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Executive MBA alumnus launches organic Vietnamese yogurt company

February 2, 2017

Fred and Phuong Chen are pictures in front of dairy production equipment
Virginia Tech alum Fred Chen and his wife, Phuong, have moved YaÜ from their home kitchen to an organic dairy production facility.

A family tradition, skills learned in the Virginia Tech Executive MBA program, and a strong desire to give back to the community have all played an integral part in YaÜ.

The new organic Vietnamese yogurt company was created by alumni Fred Chen and his wife, Phuong. The couple is currently launching it through a Kickstarter campaign.

About a year before Chen enrolled in the Pamplin College of Business’ 18-month Executive MBA program in the National Capital Region, he and Phuong were trying to find a dairy product that their young daughter, who was just beginning to eat solid foods, might like.

“We were not having much success, so Phuong decided to introduce Madeline to the yogurt she grew up with,” said Chen.

He explained that Vietnamese yogurt, made with sweetened condensed milk, is pretty much a tradition in most Vietnamese homes.

At the same time, though, the first-time parents were learning to read nutrition labels and wanted to control the sugar levels of what their daughter ate. Using Phuong’s family yogurt recipe as a base, they started experimenting on their stovetop.

The final recipe, said Chen, is a thick and creamy yogurt with both a light and velvety smooth texture with a natural sweetness and flavor from gently caramelizing organic whole milk with cane sugar.

“It is completely different from any product available in supermarkets,” said Chen, “and only 100 calories per cup with six grams of added sugar.”

They decided to name it YaÜ (pronounced ya-ooh), which phonetically mimics da ua, the traditional Vietnamese word for yogurt.

The two found that the YaÜ made in their kitchen was a hit with their daughter. They began making YaÜ once or twice a week and, to their surprise, when they shared YaÜ with friends or family, just about everybody liked it too.

Chen, an operations manager at a management consulting firm, started to wonder whether there might be a market for YaÜ beyond family and friends.

He was two-thirds of the way through a proactive marketing class when then faculty member Jane Machin gave him an eye-opening assignment: Conduct a blind taste test among his classmates to see how YaÜ stacked up against other top-selling yogurts on the market. Chen included popular Greek and organic fruit flavored competitors, but YaÜ came out on top eight out of 10 times.

“Such a positive response really surprised Phuong and me and planted the initial seeds in our minds of eventually starting a company,” he said.

The Executive MBA program played a further role when Chen’s team — enthused by the YaÜ blind taste test — elected as a final class project to develop  a case study that would investigate further the intricacies of starting a yogurt company.

They examined how an established player in the dairy industry might pivot to a new organic Vietnamese yogurt; tackled the many aspects of strategically marketing and branding the new product; and explored how to galvanize an organization to support the new effort.

 “The team identified potential problems and explored solutions, all of which was great preparation for our eventual pursuits,” Chen said.

“I can honestly say that without the Executive MBA, we likely would never have taken the leap to start our own company,” Chen said. “The various subjects covered in the program took me out of my comfort zone in analytics and operations and gave me the confidence to engage in topics like supply chain, accounting, and marketing, which have all been integral in getting this company off the ground.

“Even more important than the subject areas, have been the lifelong friendships that I made and the unwavering support of my classmates throughout the evolution of YaÜ every step of the way,” he said.

Machin’s Executive MBA class also stressed the importance of strategic decision-making that balances the interests of both profit and nonprofit organizations with those of society.

“We talked a lot about corporate social responsibility, which was of particular interest to me,” Chen said. “Having benefited from many different local community programs growing up, my wife and I have always defined happiness as being able to do something that allowed us to give back to the community. We aim to dedicate a portion of our profits to reinvest in causes that help underprivileged children.”

Chen graduated from the Executive MBA program in 2014. He and Phuong then made the decision to incorporate and spent the following two years figuring out how to scale their recipe and set up distribution.  

“As expected with first-time entrepreneurs, we have taken a few detours along the way,” said Chen, “but we have learned a lot about dairy, in general, and the food industry with its many barriers to entry.”

After striking a partnership with dairy farmers in the south central region of New York in early 2016, YaÜ has finally moved out of the Chens’ kitchen in Rockville, Maryland, to an organic dairy production facility.

“Starting a company has been an amazing experience and the most challenging thing we have ever done,” Chen said. “Hopefully, a successful Kickstarter campaign will give us the necessary boost to finally share YaÜ with the world.” 

“But,” he continued, “profits alone do not drive our ambition, as we will ultimately measure our success based on what we can give back to our communities.” 

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