Dan Bolton is a writer who has covered tea stories for many publications, including World Tea News. I always enjoy reading what he has to say about things he has found, or just hearing his opinions from his extensive experience and industry contacts. I was thrilled when I read this from him in a recent World Tea News publication: “Teavana continues to experiment with retail concepts because no one, including Starbucks, has developed the definitive large scale format for tea retail.”
Wow! Does that leave any doubt that there is huge opportunity in the tea retail space? Not for me! We’ve had a 3-year hiatus from our retail store, and have done online sales and developed our 1-minute brewing technology (which we hope to introduce sometime in 2016 to food service) and I’ve had a lot of time to think about tea retail during that time. I agree totally with Dan Bolton and, of course, I also believe a large part of that is the lack of the right commercial brewing system. One of the most recent posts on T Ching was by Holly Helt, and she talked about the challenge of being able to brew great tea consistently on a commercial level, and how different that is from being able to brew it at home.
That problem, however, is not the only challenge with finding a really ‘killer’ tea retail concept. We’ve all seen a number of concept styles, everything from Asian to English to coffee-house modern/contemporary. While all of them can work, none of them have rolled out into a national or international hit on the level of the coffee-house chains. And, as Dan said, not even Starbucks has found it. Hey…we’re talking about the #2 beverage in the world after water!
So, having stepped back 3 years and looked at the situation, I’m still watching, listening and getting ready to offer a great tea brewing solution on the commercial level. And yes, I love challenges and big opportunities, and we’re still looking at getting back into retail with a concept we have been thinking about–one that we don’t see out there in the way we would like to see it done.
Maybe we could put our tea-infused brains together here and discuss this subject further. I think, like Dan Bolton, a lot of us are sitting on the edge of our seats waiting to see who will be first to come up with the concept that absolutely nails everything tea retail should be. I’d love to discuss it here in the comments or off-line at email@example.com with anyone who is passionate or interested in the subject! It’s amazing, but over a decade after the current retail tea concepts many people now know about started forming, the race is just beginning. This ‘tea thing’ has proven to be a marathon, not a sprint, and I, for one, am thrilled that the running lanes are still wide open and no one has gotten so far ahead that the rest of us don’t have a fighting chance!
For me, I’m torn between the peacful, serene tea houses I visited in China a decade ago, where soulful music was played in a tranquil outer courtyard by a local musician and what’s available today in Portland Oregon. I do understand that to compete with coffee shops, one must offer wifi. How I wish that wasn’t the case. Perhaps separating out the two spaces might create the ambiance I crave. Yes, sometimes I want to get out and be stimulated by other people and bring my laptop to the tea shop and do some work. Other times I want a different ambiance where a friend and I can go to chat and dream a bit.
What if the real problem was the competitive approach and try to sell tea like we sell coffee???
I think that the tea industry should focus on changing/educating the population to relax and take the time to enjoy life instead of trying to be part of the rat race. Educating people about the tea ceremony and the meditative aspect of it. I think it is possible to have people use wifi and work on computer while taking minutes off from their work and enjoy the preparation of a great tea gongfu style.
Hi Fabrice. What Dan Bolton was talking about is, really, a competitive tea concept for the mass market. Business is competitive, sadly or not. if you look at tea as a business, you have to consider margins, average ring, etc., even if you’re passionate about tea. People are using coffee houses as offices and will do the same with tea when the business is set up that way. Starbucks and others want drive-throughs because that’s where they really do well, not the ‘squatters’ as people call them who stay and stay with one cup of coffee for hours. I personally don’t believe a tea concept is drive-through friendly. The tea concepts who have done the best as businesses in the marketplace, that I am aware of, are more ‘stores’ than cafes.
It’s such an interesting subject to me. Retail in general is interesting. I like looking at concepts and how they work and why they work. We are getting our first Dunkin’ Donuts in this area and they will have their own following and it will be a different one than Starbucks, as does Tim Horton and Peets. Each concept has a certain demographic that identifies with the brand. With tea, I haven’t seen that kind of brand identification and intense loyalty (yet) and that’s what’s so intriguing to me about the situation.
Very interesting concept you got here.
I remember our brief discussion on my post “The Japanese Green Tea Cafe Project.” The Project doesn’t seem to have opened its first store in OC, scheduled originally to open in 2015… Yes, at the moment it is difficult to imagine a tea retail venture as ambitious and ubiquitous as Starbucks.
Merry Christmas, Ifang! Yes, I remember that discussion about Koots Green Tea in Washington State. What’s really intriguing to me is that Dan Bolton noted that even Starbucks (owner of Teavana) is still trying to figure things out, so to speak, when it comes to tea. It’s a toughie. By the way, T2 is about to open a store in Brooklyn (owned by Lipton I think), an Australian retail concept that has done very well there. Also that the German company who bought Peets and Mighty Leaf also just bought Keurig. Looks like they’re really looking to dominate the coffee/tea space!
Thanks for the great post Diane. It’s certainly interesting to see Starbucks play with their new toy! It remains to be seen whether Howard Schultz’s passion for enterprise will overcome his passion for coffee rather than tea.
Having run the Chiki Tea café with Holly for just under a year now, we’re getting much clearer on what’s required in terms of making drinks more efficiently whilst maintaining quality.
But that can’t be the only issue at hand. Is there really a mainstream market for tea? I’m sure we all believe there is, we want there to be (because we all love tea!), but can it become as mainstream as coffee within a café context?
Also, is it fair (or “correct”) to compare tea with coffee? I get that there are a million different blends of coffee, but they all taste like… coffee! That’s no comparison to the range of different flavours that come under the term “tea”. So we’re focussing on Matcha as the main alternative to coffee, making that the centrepiece. Who knows what the right or wrong thing is to do here! The future/market will surely let us know!
Hi Alex, I enjoyed reading about your business and wish you wonderful success and agree with what you say! As Ifang and I were talking about above, the owner of about 400 Tully Coffee kiosks/shops in Japan came to the U.S. about, what, 8 years ago or so, and had a ton of money to do a tea startup. He focused on matcha in the Seattle area, a coffee hotbed. The name of the concept was Koots. The stores were beautiful, the presentation was amazing, but he shut both stores down a few years after opening. So many people have tried to hit that big tea concept and chains like Teavana, Argo and David’s have grown the most, mostly, I believe, because they were able to finance it better than the rest. I don’t compare tea to coffee, in fact, I really believe now more than ever, after having had and worked in 6 days a week a 5 star Yelp store for almost 5 years and being part owner in another two stores offering tea and coffee, that you cannot compare them. Some people seem to be offended by even the idea that tea should be presented in a mass way. I’d rather have it done by those who really love and understand it than by the coffee marketers. Go for it!
Hi Diane, Did you visit Koots? I don’t know about the ones in the US but over here in Japan the execution was very poor – a kind of McDonalds stuffed with (plastic) bottled teas, “matcha” ice cream and junk food snacks. We would love it if Chiki Tea turned into a global chain, but right now we’re pouring our energy into making it a wonderful experience for each customer walking through the door. Whether we can execute that at any kind of scale remains to be seen and is in fact the summit we’ve got our longterm sights on. In my opinion, Koots looked like it’s sole purpose was to be a chain, rather than serving a great product.
There is possibly some underlying issue to do with tea not being the same as coffee in terms of a consumable. So maybe the key is not simply trying to replicate coffee outlets/cafés/”third spaces”. It’s something we’re still looking for ourselves but we’re sure it exists!
Thank you for your encouragement!
Hi Alex, I never visited Koots but it was very upscale from the photos. Here is their 4.5 star Yelp: http://www.yelp.com/biz/koots-green-tea-seattle
This location had more reviews and photos http://www.yelp.com/biz/koots-green-tea-bellevue-2
Thanks Diane. Looks a bit better than the effort they put on here. I’m not sure if they still have stores open here (Japan) anymore… Cheers, A
The coffee shop concept will only stay viable for an other 15 years or so. People go there mostly to get a caffeine high while in a rush to go to work. With the incomparable changes our society will go trough in the next few years with the development of robotics, 3D printing and finally nanotechnology, the rush hours of 9 to 5 jobs will disappear. Giving people more time to enjoy life and not interested in the fast pace lifestyle we know today. That is where the “traditional” (with a modern twist of course) tea house will become the central meeting hub it once was in ancien China. A place where people go to meet, chat, enjoy great flavours and watch beautiful art. A place where all your senses will be stimulated in a peaceful environment. Just like fast food chains are disappearing for more healthy alternatives, coffee shop will too.
It is just a matter of time…
This past weekend, a friend took me to a tearoom in Torrance, CA. I mentioned T Ching to the tea sommelier, and she said she just read this post! Always fun to have interesting discussions this way!
I agree, Ifang! If we all put our heads together, we all love tea so much and have so much passion…we might be the ones right here at T Ching who can hit that winning concept! :)