Friday January 18, 2013 | 7 comments
In almost every aspect of our business and political culture, transparency is becoming a value identified as critical to reforming practices that have become toxic. Still, in the financial sector, the lack of transparency is seen by many economists as the biggest risk to another collapse of the economy. In 2012, the World Tea Expo (WTE) held a panel discussion on “Transparency in the Tea Industry” led by Dan Bolton, then the editor of the World Tea News and currently the editor of Tea, A Magazine. George Jage, the owner of the WTE, was the one responsible for putting it on the agenda. It was a risky thing to do since the idea of transparency in the tea industry is really a revolutionary concept.
Let me start with a little bit of historic context. There has never been any transparency in the tea industry, at least in the West. Some tea makers were well known in ancient China, but now Chinese tea merchants realize their profit margins are directly dependent on a lack of transparency. Tea makers are rarely revealed. From the beginning of trading with the West, the Imperial Decrees of the Qing Dynasty sought to make tea trading as opaque as possible for the tea merchants of Europe, even to the point of making it illegal to learn Chinese and for the Chinese to learn foreign languages. When the British broke the Chinese monopoly on tea using their Imperial Navy, they also brought the plantation/corporate model to tea production in India, ironically supported by a form of slavery that had just been outlawed in England. Even today, the wages and well-being of tea workers is a major issue affecting commercial tea producers in all the areas where the British and other colonial powers set up their plantations, such as India, Sri Lanka, Africa, and South America. They also extended the practice of deceptive marketing supported by a complete lack of transparency that survives today, inside and outside of China, and is actively and traditionally defended by the industry as falling under “trade secrets” and is essential to doing business. That’s why having a panel discussion at a major trade show was something to take notice of.
Three different groups – commercial tea producers, certifying agencies that monitor the treatment of workers and the environment, and some large tea companies – participated in the panel at the World Tea Expo. Despite having different frames of reference within the industry, everyone on the panel agreed that customers were very interested in transparency. The question remains, then, why is transparency so scarce?
The tea producers clarified it from their point of view, at least when it comes to commercial tea. Although they all said they completely supported the idea of transparency, they suggested it was outside their control. Once tea leaves their hands, except for the very few that buy from them directly, it is untraceable. That is because of the practice of blending. Most tea companies buy the bulk of their tea to blend.
Blending is another invention of Europeans, although, without question, the Chinese have blended this year’s teas with last year’s teas, although that practice was never touted as ethical, unlike in the West, where blending has been esteemed, done by “master Blenders,” who they are truly masters. The object, however, is not better tea, but rather consistency year after year by putting together good tea with bad to maximize yield. In no other industry is the range in quality so vast. Since tea, just like wine, changes from year to year, maintaining consistency is not easy, and tea tasters and blenders are masters at navigating through the tiny nuances in character that are represented in commodity tea. Price should also be consistent from year to year. There is another requirement that is unique to commercial tea – it must marry up with milk and sugar, “stand up to it,” as the pros say. It needs to be brown with milk, and it needs some sugar to balance the bitterness. For the Chinese, this is truly weird. When Lipton produces its blend that is sold in China, this local point of view is not a consideration. When you consider the British need to find a place for an excess of both sugar and dairy, it is an elegant solution targeted at the workers in its factories. It provides cheap nutrition, with an energy boost, and caffeine, a neurotransmitter inhibitor that blocks the feelings of being tired. Beautiful. Of course, the blends are a secret. This secrecy and opaqueness pertain not only to the recipe, but also the object of the practice.
From the point of view of the certifying agencies on the panel – Fair Trade USA, The Rain Forrest Alliance, and the Ethical Tea Partnership – they exist because consumers have unanswered questions about how sourcing is conducted. There is doubt in consumers minds about whether or not tea companies can be trusted to provide safe, fair-traded products that are produced in an environmentally sound and sustainable way. Fair Trade USA brings in more money a year than a lot of the tea companies that are using its logo to market their teas. Consumers are beginning to understand that fair trade and organic certification is big business that may be more interested in their profits than in their founding principles. The proxy transparency being provided by certifying agencies is becoming suspect, diminishing the marketing value of their logos.
Certainly, the tea companies on the panel paid lip service to the principle of transparency, but I got no sense that they were willing to reveal enough details of their supply chains that the claims they were making could be independently verifiable. It is going to take that type of transparency to move those companies to a position of trust. One thing is certain: in an age in which it is impossible to control information, a business that relies on secrecy to maintain an advantage in the market will certainly lose that advantage. Business, especially the tea business, just doesn’t seem to get that. It is true that this is a realization that is having a hard time gaining a foothold in general, but it is inevitable.
Transparency is an important goal for the tea industry to move toward. It provides for solutions to issues related to quality, safety, sustainability, and fair trade. Certifying agencies are limited in their abilities to provide real, verifiable assurances that a product is safe and produced by workers who are treated fairly, that the tea is authentic, and that the price represents the quality. Transparency provides for proof that goes way beyond logos. Of course, companies have to work a lot harder to provide transparency, and we will become more vulnerable to our competitors by revealing our sources. However, it seems as if there is an even greater risk to a company as a result of a lack of transparency, as recently demonstrated by Teavana’s pesticide issues. The key element to building a brand is trust. It is hard to acquire and very easy to lose.
I think that initiating this conversation, even though now it may appear a very minor thing and was a poorly attended panel at the WTE, is a very big deal. I want to congratulate George and Kim Jage for having the courage to put transparency on the agenda. They are helping to provide much-needed leadership in the tea community, and I hope they will continue. Certainly, they will listen to people in the tea community that support transparency. I also want to mention what a fine job Dan Bolton has done as well. The tea community needs more ethically oriented people like Dan. Finally, I want to say that there were a lot of tea business people I talked to while I was there who are trying to figure out how to move in the direction of more openness. It is because of these people that I am confident that things will look very different ten years from now.
Austin Hodge is the founder of sevencups.com.