Recently, there has been quite a bit of discussion on T Ching about tea bags and sachets (aka large tea bags). It inspired me to think about this more than I usually do, because even among what are considered “specialty tea retailers,” there seems to be promotion of these vehicles of delivery in order to 
appeal to the masses and boost sales. Charles Cain pointed out that some tea bags in a pyramidal shape with outstanding, appealing, and upscale packaging were commanding $5.00 for two teabags as gift items. Wowzers!
My question is: How far do we, as specialty tea retailers, want to carry this premise and still call ourselves specialty tea retailers? At what point do we just become retailers who carry the same products we can now find in specialty grocery stores – even in antique shops or bagel places, where I saw these incredibly packaged and branded tea sachets? I’m quite sure other retailers will jump on board. Shoot, there are products in Walmart now I never dreamed would be there – like organic produce. I can see it now – Walmart Private Label Specialty Tea, in sachets, of course. Would they sell? Duh.
The convenience argument can be taken to extremes. Even with a tea bag / sachet, tea must still be steeped. Entrepreneurs, how about a tea bag / sachet that times itself? Or one that disposes of itself, so that you don’t have to deal with a soggy, used sachet in the car? Wait – what about instant powdered tea? Oh, that’s right – it has already been done. I remember Mom stirring it into some water and adding ice. Argh. The kind with the convenient fake lemon flavored powder already added (so we didn’t have to cut open and squeeze in a real messy, juicy lemon) was my favorite.
We used to be in the mass-market business. We wholesaled impulse products (the kind you would see hanging on plastic strips along the aisles of Walmart and grocery chain stores) to the largest companies and chains in the world. I remember well the buyers beating us down for pennies, saying they could just private label a product if we couldn’t get it to them for what they wanted. They do anyway. I remember telling my husband that the next business we started would be an artisan business – one we could feel really good about, one that was pure quality and one in which the product would bring excitement and happiness to the faces of our customers. I just haven’t seen tea bags do that for anyone, but I have seen loose-leaf tea do that, every single day we open our doors. I’ve seen how excited customers get when we bring in a new gem. I remember how excited they were when they first used the stainless steel infuser we sell that doesn’t even let a rooibos needle through. They tell us about their growing collection of our loose-leaf teas, and how they have to hide it from their mates, because they raid the stash.
Now, I understand business, and I understand that the specialty tea and trade organizations are there to promote tea in all its forms. But we, as individual businesspeople, have to choose where we fit and want to be in the overall industry. So, I thought about the “tea bag / sachet vs. loose leaf” aspects of other niches, as follows:
Burgers
Convenience: McDonald’s
Artisan: Bobby’s (Flay) Burgers
Coffee
Convenience: Starbucks’ drive-throughs and McDonalds (again)
Artisan: Vivace
Ice Cream
Convenience: McDonald’s drive-through soft serve (see a trend?)
Artisan: L.A. Creamery
The beef industry sells more meat through “convenience” models – so does the coffee industry, the ice cream industry, and so on. The specialty tea industry will sell more tea overall through wholesalers, retailers, and growers who appeal to the masses with tea bags / sachets and instant powders in a jar. Just spoon, add water, and serve. Presto – convenience and big bucks!
A while back I read a consumer review of a company, in which the reviewer, in seeming frustration, said something like: “It looks like the concept at this place is ‘we’ll sell anything just to keep the doors 
open’.” Will specialty tea retailers decide to sell instant tea to consumers in jars with upscale labels at some point because “people want convenience”? Starbucks sells a lot of Via, I’m guessing. I am wondering if anyone here has numbers comparing dollar amount of sales of instant powdered teas to bagged / sacheted teas? There is mass-market demand for tea powder, because these jars have been in grocery chains since I was a kid. That’s some time!
Teavana has sold nothing but loose leaf and, to date, has been the most successful U.S. specialty tea retailer in terms of growth. Argo is coming up in numbers as a loose-leaf concept (don’t think they sell bags / sachets) and Teaopia and David’s Tea in Canada are red hot with loose-leaf tea.
Why hasn’t loose-leaf tea taken off like specialty coffee as a retail concept? I don’t think it’s because of a lack of tea bags / sachets – they have been part of the Victorian tea room concept forever. In fact, I think the presence of tea bags / sachets is part of why the concept HASN’T taken off like specialty coffee. I believe it’s precisely because tea has always been looked at as part of the “red hat” world of frilly doilies and tea bags … and now pretty sachets.
Specialty coffee concepts really took off when Starbucks’ Howard Schultz gave specialty coffee/espresso his version of snob appeal using a European flair and making customers feel “I’m special and sophisticated because I know about espresso and specialty coffee and how to order in Italian-sounding sizes.” I believe that when quality loose-leaf tea is presented with passion and panache, with functional, appealing, and innovative brewing equipment, and in environments that feel upscale, cutting edge, quality, loose-leaf tea will really take off. And yes, this is beginning to happen.
I wish investors who are looking at this niche would look beyond who has the biggest war chest or slickest management team and start doing their homework, searching for the needles in the haystack with techonology, fresh ideas, and amazing delivery systems. Are you an investor out there? Maybe you should be more than just a “Shark Tank” wannabe and really do your homework. You might miss the next big idea.
Now I’ll go have an amazing cup of loose-leaf tea – sans sachet – with no messy non-biodegradable silk or paper or corn-based product to dispose of – so inconvenient!
I think you make some valid and interesting points Diane. I believe that the specialty tea shops are in fact turning people on to higher quality, loose leaf tea. I think there will always be those who buy their tea in bags/sachets at the supermarket, or costco however. If we look at wine and coffee, we see all levels of products that people buy at the market or big box store. Those seeking the best go to specialty shops.
I agree that technology is important to continue to improve delivery. I’m looking forward to the World Tea Expo to see what’s new and exciting.
Presenting the choice as you have, between premium loose tea and low quality bagged tea (McDonalds vs. Vivace) I completely agree with all of your conclusions. Reality is not that simple. A microbrewery’s summer ale is the same beer served on tap at the pub or in a bottle from the liquor store. The pub version is arguable better, but it’s not “selling-out” for the microbrewery to reach out to a wider audience.
75% of American households buy tea bags and 10% buy loose tea. Putting premium-quality tea in a teabag may be a more effective PATH to conversion than convincing those 75% to switch from Lipton to Gyokuro. Once a bagged tea drinker realizes how good tea can taste, I’m no longer trying to “sell” them anything… they’re hooked and I get the privilege of being their dealer. We see people light up over bagged teas every day, mainly because we’re one of the few companies putting the same top-shelf teas in teabags that we sell loose.
One of the most common customers of our bagged teas is actually the premium loose tea connoisseur! They buy the bagged tea for family and friends with the hope of converting them. They know from experience that a package of loose tea given as a gift would not be appreciated and would likely just sit on the shelf.
My goal is the same as yours – more Americans drinking high quality tea. With 30% of our in-store tea sales going out the door in bagged tea in spite of it being more than twice as expensive for the same product, and in spite of the fact that we actively promote the loose version, I’d say the customer is speaking clearly. What they’re telling me is that they are tired of crummy bagged teas. They’d like to have their convenience AND their quality too!
How to approach this… I have rewritten my response to your post about 3 times now, struggling to identify why I feel your post is so negative. Is it because you use multi-billion corporations against relatively small operations? No. I agree where you come from there in regards to quality, but there is something to be said for paying a morgage, and employing many people so that they too can raise families and pay their morgages.
Is it because the post seems to have a very anti-big business/corporate slant? No, because I share some of those very same views, and choose where I shop and spend my money based on my moral compass, but again, there is something to be said for big employers, without which, many people would be destitute.
Maybe it is because you are putting down a product that does not deserve it, and I naturally cheer for the underdog? There are some VERY high quality teabags/sachets/pyramids on the market, that can match up pound for pound with many a loose leaf that I see sold, so no, it isn’t that – I think that you realize that.
Maybe it is that I am detecting a venting of your struggle to create and maintain a successfull small business in a market that is/has been dominated by huge corporations that really only care about the bottom line. I share that frustration, but that too, is not it.
I know what it is now. I fear that this post was maybe written from a position of inexperience with the subject matter. I followed your discourse with Charles Cain on twitter, and a lingering question remains. Did you take him up on his offer of comparing quality bagged teas to loose? I don’t recall seeing that addressed. Have you tested high quality loose vs. high quality pyramid packaged? I have, and have enjoyed them both very much. They both have their place.
The reality is, no matter how much we rail against it, the mass-marketplace will dictate the end product. As long as we are a consumer market, run by capitalism (all for that!), we will continue to have teabags and other fast, convinent methods of the product. High quality, low quality, and everything in-between.
I would also like to point out, that I have had many a drekitude cup of loose leaf tea, UN-bagged. It is NOT the container of the product that dictates quality of the experience, it is the quality of the PRODUCT that is contained that dictates the experience.
I agree, and indeed applaud, the direction that Adagio is going – bring a high quality product to the market in a format that the public understands, opening their minds to being educated about tea in general. I personally find that this works better than the approach of knocking them on the head, telling them they are stupid to keep steeping Red Rose, and scaring them away with my fanatical rantings ;)
I guess to conclude, I congratulate you for creating and maintaining a successfull artisan tea business, this makes you one of a truly small number of businesses that succeed in a niche market. However, you really should explore some of the options out there, if not for your customers, for yourself, as you may not know what you are missing!
Hi Michelle & Charles. No doubt many people will buy tea in any form it’s offered, it seems to be the retailer’s choice in how they want their brand perceived. Just read Charles’ comments re: the Teavana 100 million dollar IPO offering based on their success in selling just loose leaf tea. It seems to be a highly profitable model! Also that they are going to be concentrating less on teaware and moving more and more toward just the loose leaf teas. Can’t say that the specialty tea retailing niche is boring!! :)
Mike, maybe you read more into my post than was there? And thanks for the commendation about attempting to keep specialty tea artisan in our store. Not that we don’t have big goals…we do. As to your point re: my experience with the subject: I have been working with loose leaf teas since 2004, on a daily basis, so I’m not sure you could say there is a lack of experience in that regard..80 hours a week hands-on currently, feet on the floor. You have been following my conversations with Charles on Twitter (somebody actually does??) and I’m happy to say that I would love to have a ‘throwdown’ with Charles, he with a sachet and us with loose leaf tea. However, it would have to be his brand of whatever tea and our own loose leaf version. We choose teas from a number of sources for its’ taste, and feel that is part of the final result, as well as the brewing method/delivery method. Is that a direct enough answer to Charles’ question? Yes, I have tasted teas from sachets to the best loose leaf tea companies in the world for the last 7 years and yes, I do find vast differences in quality of teas in all venues. That’s why we cupped five more tea samples just today and constantly cup to make sure we carry the best of every kind of tea that we do carry in our store, about 50. We do not buy from any one source. I’m just glad we, as a little guy, have the opportunity to express our feelings here on T Ching without being written out by an exclusion clause! ;) (Frustration with the big corporations again?) Maybe next month I’ll tone it down..or interview another of my specialty tea retailer compatriates? (P.S. I think Charles enjoys our tit for tats as much as I do..all for the love of tea.)
Diane, I do very much enjoy the debate and have tremendous respect for what you’ve accomplished and the passion and wisdom you bring to your company.
That said, I think you’ve still missed the central premise of my position, and missed the point of my proposed wager on twitter. My wager, for the record, was a $100 bet that you personally couldn’t tell the difference between a tea brewed loose and in a pyramid tea bag. With the exception of a few voluminous teas, a large bag is just as effective at steeping 2-3 grams of leaf as an infuser.
Your argument about how you source your tea and the difference between the teas that you’ve tried loose vs. in sachets is, with all do respect, entirely beside the point! There’s no question that most tea found in bags is lower quality than that found at the top specialty shops. But the reason is not the inherent inferiority of tea bags. It’s also not a lack of customer interest. I’m not suggesting every company should be selling bagged teas. The end goal of Adagio’s teabag strategy is to get every customer drinking loose teas. Putting our tea in bags is just a more recent strategy born of 10 years in the market putting better loose teas onto grocery store shelves across the country and watching them sit as the customers chose more expensive, lower quality bagged teas. The fact that it’s been a huge hit in our Tea Stores was a bonus.
Final note… Two brothers and their mother founded and own 100% of Adagio Teas, and built it from the ground up. The company’s success and growth wasn’t a matter of making investors happy, but of making customers happy. When I opened the company’s first retail store last year, there were fewer than 10 salaried employees running sourcing, blending, warehouse, ecommerce and wholesale. Adagio is a SMALL company, run by a small team of entrepreneurs. Their success and ability to build a cult following of customers provided me with the funds to begin opening stores. In short, it was the sale of loose tea that funded the opening of our stores and the purchase of our machinery to make teabags.
It’s amazing that the Specialty Tea Industry is so small, and historically so unprofitable, that even a tiny company like Adagio gets painted as “one of those big corporations with deep pockets”.
No matter. The best competitive strategy is not to win theoretical debates over business strategy but to win customers. In the end, the customer will vote with their hard earned dollars. Time to go earn more of their business. :-D
Charles, I’m glad you enjoy it as much as I do (our ‘talks’). Maybe my post didn’t come across with the main point I was attempting to make which was: The difference between artisan and mass in tea concepts/retail..the title. The fact that Adagio’s loose leaf sales funded the brick and mortar stores and teabag-making machinery says alot, doesn’t it? I don’t know why I would be the one to judge the difference–my dog’s in the fight in that I sell only loose leaf. I say we have independent, unbiased judges, customers of neither of us but tea ‘fanatics’. And I’m not saying you or anyone else should not sell teabags/sachets. I’m saying there is profitability in a model of artisan/loose leaf and profitability in appealing to mainstream but, at some point, customer perception may become a factor as I gave an example in the original post. Teabags are selling well for you and I’m happy for you. I try to picture myself selling them (we did offer TeaSacs at the beginning about 3 years ago and stopped when they sold through because we just didn’t believe in sacks, sachets or bags as being optimum and best for results) and we just can’t see it and don’t feel it is necessary…and Teavana proves that for sure. So, let’s all do what we believe in and continue to keep discussion lively and friendly. Our concepts/brands are as different and unique as we all are as people..like the many choices in tea. And, who knows: Teavana’s IPO may bring with it the sachet option in their stores. :) By the way, I still believe that anything that comes between every surface of the leaf and the water is an impediment and brings about a lower quality infusion. If I didn’t, there would be big empty tea bags/sachets for sale on my shelves right now and, based on your results, branded packs of them for sale in my displays.
Diane, I always love your posts and your passionate way of tea. I wonder who is reading these blogs? Are consumers reading these or is it just us in the tea world? Because if a consumer read your blog, they might be frightened of us! As a purveyor of both loose and sachet teas in various forms, I can only share my experience in that the tea growers in Sri Lanka all drink BOP or BOPF- which are broken leaf teas and are totally flavorful and beautiful, we just take those very leaves and put them in a hemp sachet for the American market- there is nothing in our opinion that is hurting anyone by taking tea that the tea growers themselves drink and giving it convenience for the grocery store consumer who may live far from a specialty tea house. I have always thought that we should meet the consumer where they are and guide them with a friendly approach along the path to full or loose leaf teas. As their palates become more advanced, they usually “graduate” to loose tea at home. While loose tea is optimal, the consumer needs a bridge and putting excellent tea in a bag is a first step toward their advancement. When we poo poo their choices, we close the door and become the “tea snobs” with condescending attitudes that they run from- by being a friendly tea lady with an accepting attitude, they will be more attracted to us and maybe even become the aficionados who only drink loose tea we all envision them to one day be.
Beautifully put, Zhena.
As an independent tea merchant, we put a lot of emphasis on accessibility. We believe there is no single way to tea. As a shop with a clear focus on high quality, single-origin selections, we are always amazed at how open people are to trying new things given proper guidance. Regardless of my own preferences, I believe the worst thing anyone can do is not take tea in the way they most enjoy it. Life is just too short for that. My biggest concern with some of the artisan/gourmet bagged teas is the over-packaging. But, that’s another post entirely. Cheers!
Wow! I must have come off as a ‘tea nazi’ (as in Seinfeld’s soup nazi) :) Sorry if that’s the case. I don’t think people are turned off by our passion for loose leaf tea and we certainly don’t slap them down verbally or physically if they ask for sachets or bags. ;) And, almost without an exception, they will then begin to ask ‘well then, how do I brew it?”, which leads us to…follow me and I’ll show you, and results in a very happy customer! It seems like a case here of ‘if it’s working for you…’..then go for it!! I was watching Biography on Charles Schultz of Starbucks last night and saw how he didn’t ‘graduate’ people into the cappucinos and lattes, espresso and ordering in terms they had never heard. It was almost ‘culture shock’ and they ate it up (or drank it up!) Any tea business owner who wants to use CTC, bags, sachets, put it through an espresso machine, etc., has an absolute right to do that!!
I do think there were valid points in my posting and that it will be awhile to see how things play out. We do have a history in specialty tea of companies who don’t sell bags or sachets being highly successful and those who do being so as well and those being companies that get into bottling or mass distribution of bagged/sacheted teas. Is that fair? Love discussion on this subject or the tea business in general and feel honored that tea business owners have gotten into it and also have strong feelings and passions, even they may differ from mine! Thanks!
Diane – I don’t think you’re a Tea Nazi by any stretch- I did love that Seinfeld episode. I love your passion about the leaf but the tea bag “issue” is one that sparks a lot of emotion. I have found that many people do feel slighted when I talk passionately about whole leaf tea. As with you, that’s never my intention. I believe Zhena is right when she speaks of the graduation to whole leaf tea by many tea drinkers. It is an evolution. I too started out with tea bags – Traditional Medicinal Golden Green Tea – after my failed attempted to brew whole leaf at home. I’m grateful to Traditional Medicinal for providing the type of tea experience I needed to begin my journey in tea. Keep up your wonderful work and hold on to that delightful passion.
Ultimately, we’re not selling tea. Which is sometimes a blind spot in the specialty tea industry.
Another person in the tea world just told me that Argo is also selling concentrates of tea and specialty tea beverages for foodservice use to other companies. I’m wondering, again, if Teavana’s proposed IPO will change their direction in terms of product expansion into these other areas (selling concentrates or sachets in their stores).
Negative?
Whatever happened to debating? There’s a pro and con side, and over the years, these have taken on the meanings of negative and positive, and for something to be negative is now universally bad. Have a look at electricity, people! If it wasn’t half negative, nothing would work.
Diane has written a piece that is unashamedly partisan. And why wouldn’t she? She has a point of view and she has written a piece in support.
I happen to share her point of view, for the most part. I think she makes an excellent case.
I always find it amusing that people trot out the ‘gateway’ argument. It’s used almost as much as it is in the drug debate. And usually by experts arguing the opposite.
To me the most powerful argument is the one about Teavana.
Here in Australia, speciality retailers are few and far between, even though we rank in the top 10 tea drinking nations. Here it’s 99% bags. 80 years ago, when it was all loose leaf, we were number one. I wish Teavana would come here. As someone who also appreciates great coffee, I’d happily trade Starbucks back.
Dianne, keep fighting the good fight. When I eventually get to the US, Temecula is high on my list!