Specialty tea retailing 2011

As you know if you’ve read my other posts for T Ching, my passion is not only tea, but the business of tea – and not just owning a tea shop, but growing a concept.  It has been my experience to be part of two tea start-ups in the past few years.  The latest is the California Tea & Coffee Brewery, which is centered around a concept store in Temecula, California, in the middle of a triangle that connects Palm Springs, Los Angeles, and San Diego.  Specialty tea here is uncharted ground, while coffee is everywhere.  Those of us in specialty tea in these parts are pioneers.  We are seeing tea in this virgin tea territory gaining ground as Teavana comes to mall after mall and consumers are able to experience tea that isn’t dust/fannings or captured inside sachets or bags – some for the very first time.
 
Chicago has been a hotbed/center of successful U.S. retail loose-leaf tea store concepts, including TeaGschwendner’s, Argo’s, and, most recently, large online retailer Adagio’s.  New York has seen the Argo chain come to town and TeaGschwendner recently moved into a tiny space in Rockefeller Center.  What concepts are working best in terms of potential growth into the kind of dominance that a few coffee chains hold in their niche? 
 
Argo appears to be the only larger contender going the cafe route and sticking with it.  On the other hand, Teavana’s model has caught the fancy of a few other big players.  It seems that a small space chock full of canisters or packages of loose-leaf tea, along with cast iron pots and various other retail items, with no bakery case, specialty beverages, or comfy chairs – in upscale metro areas – is where these few larger companies are heading, even if they have tried a cafe concept.  Argo, are you on your own with the lattes, sandwiches, and wi-fi friendly hang-out kind of stores?  Will you truly be the Microsoft or Apple to Starbucks’ IBM?  In any case, will someone tell Arsen Avakian I would love to shake his hand?  This guy has accomplished something amazing since opening the first Argo location back in what, 2003?
 
Of course, the large coffee chains are now attempting to be more tea-friendly and tea-knowledgeable, allotting more shelf space to loose-leaf tea and creating tea lattes that taste good enough for people to spend money on repeatedly.  Are they eyeing any winners or potential winners in specialty tea as possible acquisitions?  It’s hard to change your brand as a coffee leader into a coffee AND tea leader.  I haven’t seen that happening at any rate, the closest being Coffee Bean & Tea Leaf, which has always been more tea friendly than most chain coffeehouses.  And successful tea entrepreneur, Steve Smith (who formerly founded Stash and Tazo), whom Michelle Rabin has written about here on T Ching, is back in the game with a boutique tea business that appears to be growing outside the original boundaries talked about here.  How exciting IS all of this?!  Very, very exciting to an entrepreneur like me . . . a real rush!!  And it’s more than exciting to just get the opportunity to play!  But we little guys should remember that Coffee Bean & Tea Leaf started in the 1960’s and Starbucks, as we all know, was really born in the ’80’s.  In other words, tea retailers, large and small . . . the field is wide open.
 
One mistake I believe start-ups/small companies often make is attempting to add stores before the first one is profitable or before they truly have a concept that is garnering a loyal (aka cult) following or unpaid-for attention, along with a sound business plan, infrastructure, team, and product mix that will appeal to enough consumers to be a real long-term winner.  It’s easy to slap a logo on anything that doesn’t move, but it does not a successful business make.  Neither do beautiful, expensive interiors or even the prerequisite location, location, location.  There’s just nothing like passion, planning, product, and persistence.  Time and lots of it – much more than any of us have – is essential.  And, what makes your business unique – what do you do/have that people will go out of their way to get? 
 
Do you have a dream of owning your own specialty tea business?  It is the most wonderful business I could have dreamed of.  I absolutely love it.  But I’ve never worked this hard in my life – over 70 hours every week in-store, six days a week, 2.5 years straight.  And on my day off, I think about it, study it, live it, and breathe it.  I wash dishes, wait on customers, do our social media (Facebook/Twitter), sweep, do inventory, make beverages, buy, train, work with our website designer, talk to wholesale accounts, pass out business cards to a waiter or CVS clerk who likes tea while eating out or picking up shampoo, come home after work hours and make POS/pricing changes, find new vendors, and look for exciting, fresh new ideas/items – it never, ever ends.  Do you want/love it THAT much?  If not, I doubt Argo, Teavana, TeaGschwendner, or Adagio will ever have to wonder if you are coming up behind them and looking for a passing lane.  If you do . . . go for it.  Happy New Year to all fellow tea lovers and tea business owners!!  Look out, 2011 – here we come!

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