by Lindsey Goodwin

The rapid expansion of the specialty coffee industry has inspired everything from awe to ire, leaving the tea industry split between hoping to see similar growth and shunning the idea of mega-chains. Lindsey Goodwin spoke with members of both the coffee and tea industries about the lessons the coffee world has to teach tea about growth.

“The Starbucks of tea”

Shelly Blanshei started Chico, Calif., coffee chain Bidwell Perk in 1996, when there were seven coffee shops in the area. She expanded to four locations and sold the business when the market became over-saturated in 2007.

She said several area Starbucks have closed since then. However, seven of the world’s 16,000-plus Starbucks remain among the 40-some coffee shops in Chico today.

Blanshei, now co-owner of T, Tea Bar and Fusion Café, thinks the inherent variety of tea culture will encourage a range of tea chains rather than a Starbucks of tea. Regardless of whether a primary powerhouse emerges, other sources said, several challenges could impede the rapid expansion of tea chains.

Bill Duffy, COO of Lone Star Bean (the independent Texas franchisee of The Coffee Bean and Tea Leaf), emphasized the importance of maintaining what he called the “integrity of the tea” and expanding at a rate that suits local communities.

Tea is not a commodity like coffee, added Eliot Jordan, director of tea at Peet’s Coffee & Tea, so there is potential for lags in quality during times of rapid expansion. However, he said, tea companies could avoid this by maintaining strong relationships with suppliers and pre-purchasing teas that meet quality specifications.

Coffee and tea together?

Many coffee businesses have had success with adding tea to their offerings. In fact, Jordan said, coffee shops commonly used to serve only coffee, but now a tea line is practically a necessity.

Duffy added that tea sales at his four locations make up 14 to 15 percent of the prepared drink sales, a number “on par” with other Coffee Bean & Tea Leaf franchisees.

This trend has left some in the tea industry concerned about their market share, especially now that Starbucks has added a full-leaf tea line to its menu. Blanshei said Starbucks could increase specialty tea consumption across America, just as it did with coffee in the 1990s.

In a move mirroring a coffee house strategy, some tea businesses have begun to offer coffee. However, sources agreed, this poses more problems for the tea than the coffee, in terms of aroma, ambiance and esteem.

Going mainstream

One of the undeniable successes of the coffee industry was its ability to reach mainstream America, which sources said was achieved through product quality and accessibility.

A major factor in specialty coffee’s success, according to Jordan, was the coffee market’s gap in quality levels. He said that before coffee’s rise, supermarket coffee was dominated by very few brands; severe price competition had left a hole for better quality coffee. Now, Jordan added, tea is in a similar position, with “two or three really large brands that have defined the market” and potential for a better quality brand to fill the gap.

Once coffee companies noticed the quality gap, they had to get consumers to notice it, too. Jordan said a “radical shift” happened when espresso-based beverages were Americanized and the coffee latté became the “signature drink” for many American coffee businesses.

Duffy sees a direct parallel here with tea. He said Lone Star Bean’s introduction of around 20 tea lattes encouraged customers to explore tea. Likewise, Jordan said, Peet’s “chai lattes” and other tea drinks are “very much an extension of the coffee drinks.”

Tea is a more versatile base for drinks than coffee, a trait Blanshei said she has taken advantage of in her menu, which includes tea lemonades, chai milkshakes, “tea on tap,” and “dessert teas” prepared with soy milk and other ingredients.

Sources emphasized that these drinks increase mass appeal by providing a comfortable entry point, just as Americanized espresso drinks did for coffee in the 1990s.

Blanshei said that early in her coffee career, she felt she was running a “mocha shop” rather than a coffee shop, but her customers’ tastes evolved toward unflavored coffee and espresso over time. Now, she said, about 70 percent of her drink sales are tea-based (rather than “pure tea”), but unsweetened iced teas and sparkling tea drinks encourage customers to brew loose tea at home.

Key differences

Despite the similarities between coffee and tea, several elements of success do not translate.

For instance, American’s understanding of tea is where it was with coffee in the 1990s, but tea education is “spotty” compared to coffee, Duffy said. Coffee Bean & Tea Leaf’s two-day employee tea training program increased tea sales by 2 percent “almost overnight,” he said, indicating the value of strong employee training programs utilized by much of the coffee industry.

Blanshei noted that optimal operating hours tend to differ for coffee and tea businesses. While tea is a relaxing ritual, she said, morning coffee is a necessity, so early hours benefit coffee businesses more than tea businesses. She added that coffee regulars appear daily like clockwork; tea regulars are less predictable.

Sources doubted that tea would see as many to-go sales as coffee, both because of need-based sales of coffee and the slower preparation of tea. However, Blanshei said, she sells a number of teas to go during her lunch rush, in part because her “tea on tap” can be prepared quickly.

Some businesses also make what Blanshei called the mistake of trying to pair “coffee foods” with tea. It’s important, sources said, to find foods that suit tea offerings.