STiR coffee and tea magazine

22 STiR coffee and tea / Issue 6, 2017 (December / January) million. Now expanding in the US it is being compared, favorably, to Avon and Pampered Chef. The c.e.o. describes the firm as a tea party company not a tea company. Is this a potential distribution channel for selling quality tea or an unsustainable "pyramid" model? The question is an open one and routinely asked and answered in articles and reviews. There a uniform agreement that it is a solid, well-managed firm, with high business ethics and a sound strategy and impres- sive revenue growth. The consultants do not pay up front fees or get rewarded by signing up more new ones. The main reported strengths of Steeped Tea are: • It builds on the social nature of tea gatherings, with women the primary market. • It has a strong and well-priced product line of a hundred whole leaf teas and accessories. • Its track record is strong: over 10 years of rapid growth, and sustained financial performance with no debt. Weaknesses mentioned in most reviews are: • There is a lack of training and marketing expertise among the consul- tants, many of whom will be able to tap their own social contacts but face challenges in expanding beyond them. • While commissions are high, the unit sales prices may not support the time commitment for many consultants. • Steeped Tea's priority in supporting its consultants has led to a policy of making them the customer ordering vehicle, with no consumer e-commerce access. CHINA Tea on Alibaba Alibaba is the largest e-commerce firm in the world. It is naturally compared to Amazon but is more like eBay in that its main base of growth is as a logistics platform for businesses to reach consumers. Its business-to-consumer Tmall has close to 400 million active customers. More and more tea companies are seeing it as a vehicle for gaining a presence in China's notoriously complex market. Examples include the negotiations by the Sri Lanka EDB to distribute Ceylon teas, Tata's contract- cost of chai from a street vendor). Meals are priced at $1.85 to $2 (INR120–180). Sushant Dash, Tata Global Bever- age's regional president for India, said "The plan is to open three kinds of formats—large -format cafés on highstreets, an abbreviated 700-square- foot format in highstreets and neighbor- hoods and kiosks in malls and IT parks." Eating out is on an upward trajec- tory, Dash said: "We want to be a part of this trend and through this pilot launch of Tata Cha want to test our model and feasibility. At the core of this venture is the motivation to enhance the appeal of tea and make it more vibrant for the newer consumer groups like the millennials. " "The menu is crafted to revive lost Indian recipes that blend warmth with a dash of youthfulness. This includes signature tea-based hot and cold beverages, traditional snacks, dunkers and meals with a twist," he said. Tata Global Beverages, the world's second-largest tea company, is based in Bengaluru, an affluent and fast-growing city with a vibrant coffee culture. Tata noted that more than 90% of the people of India regularly drink tea, which is available for as little as 15–20 cents on street corners and public transport. The $3.6 billion domestic tea market is growing by 3-4% annually, a sign of India's expanding middle class. Tata previously launched a chai retail concept in 2009 that failed. The small-format shops, essentially kiosks with limited food, closed within a year. The company release noted that based on the outcome of the pilot, "Tata Global Beverages will decide on future course of action for the out-of-home beverage space." Alibaba's first large-scale piloting of delivery by drone was for packets of tea shipped to 450 homes in three cities ing to sell Tetley tea bags, and the small British luxury brand, Whittard, using Tmall to highlight its "Britishness" in the Chinese market. Tata sees Alibaba as a key part of its strategy for targeting "white spaces," markets like China and Malaysia where it has no presence. "People [in China] are getting bored with that green tea and the hugely ritualistic aspect of making tea. In fact, they are now wanting tea bags, which is considered aspirational. The Britishness and expertise of our blenders are the two hooks that we will use in China." An industry commentator endorses "the 'British' and 'affordable luxury' angle as a good brand position- ing strategy." (Tata spokesperson) Whittard of Chelsea, the luxury tea, chocolate, and coffee firm, illustrates the strategic appeal of Alibaba's platform. Its analysis showed that Whittard had 200 resellers on Tmall drove a very large fraction of visits to its own website. Now, it sells direct with all physical fulfilment, payments and logistics handled technology, logistical support, and wholesaler and partner networks. An executive comments that the Alibaba opportunity is "insane" and asks why larger companies are still waiting. Waitrose has not waited. The supermar- ket chain sells its Earl Grey tea and digestive biscuits on Tmall. INDIA Tata Opens Tea Retail Shops Tata Global Beverages has opened four pilot cafes in Bengaluru (Bangalore). The larger 1,400-square-foot Tata Cha tea shops will be located on main streets while a smaller format store will open in neighborhood locations. The menu includes cold teas, milkshakes, dunkers, snacks and meals. Tea sells for 75 cents a cup (INR50, which is about triple the Tata Cha shop

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