Thursday July 23, 2009 | 9 comments
I’ve been in the tea business for five years now as an importer, wholesaler, and retailer with both physical and online outlets. During this period, the number of physical stores has doubled, the number of online retailers has at least tripled, and the quality of tea available in grocery stores and cafés has improved dramatically.
Even with all this growth, the big question nagging those in our industry is simply, “where do you get YOUR tea?” Or more importantly, where will the average American get his/her tea five years from now?
What about the big grocers? They clearly have the greatest potential for spreading the joy of high-quality tea to the masses. Grocery store coffee has always been somewhat limited due to the fact that excellent coffees should really be consumed within a few weeks of roasting. Tea, on the other hand, is a seasonal product and, by necessity, must have a shelf life of at least a year. Grocers will likely follow a few steps behind the trend towards quality, so who will educate the customer and introduce premium tea the way Starbucks introduced premium coffee in the 90s?
There are an estimated 4,000 physical tea shops in the U.S. right now, up from less than 2,000 when I started studying this industry in 2004. Tea rooms (ranging from cafés to bistros to full-service restaurants with a tea theme) have accounted for a lot of this growth in the past few years and hundreds more are currently in the planning stages. Will tea rooms take business from coffee shops? There are more than 25,000 coffee shops in the U.S. Is there room for a doubling of specialty tea cafés or will existing café owners get wise and start serving higher-quality teas to complement their specialty coffees? What happens to the tea rooms if most cafés and restaurants embrace quality tea?
Many loyal tea enthusiasts have gone online to get access to better selection and pricing than is available in their local community. Will niche online retailers win out by creating compelling online shopping experiences? Will the big retailers take advantage of economies of scale and high margins to crush the “little guys”? Or will Amazon.com turn its eye towards specialty food products and crush even the big tea retailers the way they’ve crushed nearly everyone in the online book business?
Tea will always be more of a sensory-driven product than books, so maybe specialty tea retailers will lead the customer-education process. These would be shops focusing on loose-leaf teas and accessories instead of the cups of tea and pastries favored by the tea rooms. Teavana received venture capital backing and opened more than 100 retail shops (without seating) based on the assumption that this was the future of specialty tea.
The answer will certainly be some of all of the above. Business guru Peter Drucker once said, “The best way to predict the future is to create it.” That’s what I’m trying to do… but let me ask you, “Where do you get YOUR tea?”
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I buy about half my tea online and the other half in grocery and import stores. Whole Foods and World Market have a fabulous selection of high-quality loose and bagged tea, as do a few higher-end grocery and gourmet stores in my area. I’ve even found some decent organic bagged teas at the closeout store Big Lots.
So far I’ve bought teas online from Adagio, Dragonwater, and English Tea Store. A friend sent me samples from SpecialTeas and those were lovely as well.
I’m not too picky though; I tend to stick with the mid-grade brands. I’m more interested in convenience, value, and variety than in name recognition or top quality.
Having an on-line tea business at T Ching has certainly changed the way I get my tea. I must admit however that when ever I’m in a new area, I search out the specialty tea shops and see if there’s anything there that I don’t have, and enjoy sampling unusual teas. I believe that the local tea shops will continue to be the educational leaders in helping people learn and progress with their tea experience. I also believe that on-line sellers will continue to thrive as they can provide unique teas that should have the required freshness that tea shops demand. As for the larger supermarkets, I just don’t think they’ll ever be on the cutting edge so their appeal is essentially one of convenience. There you are at the market, doing your weekly shopping and if you’re out of tea – you can easily pick some up. I haven’t bought tea at the supermarket for many, many years.
I think there’s plenty of room for highly focused and targeted independent tea shops. the key is to offer an outstanding product, a unique and captivating shop, and a memorable customer experience. This is a segment with enormous potential for retail innovation.
House of Tea (http://houseoftea.ca/main/) in Toronto is amazing. It often is ranked as the #1 ranked place to get tea in Toronto. Owned by a lovely family from Sri Lanka. So in general I prefer to get my tea from dedicated tea-shops rather than general grocery stores.
the most difficult thing is to sell good teas – and that is what we have been doing ever since 1998 – growing alongwith the tea revolution in america – and find there are no set patterns of people buying teas from various modes – this is ever changing
Our experience has been that the appetite for good teas is increasing rapidly. Across three retail stores, our website, and wholesale department our top five best selling teas include two premium teas.
Our best Assam sells for $25 for 100g (http://www.teamerchants.com/buy/1/1/25/Assam-Marangi/160.aspx)
Our best Japanese green sells for $45 for 100g (http://www.teamerchants.com/buy/1/14/77/Japan-Gyokuro/720.aspx)
Of course the top five also includes an Earl Grey and a basic Sencha but the customer interest in these premium teas is an encouraging sign!
Until people find us and buy from us :)
They tell us they have been buying from a number of sources including: Costco, Trade Joe’s, Whole Foods Market, internet sites. These are people looking for good tea. I have tried some of the “internet tea” they bring in for us to taste and it’s not so good as a rule.
It’s hard to compete with big budget companies and that’s what can really be frustrating but you just continue to attempt to get the word out there day by day. People truly are looking for great teas and herbals. Our biggest sellers in the store in Southern California are fruity blends/flavored blends, not so much the straightforwarded unblendeds such as Charles reports.
I think the demographic here and our menu tends to that direction. We do get purists and we do have great classic tea for them as well. We also are experimenting with a temporary website to get some direction on what’s selling best but not to the degree we plan to market online in the future.
In 2007 Chengsha Tea Convention I and Joseph Simreny had a hearty laugh on the concept of 5 dollars a kilo tea sourced from the plantations which passes on as premium labels to the consumers by the purveyors of fine teas. So a real 50 dollars a kilo tea need to pass as super premium tea – and that is where difference lies. Since the consumer is naive and tea is masked by various materials like flavours and additives – judgement is very difficult and stories makes them still more difficult.
God help Peter Druker here.
I’ve received tea samples where the bags (brown in this case) are literally soaked with flavor oils. It’s not hard for us to choose teas. They look and taste wonderful and customers love them. I don’t care about the ‘pedigree’ of a tea if it doesn’t fit the profile of our demographic, that’s bottomline possibly. Almost all we purchase are classed organic and Fair Trade, and I sometimes wonder how closely things are policed in any industry in regards to that. It’s so easy to taste and see the difference. Most people who taste what we offer here are shocked because they are so clean and the flavor so bright. You can’t skimp for margins. But we are very nontraditional and go almost completely by taste, blended or not and then present nontraditionally as well. CTC is something we never use, nor bags. I hope we never go to bags even for spa packages but I’m being pressured there.