• Tea Magazine Evolves…

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    PHILADELPHIA, Penn. — Tea Magazine® a 20-year-old consumer publication for tea enthusiasts is replacing its bi-monthly print edition with a combined print +online content package for its readers, including a new book-style softcover guide to tea published annually.

    In mid-April ITEM Media will launch The Daily Tea (www.thedailytea.com) a subscription-based tea portal replacing www.teamag.com. Visitors to the site will see a mix of free and paid content, along with new articles each month, and some previously published in Tea Magazine. Subscribers have their choice of several different newsletters — for example, newsletters targeted to those interested in cooking with tea; Yoga and tea; tea travel and terroir.

    Chief Media Officer Graham Kilshaw
    Chief Media Officer Graham Kilshaw

    Subscribers will get at least three new feature articles a month, “…the articles will be accompanied by video, behind-the-scenes interviews and picture galleries, which is a lot more than we could do in print,” said Chief Media Officer Graham Kilshaw.

    Since acquiring the magazine in January 2012, “we have built the audience from just a couple of thousand to more than 30,000. Most of this growth has come from our digital platforms, and very little has come from our print media,” said Kilshaw.

    “We now see an opportunity to grow our audience significantly beyond its current 30,000 people – digitally. Consequently we are going to make several changes starting in May 2014,” he said.

    The 150-page book-style magazine, often referred to as a “bookazine” will have longer in-depth feature articles on science, geography and history and “great photography,” said Kilshaw. There will also be a catalog of tea products, said Kilshaw. The publication will be mailed to all subscribers and sold nationally in bookstores and by grocers including Whole Foods Market.

    Annual subscriptions are $24.99 and include the new $9.99 “Tea Magazine 2015 Tea Guide” mailed annually in September.
    Kilshaw was upbeat about the new direction which he described as “evolving from predominately print with a little bit of digital to becoming predominately digital with a little bit of print.”

    “This is all about aligning our goals and strategy with our resources. Producing the print magazine required us to spend 80 percent of our resources on 20 percent of the content. During the past 24 months print subscriptions increased by a couple of thousand while our digital audience has grown by five times,” he said.

    LOGO_TeaMagazine_400px“The change in the mix of media is driven by our readers,” said Kilshaw. “Print generally-speaking attracts an older demographic and we want to reach a broad audience. Younger tea drinkers are forming their tea habits now, experimenting widely and trying out lots of different teas. They represent the future customers of our media clients,” he said, adding , “We want to build a very large audience for the tea community.”

    The company expects to soon announce a new content manager to replace Kate Sullivan who left in December.

    Learn more: www.thedailytea.com

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    Dan Bolton

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  • Effective Strategies for Email Newsletters

    For many tea companies, the email newsletter has been a critical tool for communicating with and maintaining a relationship with customers. These documents promote products, share information about the company and its people, and more than anything, attempt to grab attention in a sea of inbox clutter.

    Electronic newsletters have, in many cases, replaced print mailers for a number of reasons. The first is cost. Electronic newsletters are significantly less expensive to produce than print and they can be sent to an unlimited number of customers. They are fast – instantly communicating time-sensitive information. They also provide you with a better way to track response. Analytical tools allow senders to see who is opening the document, how long he is reading for, and whether or not he clicked a link that resulted in a later sale.

    Remember, getting customers to read isn’t your real goal. You want them to read so that they can eventually be converted to customers. You should be thinking about how to use your newsletter to encourage people to share their information with you (name, address, email), to sign up to receive regular communications, to request information, and to share your information with others. You want to provide information that creates more educated customers. Share information about your products that encourages them to explore your product line and try something new. Get them to spend time on your website. Link! Link! Link!

    But how do you make sure that your email newsletter stands out from the crowd?

    • CONTENT IS KING. No matter what, you must focus on content. You need to prove that you are excited about what you do and that you are knowledgeable about tea.
    • Look at the newsletters you read. Why do you open them? Which ones do you like? Are you scanning for certain information when you look at them? What do you see in the subject line that makes you click in the first place.
    • Keep the subject line short, but with enough to make it something customers want to open.
    • Send it from an actual person who writes an introductory note, rather than a generic corporate email address.
    • The tone should be accessible and conversational. No lectures here and PLEASE check spelling and grammar. Use bullets and make it easy to skim.
    • Use images but keep them small and do not embed them. They should sit on your server and be linked to the newsletter with code. Otherwise the file will be too large for your readers.
    • Consider adding “extras” like video which helps your company feel accessible and personal
    • Establish an editorial calendar that plans out the information you will provide in a way that supports your business’s sales strategies.
    • Whenever possible, include a call to action.
    • Always end with an “About Us” so customers are sure they know who you are.

    In the future we’ll talk more about the actual content — what works and what doesn’t.

    What do you find brings the best response to your electronic newsletters?

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    Tea Biz serves a core audience of beverage professionals in the belief that insightful journalism informs business decision making. Tea Biz reports what matters along the entire supply chain, emphasizing trustworthy sources and sound market research while discarding fluff and ignoring puffery.

    Need help making your electronic newsletters shine? Tea Biz can provide new content or make recommendations on your existing publications. Click here for details or email [email protected].

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  • Service and Innovation

    Service and innovation differentiate tea retailers. At its core, specialty tea is a commodity since most blends use similarly sourced mid-grade green or black tea enhanced with ingredients and flavor.

    The lowest tier in the sector consists of tea-only blends that are bagged and retail for less than $300 a kilo. The entry point is $5 for 200 grams (equivalent to a 100 ct. box of 2-gram teabags) or $25 per kilo with many supermarket teas selling for $7 to $8 per box ($35-$40 per kilo). This tea costs $2 per kilo at origin and is blended with similarly priced teas for consistency. It costs $1 to ship a kilo to the U.S. and less than $1 to fill, tag and box 100 tea bags. Marketing established blends is a rising cost. Store-brand competitors pressure national brands but there will always be a place for bottom-shelf tagless tea bags selling around a nickel to a dime.

    The upper tier is loose leaf with fruit, spice and floral inclusions, pyramid bagged, gift boxed or in tins. A 25-gram pouch of specialty blend sells for $15, earning retailers $300 per kilo. Retailers get only 5-cents a tea bag selling Lipton but they sell a lot of Lipton. Nearly every home in the country has a nationally branded tea in the pantry. Fewer than one in ten are willing to pay $1 a tea bag for a foil-wrapped Tea Forté pyramid (with 4 to 6 grams of tea) but grocers selling Adagio, Rishi, Numi and Republic of Tea are getting $250 a kilo a ten-fold premium.

    The core component of these teas arrives in shipping containers warehoused and blended by a few gateway importers with entrenched (often family) supply chains originating in China, Taiwan, Japan, Sri Lanka, Kenya and India. Raw materials for blending are very similarly sourced and priced with tea often the least expensive component. There are an infinite number of blends and taste sensations but remarkably little variance in a warehouse stacked to the ceiling with four million pounds of tea.

    This is why service and innovation are critical to retail success. Service is the key point of differentiation. It begins with that first impression, the cold-call presentation that gives buyers a reason to believe that working with you as a wholesaler will benefit their business. There are often two or three wholesalers with identical price points pitching a retailer whose first concern must be to meet the needs (within limitations) of his or her customers. The fact that sales of these similar teas are growing is due to the nearly continuous introduction of new formulations and experimental blends and the presence of color, texture (chunks and leaves, not dust) and intense flavor (often added).

    This suggests the path forward is to innovate with taste and convenience foremost. Cultivate in those who show interest a more sophisticated appreciation of the profitable, highest quality teas. Tell the story, let them taste the tea. Repeat. Repeat. Repeat. Retailer and customer advance in step with sellers bringing ever-larger numbers of specialty tea drinkers into the tent where a growing percentage of newly-converted tea lovers share and spread the joy of discovery after readily paying the always-reasonable price for the pleasure of a fine cup of tea.

    LinkedIN: Share you thoughts on the importance of service and innovation.

    —- Dan Bolton

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    Dan Bolton

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  • Synchronized Real Time Tea Blending

    TEABIZ_NEWS_Equiplment_JamesMackness2_680px
    Motovotano Founder James J. Mackness, Seattle, Wash.

    SEATTLE, Wash. — Mixing tea ingredients is easy. Keeping them stable and evenly dispersed is not.

    “Inclusions” is the technical description for the flower petals and bits of fruits and nuts, rind shavings, spices, tiny peppers and candy added to modern tea blends. Sales of these specialty teas are brisk with marketing that invites consumers to constantly try new formulations.

    TEABIZ_NEWS_Equipment_Epanie_Inclusion_320px
    Example of a large, difficult to blend inclusion.

    Color and texture are critical to the appeal of these teas. New recipes increasingly call for odd shaped bits of botanicals of varying densities that make consistency a challenge.

    Take for example maple sugar flavored black tea, a hit here in the Great White North that eluded blenders for decades. On exiting a commercial “V” blender the mix seems well dispersed but the sugar quickly settles during the packaging process and in transit separates into a sticky dense layer of maple underlying tea with no maple taste.

    TEABIZ_NEWS_Equiplment_EpanieMachine_380pxSynchronizing combinations of precisely weighed ingredients during the bag-making process is a promising development by Epanie, a South Korean manufacturer of an innovative tea bagging machine. Motovotano, a Seattle firm founded by tea industry veteran James J. Mackness, is the first company to use the equipment in North America. The pyramid-style filling and bagging machine blends gourmet tea in real-time.

    The pyramid has established itself as the go-to format for high quality blends. But large inclusions such as flower buds that delight the eye are difficult to apportion. Improvements in its design by Epanie over existing pyramid and traditional filter paper sachets allows for larger tea leaves and for those leaves to unfurl and brew properly for superior taste. Bags can be made of nylon, non-woven commercially compostable or certified biodegradable materials.

    TEABIZ_NEWS_Equiplment_EpanieBin_380pxMotovotano’s Epanie Pyramid Teabag machine utilizes eight servo-motor controlled weigh bins holding either a single inclusion or pre-blended mix that can be flavored. In a recent demonstration Mackness first blended several ingredients with similar density and volume in a traditional V blender. He then placed this mix in the Epanie machine along with several difficult to handle inclusions such as Calendula flowers and a spice with an intense flavor profile. A control panel instructed scales to tip the precise weight into each bag before it was sealed.

    Click here for a video demonstration.

    Mackness showed how the machine lets formulators cup on the fly. Pausing production to drop a bag into a hot cup of water instantly revealed the color and infusion time and most important, the flavor imparted by the inclusions. After a sip, using a touch-screen panel he then adjusted the scales in the individual bins to deliver slightly more (or slightly less) of one or more ingredients.

    Digital touch screen controls.
    Digital touch screen controls.

    “Traditional tea bag production pulls from single batch blends, which does not produce as consistent or flavorful a product,” said Mackness. “The Epanie delivers a consistent flavor profile and uniform appearance because each ingredient of the blend is apportioned by weight into the bag,” he said. The 1200 pound machine will bag up to 85 pyramids per minute, each containing up to 20 grams of inclusions.

    Mackness said the machine is ideal for artisan tea blenders.

    Flying Bird Botanicals founder Scout Urling agrees. The small family-run business in Bellingham, Wash., has developed recipes based on ancient herbal knowledge and wisdom. Organic ingredients, many of which are large and odd-shaped, are sourced in the Pacific Northwest. “Our intent is to provide products of comfort, therapy and efficacy all while creating a delicious cup of tea,” said Urling. “The new tea bags allow for the convenience of bags and the efficacy of loose tea,” she said.

    Tasting formulation on the fly.
    Full of goodness.

    Motovotano promises to make the physics of blending tea less daunting and the process of creatively pairing tea and ingredients more fun. The company is seeking boutique teas, and restaurant, hospitality and grocery chains interested in private label product. Inland Packaging, Inc. is the manufacturer’s exclusive representative. To learn more about blending tea in real-time visit www.motovotano.com or email: [email protected].

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    Dan Bolton

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  • Investors Bet $1 Billion on Tea Retail

    Retail News

    LOS ANGELES, Calif. – Investments, mergers and acquisitions fueling tea retail during the past 18 months reached an unprecedented $1 billion.

    Remarkably, investments in coffee retail during this same period top $10 billion.

    LOGO-CoffeeBean&TeaLeaf_240pxThe latest move is a sizable (but undisclosed) investment in California-based Coffee Bean & Tea Leaf. The deal was disclosed Friday by a consortium led by private-equity firm Advent International in Boston and CDIB Capital (the overseas investment arm of Taiwan-based China Development Financial Holdings Corp.) along with Mirae Asset Private Equity, a Korean venture.

    The privately held Coffee Bean & Tea Leaf was founded in 1963 and has a large-scale tea blending facility in Camarillo, Calif. The company owns 178 stores and franchises 764 stores in 30 countries with 250 in Korea. It opened its first Asian store in 1996.

    Victor Sassoon and his brother Sunny remain significant shareholders, according to a Sept. 12 release.

    “Since 1996, we have worked very hard to build The Coffee Bean into the global and innovative company it has become today that touches the lives of millions of guests every week. The Coffee Bean & Tea Leaf® celebrates its 50th anniversary this year and we feel very blessed and excited to join our new partners in continuing to realize the Company’s significant potential as we look forward to the next 50 years of growth on all levels,” according to a joint statement by CBTL Executive Chairman Sunny Sassoon and Victor, who is CBTL CEO Asia.

    “The Coffee Bean is the largest independent global player in a dynamic industry,” said Jeff Case, a Principal at Advent International. “The coffee and tea market is poised for continued growth, driven by rising coffee consumption globally and an expanding middle class in Asia and other growing economies throughout the world. We believe this investment will serve to accelerate the brand’s development and market share and we look forward to working with the management team to accomplish that growth.”

    Will Kussell, a member of Advent’s Operating Partner program, will serve as Vice Chairman of The Coffee Bean Board of Directors. Kussell was previously president and chief brand officer of Dunkin’ Donuts Worldwide where he led the successful repositioning of the company as a coffee and bakery segment leader, increasing U.S. sales from just over $1 billion in 1994 to more than $5 billion in 2009. He also established an international growth strategy for Dunkin’ Donuts that led to a 60% sales increase from 2004 to 2009.

    CBTL President and Chief Executive Mel Elias told Nation’s Restaurant News “The brand was well accepted in Asia, in part because The Coffee Bean had long focused on premium tea in addition to coffee — offering a leg up in a part of the world that had yet to adopt coffee-drinking ways.

    The brand’s emphasis on tea will also be an advantage in the U.S., where consumer interest in tea is booming, Elias said. “When I started about 15 years ago, tea was about 4 percent of sales. Now it’s 15 percent, and it’s our fastest growing category,” he told NRN reporter Lisa Jennings.

    Coffee Retail Investments

    CBTL (Private) – $undisclosed – Advent International (Sept. 2013)
    Master Blenders 1753     (Public) – $9.8 billion – Joh. A. Benckiser Group (April 2013)
    Caribou Coffee     (Public) – $350 million – Joh. A. Benckiser Group (Jan. 2013)
    Peet’s Coffee & Tea     (Public) – $974 million Joh. A. Benckiser Group (July 2012)

    JAB paid $73.50 a share, a 29 percent premium for Peet’s in July 2012 and $16 per share for Caribou, a 30 percent premium. The company then paid $9.8 billion or $16.71 a share for DE Master Blenders 1753, the largest coffee acquisition in history. Illinois-based Sara Lee Corp. became Hillshire Brands last year, spinning off its international coffee and tea business in June 2012 to create DE Master Blenders 1753. The previous high was the $3 billion paid by JM Smucker Co. for the Folger’s coffee brand which it purchased from Procter & Gamble Co. in June 2008.

    Tea Retail Investments

    T2 (Private) – $80 million est. Unilever (Sept. 2013) – See Tea Biz T2 Post
    Teavana (Public) – $620 million Starbucks Coffee (Nov. 2012)
    DAVIDsTEA     (Private) – $14 million (April 2012)

    Tea represents at least 10 percent of sales at the coffee firms listed above with greater margin contribution than coffee. This means the Peet’s, CBTL and Caribou deals represent at least a $150 to $200 million investment in tea retail. Tea represents much less of the the Master Blenders portfolio includes Tea Forte and Pickwick Tea, a multi-million dollar brand with about 70 percent of the Dutch market and 12 percent of Europe’s tea sales. If you assume Unilever paid at least $80 million for Australia’s T2 the total investment in tea retail tops $1 billion. Unilever did not disclose what it paid for T2.

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    Dan Bolton

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