Trends in the Wholesale and Retail Loose Leaf Tea Industry

The tea industry in the United Sates is a growth industry and the role of retailers or value added resellers has played an important part in the overall expansion. Value added resellers and retailers add significant value to the tea industry as they bundle tea offerings with quality dining and other services but they must be supported by comprehensive wholesale programs that are reliable , consistent and profitable.

What trends are driving the market?

In most countries in the world, tea is the second most popular beverage after water. The one exception is tea drinking in the United States. But the market for quality loose leaf tea has unlimited upside potential for tea drinkers in this country.

The market for high quality loose leaf tea is experiencing strong growth and this is expected to continue for the foreseeable future. The growth of revenue and profits in the value added retail sector of the market is also very strong particularly when tea is prepared and presented as a part of a total offering in tea rooms, fine dining establishments and hotels.

There are a number of factors influencing this growth in loose leaf tea demand:


The incredible good taste of tea and blends.
The health benefits of tea.
The wide variety of tea flavors and blends.
A growing awareness about the enjoyment benefits of loose leaf tea .
An expansion of the value added reseller network for quality loose tea.
Many consumers are looking for an alternative to coffee as a hot or iced drink of choice.
Consumers are tired of the "tea bag mentality" where the taste and quality of tea is sacrificed for the convenience of the tea bag.

Because of a number of historic factors like the American Revolution and other socio-economic events, the market for loose leaf teas was stalled for over two centuries in the United States but that is changing dramatically and rapid growth is now a fact.

What is the biggest mistake retailers make in regards to their tea program?


The biggest mistake that retailers make is the failure to prepare and present tea properly.

Quality tea, served either hot or iced, is a wonderful discriminator for any restaurant, tea room or hotel. Quality, loose leaf tea on the menu of a high quality food establishment will separate the retailer from the competition.

Quality tea can also serve as a profit center for the retailer as consumers are willing to pay extra for a quality cup of hot tea or glass of quality iced tea.

Many resellers however, have not focused on the value that tea can bring to their Unique Selling Proposition. Through oversight in the tea offering, many consumers are left with lower levels of satisfaction and this is adversely affecting retailers and their overall product offering.

For consumers, there is nothing more deflating for the total dining experience than a bad cup of tea, offered without consideration to the consumer. At the close of an otherwise ideal meal experience costing in excess of $100.00 per person, customer satisfaction can be ruined by simple oversight. This happens time and again as tea drinkers, expecting a quality brew are slighted by a saucer with tea bags mixed with a cup or bowl of warm tap water.

Ending a meal this way is a good way to loose customers to the competition.

Advice to retailers to maximize their tea program


High quality loose leaf tea can play an important part in a retailer's business. As the demand for quality loose leaf tea expands, retailers should :


Understand the tea culture and the role of tea in growing your business
Use only the highest quality loose leaf tea
Train your staff to prepare and present both hot and iced tea in a quality manner.
Offer the customer the best tea ware (tea infusers and pots) to complete the presentation.
Include quality tea as part of you Unique Value Proposition and product/service offering.

Things to keep in mind for new retailers


The most important thing is to deal with a tea manufacturer that offers a total benefit program to the retailer including:


Highest quality, best tasting tea backed up by superior packaging and a no questions asked guarantee of quality.
Dedicated customer support with staff knowledgeable about tea and the tea business (not just taking orders)
Multiple-tier wholesale pricing. with volume based discounts.
Easy ordering and order lookup
Unlimited shipping locations per order.
Single point of billing for multiple locations
Automatic recall of locations and recipients.

Value added tea resellers and retailers add significantly to the tea industry but they also need quality wholesale programs to support their value added efforts. Retailers should seek out the best tea suppliers that meet their value added requirements.

Jon M. Stout is Chairman of the Golden Moon Tea Company. For more information about tea, wholesale tea and black tea go to goldenmoontea.com

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History of Tea - Taxes and Smuggling in 18th Century England

Since its introduction into the Western world, tea has grown in popularity and is now the second most popular beverage in the world after water. Throughout its history tea demand has dramatically increased as a result of its good taste, health and medicinal properties and increasingly efficient channels of production and distribution.

Perhaps the most important benefit for the consummate tea drinker is the aura of good feeling and stress reduction.

Tea production and distribution became big business throughout the world as enterprising individuals and companies invested in tea plantations and distribution assets to meet the growing demand for tea. As the business expanded, national governments began to view tea as a valuable source of revenue. Government regulation and taxation often had a detrimental effect on free commerce and customer satisfaction however.

The popularity growth of tea in a country such as England, a country whose tea culture is well established, provides for a viable case study on the social and fiscal influences on the consumption of tea.

During the sixteenth century in England, tea became a popular beverage mainly for the upper classes. Based on a unique taste and realization of tea health benefits, more efficient channels of distribution opened. Although the imports were initially slow, a growing understanding of the lifestyle benefits of tea accelerated this growth into the 18th century.

During this time, taxation, smuggling and adulteration of tea became significant factors in the English tea culture.

Considering tea a tropical luxury, the English government saw revenue-raising opportunities in tea to fund a military buildup that supported expansion of the British Empire. By the 18th Century, tea was a hugely popular drink in Britain but, to the everyday consumer, it was also prohibitively expensive. Tea smuggling became a growth industry in England as smugglers profited as they met the demand for lower cost tea by ignoring oppressive customs duties.

This created a demand among the British population for cheaper tea; when that demand could not be met by legal means, a great opportunity was presented to those people who were less than concerned about breaking the law. From the beginning of the 18th Century, the trade in smuggled tea flourished.

Smuggled tea was that which was brought into the country illegally - it was not imported by the East India Company and it did not pass through customs. Being light and easy to transport, tea was a very profitable smuggling commodity - even more so than alcohol in which there was also a healthy smuggling trade.

The State Needs Money

Like any state, 18th Century England was no exception to the need to raise revenue. Mercantilism was the English policy and a military presence was required to support the English role in overseas colonies and possessions. Expansion of world interests requires two things: a strong military and funds to support military activities.

The state sought to import duties and excise taxes as a way to raise the necessary funds; these taxes soon became excessive. The Government had to legitimize the tax and did so by treating tea initially as a "luxury" that could support high duties in the eyes of the public. Later, however, tea was correctly classified as a "necessity" that would only support lower levels of taxation. Before the Tax Reform Act of 1784 for example, the price of tea was burdened with taxes and duties of over 100% of the pretax price.

In addition, although the supply of tea continued to increase as tea plantations became more productive, the price remained high as the East India Company (granted a monopoly on tea imports by the English Government) artificially manipulated supplies to maintain prices.

High Taxes and Manipulated Supply Lead to Smuggling as a Growth Industry

A pattern developed in English commerce in tea. As taxes were raised on tea imports, smuggling increased in a successful attempt to meet the underlying growth in demand. But smuggling and high taxes had a direct relationship and produced a negative effect on the English economy and population at large.

Although taxation is important for raising revenue, most economists acknowledged that high taxation encouraged smuggling and also that the quantity of tea being smuggled was directly linked to the level of duty levied on legal tea imports. In England, at the beginning of the 18th Century, the government's need to finance a war in Spain led to an increase in taxation on tea and the price of leaves rose dramatically.

The tax was deemed outrageous and fueled the activities of the tea smugglers. Duty was later slashed by Henry Pelham in 1745, which meant that more tea was legally imported; the quantity passing through customs more than doubled and the increase of tea imports on which duty was paid actually led to the government's revenues from tea being increased.

However, in the 1750s, the need to finance another war led to another increase of the duty on tea. This, in turn, led to a surge in the business of the smugglers, which continued to thrive throughout the third quarter of the 18th Century.

Though illegal, the smugglers had the support of millions of people who could not otherwise afford to buy tea.

A great deal of tea was smuggled in from continental Europe, shipped into Britain via the Channel Islands and the Isle of Man. Although smuggling was widespread, in the first decades of the 18th Century many of the smugglers themselves operated on a very small scale. Scores of smugglers used their own small boats in which the contraband tea was then sold to personal contacts and local shopkeepers. Smuggling became a cottage industry.

It was, by now, widely acknowledged that the only way to tackle the smuggling problem was to make tea cheaper - in effect, to reduce the duty paid on it. Therefore, the East India Company, who had powerful allies in the British Parliament, lobbied for the duty to be lowered. The power of the corporate world was thus added to popular demand for permanent change in the tea tax.

It was when William Pitt the Younger became Prime Minister in 1783 that the work of the anti-tea duty forces finally achieved their goal. As a former Chancellor of the Exchequer, Pitt was familiar with tax policy and the impact of high taxes on tax revenue. He understood that raising the tax rate often resulted in decreased tax revenue.

Pitt slashed the tax on tea and made up for the revenue lost by hugely increasing the window tax, which was a property tax much easier to enforce. The Commutation Act of 1784 reduced the tax on tea from 119% to 12.5%. Tea smuggling ceased to be profitable and the smuggling trade vanished virtually overnight. More importantly, tea was treated as a necessity rather than a luxury with long term implications for lower tea taxes.

The consumption of lower taxed tea greatly intensified, so much so that even with the reduced rate of tax, the amount of revenue collected from tea was soon restored and eventually exceeded pre-reduction revenue. Equally important, tea became the standard beverage for the greater majority of the English population.

Ultimately, tea drinkers had the window tax to thank for the popularity boost of their favorite beverage!

Jon M. Stout is the Chairman of the Golden Moon Tea Company. Golden Moon Tea carefully selects the finest rare and orthodox teas, which are processed slowly and handcrafted with extreme care. At their website, you can learn more about their current tea offerings, including their exceptional green tea, white tea, black tea, oolong tea (also known as wu-long and wu long tea) and chai. Visit goldenmoontea.com for all details concerning the Golden Moon Tea Company's fine line of teas.

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The Future for Loose Leaf Tea and Tea Rooms

The new American tea culture places high value on stress reduction (perhaps partially attributable to the relaxing properties of L-Theanine--a natural amino compound occurring in tea), product purity and exotic teaware and other brewing accessories (the after-market for tea accoutrements is substantial compared to espresso-based drinks).

Until the boom in Ready To Drink teas (circa 1990-95) made tea drinking simultaneously easy , fashionable with colorful and appealing packaging, and healthy (a no/low calorie, antioxidant-rich alternative to carbonated beverages), tea sales in America were sleepy at best. Annual retail sales had not reached $1 billion prior to 1990 and tea producers were simply uninspired.

Snapple, Arizona Iced Tea and a handful of other specialty Ready To Drink teas catapulted the entire loose leaf tea category into double-digit growth while whetting appetites on Wall Street.

Increasing interest from America's 76 million baby boomers just beginning to embrace tea as a health-promoting product for the entire family is laying a solid base for loose leaf tea.

This exceptionally health-conscious demographic is starting to explore loose leaf tea culture through brewed tea beverages, tea-based skincare products and neighborhood cafés offering exotic teas.

The consumer product dollars available for loose leaf tea purchases within the U.S. over the next decade will be significant

This stellar consumer interest in tea is being driven by scientific findings linking tea consumption and improved health and a seemingly endless wave of favorable media coverage. Novel blended flavors and convenient packaging may be securing American consumers attracted to loose leaf tea, but news of the health promoting benefits afforded by regular tea consumption is the number one market driver.

Researchers have released survey data indicating heavy frequency consumers of herbal and hot teas spend more on healthy and natural products than the general population or coffee drinkers.

This is yet another indication of the emerging demographic pursuing loose leaf tea within the nation's hottest spot for loose leaf tea sales--natural foods retail outlets.

Finally. As the demand for loose lea tea grows, customers will also demand pleasant and wholesome surroundings to better enjoy the tea experience.

The tea room business, as a result, has a very strong growth path and a bright future.

Jon M. Stout is Chairman of the Board of Golden Moon Tea a division of Element H2O. Golden Moon Tea is a supplier of high quality loose leaf tea and high quality tea ware. Golden Moon Tea’s website is found at http://www.Goldenmoontea.com

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