Taipei Times: When and where did you open Taipei's first pub?
Michael Cottingham: In fact, there were a couple of other Western restaurants opened shortly before us in Taipei, notably the Zum Fass and the Wooden Nickel, but I think we can justifiably claim to have opened the first real pub in Taiwan. It was called The Ploughman Pub, and was located in Shuang Cheng Street. I had arrived in Taiwan in 1976, having been sent here from the UK to work on the railway electrification project, which was one of Taiwan's 10 Major Infrastructure Projects organized by Premier Chiang Ching-kuo (
TT: What was it like in those days dealing with the government, the authorities and the gangsters?
Cottingham: The government didn't know what a pub was, so in those days we had a restaurant license. That was fine, but it certainly raised some eyebrows when the various authorities saw what foreigners did in restaurants. However, foreigners were held in certain respect at that time, so, even though Taiwan was under martial law, we were allowed a great deal of liberty. But it was a little strange to have to get the script of our pantomime 'Snow White and the Seven Dwarves' passed by the Garrison Command.
We never had much problem with gangsters, contrary to what you might think. They would occasionally come in the pub, but after being bought a beer by one of the regular customers, or challenged to a game of darts, they would realize that the usual awe in which they were held by the local population was not going to work here. They would then either decide that all foreigners are crazy, and disappear, never to be seen again, or realize that they quite liked the atmosphere, and that they would be treated just like anyone else so long as they reciprocated. It was not an atmosphere where you could act like a "big-shot," but a few became regular customers. In fact, we had just about the most diverse set of customers you could imagine. It was not uncommon to see ambassadors and students, old and young, Chinese and Western, rich and poor all getting along famously.
TT: With respect to your comment "foreigners were held in certain respect at that time." What major changes have you seen in your 26 years here in terms of the attitude towards and treatment of foreign business people here?
Cottingham: Don't get me wrong, I think that foreigners still enjoy a privileged position in Taiwan, especially on a personal level, although perhaps foreign companies don't receive quite the same privileges. But back in those days, 26 years ago, Taiwan was a pretty lawless place, and foreigners were more of the pioneer type, so it was quite normal to see the rules stretched a bit. The attitude was that all foreigners were Americans, and America was the main ally against the communists. So the tolerance for some sometimes rather extreme behavior was quite high. But Taiwan was still under martial law, so any discussion of politics was completely out of the question. Nothing critical in any way, shape or form would be tolerated, from anyone -- local or foreign.
Overall I would say that the changes have been for the better. Foreign businesses have made great strides over the past 10 years, and the rule of law has gradually taken over from the rule of guanxi.
TT: Who was the early competition at that time and how long did it take before copycat pubs started showing up on the scene?
Cottingham: We were located on Shuang Cheng Street, also known as the Combat Zone. This was the haunt of many of the GIs who were still in Taiwan at that time. In fact, the GIs did not leave until the middle of 1979, after the recognition of China by Jimmy Carter at the end of 1978. Well, the "Zone" was the home of many, probably hundreds, of girly bars catering to the GIs, and extended from Chungshan North Road to Linsen North Road, and from Mintsu East Road to Minchuan East Road. After the departure of the Americans, the girly bars were seriously short of business, Yet there was this pub nearby, run by a foreigner, doing great business. It didn't take long for most of the bars to add 'pub' to their name, thinking that this was the magic which would save them. Unfortunately this cheapened the meaning of the word "pub" and to this day in Taiwan it does not do justice to a great British institution. Within a year there were more serious competitors, often run by foreigners, usually following the same traditional "English Pub" theme, with plaster walls and wood-beamed ceilings.
TT: When did you introduce live bands into the pubs and what role did they have in the business' popularity?
Cottingham: Our second pub was called The Ploughman's Cottage, opened in 1980. This was a bigger pub, on Nanking East Road near Tunhwa North Rd. There was a dining room and a separate bar, but because of the location -- it was considered the boondocks in those days -- we had difficulty keeping customers until midnight, which was closing time. So we hired a couple of Americans, Ed and Steve, who played great fiddle and guitar, to liven up the bar. Well, this was a great hit, so we then introduced a once-a-week band in the Ploughman Pub. In 1984 we took over a restaurant, and changed it into The Ploughman Inn, put in a stage and had live music every night. That was really the beginning of the pub band scene in Taipei. By the late 1980s we had seven outlets, all with live music every night, and were keeping 15 bands busy. About half of these bands were foreigners, those being the days before work permits. The business had changed over time, and our customers were about 80 percent Chinese. They liked the atmosphere of the pubs, but they loved the live music, as did the foreigners, and so the business gradually focused on live music. We had all kinds of bands, from Dixieland to punk, hard rock to big-band, jazz to metal. It was tremendous fun.
TT: What did the big government crackdown on foreigners playing music in Taiwan in the late 80s do to business and the quality of live music in the short-term and long-term?
Cottingham: Well, the crackdown was actually on all people working without permits. No foreigner, musician, lawyer, or bank manager in Taiwan had ever heard of a working permit, so everyone was affected. The law was introduced, or enforced, without warning, so many foreigners were effectively illegal overnight. It also took some considerable time for the authorities to iron out the wrinkles in administering the law, so there were lots of catch-22 situations. Musicians were in the unfortunate position of having to work in public, on stages in pubs and hotels, and were an easy target for the police. What did that do to our business? Well, it made the music scene much less creative, we had to employ cover bands with the energy of a snail, and we had to pay a much higher price for them, because of the shortage of bands. Naturally this impacted business somewhat [but with time] the music scene has recovered, even surged ahead, but I still believe the professionalism of bands has a ways to go.
TT: Seems everyone is opening pubs these days, from movie stars to business moguls. What is the normal life expectancy for the average pub and how many of them actually survive long-term?
Cottingham: I don't think you can put a time-frame on it. Except that if a pub doesn't work in six months, then it's not going to work at all without a serious makeover. There are other issues too. The government still does not have a license specifically for pubs. Most are officially restaurants, or coffee shops, or have no license at all. There are also difficult zoning issues in Taiwan, Taipei especially.
This means that a lot of pubs do not invest in quality establishments, because their license is always in doubt, and they may have to shut down at any time. They are especially vulnerable when offering music, live or otherwise, as the authorities seem to frown on dancing and the like. Personally, I feel the authorities would do better to license pubs properly, and then strongly enforce the regulations.
TT: When did you start importing and distributing beer, and besides Corona, what other brands do you represent in the market currently?
Cottingham: I started Cottingham & Co in 1992, specifically to import Corona, which had just been allowed into the Taiwan market by the Taiwan Tobacco and Wine Monopoly Bureau. I was getting tired of running pubs by that time, having done it for about 15 years. All that fun gets to you after a while! The beer importing business was perfect for me, as it allowed me to use the knowledge and contacts I had built up, and it meant I could go home before 3am. I continued both businesses for a while, but in 1997 I stopped operating pubs, although I still maintain some investments in pubs in Taiwan and China. Now, in addition to Corona, my company also imports Carlsberg, which is mostly draught beer, as well as Boddingtons, Erdinger and Grolsch brand beers. In the past couple of years we have branched out into spirits, such as Beefeater gin, Kahlua, and Sauza tequila, and we have just added Ballantines Scotch whisky and Courvoisier Cognac to our portfolio. The alcoholic drinks market in Taiwan is currently down with the recession, but we are still growing with the addition of these new brands. I am confident that the economy will turn around, and I see a bright future. Our best seller is still Corona, but each product has its own separate identity, and we have a strong portfolio.
TT: Who is your main competition in the beer market and what strategies do you employ to compete with them?
Cottingham: Our competition varies depending upon the sales channel. In pubs and restaurants our main competitor is Heineken, with Budweiser also becoming stronger. I have a great respect for Heineken, who have managed to keep the same strategy for many years, and their consistency has paid off. In draught beer, San Miguel and Miller are our main competitors, but we always have to remember that Taiwan Beer still has over 80 percent of the beer market in Taiwan, and there is a tremendous loyalty among Taiwanese consumers to this product. Most of our products are at the premium end, so we are not directly in competition with Taiwan Beer, but the newly-arrived Chinese beers, notably Tsingtao, cannot be overlooked.
TT: How do you give rival beers a run for their money?
Cottingham: We have always been a marketing-driven company, and will continue to be so. In the early days, we did not have tremendous distribution, like the Monopoly Bureau or some of the food distributors who also handle beer, so we had to rely on creative marketing.
Our distribution is better now, in fact we reach around 8,000 outlets. But the experience we have gained in marketing is still our greatest strength. We also believe in market education. Taiwan has not been open to foreign beers for very long, so there is a lack of knowledge in the trade.
TT: Is there a problem with local bartenders and their working knowledge of the products they sell?
Cottingham: Yes. This year we have started a free newsletter, actually more or less a magazine, showing what's happening with our marketing, and also giving the reader a lot of product knowledge. It's aimed at our whole distribution chain, from producer to importer, wholesaler, outlet and bartender, and we hope it can help to upgrade the professionalism of the trade. It's called Happy Hour, and is 90 percent in Chinese. For those interested our Web site is www.cottingham.com.tw
TT: How many brands of beer are currently in the market and how many do you believe will actually stick around long-term?
Cottingham: There are probably more than eighty brands imported into the Taiwan market, although only 10 or so have significant volumes. There will be many more brands in the near future because of the success of Tsingtao. Their entry will encourage many more "me too" brands to be imported from China. Taiwan has a history of crazes in the drinks business, starting with foreign beer, then dark beer, then red wine, then draft-in-a-bottle.
I believe that Chinese beer is the next craze. In two years' time we will see if it is a long-term trend. Which brands will stick around long-term? Ours of course, plus the major international players who have the marketing power to make it happen, and the staying power to keep going in a very competitive market.
TT: With the government recently opening the market to micro-breweries, does this create a new market niche and what kind of competition does it pose to beer importers?
Cottingham: I think you are correct, it will create a new market niche, but I think it will be a very small niche. In fact the market is not quite open yet, but as is normal in Taiwan, some outlets will jump the gun, or have already done so. Personally I like the idea of micro-breweries, especially if we get the range and quality available in America. The major brands of American beer are quite frankly not my favorites, but the micro-brews certainly are. However, I think it will take quite a long time for this new industry to develop the quality necessary, and even longer to develop brands. We may be in for some disappointments, but there will always be some successes.
I don't think there will be any real competition to beer importers from micro-breweries. In fact, it may help to educate the public about the many different kinds of beer produced around the world. But there will always be a requirement for strong international brands, especially in the premium sector.
TT: What about the spirits market -- who is the tough competition and where does Cottingham & Co. stand in that market?
Cottingham: We are quite new to the spirits market. We started a couple of years ago with Beefeater Gin, Kahlua, and Sauza tequila, which were aimed at our traditional sales channels in the pubs and the supermarkets/hypermarkets. We have done quite well with those. Now we are moving into the more traditional night-club markets, with Ballantines and Courvoisier. This is something new for us, and we are a small player. But that's fine for us, as we need to learn about these new markets. The tough competitors here are the Johnny Walker brands, who enjoy a tremendous share of the business. Scotch has benefited enormously from the leveling of taxes, so that duties on Scotch, Japanese, and American and Canadian whiskies are now all the same. Scotch has been surging ahead recently. We hope to be a part of that.
TT: What kind of change -- good or bad -- has WTO membership for Taiwan created for your sector?
Cottingham: The biggest overall change has been that the old Taiwan Tobacco and Wine Monopoly Bureau has lost its special status.
Previously, the Monopoly Bureau collected all duties from imported brands as a "Monopoly Benefit" which meant that we paid all our duties to our largest competitor. Cool system, if you are the Monopoly Bureau. They also decided what was allowed and what was not in terms of promotions.
This rather unique system has been dismantled, and we now pay duty to the Ministry of Finance -- so does the [former Monopoly Bureau] now. So they have changed from being a tax collector to a taxpayer. So there has been a considerable leveling of the playing field, to put it mildly.
TT: You are a ground-breaking entrepreneur: You introduced Taipei to good pubs, good beer and live music. What future aspirations do you have for the company?
Cottingham: You know, Taiwan is a kind of opportunistic place, things just come along and happen, and you can never be really sure what it will be that you will get involved in. I want my company to be a market leader in the professionalizing of our industry, and there is a lot of work to do in that area.
I don't suppose consumers will notice the benefits of that overnight, but I think medium-term we can look forward to better promotions and sponsorships. If you look at sport in Taiwan, for example, it is not well-developed, and this is an area where beer and spirits companies have been very active around the world. More could be done in Taiwan, and we hope to be part of supporting it.
Being part of the business environment in Taiwan has been a great pleasure for me, and I continue to enjoy the challenges. Most of my activities have focused on the entertainment industry, and there is nothing like seeing a crowd of people having a great time. It's a real pleasure knowing that you have played some small part in making it happen.
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