Rumor has it…

PASADENA, Calif. – Fifteen years ago rumors began circulating that a massive beverage corporation was launching a branded tea retail venture.

Grocery and mass market CPG sales were solid and sales in the company’s food service and hotel channels were robust. It seemed the perfect time for this multi-billion dollar brand to break from the pack of packaged goods suppliers and establish a national tea chain.

The café’s name: The Lipton Tea House

The concept store opened in December 1997 in Old Town Pasadena, an affluent and storied shopping district scanned enviously every sunny News Years Day as the floats of the Tournament of Roses Parade make their way to the Rose Bowl.

Lipton’s then-Director of Tea Buying Peter Goggi remembers the attempt and outcome.

The tea house sold 52 kinds of loose teas unavailable in other channels. Canned Lipton iced tea was not available. The storefront’s light wood and chrome interior resembled a Starbucks. Patrons could order scones and a tea latte — made from tea, milk, cinnamon and other spices.

“The idea is to show consumers how interesting and diverse tea can be,” Gasper Ferraro, director of finance for Lipton’s food service division, told London-based Design Week in Feb. 1999.

Here is the magazine’s account: “Lipton thinks America may be ready for teahouses. Tea sales have been growing by 5% a year, thanks to New Age beverages like Snapple and Fruitopia and fruity herbal teas from Celestial Seasonings,” wrote Design Week.

“Lipton, the nation’s largest tea company with 35% of the $3.3-billion market, isn’t taking any chances with tea. British-based Unilever said it zeroed in on this region for its pilot tea house because Southern Californians tend to try new things. It chose Pasadena’s Old Town area because it has heavy foot traffic, with a mixture of locals and tourists.

Goggi, now vice president of the Tea Association of the USA recalls the experiment fondly.

“They came close, but never quite hit their foot traffic and per check targets,” he said.

Nonetheless, it gave Lipton “an unprecedented opportunity to sit down face to face with our customer and understand their needs, try to develop new products for them,” said Goggi. “It was a really useful consumer laboratory for out-of-home offerings. The experiment led to branding stand-alone beverage solutions in quick serve like you see with B.W. Cooper tea and Fuze in Subways,” he said.

Unilever has since conducted other experiments with tea retailing overseen by Hartog-Union in Belgium and with Bru World branded coffee shops in Mumbai, India. None took hold.

In the ensuing years Nestle’s Nespresso brand established coffee boutiques on the continent, U.K. and the U.S. in New York and Boston. Combined with its capsule equipment, Nespresso topped $3.6 billion in sales in 2011.

Then, this fall, rumors began circulating again. Marketing Week published a job circular soliciting a manager to help create “the definitive tea experience.” This time the Unilever brands under discussion were LanChoo, Lyons, Brooke Bond D and PG Tips; the U.K.’s top selling tea.

Unilever would not confirm that concept stores would be constructed this fall with a global roll-out in 2013 and full roll-out by 2017.

Observers note the success of Nespresso and that Starbucks recently introduced its own single-serve machine for making in-home lattes and espresso. Unilever is missing an opportunity, but must also avoid upsetting large grocery and mass market outlets as well as foodservice customers that could view cafes as competition.

But the most challenging aspects date to 1999. Can Lipton, perceived as a fine but common tea, wear the robes of a premium brand?

Lipton’s selection of 52 unique teas might have established a foothold for the top-selling greens, and oolongs, Rooibos, pu-erhs and popular herbal blends we see today.

It is certainly harder to stand out from the crowd. In the early 1990s there were five trademarked U.S. tea companies selling specialty tea. R.C. Bigelow, Golden Moon of Seattle (Yogi), The Republic of Tea in San Francisco, Tazo and Stash.

Now, even excluding online-only ventures, there are hundreds.

A brief version of this article first appeared in Specialty Coffee Retailer.

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