around and go to a lower quality.”
LOYALTY
At Sun Sui Wah, On is vexed. He’s heard that Overwaitea might drop Dan-D Pak as a supplier after 20 years with no given reason. On found out two days ago and he’s mad. Reminded of the issue at dinner, On starts to utter fighting words, but bites his tongue. On has a love/ hate relationship with the majors. They lack the personal loyalty he so deeply values.
“Everything is systematic. They don’t feel sorry for you. They don’t have regard to your survival. When we deal with small independents, we want to build up win-win situations.”
As proof of that conviction, he still caters to his oldest clients just one case of product at a time, even though in his heart, he believes the independents are a dying breed.
Rents and property taxes are high, staffing is hard, and the majors are not only consolidating but encroaching on independents’ traditional advantage of access to local product.
First generation entrepreneurial superstars such as Sunrise Market’s Leslie Joe and Kin’s Farm Market’s Kin Wah Leung, a mechanic turned produce-store owner, may have managerial children in their businesses, but they are unusual. “Not many people can go through the grind of seven days a week, 12 hours a day,” Peter Joe, Leslie’s son said.
“The independent grocery chain will eventually be history,” On said. As it stands, only 35 per cent of On’s overall sales now go to independents. In order for Dan-D to thrive, On must work with the conglomerates and look overseas. “We have to export.”
Yet on this night, On ignores all uncomfortable business truths and delivers a dinner speech urging his guests to take heart.
“If you have cash, open next to Superstore, Loblaws, Nestors Market. Don’t be afraid. You will share their market,” he said. “We can’t care about Loblaws. It’s the little guy who contributes to the economy, not the rich guy.”
On tells his audience of the early days, of meeting Leung and Leslie Joe every day at dawn, each with their respective trucks, at the produce wholesalers on Vancouver’s Malkin Avenue. Joe, 81, stands, reddening, and beaming with the attention and recognition of his years of hard work.
Irene Kavanagh looks on with pride, remembering, perhaps that On was once the little guy, slender and heartbreakingly young, but determined as a blade of grass, more willing than anyone to work hard, and determined to grow.
When it comes to machinery, learn from the Germans. When it comes to discipline, punctual, you learn from the Japanese.
DAN ON