A Call for Standards – Need to Know

What tea professionals need to start the week of Dec. 8, 2014 —

A Call for Standards

By Austin Hodge

The last decade has seen a boom in what the industry calls ‘Specialty Tea’, but if you ask for a definition you will come away confused.

What is so special about ‘Specialty Tea’?

Not much. A close examination reveals commodity tea that has been adulterated in some way, typically by blending ingredients such as pieces of fruit, exotic herbs or flower petals. Since the ingredients are dried, tea blenders spray (yes, spray) on lots of flavor. I’m using the word “commodity” to include any large-scale tea where the production goal is quantity over quality. There are great quantities of traditional tea growing in every tea producing country. These include green tea, puer tea, wulong tea, white tea well as black tea. There are also an endless variety of herbals incorrectly labeled teas.

Why set standards for ‘Specialty Tea’?

Without standards, the market faces chaos. Where would France be if it had not established standards for wine almost 500 years ago? Italy followed suit and prospered. Stop and think, would the debate over which is better — Italian or French wine — have turned out differently if the Italians had been the first to set standards?

Picking Standard for Breakfast Qimen Tea

Picking Standard for Breakfast Qimen tea is two leaves and bud

It’s important to understand that standards not only define products, they establish markets, and whoever defines a market, controls it. It is undebatable that the French have created admirable markets for their wine, as have, more recently, specialty coffee retailers.

The chaos in the ‘specialty’ tea market comes from the fact that no one, from buyer to seller, actually knows the value of the tea they are buying or selling, or how to clearly establish its value. Price is derived mostly from marketing — price is certainly not based on the quality of the tea. In a practical sense, words like “quality”, “value”, and, “excellence” have been watered-down into obscurity as much as “specialty.”

Nowadays, tea is whatever the merchant says it is, opening a lot of ground for dubious interpretation. In contrast, standards are consistent and independently verified. The specialty coffee industry has done an excellent job of establishing standards, which has lead to levels of excellence and increased profitability enjoyed by the entire coffee industry.

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Coffee and tea both began as rarities for the rich, evolved into commodities for the masses and are gradually becoming artisanal offerings – the choice of connoisseurs.

Everyone my age remembers that back in the day, coffee was either the Red Can (Folger’s) or the Blue Can (Maxwell House). There were neighborhood diners and corner cafes where a cup of coffee cost a quarter. This was coffee’s “First Wave.” Americans annually drank an average of 10 lbs. of coffee per person. Per capita consumption was measured by the gallon because the efficiencies of the commodity model made it cheap.

The turning point was 1974 when independent coffee shop owners established a standard for “Specialty Coffee.” The adoption of standards launched the “Second Wave.” Pioneers such as Alfred Peet at Peet’s Coffee & Tea, Starbucks, and Coffee Bean & Tea Leaf would not exist without these standards. Innovations in growing, sourcing, roasting, packaging, and coffee brewing followed.

The market for specialty coffee was more sophisticated, resembling its European counterparts. Coffee of this quality command a higher price; it no longer had to be cheap. Thus “quality” coffee became easily distinguishable from commodity coffee.

The term “Third Wave” was coined around 2002 when small coffee businessmen traveled to coffee farms to source direct and eventually became experts in every aspect from growing to roasting to brewing. This took the small retail coffee businesses to a new profitable level that could differentiate itself from the like of Starbucks and company. Once in control of the entire supply chain, not only did standards raise retail margins for retailers, the discovery of great coffee also opened the door for a respectable wholesale business selling to other quality businesses whose business models did not include working the complete supply chain.

The “Third Wave” aspires to an even higher level of coffee experience. It begins with direct sourcing. Only direct sourcing can insure quality and answer questions about fair trade and farming methodology with confidence. Third wave coffee also places high value on production and preparation: the goal is to get the best possible cup. Third wave coffee owes its existence to Starbucks for building the market for better coffee, and for establishing the benchmark. Retailers exceeding that level could not profit in the market that Starbucks created. Third Wave roasters realized they needed to get a whole lot better to beat Starbucks, and to do so they needed expertise and transparency along the entire supply chain.

Similarly, two years ago Starbucks changed the tea market dramatically for small independent tea businesses when they bought Teavana. From here on, every small tea business is going to be defined in relation to the nearest Teavana, like it or not.

Picking standard for LiLi Xiang tea

Picking standard for LiLi Xiang tea is three top leaves

The difference between coffee and tea is that there are no standards that give tea business the tools to beat Teavana. Starbucks redefined the market for coffee on almost every level. They will do the same for tea. Small tea businesses and major tea corporations alike are going to feel the heat. Without standards, Teavana, with its extraordinary marketing muscle, can define tea quality any way they want.

If standards for specialty tea mirrored the standards for specialty coffee the only tea that could quality as “specialty” is tea judged to be within the top 20%. Most of the tea sold as specialty tea in the West would be disqualified. Just as there is with coffee, few multimillion dollar companies are going to support standards for quality in the tea industry.

Why would they?

Tea’s “Third Wave”

In the spring of 2014, Jesse Jacobs of Samovar Tea, wearing a cream-colored canvas apron over a fashionable t-shirt, announced the coming of the tea industry’s Third Wave.

But can the tea industry really be on the verge of entering into a movement equivalent to that of the coffee industry? Even though both tea and coffee have the Starbucks Corporation in common, it is going to take the tea industry a very long time to catch up to the sophistication of the coffee industry. The discussion about standards for ‘Specialty Tea’ has not even begun.

Picking Standard for Liu An Gua Pian. The second opened leaf is picked as soon as it matures to the size of a pickers thumb

Picking standard for Liu An Gua Pian. The second opened leaf is picked as soon as it matures to the size of a picker’s thumb

Looking forward, a profitable market for small tea businesses will require standards. These need to be objective, understandable, and replicable. Standards provide growers with a definable goal for crops and harvesting. Standards enable tea makers to formulate products clearly identified by buyers, which give the producers incentive to get better. Direct sourcing will become increasingly important for the tea businessman. Consumers will actually know what they are paying for and where it originated.

Establishing standards brought extraordinary advantages to coffee growers including unimaginable financial success. A small Brazilian coffee grower this month won the Alliance for Coffee Excellence’s 100th Cup of Excellence (COE) competition to earn $50.20 per pound at auction, the highest price ever paid per pound for COE coffee. He took home $106,000 in a country where the per capita income is less than $1000 per month. What is noteworthy is that Brazil is the largest commodity coffee producer in the world. Think what standards for quality would mean for small holders in India and Africa, areas still economically strangled by the colonial commodity system. Establishing an objectively evaluated standard establishes value that can be communicated thru the supply chain to the customer. Excellence is the reward.

China is realizing the benefits of standards in its domestic market for tea right now. Their tea industry was destroyed through a 150 years of war and internal strife. As China recovered following World War II and the Mao era, tea was mediocre at best across the country. More than a decade ago China set standards for quality and freed tea makers to create and profit from their own business. Since then, China has experienced a renaissance in tea making: tea being produced for the domestic market is the best it has ever been in history; China has become the largest tea producing country in the world, gets the highest prices for its tea, and has the highest average price for tea. China has the best teas in the broadest categories; it has defined standards, and grows the largest percentage of tea using traditional, chemical free growing practices.

The coming of standards is inevitable. Small businesses that are dedicated to quality in real terms, not just in the marketing of their products, will benefit.

It took years for standards to impact coffee, but things will move quicker with tea due to the benefits of the information age. The tea industry is ready for professionals to lay the groundwork for “Third Wave” tea. Let’s leave it to Teavana to push the second wave along in building the market, like their parent company did.

What is great about getting the ball rolling towards standards for quality and, eventually — excellence — is that small businesses that are struggling to establish new business models need not worry, for the best practices for quality in the tea industry go beyond the reach of corporations, economies of scale, and deep pockets of marketing departments. Standards are the essential tool for the tea entrepreneur.

So become a pro, take some Chinese classes, and get you passport up to date, and by all means study the Specialty Coffee Industry. They have become experts in coffee on every level. You might want to remember that this year Peet’s hired a woman that is fluent in Chinese and has a masters degree in tea from Zhejiang University.

Standards, direct sourcing, transparency, expert level knowledge about tea and its culture, logistical mastery, inventory management expertise, and tea preparation skills are all requirements for ushering in tea’s third wave. Herein lays opportunity, challenge, and the promise of excellence. Let’s hope tea entrepreneurs’ passion for tea is strong enough to take them where they’ll have to go.

Austin Hodge is the founder of Seven Cups Fine Chinese Tea in Tucson, Ariz. http://www.sevencups.com

Copyright Austin Hodge.

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Tea Biz serves a core audience of beverage professionals in the belief that insightful journalism informs business decision-making. Tea Biz reports what matters along the entire supply chain, emphasizing trustworthy sources and sound market research while discarding fluff and ignoring puffery.


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Teavana Update

Hard numbers are hard to find but a year after it was sold to Starbucks Teavana appears to be on a roll.

At the company’s annual meeting in March CEO Howard Schultz introduced Oprah Chai Tea in a surprise announcement that brought the celebrity on stage to discuss her love for tea.

TEABIZ_OprahChaiTeaThe audience was treated to samples and Schultz said $1 from every 2 ounce package would support Oprah’s favorite charities. He announced the construction of 20 new Teavana tea bars in 2014 with major cities including Chicago and Los Angeles. The tea goes on sale Apr. 29.

Schultz reasserted that “a year after the acquisition of Teavana, we are more convinced than ever that we have the opportunities to transform the tea category in the way we have transformed coffee all around the world.”

Earlier in the year, during the company’s quarterly earnings report, Shultz said that Teavana’s two flagship stores in New York and Seattle are demonstrating that Starbucks’ single largest investment to date is beginning to pay off.

TEABIZ-TeavanaFineTeas+TeaBar_Howard_Schultz_340px“Recent research confirms that Teavana now enjoys the highest level of awareness of any super premium tea brand and like Starbucks, Teavana had a solid Q1,” Schultz told analysts.

Starbucks reported a record $4.2 billion in revenue during the quarter including $159.2 million in the segment that includes Teavana. Overall the company grew revenues 12% with comparable store sales rising 5% in the Americas where store traffic increased 4%.

Financial record footnotes* state that an increase of 174% over Q1 FY13, “is primarily due to the addition of Teavana retail store revenues beginning in Q2 of FY13.” The $159.2 million combines revenue from Seattle’s Best, Evolution Fresh, Digital Ventures and Teavana. The first quarter includes holiday spending and is always strong but revenue in the segment is on track to post $630 in combined sales, most than half of which will be from Teavana.

TEABIZ-TeavanaFinancials2013_Consolidated RevenueIn the company’s annual report, released in September, the financial segment that includes Teavana grossed $393.7 million for the year which was up 88.7% compared to the previous year largely due to the contribution from Teavana, but the exact amount Teavana contributed was not stated. Net revenue for the segment increased $185 million during the year, “driven by incremental revenues from the acquisition of Teavana in the second quarter of fiscal 2013 (approximately $156 million),” according to the financial filings.

Prior to the Starbucks acquisition Teavana reported quarterly earnings of $43 million and estimated annual sales of approximately $250 million. The company operated 284 stores at that time so a useful guesstimate is annual sales of at least $350 million. The final number will depend on how many stores are built. Teavana’s mall venues typically gross $850,000 to $1 million in sales. Going forward analysts will be able to compare year-over-year results.

Schultz said that “one year into the integration of Teavana, we are poised to begin the roll out of additional stores on the heels of the successful opening of our first two Teavana tea bars in New York City and Seattle.” The company, which currently operates 366 stores, intends to open 1000 more in the next five years. This averages 4 to 5 stores per week, a threshold easily met by a company that currently opens 1,500 coffee shops a year.

TEABIZ-TeavanaTeaBar_Exterior_320pxAs it did with coffee, Starbucks is building gorgeous Tea Bars to showcase the brand in highly visible locations like New York City’s Central Park and Seattle. It will then roll out smaller venues in major cities around the country. These stores are cost-efficient and designed to drive profitability.

“These two beautiful new stores are already providing us the key insights that will help us achieve our goal of combining and leveraging Teavana’s strength and authority around loose-leaf tea and tea merchandising,” according to Schultz.  Starbucks understands consumers and what it takes to profit from innovative, handcrafted beverages and a retail store development to create a new retail platform and a unique international premium tea house experience.

Reading consumer response online offers a glimpse of these insights:

On Yelp! Jackie F. from Miami writes: I had heard about this store opening and made sure that I visited on my weekend trip to NYC… love the environment, service and choices that were available.  I have purchased my first three loose teas and sugar and looking forward to buying more in the future.  Emily was extremely attentive and helpful during my selection process… she wasn’t pushy or overbearing.  Can’t wait to get home and make it on my own.”

Nathali Z. from Brooklyn writes: I came here led by my cousin who is a Teavana aficionado. I was excited to be in this new space and have my first Teavana Tea. The place was busy with people being helped by sales associates. When we ordered our tea the staff was very friendly, cheerful and attentive. There is an area to sit down and have our “bites”. My cousin got a chocolate brioche and I had a croissant. They were yummy but not spectacular. The tea on the other hand delicious! It was very calm and my cousin and I were excited to be one of the first people here. Definitely coming back!”

Katie R. in New York writes: I LOVE THIS PLACE! I’m so glad that Starbucks has finally opened up its first tea location… Long overdue… I’d visit this over a Starbucks coffee shop any day. I’m tea obsessed and Teavana has the best teas, hands down. The chai latte was incredible. The food selection looked great, too! I just hope they expand to other locations in Manhattan, so I don’t have to make the trek to the Upper East Side.”

This is Yelp! after all, so there were also complaints: “Plenty of cash registers, not enough tables and chairs… “NO where to sit…. and “I really wanted to like this place, but my gut is that it is a concept that won’t work… and “Because there is no coffee, it is not a place to be patronized by groups of people together, because some will inevitably prefer coffee…” comments overall were were positive or benign: “Pretty spot! I got the coco caramel sea salt latte, which ended up being too sugary and sweet for me, even after they remade it without putting any syrup in it!! The jasmine silver needle in a pot was good, though!”

Marketing is much stronger under mighty Starbucks and the public relations team that handles the account at Edelman is first-rate. In January the timely introduction of a limited edition Golden Dragon Yellow tea drew media attention and the Chinese New Year loyalty card and teaware are further evidence of integration of the brand. Customers loaded $1.4 billion onto Starbucks cards last quarter, up $260 million from the previous year. Teavana branded cards are interchangeable with the familiar mermaid which means that 40 million cardholders can conveniently charge a drink. Customers activated more than 2 million new cards a day in the week before Christmas.

Premium single cup is the fastest growing segment in at home coffee and Starbucks has grown its share to 18% of the segment over the last two years, said Schultz. The company has now sold 2 billion K-Cups. Last spring the company introduced Teavana flavors in K-Cups™ and this fall Teavana chai launched in Starbucks’ Verismo single-cup format.

TEABIZ-TeavanaTeawaresUpgrade

Upgraded Teaware

The website has not undergone a lot of visible changes, but a close look shows an upgrade in teaware including an expanded number of exclusives. Porcelain and bone china are featured along with a packaging refresh with a QR Code and new graphics. The Teavana smartphone app has been updated to make it easier to locate stores. Teavana has 328,000 Facebook likes (Starbucks has 36 million and 5.6 million Twitter followers).

Mall-based stores as a whole were hard hit by a 15% slowdown in retail foot traffic and since the majority of Teavana stores are located in malls that had to hurt. Most of Teavana’s 366 stores in the U.S. and 62 shops in Canada are company owned. It also has 28 franchised stores in Mexico.

The tea market is a huge opportunity for the company. Globally tea is estimated at $90 billion with only a fraction of the tea sold as “value-added.” In fact, the majority is not even packaged. The success of the flagship stores means the company will expand more quickly now.

Two developments hint at the future for Teavana. During a major reorganization of the senior management last week it was announced Schultz “will expand his focus on innovation in coffee, tea and the Starbucks Experience as well as next generation retailing and payments initiatives in the areas of digital, mobile, card, loyalty and e-commerce.”

In his remarks Schultz promisedto bring breakthrough innovation to the tea category in the U.S. and Canada this spring and summer and to the international markets in the years ahead.”

A second clue is that Teavana founder Andrew Mack has retired from Starbucks. Teavana named Starbucks Vice President Annie Young-Scrivner the new President of Teavana and placed Teavana under the direction of Cliff Burrows, who is group president, U.S., Americas and Teavana. Young-Scrivner previously led the Tazo Tea division and was in charge of Starbucks Canada. Burrows, 54, joined the company in 2001 and previously worked as managing director of the U.K. division where franchising is common.

Look for Teavana to expand overseas via traditional franchising. The EMEA region now has 2,033 stores of which 1,177 are franchised. Starbucks has very strong franchise relationships in both Europe and the Middle East. Sales growth in the region was 11% last quarter with revenues of $339 million. A turn-around in the EMEA results, which were previously slack, suggests an opportunity for expansion that would include Teavana.

TEABIZ-TeavanaFinancials2013_ValuationFinancial Footnotes:
The Teavana sale closed Dec. 31, 2012. The final accounting states that Starbucks paid $615.8 million in cash. At closing the company repaid $35.2 million in long term debt. Intangible assets such as the Teavana name were valued at $105.5 million. Teavana’s proprietary tea blends were valued at $13 million. An astounding $467.5 million of goodwill represents the intangible assets that do not qualify for separate recognition, such as established global store presence in high traffic malls and high-sales-volume retail venues, Teavana’s global customer base, and Teavana’s “Heaven of tea” retail experience in which store employees engage and educate customers about the ritual and enjoyment of tea.

Oprah Chai Tea

SLIDES-INNO-Oprah-Schultz
By Peggy Watt

Starbucks has underscored Teavana’s role in the company by teaming with chai-loving icon Oprah Winfrey, who arrived to cheers at Starbucks’ annual shareholders meeting in Seattle March 19 to introduce Teavana Oprah Chai, a custom blend arriving in Teavana and Starbucks stores next month.

A year and a half after Starbucks bought Teavana, Starbucks CEO Howard Schultz is still touting the company’s commitment to tea – “the $90 billion global tea market,” as he told the shareholders several times.

“We’re going to do in the long term for tea what we have done for coffee,” Schultz said, noting that he sought a like-minded partner to promote Starbucks’ refocus on tea.

Starbucks StageThe introduction of Oprah Chai is not only promoting a love of tea, but also reinforces Starbucks’ charitable efforts. (At its annual meeting Schultz emphasized its recent support for veterans’ groups and hiring veterans and veterans’ families.) Because Winfrey is also known for her charitable work, sales of Teavana Oprah Chai will benefit the Oprah Winfrey Leadership Academy Foundation, which supports education programs for youth. For every two ounces sold, $1 goes to the charity.

The blend goes on sale April 29 in Teavana and Starbucks stores in the U.S. and Canada. It is described as an infusion of cinnamon, ginger, cardamom and cloves, blended with loose-leaf black tea and rooibos. Winfrey developed the blend with Teavana teaologist Naoko Tsunoda.

Baristas at the meeting offered samples of sweetened and unsweetened varieties to good reception, even for this generally coffee-focused crowd. (Starbucks annual meetings are appreciated for their generous spread of coffees and bakery items – which this year were all from La Boulange, which Starbucks acquired a year ago).
Winfrey and Schultz settled into overstuffed chairs on stage to discuss their deal.

Schultz related that he had observed Winfrey drinking tea at a wedding they both attended. “You didn’t think much of the brand,” she reminded him wryly. He didn’t, and so he sent a sampling of Teavana Chai to her hotel room, which began a conversation that led to her designing Teavana Oprah Chai with the Teavana development team.

“Starbucks is not just a coffee company. It’s about nurturing the human spirit,” Winfrey said. “And that has been my goal in life. This felt like something I really loved and I really cared about and that would be fun to do.” She said she is a longtime chai drinker and welcomed the opportunity to develop her own blend. Teavana Oprah Chai will be served to guests on “Steep your Soul,” a new segment on the OWN Super Soul Sunday show, when guests share their recharge rituals. “I offer them my chai, and they take it whether they like it or not,” Winfrey declared.

Schultz referenced both the common ground of commitments to social causes and having gone through difficult times as businesses. Headlines flashed on the display at the shareholders meeting referenced both lucrative times for Starbucks and the rocky start of the OWN cable network. He said he sought a partner who “loves tea” and “is committed to giving back.”

Oprah ChaiThe packaging is distinctive, too: the canister is an attractive light olive tone with copper lid. The clever box design has an orange base but that same olive-green lid, short enough to show the orange base.

Teavana Oprah Chai will also be featured in a new store design, Teavana Fine Tea + Tea Bars, open now in Seattle and New York and scheduled to open 20 additional locations in the coming year including Chicago, Los Angeles, and New York City.

View the Starbucks product release press announcement here.

For past Tea Biz reports on Teavana/Starbucks, see Oct. 2013 First Look at Teavana Fine Tea Bar (Oct. 2013), Teavana Update (Feb. 2014), and Teavana Founder Andy Mack Leaves Starbucks (Feb. 2014)

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Tea Biz serves a core audience of beverage professionals in the belief that insightful journalism informs business decision making. Tea Biz reports what matters along the entire supply chain, emphasizing trustworthy sources and sound market research while discarding fluff and ignoring puffery.


Tea Biz posts are available to use in your company newsletter or website. Purchase reprint and distribution rights for single articles or commission original content. Click here for details.

Pimp My Tea

China’s CNTV assigned a reporter to visit Los Angeles last week to describe the tea industry in America.

The serious video report, hilariously but aptly titled Pimp My Tea, includes an interview with International Tea Importer (ITI, Inc.) and Chado Tea Room Founder Devan Shah, a visit to the American Tea Room in Beverly Hills and conversations with tea drinkers.

In America “the tea is infused with all sorts of interesting flavors” explains the reporter as the camera pans pouches labeled Macaroon (cacao bits, rooibos, coconut, licorice) and Toasted Fig (pu-erh, figs, dandelion roots, coconut flakes and fennel) or Brioche, advertised as “aromatic as a French patisserie” with almonds, cinnamon and safflower blossoms.

To a purist, concoctions like Chamomile Lemon and Dry Desert lime seem quite ordinary beside Carrot Curry and Beef Cabbage, Spinach Chive and Broccoli Cilantro “tea.” The blends described above no doubt appear to the Chinese exactly like the garish, gaudy and extravagant embellishments gangbangers use to transform 1970s caddies, a vintage Ford Fairlane or Lincoln Continental into pimpmobiles.

The Chinese treasure several blends such as Jasmine green tea but for the most part consumers there seem content with tea processed much as it was a 1000 years ago. In America the blends featured in most shops were developed within a few months of launch. They appear and disappear with the season.

Source: CNTV Culture Express

Service and Innovation

Service and innovation differentiate tea retailers. At its core, specialty tea is a commodity since most blends use similarly sourced mid-grade green or black tea enhanced with ingredients and flavor.

The lowest tier in the sector consists of tea-only blends that are bagged and retail for less than $300 a kilo. The entry point is $5 for 200 grams (equivalent to a 100 ct. box of 2-gram teabags) or $25 per kilo with many supermarket teas selling for $7 to $8 per box ($35-$40 per kilo). This tea costs $2 per kilo at origin and is blended with similarly priced teas for consistency. It costs $1 to ship a kilo to the U.S. and less than $1 to fill, tag and box 100 tea bags. Marketing established blends is a rising cost. Store-brand competitors pressure national brands but there will always be a place for bottom-shelf tagless tea bags selling around a nickel to a dime.

The upper tier is loose leaf with fruit, spice and floral inclusions, pyramid bagged, gift boxed or in tins. A 25-gram pouch of specialty blend sells for $15, earning retailers $300 per kilo. Retailers get only 5-cents a tea bag selling Lipton but they sell a lot of Lipton. Nearly every home in the country has a nationally branded tea in the pantry. Fewer than one in ten are willing to pay $1 a tea bag for a foil-wrapped Tea Forté pyramid (with 4 to 6 grams of tea) but grocers selling Adagio, Rishi, Numi and Republic of Tea are getting $250 a kilo a ten-fold premium.

The core component of these teas arrives in shipping containers warehoused and blended by a few gateway importers with entrenched (often family) supply chains originating in China, Taiwan, Japan, Sri Lanka, Kenya and India. Raw materials for blending are very similarly sourced and priced with tea often the least expensive component. There are an infinite number of blends and taste sensations but remarkably little variance in a warehouse stacked to the ceiling with four million pounds of tea.

This is why service and innovation are critical to retail success. Service is the key point of differentiation. It begins with that first impression, the cold-call presentation that gives buyers a reason to believe that working with you as a wholesaler will benefit their business. There are often two or three wholesalers with identical price points pitching a retailer whose first concern must be to meet the needs (within limitations) of his or her customers. The fact that sales of these similar teas are growing is due to the nearly continuous introduction of new formulations and experimental blends and the presence of color, texture (chunks and leaves, not dust) and intense flavor (often added).

This suggests the path forward is to innovate with taste and convenience foremost. Cultivate in those who show interest a more sophisticated appreciation of the profitable, highest quality teas. Tell the story, let them taste the tea. Repeat. Repeat. Repeat. Retailer and customer advance in step with sellers bringing ever-larger numbers of specialty tea drinkers into the tent where a growing percentage of newly-converted tea lovers share and spread the joy of discovery after readily paying the always-reasonable price for the pleasure of a fine cup of tea.

LinkedIN: Share you thoughts on the importance of service and innovation.

—- Dan Bolton

Synchronized Real Time Tea Blending

TEABIZ_NEWS_Equiplment_JamesMackness2_680px

Motovotano Founder James J. Mackness, Seattle, Wash.

SEATTLE, Wash. — Mixing tea ingredients is easy. Keeping them stable and evenly dispersed is not.

“Inclusions” is the technical description for the flower petals and bits of fruits and nuts, rind shavings, spices, tiny peppers and candy added to modern tea blends. Sales of these specialty teas are brisk with marketing that invites consumers to constantly try new formulations.

TEABIZ_NEWS_Equipment_Epanie_Inclusion_320px

Example of a large, difficult to blend inclusion.

Color and texture are critical to the appeal of these teas. New recipes increasingly call for odd shaped bits of botanicals of varying densities that make consistency a challenge.

Take for example maple sugar flavored black tea, a hit here in the Great White North that eluded blenders for decades. On exiting a commercial “V” blender the mix seems well dispersed but the sugar quickly settles during the packaging process and in transit separates into a sticky dense layer of maple underlying tea with no maple taste.

TEABIZ_NEWS_Equiplment_EpanieMachine_380pxSynchronizing combinations of precisely weighed ingredients during the bag-making process is a promising development by Epanie, a South Korean manufacturer of an innovative tea bagging machine. Motovotano, a Seattle firm founded by tea industry veteran James J. Mackness, is the first company to use the equipment in North America. The pyramid-style filling and bagging machine blends gourmet tea in real-time.

The pyramid has established itself as the go-to format for high quality blends. But large inclusions such as flower buds that delight the eye are difficult to apportion. Improvements in its design by Epanie over existing pyramid and traditional filter paper sachets allows for larger tea leaves and for those leaves to unfurl and brew properly for superior taste. Bags can be made of nylon, non-woven commercially compostable or certified biodegradable materials.

TEABIZ_NEWS_Equiplment_EpanieBin_380pxMotovotano’s Epanie Pyramid Teabag machine utilizes eight servo-motor controlled weigh bins holding either a single inclusion or pre-blended mix that can be flavored. In a recent demonstration Mackness first blended several ingredients with similar density and volume in a traditional V blender. He then placed this mix in the Epanie machine along with several difficult to handle inclusions such as Calendula flowers and a spice with an intense flavor profile. A control panel instructed scales to tip the precise weight into each bag before it was sealed.

Click here for a video demonstration.

Mackness showed how the machine lets formulators cup on the fly. Pausing production to drop a bag into a hot cup of water instantly revealed the color and infusion time and most important, the flavor imparted by the inclusions. After a sip, using a touch-screen panel he then adjusted the scales in the individual bins to deliver slightly more (or slightly less) of one or more ingredients.

Digital touch screen controls.

Digital touch screen controls.

“Traditional tea bag production pulls from single batch blends, which does not produce as consistent or flavorful a product,” said Mackness. “The Epanie delivers a consistent flavor profile and uniform appearance because each ingredient of the blend is apportioned by weight into the bag,” he said. The 1200 pound machine will bag up to 85 pyramids per minute, each containing up to 20 grams of inclusions.

Mackness said the machine is ideal for artisan tea blenders.

Flying Bird Botanicals founder Scout Urling agrees. The small family-run business in Bellingham, Wash., has developed recipes based on ancient herbal knowledge and wisdom. Organic ingredients, many of which are large and odd-shaped, are sourced in the Pacific Northwest. “Our intent is to provide products of comfort, therapy and efficacy all while creating a delicious cup of tea,” said Urling. “The new tea bags allow for the convenience of bags and the efficacy of loose tea,” she said.

Tasting formulation on the fly.

Full of goodness.

Motovotano promises to make the physics of blending tea less daunting and the process of creatively pairing tea and ingredients more fun. The company is seeking boutique teas, and restaurant, hospitality and grocery chains interested in private label product. Inland Packaging, Inc. is the manufacturer’s exclusive representative. To learn more about blending tea in real-time visit www.motovotano.com or email: james@motovotano.com.

Need to Know (Oct. 21, 2013)

What you need to know to start the week.

  • Canada Coffee & Tea Show
  • World Tea East

Retail News

VANCOUVER, British Columbia – Canadian consumer demand for coffee and tea continues to climb as evidenced by market research and the enthusiasm of attendees at the Canadian Coffee & Tea Show.

The show, managed by Fulcrum Media, attracted a big crowd Sunday to the Vancouver Convention Centre on the city’s spectacular waterfront. The venue shifts from Toronto to the West Coast annually. There were a dozen tea vendors among the 78 exhibitors on the show floor.

Sessions include “The Importance of Tea Training” and popular workshops like Le nez du thé (The Nose of Tea) and an advanced, hands-on tea blending class Sunday. The show continues today with a report on growth in the Canadian tea industry that Tea Biz will cover.

A session on making mixed drinks with tea drew a big crowd. Shabnam Weber with Tea Emporium, Toronto explains the basics.

Tea Emporium’s Shabnam Weber explains the basics of tea and spirits.

“Raise your Spirits” was a lively workshop and floor demonstration led by Shabnam Weber with Tea Emporium. The demonstration was sponsored by Spirits Canada. Shabnam taught the basics of mixology with samples for all in the crowd.

Specialty beverages in bars and restaurants made with tea are gaining popularity and are simple to make, she said.

Sandy McAlpine, president of the Canadian Coffee Association, said there are 8,500 coffee shops in the country of 34.8 million with 65 percent drinking coffee the previous day. Per capita consumption is among the highest in the world at 5.4 kilos (12 pounds) per year. About 50 percent of Canadians drink their coffee at home with 36.7 visiting retail shops for “mainstream coffee” and 6.3 percent drinking specialty coffee, with another 5 percent drinking their coffee at the office.

The food service mainstream coffee is critical to restaurant success and valued at $3.3 billion with specialty coffee exceeding $900 million in sales. Daily incidence of coffee drinking is 2 percent higher than tap water and well above the 36 percent who reported drinking tea the previous day.

McAlpine marveled at the rapid growth of single-serve coffee which had “virtually no role at home five years ago.” Single cup offerings now account for more than 40 percent of value and nearly 16 percent of volume with no sign of slowing, he said.

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Michael Menashy, Tea Sparrow.

Michael Menashy had already signed a dozen subscribers to his Tea Sparrow online tea club by mid-afternoon. The Vancouver-based service currently offers 59 crowd-sourced teas narrowed from more than 780 submitted. The program launched last November and is approaching 500 members. Club members receive in the mail branded tea in several categories: green, black, rooibos and single-estate which is re-packaged. Club selections are from well-known suppliers such as Rishi Tea and TeaSpot. www.teasparrow.com

Key Café presents an interesting option for ancillary revenue. Clayton Brown explained that house owners can safely leave their house keys with local cafes via a secure online verification system useful to AirBnb vacationers and by local property managers. Café owners get a flat fee for making the keys available and benefit from increased traffic as individuals retrieve their keys. “The conversion is about 25 percent,” Brown explained, but the sample size is small (five cafes). Subscribers control access to their keys from a computer or mobile device and can let somebody into their home remotely from work or the beach.www.keycafe.com

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Greg Lui, Black Tusk

Greg Lui with Black Tusk Trading in Vancouver displayed the company’s award-winning Majestic Earl Grey, an authentic Jasmine Pearl and his latest creation, “Cold Comfort” a blend of Echinacea and Japanese sensha, rosehip, lemon grass and hibiscus. www.blacktusk.biz

Coffee vendors predominate with all the major expresso equipment on display. Alfa Cappuccino, a distributor was demonstrating the Reneka R-80 Barissima 2-group multi-boiler espresso machine with with Aroma perfect and Micro Sieve and the latest in programmable features.

Vladimir Martinov demonstrates the latest Reneka Espresso machine from Alpha Cappuccino.

Vladimir Martinov demonstrates the latest Reneka Espresso machine from Alpha Cappuccino.

Models of the French-made machine sell for $19,000 to $24,000, according to sales representative Vladimir Martinov.

The Metropolitan Tea Company in Toronto is one of the largest tea suppliers in North America servicing 7,000 specialty retailers with a vast selection of teas and tea utensils and tea ware, according to Chris Clark. www.metrotea.com

Sara Kadowaki of Sara's Caddies describes her favorite tea with Sameer Pruthee of Tea Affair, Calgary. Sameer likes Japanese Sencha, he says, Sara likes Chai.

Sara Kadowaki of Sara’s Caddies describes her favorite tea with Sameer Pruthee of Tea Affair, Calgary. Sameer likes Japanese Sencha, he says, Sara likes Chai.

Tea fans gathered for an evening cocktail party where one topic is always style and flavor favorites. Sameer Pruthee of Tea Affair noted his desire for daily Sensha and Sara Kadowaki of Sara’s Caddies, a supplier of fine Japanese tea, admitted a fondness for Indian chai.

Learn more at www.coffeeteashow.ca

World Tea East

ATLANTA, Ga. – The tea retail community is gathered at the Georgia Convention Center for the third World Tea East. The event, which continues through Tuesday, attracted several hundred attendees from as far as Brazil and South Africa, but most were regional retailers. There were 35 exhibitors.

George Jage, Group Director of F+W Media’s The Beverage Group, said that “World Tea East got off to a strong start despite the challenge of a NFL football game being held next door. With only 25% of the registered buyers braving the traffic and parking complications, exhibitors were pleased with the first day results,” he said.

Leading tea retailer, Teavana, had several people on the floor and engaging with many of the top suppliers, reports Jage.

The event is known for a quality educational program that includes a two-day New Business Boot Camp. Popular activities include tastings of the prize-winning tea from the North American Tea Championship.

Presenter Jane Pettigrew said academic and training sessions were well attended. Her class had 17. She reports vendors commented on “good interest and sales” and said that 30 attended the boot camp “some of whom have a great deal of knowledge and have travelled quite a bit to origins.”

Highlights include:

  • A workshop by Jonas Feliciano and Elizabeth Friend, analysts at Euromonitor International, on global tea branding revealed over-saturation in the tea industry has led manufacturers to change the context in which tea is being consumed, rather than driving incremental tea demand. The trend means packaged tea sold in modern retail shops is growing at the expense of unpackaged tea sold in traditional markets. To differentiate premium tea from commodity, manufacturers stress functionality and convenience. They predicted growth of tea-themed shops as the next wave in modern chained cafés, using the third-place benefit to draw tea-drinkers out of their homes. The U.S. is now the world’s fourth in value at $2.1 billion, trailing China $9.5 billion; Japan $4.7 billion and Russia $3.7 billion.
  • “Vino Teano & Tea Lagers” a session featuring wine- and beer-enhancing tea sachets led by Capital Teas founder Peter Martino and his colleague Nkaiso Akpabio, vice president of retail operations.
  • Japanese matcha supplier AOI announced the company was awarded a Food Safety Certification (FSSC) 22000, a new global food safety standard for food manufacturing from the Global Food Safety Initiative (GFSI), recognized by the Confederation of the Food and Drink Industries of the European Union (CIAA). Learn more: http://www.aoimatcha.com

This year’s event was co-located with the Atlanta Foodservice Expo, a tradeshow that features kitchen equipment, technology systems, restaurant services and foodservice tools. The impact of the co-location with the Atlanta Foodservice Expo was highly apparent with a lot of chef coats in the aisles at World Tea East and in the NATC Winners Tasting Circle tasting the best teas of 2013,” according to Jage.

Tea Biz incorrectly reported that during the show Devan Shah, founder of International Tea Importers was awarded the Cha Jing Award for Lifetime Achievement. The Award ceremony was postponed until May 2014 where it will be held a World Tea Expo, Long Beach, Calif.