STiR coffee and tea magazine

22 STiR coffee and tea / Issue 3, 2018 (June / July) Finlay built its tea business to become the largest tea company in the world in the 1970s. It still owns estates in Sri Lanka, Argentina, and Kenya but sold off its Indian gardens in the early 1980s. It maintains production plants in England. Clearly, the lab investment that is expected to grow to $60 million is representative of trends toward new forms of integration: vertical in the tea business and laterally into other markets. A trigger for the lab and choice of location was Finlay's London parent firm acquiring Autocrat, the Rhode Island- based coffee extract and syrup producer that has been a leader in cold brew. The stated goal was to mesh Finlay in tea and Autocrat in coffee: "it made sense to bring the two fastest growing categories in beverages together." The move to integration will be extended in the second phase of the lab: the addition of advanced manufac- turing facilities. The innovations in flavors and beverages categories plus the U.S. FSMA (Food Safety Manage- ment Act) demand many new produc- tion, packaging, shipping and quality assurances innovations. The site of the lab is a major decommissioned U.S. Navy facility in Quonset, Rhode Island, where Autocrat is based. The Quonset Business Park has excellent shipping and road/rail transport infrastructures and provides a strong U.S. base for the British firm. R&d is not a term widely used in reference to tea: research, yes, product development, market development… The beverage r&d era seems likely to emerge rapidly. Jessica Vets New G.S. Haly c.o.o. Jessica Vets is the new operations chief at G.S. Haly Company, the California-based tea wholesaler and specialty tea importer. A company release states that "Jessica brings a wealth of business man- agement experience to her new position, having served in diverse management positions with a Puget Sound chamber of commerce, farmers markets, and consumer audio goods stores." Vets also worked in tea retail and with a B2B publisher of tea industry trend reports. Vets have a background in graphic design and marketing and holds an MBA from Seattle University. Vets said, "the opportunity to help steer one of America's most iconic and treasured specialty tea industry pioneers into its third century of operations is an extraordinary blessing and challenge I am exceedingly enthused about." VIETNAM Targets Tea Brand-building Both the domestic and export tea markets in Vietnam are marked by the same growing priority: branding. Though it's the fifth largest exporter of tea, the government focus on sales to bring in foreign exchange almost entirely ignored quality. Vietnam tea has a low image even though its smallholders produce some stunningly fine teas, often from wild trees. Exporters targeted markets that had loose requirements for pesticide levels in the tea, certification and safety. Price was the only issue and Vietnam sellers put strong pressure on farmers to force further cuts. 98% of Vietnam teas are shipped in 50 kilogram packs. The 2017 price was about two-thirds the world average. An undated published presenta- tion by the Vietnam Tea Association, probably around 2014, states that there are no export brands but that branding was "fast growing" in the domestic market, with "around more than 100 brands among 600 tea companies." When 5 out of every 6 companies are brandless, this positive interpretation seems more than dubious. A government initiative to establish "Cheviet" as the national tea brand seems to have meandered into oblivion. It viewed branding as marketing and labeling. Now, the industry is recognizing that branding begins with quality. In the domestic market, the bubble tea and broader milk tea markets have expanded at a very rapid rate in just the past three years. Packaging is excellent and quality high. Chatime, Ding Tea, Puc Long, and Toco Toco are expanding outlets, often via franchising. International brands are exploiting the opportunities in the main urban markets the main growth areas are the one-third of the nation's rural population. Japanese brands are strong and popular. In exports, the industry is learning that while it can sell mediocre tea, it can't brand it. Premiumization and branding go together. Government policy, financial support and training are being focused on quality. Japan has practically banned it. A worrying signal is the 2018 drop in sales to its main markets as they tighten standards. Pakistan, its largest customer, has cut imports by 29% in volume and 19% in value – i.e., the cheap stuff. The same pattern is apparent for Russia, China, and Taiwan. At the high end, there is a small but distinct trend towards branding regional specialty teas. One example is Shan Thuyet (Snow High Mountain tea) from the central provinces. This grows on wild trees, some up to 15 meters tall. It is processed to make green and black teas, often infused by lotus or jasmine. There is also a Silver Needle. Man Hao is a rebranding of a tea with a long lineage. It was exclusive to royalty and complex in its processing, being aged for up to four years. It is produced in the north. For each kilo of harvested tea leaf, a kilo of lots seeds, from 1,500 flowers, "embalm" the tea. These are easy to describe. They are stunning, complex, rich, and unusual. The adjectives are directly opposite those for the generic exports. Their branding is being driven by a small number of specialty sellers. One national U.S. seller markets an inexpensive and excellent Wild Black tea from the northern Ha Giang region, on the Chinese border. Distribution remains very small. For optimists, this recalls Nepal's teas, now gaining market presence through its Guranse and Ilam branding. Whether this is so or not, Vietnam teas must find a way to earn branding power. G.S. Haly c.o.o. Jessica Vets

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