Across the country, a ground-level appreciation for tea is growing, partly due to the availability of higher-quality teas at a range of retailers, including a growing roster of specialty tea shops. Many of the most successful of these specialty tea businesses seem to be doing it more or less on their own, keeping their heads down, following their unique strategies, and – either by design or because they lack extra time and energy at the end of long work days – being disengaged from greater tea industry at large. Is this because when they do take a moment to poke their heads up – prairie-dog style – to sniff the winds of the tea industry at large, what they see is chaos?
For those who have long been in the tea business, this state of being might be old news. Our attention on the matter was raised through a paradigm we call “The Maxim of 3.” Simply stated, it’s an awareness that if three unrelated, unprompted events appear within a close time frame, all pointing to a similar condition or point of view, there is probably something there that deserves more attention. Within a few weeks of each other this summer, we experienced the following:
- After attending the World Tea Expo in June, we were fortunate to be able to attend the Summer Fancy Food Show since it was right here in our backyard at the Washington, DC Convention Center. While many of our conversations at the World Tea Expo were with vendors we have had a relationship with over many years, there were new connections made as well. The follow-up from vendors after the World Tea Expo was minimal, with very few companies who we had shown specific interest in getting back in touch with us to provide additional information or finalize a sale. We tried to keep the lack of follow-up in context, fully aware of how small a company we are – one store plus some Internet sales, we’re not any salesperson’s big “get” on the convention floor. Yet, after the Summer Fancy Food show, where our company was an even smaller fish in a dynamically bigger pond, we received a steady stream of follow-up phone calls, emails, pricing information, and ordering catalogs. Having done everything we could to put sales leads in the laps of vendors in the tea industry, why was their response so weak and ineffectual by comparison, particularly in a slow business climate when every sale counts?
- The Teavana initial public offering (IPO) was held up within the tea industry as proof-positive that the tea-retailing segment was maturing, that tea remained a hot trend, that despite the tough economy we’re still in the growth curve, and that our “Starbucks Moment” had arrived. The stock offering performed well, held its share price value after the IPO ($25.60 a share at the time this was written), and raised a hundred or so million dollars for the future growth of the Teavana chain.
While the information highlighted in the IPO certainly made a convincing case for a lot of tea sales, what was left out was telling as well? The relative costs and profitability of specialty tea retailing in a mall environment remain unclear. Do we really want to stake an industry flag in the ground to mark the growth of specialty tea retailing based on their IPO and Teavana adding a couple of hundred more locations to shopping malls? Aren’t we ignoring a “changed retail landscape“? Only one new enclosed shopping mall has been built in the United States since 2006 and only two new malls have opened in Canada since 1992. There may be tea sales to be had in shopping malls, but it is not a path to specialty tea nirvana.
- Recently – at first privately and then publicly – we’ve had our concerns about the lack of an organization or association that truly represents the specialty tea segment of the U.S. tea industry. This issue bubbled up here on T Ching recently in a post regarding the U.S. Tea Association, home of the Specialty Tea Institute. Regardless of how the debate plays out on some of the issues raised in the post and in other forums, it seems clear that for those focusing on specialty teas and specialty tea retail shops, there is a disappointing national void.
Specialty tea merchants and suppliers necessarily spend much of their time minding their day-to-day business operations and yet many are frequently stepping up to address larger industry issues because there simply is no other voice. Where was the national industry response to the crisis in Japan? Where is a national response and policy to the subsequent safe import procedures and testing of Japanese teas? Where is the national response and dialogue with the FDA about effectively and legally communicating tea health benefits? Why is the national specialty tea industry not pushing back against the beverage industry at large, whose interests in promoting nutritionally empty, highly sweetened drinks are in direct conflict with the unique qualities and benefits of specialty teas?
To their credit, the World Tea Expo and its staff have made impressive efforts to be a touchstone on some of these issues. In their conference programming, they have given specialty teas and specialty tea retailers a forum, but there are limits to what they can do. Ultimately, their focus is on staging the World Tea Expo events and stepping too far into industry response and advocacy have the potential to create real and imagined conflicts of interest.
And so this prairie dog takes its head down and returns to its tea burrow. Is the tea industry and its forgotten step-child, the specialty tea segment, more dysfunctional than other comparable industries? Difficult to say, but it definitely seems more reactionary than visionary. Is our success solely defined by the industry’s ability to ride the wave of a more health-conscious consumer trend? If necessary, could the specialty tea industry take control over and drive its own success in the future? Tea willing, head down, and godspeed, the answer is yes.
Guy – I think you’ve made many important observations. As mentioned, we do need a champion to maintain focus and direction for the thousands of individual tea sellers. It doesn’t seem to me that the Specialty Tea Association is filling that need. I worked with George Jage at the Expo to approach a handful of leaders to discuss this very issue. Unfortunately there was insufficient time and interest to proceed. Essentially it never got off the ground. George is in the awkward position of not being able to rock the boat as his finanical marbles are clearly placed in the Expo. By challenging the status quo, he risks loosing his sponsors, his livelihood and the real potential to continue the Expo. Ultimately it’s not his responsibilty – it’s ours. I wish I had the answer to these issues. I’ve tried to engage Joe Simrany but he too has his agenda and in truth, I don’t believe it’s to support the small tea shop owners. Tea is BIG business and the consequences of being fully transparent may not be possible. Why we’re not demanding the FDA respect the research being done by well respected Universities and insist they acknowlege the health benefits of tea is actually a political issue. The U.S Tea Association has bigger fish to fry apparently. My fear is that those fish don’t smell to good.
Although you and I, and many others, have the passion to help bring about change, we lack the funds to really be able to make substancial progress. As I have no sponsors to lose and no personal agenda to be concerned about, I’d welcome the opportunity for T Ching to provide a forum for this type of discussion. We can all speak freely without concern of censure. We will post all pertinent ideas regardless of their viewpoint. Let’s get this discussion going. I so appreciate your voice and your wilingness to speak openly about a topic that desparately needs discussion, inspiration and change.
Hi Guy & Michelle! Bottomline is it takes money to make money. The biggest tea chains had more startup capital than we do. Whether through family or peronal wealth or VC money, they can look prettier, grab choice locations and get the marketing buzz going. They can afford the visually exciting websites and displays at retail. Such is life. Does it mean there’s no hope for the rest of us? No. It just means we have to have killer product we understand, have a clear vision and plod along until someone with the money and connections likes what we’re doing, or at least do our best every day and pray the market will reward us. We’d better love what we do. I do, & you two do. How can we help eachother grow or can we? Trying to organize people is the challenge, getting egos and disparate visions and product mix and locations to focus for a common advantage. That’s what big guys count on..that we can’t. They throw up locations as fast as possible to be ‘the brand’, and that’s capitalism and business. That the consumer does do what is convenient and relies so much on costly/slick presentation, etc. is reality. Here in Temecula we are gaining ground.
Guy, great article. I am always interested in what you have to say.
Michelle, thanks for providing the forum.
Diane, of course we can help each other. That’s the great thing about the internet and the open exchange of information. That makes transparency an inevitability, that is something the industry needs to come to grips with. I am writing this from China, were even with the full force of the Chinese government trying to control information, people are talking to each other freely here. The genie is never going back into the bottle. You are right Dianne that money is helpful, but Guy is right, there are a lot of small tea businesses that are making in difficult time, with their heads down doing the hard work. I know a young woman in Brooklyn that just opened a tea house, that 9 months ago had a stand on the street, I know at least 5 new businesses that have opened in the last year, people in there 20s that are building tea businesses focusing on quality tea, information, and good customer service, that are leveraging social media marketing, as well as person to person education, and they are doing a great job. I dont think any of them had any start up money. We started our business in a local farmer market in Tucson. We have grown every year we have been in business.
We certainly don’t need George or Joe to rock the boat for us, we can do it ourselves.
Thanks for the fine article Guy.
It’s easier than ever to organize
Money, or business capital and the lack thereof certainly is a factor in specialty tea as it is now for almost every small business in this economic climate. Warren Buffett may gleefully loan billions to a sinking Bank of America but I don’t think he is going to be knocking on tea shop doors any time soon.
This post wasn’t really about the money game, it was about that other valuable resource – personal energy. Energy that is taken out of specialty tea businesses because we have to address concerns not being handled by the larger institutions of the tea industry. We’re on the front line and get the customer questions every day. We have to respond to things the industry isn’t getting out in front of with press releases or industry news articles or industry/government responses.
The energy of the specialty tea industry is being sapped to provide cover for the greater tea industry at large because they avoid the questions, aren’t proactive and transparent enough or try to get by using barely legal marketing claims to misdirect the consumer.
The specialty tea industry needs to say – enough. We want that energy back. The money will follow.
I’m with you Guy!
Yeah, me too, so why don’t we take it back ourselves. I think we are different from the old players, let’s start our own game. I have very little doubt that we can do it and still do our work. I am certainly happy to help out. Certainly out there in DC you know the power of small groups organized for a common purpose.
Guy, I really enjoyed reading your thoughts here on the current state of the USA tea industry.
I’ve recently found that when compared with their tea counterparts, specialty coffee purveyors have a much better understanding of teamwork. You know me, I know you, we love coffee, let’s grow our industry together. As a sort of insult to injury, they are on average significantly more responsive and more proactive about pursuing business deals. Is this just a byproduct of being more caffeinated?
All jokes aside, when I look at the specialty tea industry, I see the same thing as you Guy — a person on every corner that only pokes his head out only when gunshots are being fired. Why does the industry seem so fragmented? So gray? I think it’s time for everyone to get connected. Leveraging each others resources and working together can create real long term momentum for the specialty tea industry. That’s something that one small company can never accomplish alone.
Guy, thank you raising a real issue facing our industry: Lackluster support and apathy.
First, to Guy’s initial point, I must remind our exhibitors of the importance of following up on their trade show leads once again. It is estimated that 80% of trade show leads are not follow up on (Center for Exhibition Industry Research).
It is foolish to think that people make an investment into a proven form of marketing and then throw money away by not following up on those leads. We can lead a horse to water….
I started the Expo nine years ago and we will celebrate our 10th year next June. Before I started the Expo, the specialty tea industry had little if any voice and no sense of community. World Tea Expo has helped create and sustain that community. We are undertaking a major initiative in 2012 for a “no repeat” educational program and will not repeat any of the nearly 500 educational sessions we have done to date. We want to get the entire industry to get involved and support this milestone event. Fresh content, fresh ideas, fresh crops. Guy, you should think about at what you can share with the community to help other tea businesses grow, run better, market more effectively, etc. The form for submission can be found on our website, http://www.worldteaexpo.com
For our industry to grow and flourish, we need everyone to be an advocate and to get involved. We (World Tea Media) have struggled with industry support since the very first day we started the Expo when the traditional players all told me to get lost and this would never work. We quickly found out they are not our target customer!
But there are many companies who sit on the sidelines, or come to the show as an attendee that should be exhibiting. Austen, you have been critical to say the Expo does not have value to your company. If the Expo is the largest gathering of tea buyers and professionals in the industry and you wholesale tea, well, then what will provide value to your business? (rhetorical question, no need for extensive diatribe). Unfortunately, other companies like Numi, Zhena’s Gyspy Tea, and Two Leaves and a Bud also don’t exhibit while similar companies like Rishi, Stash, Ito En, and Tea Etc. and scores of others are flourishing and making exceptional ROIs at our event.
By these other companies not exhibiting it hurts our business, their business AND the industry. As I mentioned, the Expo is the largest gathering of tea professionals and buyers in the country. When they come, they are seeking out leading brands and established wholesalers as well as emerging companies and new products. If these companies are not present, the buyers won’t know they exist, nor will they see the diversity of offerings they are seeking.
The greater the number of companies that exhibit, the more content for the attendees. The more content for attendees, the more buyers attend. The more buyers that attend the more specialty and premium tea they buy, the more consumers are offered, the more the industry GROWS!
If all this sounds self-serving — it is. Trade shows like The World Tea Expo provide a needed and valuable platform
for businesses on both sides of the transaction. By coming together, the Expo creates something that is truly greater than the sum of its parts. Yes it is a business…. those that know me and my team understand we have always been more driven to grow the industry and provide solutions to our customers than to drive profits. Our most recent event in Philadelphia was extremely successful for our exhibitors but we lost an enormous amount of money due to lack of exhibitor support. (In retrospect, I should have set the business up as a non-profit as it has mostly been that over the years!). We are not a large trade show company, but a small company serving the specialty tea industry. And we will continue to put our customers first and profits second as I believe that we will someday do well by continuing to do good.
As to the Specialty Tea Institute, they too are in need of larger support and greater leadership. They are dependent on volunteers and if they industry wants them to take more action, offer more programs, and serve them better, they need to join and express their voice. We have been asked by countless people to create a new association or to offer certifications in lieu of STI, even by their advisory board members, founders, and chairmen! This has always been a difficult proposition as I believe that any of these options would only create divisiveness in an industry that is too small and interconnected to survive any self-inflicted internal battles. Before you go out and try to start a new association, I think it is only fair you tell STI what you need from them to become a member and if they can offer you what you need, then you should join it and improve it.
I am always reminded of a lesson my grandfather taught me to leave something in as good if not better condition in which you found it. I fear this concept has been lost for many today.
In summary, we are all in this together, regardless of the size of your company or your buying power as a retailer. And it is a far better solution to get involved to steer our industry in the right direction that to try and start over from square one ultimately creating division instead of unity. And the worse thing anyone can do is stand by and do nothing.
Kindest regards,
George Jage
President
World Tea Media
George, the hard work of your team putting on the World Tea Expo IS appreciated, we probably don’t say it as loudly, as frequently and as publicly as we should.
I’ve always been told that the most dynamic way you can change a business is to look outside your business category at what others are doing and then reinterpret that success into your business. It will be new, fresh, innovative and you won’t be doing the same thing everyone else in your industry is doing. The tea industry does this but not nearly enough nor as quickly as the market demands.
While I agree with most of what you wrote, I came to tea after years in another industry and can say with an outsiders perspective that there are things we accept as part of the status quo in the tea industry that are unacceptable in other industries. A trade association representing an industry has to be a leader. Has to have some paid staff. Has to be inclusive. Whether it is the current structure, a general dysfunction, poor allocation of funds or a just-get-by attitude, the STI exists as the status quo but it is certainly not acceptable and I’m not sure if it is really salvagable.
“Those skilled in transformation will not be easily deceived; those knowledgeable in the art will not be alarmed by the unusual” – Lu Jia
Not sure you really want me to speak at the conference George. At least not in a recorded presentation. ;) Looking forward to 2012.