is no weak sister
The specialty tea retail industry is a fraction of its coffee cousin, but it's coming on strong and has lots of potential.
BY PAN DEMETRAKAKES
T
ea is supposed to be a calming drink, but its growth potential has set some hearts pounding.
Joseph Simrany, president of the Tea Association of the
USA, estimates that there were maybe 200 teahouses in the U.S. 15 years ago—and upwards of 4,000 today. "If you look at the teashops, there's an explosion of
entrepreneurs, drawn by the profit potential," Simrany says. "Your cost of entry into this business is relatively low." Tea retailing still is a fraction of the coffee retailing, which
stands at about 25,000 outlets in the U.S. But tea's growth potential equals if not exceeds that of coffee, according to David De Candia, director of tea at Coffee Bean & Tea Leaf, a chain of about 750 stores based in Los Angeles. "There are different things that we've been trying out to cater
to that customer base, because they're definitely out there," De Candia says. "The growth in tea shops has been crazy." On the other hand, many tea shops have taken a recessionary
hit. Daniel Bolton, publisher/editor of the World Tea News newsletter (and former editor of this magazine), estimates that the recession has claimed between 300 and 600 tea shops. These were "mostly marginal operations earning less than $250,000"
12 | November 2011 • www.specialty-coffee.com
annually, Bolton wrote in an e-mail. "Attrition is much higher among independents than among chains & franchise." One complicating factor is the increasing presence of tea in the
two largest coffee chains, Starbucks and Caribou. As tea spreads in popularity and coffee shops expand their tea selections, they will tend to take business away from shops primarily devoted to tea. Bolton estimates that in some cases, coffeehouses with good tea offerings have taken up to $150,000 in business away from nearby teahouses. There are some shops where coexistence between coffee
and tea is built into the business model (see "Tea and coffee: Natural pair or odd couple?" on page 14). But for the most part, successful operations are the ones that take into account the differences between the two beverages. One of the biggest differences is in selection. When it
comes to variety, specialty tea dwarfs specialty coffee, says Bill Waddington, owner of tea supplier TeaSource. "The world of tea is so dramatically larger than the world of
specialty coffee," Waddington says. "Realistically, there's 40, 50, 60 kinds of coffee, if you're being generous. That's it. We carry 250 teas, and we're scratching the surface. And that's real teas, not even counting herbals."
