Wednesday August 24, 2011 | 9 comments
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.