Teaconomics

L’Heure Gourmande by Adrian Scottow

Small tea business are like every other small business in the world. They face different challenges be it competitors, taxes, difficulties to find good suppliers… but they also have unique advantages in terms of their capacity to evolve, a peculiar relationship with their customers, the services they can provide.

This can be summarized in one sentence: small is beautiful but big is powerful.

One of the first decisions to make before launching a retail business (and tea is one of these) is what should be the focus or should I say the market for the future new company: should it try to provide everything (or nearly everything) or focus on a peculiar market (Japanese teas, home blended teas…)?

Some of you would object that this approach is quite academic and that usually people when starting a business don’t really know where they are heading or I would rather say, they don’t have a clear vision of what I just wrote about. They might have an unique expertise, some specific suppliers, a peculiar idea but for most of them (and I did write most of them), the idea is launching a business for different reasons.

This is exactly why I decided to write on this topic.

As usual, I won’t go too deeply in the topic as it is a mere introduction to something that I am sure has already been studied many times in different industries/fields.

What I want to do is provide a first look at these two alternatives and their pros and cons.

The “provide everything” approach as its name implies is a generalist approach which intents to give a little of something to everyone or to have every single need covered.

Table 1: Some pros and cons of a “provide everything” approach

The “focus, focus, focus” (the third focus being there to avoid any confusion with Hocus Pocus) approach is completely the opposite as it aims at being the best/only/… seller of a specific thing and be recognised for it.

Table 2: Some pros and cons of a “focus, focus, focus” approach

I think most of the pros and cons can be understood quite easily so I will only comment a little more on two of them.

The first one is the trend parts.

If a company is surfing on the wave of the health benefit of green teas and selling only these teas ; it will have troubles to use what was its main selling argument when this trend “dies”.

And if it has nothing else to promote its products, it might be in dire straits.

On the other side, if it sells several products, it will have no problems surviving the different trends that rise and fall.

Obviously this simplification doesn’t work if you are talking about a trend that has been around for so long that it is something normal to most people in an area or in the world.

The second one is the higher value of the products sold or the willingness of the customers to pay more.

When a company is focusing on a product or a line of products, people recognise its expertise (I made the hypothesis that this company is knowledgeable about what it is doing) and are eager to pay more (probably a little more) for its products.

Why? Because deep inside us, we know that expertise has a price and that this price is worth it when expertise and quality go together. How do we know if they do? The first answer is by trying but we are also willing to believe more in the product quality when it is sold by someone knowledgeable in a topic.

Don’t tell me that it is the same as a salesman selling vacuum cleaners or encyclopedias as it is not. These people are sales experts not real vacuum cleaners experts. The good ones could sell you anything.

This is how this post ends but I am sure I missed something. So don’t hesitate to comment/discuss/correct me…

Napoléon on Saint Helena

What? I forgot something? The Great Captains?

No they didn’t all drink tea but they give a lot of thoughts to this being everywhere vs. focus problem and as always in military things, there was never a clear answer as it depended on a lot of things.

«Any damn fool can put on a deal, but it takes genius, faith and perseverance to create a brand.»

David Ogilvy (1911-1999)

With such a quote to begin with, it is obvious that I can only speak of two things: deals or brands.

I hope your bets were on the second one as I will be talking about brand and the tea world.

According to the American Marketing Association Dictionary, brand is the “name, term, design, symbol, or any other feature that identifies one seller’s good or service as distinct from those of other sellers.”

But this is not all, a brand is also something else, it is a promise made to the buyer that he/she buys something special or solid or good or… and this is what we will be dealing with here.

A brand has :

1. some unique attributes (a brand is known for being expensive, cheap, long lasting…) ,

2. some unique advantages (this is the message behind each attribute),

3. some values (a brand is the mirror of the company that created it),

4. a culture (a Japanese brand is not at all like an American one),

5. a personality (what would you associate this brand with?),

6. some specific buyers (a brand is linked to a specific set of people that are expected to be suited for it).

As you might have guessed, this list comes from a marketing book I had as a student (Marketing Management by Kotler & Dubois, 9th Edition) but I just wrote it down there as a reminder of what a brand is.

Now you might ask me how does this relate to tea because we all drink teas and you don’t drink brands (although some of us only drink tea from one or several specific companies because they are who they are (isn’t this a brand thing?))

You can see it that way but I don’t think it is simple like that, otherwise why would some people only drink Darjeeling (you can write here Chinese, Taiwanese or any other tea producing country)? or teas from a specific estate? or only one kind of tea?

Let’s spend a little time on this example and don’t forget that all the things I write are my ideas not the truth.

What is a Darjeeling tea? According to the Tea Board of India and its Geographical Indication for this type of tea:

“the definition of Darjeeling Tea has been formulated to mean tea that:

• is cultivated, grown or produced in the 87 tea gardens in the defined geographic areas and which have been registered with the Tea Board;

• has been cultivated, grown or produced in one of the said 87 tea gardens;

• has been processed and manufactured in a factory located in the defined geographic area; and

• when tested by expert tea tasters, is determined to have the distinctive and naturally occurring organoleptic characteristics of taste, aroma and mouth feel, typical of tea cultivated, grown and produced in the region of Darjeeling, India.”

Source : Tea Board of India, http://teaboard.gov.in/inner1.asp?param_link_id=610&mem_link_name=About%20Darjeeling%20Tea

This definition is good but not enough to tell us if Darjeeling is a brand or not.

If we read it, we can summarize it into an unique set of attributes (quality, distinctive taste and aroma, grown in a specific place), advantages (you get a good deal for your money, you have a good tea, you can trace it to where it was grown) and values (the Champagne of tea).

To find the three other items, we have to think a little about the background of this tea.

Looking at its history and even its current organisation, it is easy to see that Darjeeling is a product of the British Empire. We now have the culture (a British Empire/British India one)

Based on all the previous lines, we can guess a personality (traditional, high quality, British), which helps us to define or to imagine what a specific customer for this tea might be (someone a little bit snobbish but still wanting a high quality product).

With this we managed to go through all the 6 items that makes something a brand and we can now say that Darjeeling is indeed a brand.

So next time you drink a tea, stop for a minute and see if your favourite tea country, type of tea or even estate would qualify as a brand.

And guess what? the answer could be yes.