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Summer 2000 Time for Tea

Teaism is alive and well as a chain of three specialty tea houses and restaurants in Washington, DC. Stop in sometime and you might find George Stephanopolous sipping a cup of imported tea and reading. Or actor Sam Waterston, or dance legend Twyla Tharp, or ABC newsman Chris Wallace. On Sunday mornings, Attorney General Janet Reno often stops in for a cuppa and some fresh ginger scones.

You won’t find President Clinton, though, despite that a Teaism shop is just a block from the White House. And he’s not the exception. Many Americans haven’t converted to the subtle pleasure of this ancient brew—yet. But a growing number of people are discovering life beyond latte.

The numbers prove it: Annual tea sales in the US have nearly quintupled in the past decade, from slightly less than $1 billion in 1990 to more than $4.6 billion today. And sales continue to build steam, according to Brian Keating, president of The Sage Group International, a tea industry consulting firm in Seattle. Every day, half of all Americans drink at least one cup of tea, either iced or hot. And that means a sweet market for specialty tea retailers.

Three key factors drive the tea trend: scientific reports confirming the health benefits of tea; the aging population looking to remedy both physical and emotional aches and pains; and an increase in nesting or “cocooning” behaviors. While no one claims that drinking tea will restore youth, legitimate studies show that tea lowers blood fats and can help fight some cancers, cardiovascular disease, and even osteoporosis. Tea also has anti-bacterial properties that can strengthen the body’s immune system, and anti-oxidants known as “flavonoids” that help prevent cancer.

This is great news to the 75 million baby boomers entering their 50s and ready to eschew—and undo—a diet laden with fat, salt, oxidants and caffeine by adopting foods that nourish the body and the spirit. “Tea fits in nicely with some lifestyle trends that have emerged in the last 10 years, what [sociologist/trend-watcher] Faith Popcorn calls ‘cocooning,’ or what you see best-selling books and TV shows referring to as ‘simplifying your life,’” says Wendy Rasmussen, executive director of the American Premium Tea Institute (Los Alamitos, CA), a four-year-old trade association. “Tea, although incredibly complex as a beverage, also is very simple—leaves, water, vessel,” says Rasmussen. “When you really begin to enjoy tea, you find that its health benefits also include the peaceful minutes it takes to properly prepare a pot.”

The typical American tea drinker is a woman 35 years old or older, accounting for 70 percent of all tea drinkers in the US. But that doesn’t mean there’s no market for the other 30 percent. Rasmussen says a group of young mothers meets at her house for a pot of tea when she gets home around 5 p.m.; and she recently met a 30-something car salesman who enjoys Japanese green teas like Sencha at the end of a hard day. Gen-Xers and their younger Gen-Y siblings are passing up coffee and cola in favor of tea, especially flavored ice tea and tea-related drinks like South American yerba matte. They’re also trying a Taiwanese drink called “bubble tea,” a black tea mixed with condensed milk and tapioca balls, shaken in a martini shaker.

Karen Foley, associate editor of the trade magazine Fresh Cup, believes tea-drinking is a backlash against an increasingly technological age. “The interest in yoga and in tea come from the same synergy,” Foley says. “People want to escape a fast-paced world and get into a tranquil state.”

Tea houses

The number of specialty stores and eateries focusing on tea is growing in tandem with the number of tea drinkers. Major tea companies such as Lipton and Celestial Seasonings are testing the waters with their own specialty retail ventures. Lipton’s bright, inviting store in Pasadena, CA, is simply called Teahouse. Lipton entices Teahouse customers to participate in tastings of exotic teas from around the world, as well as tea-based innovations like Fruit ‘n’ Tea frappes or spritzers, and hot and cold tea-based lattes.

Celestial Seasonings, based in Boulder, CO, opened a test store in a nearby Cherry Creek mall last October to advertise and build the brand, says company president Steve H. Hughes. The 1,200-sq.-ft. store is decorated in a style best described as “New Millennium Cozy”—natural wood tones, soft colors on the wall, and a beautiful fireplace flanked by two leather chairs. The look creates an atmosphere that encourages customers to linger.

The store, which is open seven days a week, sells Celestial Seasonings teas, of course. But a good 70 percent of sales come from tea-related accessories—tea pots, mugs, balls, baskets, serving trays, books, cards, journals, and logo products—following the model established by coffee retailers like Starbucks and Barnie’s. “It’s important to sell accessories,” Foley says. “If you sell loose teas, you want people to enjoy them to the fullest, and that means having a good pot and ball, at least. Retailers have a responsibility to follow through on that, and selling accessories adds to your credibility.”

Hughes says Celestial Seasonings hasn’t decided if the store will remain open after its one-year trial, or if they will open additional stores. But if the test store is successful, the company may look to partners for those additional sites.

Despite major tea companies venturing into specialty retail with tea stores, most are still the domain of small entrepreneurs who want to share their passion for tea, one customer at a time. Their mission goes beyond selling tea things. The key to their success is in giving customers a total tea experience: opportunities to learn about tea at workshops; taste different teas and the foods that complement them; buy varieties of loose teas with informational cards about the variety; and purchase various tea accessories. Because of the complexities of selling tea, which some compare with selling wine, industry experts say it’s essential for store owners and staff to learn as much as possible about tea. Brown and Orr, who have backgrounds in the restaurant industry, made extensive visits to New York tea houses before launching Teaism.

The two-year-old Qingping Gallery Tea House, nestled in a culturally diverse Boston neighborhood, is typical of the total tea experience. Owner Wu Jianxin, a former student dissident in his native China, and partner Sarah Morgan invite customers to spend time relaxing in their two-story, 1,300-sq.-ft. establishment decorated with dark woods and antique rosewood furniture. “Everything in my shop is for sale,” Jianxin says. “If people want to buy one of my tables or chairs, I will sell them.”

As they listen to Eastern-inspired music, Qingping customers nibble on exotic dried fruits and drink tea poured from clay teapots handmade by Chinese artists. Visitors can learn the unspoken rules of the tea ceremony, such as the eldest person at the table must ensure that the teapot spout never points toward anyone else—that would be rude. Afterward, customers can buy paintings by Chinese artists whose work cannot be seen in China.

The premise underlying Qingping is that the pace of life should be slow enough to savor—a concept most Americans have trouble grasping. But Jianxin shows customers how everyone can carve out a few minutes for a tea break. “You can take 20 minutes and rush into a coffee shop, wait in line 10 minutes for a cup of coffee, and drink it on you way back to the office. Or you can come in and sit down for 20 minutes and refresh yourself in a very different environment,” he says. While many customers come from the neighborhood, Qingping, which seats 50, is catching on as a place to hold small business meetings—a change of pace through a change of environment.

Since specialty tea enterprises generally operate on a limited budget, marketing often depends on word-of-mouth advertising and free publicity. A recent rave review of Teaism’s food in the Washington Post increased revenues by 30 percent, according to Brown. She notes, however, that the self-service restaurant, which features Japanese bento boxes, Tandoori kebabs, and hamburgers with ginger and jalapeno—really isn’t a profit-maker. “It’s hard to make money in the restaurant business,” she says. “We use the restaurant for image-building and for selling the tea. The retail side of our business brings in greater profit margins.”

Cyber-tea

Brown and Orr will turn their attention to building Teaism’s business through Internet sales in the near future. And they’re not alone.

“Tea isn’t just about grannies sitting in rocking chairs,” says Patricia Carlisle, director of merchandising for Flying Saucers, a Leesburg, FL, company that is going after the youth market with intergalactic zeal. Launched in 1994, Flying Saucers sells a variety of specialty tea (and coffee) on its Web site—teas like Astronomic Apricot Almond, Blackberry Blastoff and Planetary Passion Fruit—and delivers them in packages that look as if they were designed by ET.

Flying Saucers currently operates tea and coffee stations in 20 gift shops from New Jersey to California. But the company’s most eye-popping marketing device so far is its first recently-opened, company-owned store. Located in downtown Orlando, where herds of Disney-weary tourists roam free, the store combines tea drinking with a sci-fi décor: murals with aliens, laser lights that respond to human voices, and an alien mascot ready to have his picture taken with customers.

It might sound a bit over the top, but innovation is the way to go, says Keating. “Everyone wants to open a cute Victorian tea room, and there are thousands of those,” he says. “As wonderful as that European heritage is, no one is going to retire on that, because a lot of baby boomers aren’t turned on by fine china and being asked if they want one lump or two.” He encourages specialty tea retailers to get creative, use a theme—African, Asian, fusion or something else—and have fun with it.

Keating also advises thinking creatively about how and where to sell your tea. Despite Flying Saucer’s own presence, the Net is saturated with specialty tea retailers, he says. But carts and kiosks are a wide-open opportunity because few retailers have tried it.

According to Shopping Center Business (December 1999), Lipton opened 200-square-foot tea kiosks at three universities, including the University of Southern California, and plans additional locations at convenience stores, strip shopping malls, office buildings, and the US State Department. Keating believes the opportunity exists for many other specialty retailers to fill this niche.

Industry experts agree that one of the biggest hurdles to overcome in operating a specialty tea business is the public’s lack of knowledge. Accustomed to the taste of mass-produced tea bags, Americans need time and education before they can fully embrace premium tea as their beverage of choice. Retailers must be prepared and willing to spend time explaining the varieties of the tea they sell and optimum brewing techniques.

Hughes believes that the surge of interest in tea can be traced to them: “Starbucks helped make people aware of hot beverages and to take them more seriously,” he says. And the Starbucks growth model is often invoked in discussions of tea sales. Yet experts believe that despite the forays a few large tea companies have made into retail, specialty tea sales will remain in the hands of small retailers. “There are more than 3,000 varieties of tea and many ways to brew them,” Keating says. “It’s a complicated product and not easily ‘cookie-cuttered’ like coffee [is].”
Still, there are lessons to be learned from the Starbucks experience. Rasmussen says the tea business would do well to look at all of the educational materials Starbucks puts out to the general public. “I believe that, just as the specialty coffee industry should credit Starbucks for the general consumer knowing about things like ‘origin’ coffees and the difference between a cappuccino and a café au lait,” he says, “there’s room in the tea industry for a company to do the same favor for premium tea.” Hughes of Celestial Seasonings concurs: “This is a very exciting time for specialty tea.”


Pamela Rohland

Pamela Rohland often writes about the joys and tribulations of entrepreneurship for a variety of regional and national business publications.

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