11.09.09
Tea’s tipping point?
posted by Heidi Kyser | 5 comments
The tea industry is awash in oft-cited statistics about its global dominance and projected growth. But lately, I’ve observed some anecdotal activity that seems a better indicator that specialty tea may be on the verge of breaking into the big time.
My fellow researchers and journalists (especially those who are new to the tea industry) and I like to joke about how some “common knowledge” in the tea industry is impossible to verify. One example I’m sure you’ve heard and probably used: Tea is the second-most drunk beverage in the world. Really? According to whom? (Seriously, if you know, please tell me.) It’s not hard to believe; just hard to fact-check.
Then there are the items that actually are facts, but are also unfortunately misused. For instance, the Sage Group’s projection that tea sales in the U.S. are expected to exceed $10 billion in 2010 (from the Specialty Tea is Hot Report). People using this stat frequently leave out that it includes beverage and non-beverage categories - meaning tea for brewing, as well as tea extracts, powders, and other tea for ingredients - and therefore is not directly applicable to tea shop growth, per se.
Until more specific, verifiable data is available, wonks like me are stuck with analyzing our own observations. Two recent developments seem significant to me.
The first is the emergence of Village Tea Co. Launched at World Tea Expo in May, the company is rumored to have solid financial backing. It hit the market with a multi-pronged business strategy encompassing two of the most successful models operating in the market today (see our interview with CEO Martin Ekechukwu), combined with an innovative approach appealing to the family.
Following the launch of its online business, Village Tea has begun opening its brick-and-mortar shops (see our story, as well as the more recent Dallas Business Journal coverage.). So far, everything is going according to plan for Village Tea Co. This is significant, in that the company has made no secret of its ultimate plan: world domination – or, as Ekechukwu put it, “the holy Grail,” also known as becoming the Starbucks of specialty tea.
It seems Ekechukwu will have to beat Starbucks to it; the Seattle coffee giant itself is currently experimenting with premium loose-leaf tea. This is happening at 15th Ave. Coffee & Tea, Starbucks’ off-brand attempt at recapturing its neighborhood feel. Reportedly, the company has several other such unique, culture-specific spots in the works.
Starbucks-branded stores serve bagged tea by Tazo (also owned by Starbucks), often, in my experience, in a paper cup with boiling water poured over it. I’ve even had baristas ask me if I want one tea bag or two, indicating a lack of understanding of the quality of their tea and the correct brewing method.
15th Ave. promises a different experience. Consider the description under “Our Teas” on the home page of the Web site: “Picked at the height of the season, dried and cared for, our teas are sourced from unique and distinguished tea farms.” Jump to the tea page, and you’ll find a menu of 17 specialty teas, listing the name and origin, along with a detailed description of the leaf, the process, and the flavor. Although the selection is noticeably mainstream, 15th Ave. does hand-brew its teas by the pot or the cup.
For at least the year and a half I’ve been covering the specialty tea business (and much longer, I suspect), many players have speculated on the industry’s potential to break into the big time. In business journalism and research, we learn to “follow the money.” Right now, the money seems to be leading, albeit cautiously, to specialty tea.
So, the next question people in the industry ask may be: “Is this really what we want?”
November 9th, 2009 at 1:16 pm
O.K. you’ve got me……..why wouldn’t the people in the industry want specialty tea to go mass market in the States? Please don’t tell me it’s snob appeal. When tea has the potential to impact health and wellness, don’t we have a moral obligation to turn everyone on to tea?
November 9th, 2009 at 3:04 pm
I’m sorry to say it but I’m probably not going to buy from any more American tea merchants. The whole issue is a non-starter for me. I only want Puerh and I get it at prices that are often under wholesale from sellers who ship it direct from Yunnan to me. No middleman or Western retail overhead jacks that price up. Not everyone can source their tea like me. They’re not all going to go for Puerh like me. But I’m not going to support any of my American friends in the tea business with dollars.
November 10th, 2009 at 6:07 pm
I can’t watch this on the old computer here at the store but they are one of quite a few company’s wanting to become the ‘Starbucks of Tea’. “Rumored” money..hmm. There are a few companies with money backing that have grown well, one being Teavana, which is not going for the cafe concept (as yet anyway) but mall retail, and Argo Tea in Chicago with about 15 locations to date and VC money.
Whenever I hear these stories, it makes me think how slow we’re going, attempting to really tweak the model/concept on a daily basis. In over a year of retailing in just this one store (and having been a partner in another), I can see the multitude of changes we’ve already made to the model and more yet to come before any kind of meaningful statements about our future growth plans.
I believe Teavana had planned to franchise but has decided against, and that Argo, if I remember correctly, was once taking info on potential franchisees on their site but now I don’t believe they are either.
As for Starbucks and tea–Coffee Bean & Tea Leaf is a chain that went for that niche themselves a long time ago and has a recognition in loose leaf tea within the coffeehouse industry.
And so, the ‘race’ continues. If passion for quality is lacking and it’s all about just $ and size, it will just be another race McDonald’s and Dunkin’ will probably get into at some point like they are with coffee.
November 10th, 2009 at 6:09 pm
Reading this back, it’s why I don’t like to write here at the store..too many mistakes due to hurry.
What I couldn’t watch here was the video interview, which I’ll do later. Forgive the grammar, etc. Back to work!
November 14th, 2009 at 2:33 pm
Let’s not forget yet another new entry (by old pro Steve Smith) Smith Tea, has just recently launched and is already on grocery store shelves and specialty shops. He has an interestingly unique approach to his brick and mortar shop. Michelle will be publishing a post soon about his new venture as well as a personal interview with him. Stay tuned.