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My kingdom for a horse! Or rather an island for a tea!

Obviously, Richard III had no clue about tea otherwise he would never had asked for a horse.

In my case, I asked for tea but since I am no king, I only offered an island, the island of Sylt.

For those of you that are not German or Danish, I know I need to explain a little some things and I hope that the Germans and Danish that read the next few lines will accept my apologies for stating obvious or known things.

However, in either cases I won’t bother you with a tourist guide to Sylt.

 

Sylt is a Frisian island north of Germany and only a couple of kilometres (if these are kilometres) away from Denmark.

Its size shrink every year but they seemed to have been able to stop the process by bringing in sand, which according to what I heard was a highly controversial move.

It is the German equivalent to Saint-Tropez (without the ships or I missed them) because a lot of wealthy and famous people have houses there.

My trip was not tea oriented but the guide spoke about several tea places (one to drink and 3-4 to buy good tea) and I managed to find them and much more.

See the pictures below for the much more (a huge buy and drink tea shop/salon) but don’t ask me anything about this place since I was there on a Saturday at 14h00 and exceptionally they had decided to close earlier.

The previous lines were just an appetizer for one of our fellow Teatreaders to one day go to Sylt and make us a full report.

As I said the trip was not tea oriented but I had high expectations.

Why?

Because in Germany, the Frisian Islands are known to be the place where people drink tea.

They even have their own tea ceremony, with cream and rock candies (for anyone going there, don’t forget to put the spoon in the cup but only after you drink the third one).

Since I am always eager to understand things that are non-logical at first sight, I asked people in a tea store why were the Frisian Islands so famous in Germany for their tea.

 The answer is that one day, a ship came to England with tea but it had to go through a storm and the tea ended all mixed up since everything was broken but the teas were still dry.

When the ship arrived, the English didn’t want it since it didn’t suit their peculiar drinking habits.

So here they were with a ship full of tea but no one eager to buy it.

This is when a “nice” Frisian merchant (I don’t know why but merchants are always nice fellows in these stories) who was there said that he would buy it and the ship was sent to the Frisian Islands. It seems that people there liked it so much, they rationalised the all thing (after all, you cannot make your favourite drink rely on the weather, such an unreliable thing) and perfected it to make the now famous (at least in Germany) Frisian Blend

A nice story, no?

However the truth might be a little different.

Frisian are not far from the Netherlands (Frisian is also a region in the Netherlands) and since they speak more or less a close language (at least at that time) and were good sailors, they were quite often recruited by the Dutch East India Company to sail on their ships.

Since every sailor was doing a little bit of trade for himself, it is no wonder that tea came to the Frisian Islands, probably first as a drug but helped by the Church it quickly grew in popularity and managed to become the number one drink before beer.

This upset Prussia, which had become the owner of East Frisian (as this part of the country is known) in 1744 and in 1778, they tried to ban it but failed and two years later, they had to lift the law.

You will ask why were they so upset?

To understand it, you have to remember that at that time, Frederick II was King of Prussia and trying to “modernise” Prussia, which for that time meant that the economical theory they applied was mercantilism (http://en.wikipedia.org/wiki/Mercantilism) or in other a bit too simplistic words “don’t let my gold go in the other countries and force them to bring their in mine .”

The Frisian love of tea meant a “huge” trade deficit with the Netherlands and good old gold coins going there instead of staying in Prussia.

This was not the last time that mainland Germany had to do something for the Frisian Islands and their love of tea as during World War II, they were allowed a bigger amount of tea per day than the rest of the country.

Is this more logical than the nice tale I told you a few lines above? Yes but since I could not find any peculiar reason behind the famous Frisian blend, I think both explanations go together rather well. Mine for the reason behind tea in the Frisian Islands and the other for the blend.

If you ever find a better explanation for it, just let me know and I might send you a pack of Frisian Mischung.

 

Category: History, Market  7 Comments

The (Tea)World is a village

TeaWorld Rendez-vous ©
I had read this name on the Internet but that was all as I had thought “this is probably another American thing, where I will never be able to go.”
But I saw something on several tea blogs that got me interested as I figured out it was in Brussels not too far away from where I live.

So here I was on Saturday, May 5th at Tours & Taxis, a former marshalling yard and import/export hall
The event was hosted in several big white tents and I managed to park nearly in front of the entrance (probably because I was there early in spite of my GPS having troubles to find its way in the tunnels).

After paying my ticket, I received a nice small cup as ticket and to taste what the different companies had to offer.

First halt for Hennessy/Theodor but the tea wasn’t ready yet (remember I was there early) and I am not into cognac, even when it is mixed with tea.

The next stop was for an unknown to me Swiss brand of kettles and such, Solis. I probably would not have stopped by them if I hadn’t seen my “magical” kettle there and heard the sellers saying it was new in Belgium.
I spoke with them and found out that they had just received it and I told them about tea, this product, how I was satisfied, how it worked…
I even tasted their first test (not the best tea made by this kettle) and gave them the name of the brands in France and in the USA that sell this product.

A nice lady then stopped me and said that they were offering a special discount on mint green tea.
I said “Thank you but I don’t like mint.”
She offered me to come back 15 minutes later to see a tea master preparing a “state of the art” tea.
Unfortunately, I didn’t make it back in time (too many things to see and too many people to talk to).

I then went to the tea bags corner (I know @thedevotea but I had to go through it) and found pyramidal and square tea bags, with more room than in a normal one.
I had read about both of them but I wasn’t really convinced.
What was more interesting in Lu Lin Teas was their boxes (and trials sessions) of Chinese teas and even more their small 9 loose leaf tea samples boxes

I then discovered African teas from Rwanda and Burundi.
Both ladies were quite informative on the tea, how it was produced and processed.
I tasted teas from both countries and I prefer the ones from Rwanda as they were not as harsh as the one from Burundi but perhaps they were better prepared.

I then stumbled upon a Korean company proposing herbal teas with medicine virtues (not my cup of tea) and a Japanese stand where I tasted two Japanese green teas made in the traditional way.
Speaking of the Japanese, I also witnessed a Japanese tea ceremony and then tasted a Chinese Jasmine tea.
Unfortunately, the Vietnamese were not there but I picked some papers they had left.

At that time, I was glad to have learned Spanish as I was in the Argentinian part of the salon and I talked with a nice lady selling tea bagging machines (now I know how it works), people from the Ministry of the Mission Regions (the former Jesuit Missions where they grow all kind of food stuffs including tea), someone from an Argentinian tea estate.
I tasted their green tea and I think they are probably still too much tea bags oriented but let’s give them some time and I am sure we might be surprised by what they do.

I then got back to the entrance and Theodor where a really nice and distinguished gentleman talked to me about Theodor.
He was quite knowledgeable about his company, where I could find their teas and he even listened to me speaking about how I select the teas I buy (me and my strange “tea-ories”).
I was even more pleased when I found myself speaking 5-10 minutes with Guillaume Leleu about teas.

After that I had to pay a visit to some relatives so I left the TeaWorld Rendez-vous©.
I didn’t buy anything but I was happy to have met people and  to have discovered new things.
In the end, this is what tea is all about.

Category: Industry  8 Comments

“Why is a raven like a writing desk?” or how to be surprised in a well-known shop

I guess that at this point in time, @peter is probably wondering what I am doing and why I needed to tease him.

To be honest, this reminds me a story about Hatta and Haiga when they were drinking tea together and wondering “Why is a raven like a writing desk?”

Right now, half of you are thinking I have given up trying to resist our mad side and the other half (the more gentle) will think I have been cut out of my tea supplies for too long.

Both half are wrong. For the first half, I just intent to show that out of crazy and erratic things, good things can come. And for the second half, just look below.

 My teas

Let’s get back on tracks.

10 days ago, I was at my parents’ place for a birthday (a round one but I won’t tell which one) and I was sent to do some shopping in a supermarket near their house.

I was near the fruits and vegetables when suddenly something seemed out of place…

 Vrac Auchan

Yes, this.

A “take it yourself” space full of coffee, spices and … teas.

You read it right, teas sold in bulk and that you can smell, see,…

I thought “Peter, where are you hiding? Do you work for a French company?”

I went there and looked at it, I even took several pictures and was asked by a member of the staff not to do so as it was forbidden.

Like the good boy that I am, I listened to her but I can still tell you what they were selling :

Fruits and flowers black tea (Chinese tea), Red fruits green tea (Chinese tea), Citrus and passion fruit green tea (Chinese tea), 2 Infusions, Red fruits black tea (Chinese tea), Tchai tea (Chinese tea), Sencha (Chinese tea), Earl Grey (Chinese tea), English Breakfast (Ceylon and Indian teas), Darjeeling (Indian teas), Ceylon BOP (Ceylon teas), Mint green tea (Chinese teas)

There were no other indications like gardens, provinces… but what I can tell you is that they were not expensive at all.

Since I wanted to show you something but couldn’t (I only have one word), I decided to send a message to their Customer Service requesting pictures and asking for more information.

They answered rather quickly and here is what they wrote (don’t worry, I translated it).

Auchan wants to sell more and more discount products while protecting the natural environment. To do so, we are always looking for new solutions.

This is why we are testing in this shop a compete range of food products of quality but sold in “bulk.” Some products are pleasure products. But quite often, they are those we don’t buy on a daily basis (too expensive, not needed).

Our idea behind this new range of products? To allow our customers to have them but to let them decide on the volume or the quantity).”

I don’t know if they will test it in another supermarket or diversify their suppliers but I will follow this test and see what happens.

I didn’t buy anything yet but next time, I will (I need to check the quality and support “good” ideas.

Category: Market  8 Comments

You will get lost but one day you will thank me

What a strange title, no? But I do think that you will understand what I meant before the end of this post.

Call me a magician but I know what your deepest dream is: you all dream of owning and operating a tea plantation.

Can you imagine the joy of drinking your own production?

However I am no magician but someone interested in tea, figures and facts. Therefore you can imagine how happy I was when I found online a paper called “Rapid estimation of the minimum size of a tea project” (Guinard André. Evaluation rapide de la dimension minimum d’un projet de production de thé. In: Économie rurale. N°87, 1971. pp. 67-71. http://www.persee.fr/web/revues/home/prescript/article/ecoru_0013-0559_1971_num_87_1_2137).

Unfortunately, it is in French and it was written 40 years ago.

But I am here to help you and I am not sure but I thought that perhaps what was true 40 years ago is still true today.

My only fear is that it might become too complex but we will see.

The first thing to understand is that this estimation is based on the profitability criteria, which for the author means finding out what is the minimal size which minimises fixed costs per unit of production.

Why does he want to do that?

Easy. Fixed costs are business expenses that are not dependent on the level of goods or services produced by the business (source: http://en.wikipedia.org/wiki/Fixed_cost); so the lower they are per unit produced, the higher the profit is for each sale.

Why did he use them and not other direct production factors (capital, work force, land…)?

Simple, because it takes so much time to “create” a plantation that the optimal use of these direct factors is too far away to be of any interest here.

The author decided to focus on the factory as even if it is not the most costly part of the process (20 to 30% of the investments and total price of the project), it is one where the fixed costs are the most important (50% of the fabrication costs).

 

Here comes the tricky part.

The total daily capacity of the factory is equal to the number of production lines available multiplied by their hourly production capacity and the maximum operational hours per day.

But how do you find what is the needed daily capacity? It is quite simple; the factory needs to be able to deal with the maximal daily production of the plantation, which is function of the maximum production by hectare multiplied by the number of hectares.

This means that the size of the plantation must be equal to the total capacity of the factory divided by the maximum production by hectare.

Let me guess. You are lost, aren’t you.

The only important thing to know is that if you ever get your hands on the perfect piece of land to create your own tea plantation, you will have everything you need to decide how to optimize it.

Category: Industry, Theory  14 Comments

The other side of the coin, or double speak of the tea pseudo-worldy ?

This is not something I wrote but the translation in English (thanks to @jackie and @lahikmajoe for proof reading it) of a post made by Guillaume Leleu, the owner and founder of the French tea company Theodor (www.theodor.fr), on Monblogdethé (www.monblogdethe.fr).

The original post was in French and in it, Guillaume Leleu speaks about flavoured teas.

But I will let the stage to the maestro himself.

This is about tea. Tea? Yes, so much talk about what one claims to know. Success? Reputation? Respect? Dare I believe that all of this is only pure jealousy?

Why do I find it hard to believe that this is a subject where people speak frankly, objectively and without ulterior motives, or nasty intentions? Because if I were wrong, at least, we would open up a debate. Public or not, it would allow the exchange of ideas.

But this cannot happen, as long as the narrow-mindedness of some, the meanness of their comments, their lack of arguments are not publicly exposed.

To have the courage to voice their opinions, and to speak out against those of others, are acts of chivalry, something of another time, nothing more than a dream today.

So be it, but let’s use the same weapons of treachery and hypocrisy that our friends use. Let’s say things out loud without naming anyone, the evil of what is left unsaid.

I have rarely seen as many articles, posts, memos as I do today, lamenting all the wrongs of flavoured tea, how it infringes on on the “holy drink”, the only tea worth our attention; unflavoured and single origin tea. A term used by pseudo experts, not marketing driven at all, of course, not what were you thinking?

So, flavoured teas are just a way of “marketing teas of unbearable taste… that stink… without body .. of mediocre quality… with “cheap” flavours”… only worth “cooking with”… “… to make things easy and profitable for tea merchants.”… “pulling the wool over your eyes” … and one should never “stoop so low as to consume such improper drinks.” As to those “poor fools” who consume, purchase and enjoy them I shall not repeat the comments made – one more glorious than the other – about these likely uneducated, uncultured, and ill-mannered people.

These opinions would not be problematic if they were well, just simply opinions, points of views open to contradictory response, leaving room for doubt, or recognizing difference. Rather they are verdicts in a rigged trial where guilt is proclaimed before the proceedings even begin.

Instead the remarks reek of intolerance beyond what education and good breeding allow. They are abusive, petty, mean, proof of a total lack of courage, and audacity. It is my duty not to remain silent, and I must restore a little bit of respect to this much maligned flavoured tea.

Of course this problem isn’t new. Wanting to create a scale of values in this righteous world, to establish a noble lineage – more noble than others, to boast about privilege has always been the joy of the pseudo intellectual bourgeoisie. Better value yourself, rather than wait for others to do so, especially if you know how little you are worth. It is easier to pretend to be, than simply be.

So is flavoured tea a “second league” tea?

You will have understood that according to some: YES, or even a third or fourth league one.
In my humble opinion as small creator of such blends, but also as a mere consumer: NO and far from it.

Flavoured tea is one of the many facets of tea and always has been. It is one aspect, alongside the gardens, varieties, and methods that make up tea to the most noble degree. It is an integral part of the drink and merits the same recognition as a Dan Cong, a Darjeeling or an Oolong from Taiwan.

Lu Yu would turn in his grave if he knew of this stance that perpetually questions the value of flavoured tea. Because it goes against the whole philosophy behind tea. Tea is the drink of hospitality, of welcome, it is the drink of the poor and also the rich. It is the drink with more than a thousand and one faces.

Tea is the ambassador of tolerance, of respect, of cultural encounters and exchange.

There isn’t, and there never was a degree of nobility in a cup of tea. It is a drink, and the harmful Western way of assigning degrees of value to man should not be applied to tea.

Personally, I drink more pure tea than flavoured teas because I enjoy the widely variable characteristics of the former. Does this give me the right to judge or shun my neighbour? Does this give me authority to pretentiously dismiss those who do not share my tastes?

After all, this is nothing but a matter of taste, not of finesse, elegance, nor even the spirit of taste but one of egotistical self appreciation, of loving what one loves.

Flavoured tea, not only the teas I create are nothing but nature meeting nature, one plant “Camelia” mixed with other plants, be they fruits, flowers, spices. How is this less noble than a single origin tea? I don’t know.

Do these critics ever cook? Do they only eat their tomatoes plain, without vinegar, salt, pepper? Don’t they cook their meat or their fish? Do they eat everything raw?

Is creating a flavoured tea a diabolical act where you alter what is most noble? Does this make me guilty of sorcery? Am I committing the unforgivable in wanting to create a cookie flavored tea – to the point where comments, one more flattering than the next such as “”marketing tea… that stinks… without body…” are applied?

IF this is the case, I am lucky that I was not the first. Poor Chinese, Arabs, Indians and other devils who showed me the way! Oh no, I forgot, a Chinese flavoured tea is as noble as a tea flavoured in France yes, yes I assure you. Probably the lineage

When Hennessy requests my expertise to match its “fine de Cognac” with tea, to create a new drink, is that wrong?

But my God, Chanel dyes the cotton and the linen it uses to make its most beautiful dresses! Hermès mixes leather and zamak, that it uses as clasps for its handbags. I ask myself what is the world is coming to?

I had hoped that 2012 would allow us to focus on the most important values in life: sharing, respect, self-sacrifice. It is a waste and I am truly saddened when I see myself having to write this letter to respond to poor comments.

What reassures me, however, is that in our modern world, most tea consumers don’t listen to such rhetoric. They don’t impose their tastes on others by presenting them as the only way, thus claiming the monopoly on wisdom. . How many tea lovers have I known who discovered the flavour of Puer thanks to flavoured teas? And let’s dare ask, would we find pure tea today if flavoured tea wasn’t sold? I can assure you the answer is NO.

My morning tea is a Souchon, my daily tea is quite often an Oolong, or a wonderful Japanese green tea. I must confess that I like the multiple and complex notes of a plain tea… but those aside, I am always eager to taste the elegance, the surprise and the pleasure of the floral, spicy or greedy notes of a cup of flavoured tea. There is one thing that is true: I do not prepare it following the Gong Fu Cha and I suggest those who prepare a flavoured tea in such a manner, should refer back to their pseudo expert – as for their information – this ceremony is reserved for Wulongs.

To conclude, these are the same people who, with their double speak of flattery and hypocrisy, call the company I have the honour to have founded “the best company” for flavoured tea, “renowned for its blends.” This permits them to infer politely that at Theodor you’ll only find third rate teas.”

So, Ladies and Gentlemen, you the self-righteous of the tea world, worldly in another world, it is with pride and unconcealed joy I inform you that I serve my creations and blends to thousands of tea lovers every day.

Understand that our blends are highly respected and accompany the meals in the best restaurants of the world, as well as those in simple establishments. It is with dignity that I strive to maintain the glorious title you have bestowed upon us. And if you permit me to give you one last piece of advice – because unlike you the company I represent does not practice discrimination: You will also find some of the finest selections of teas that the world and nature offer us, through the gardens, the plantations and the people. It is up to you to find merit in this aspect of tea. However, in order to do so you will need to become a little more open-minded.

Long live the mixed, the melting pot, and diversity. Here’s to a long and peaceful life to pure tea, flavoured tea, smoked tea, and all the other wonderful plants, flowers, and fruit infusions that bring sensory pleasure and smiles into our cups and glasses every day.

Guillaume Leleu

Category: Industry, Market  8 Comments

“Café du Commerce” and tea

Let’s start with what is called in French a “Café du Commerce” analysis (mostly a popular wisdom analysis that you can hear in most cafés): tea prices are too high.

You do agree, right? How many times did you hear that? Or perhaps even say it?

I once explained why the same teas sold by two different companies could be sold at different prices(Whats in a name?…Price) but this is not really the point made by popular wisdom here.

The point is more that the price of the commodity itself is high.

Since I begin to write this blog, this question of prices has been fascinating me. Why?

Because tea is for now still sold through auctions and is one of the last (if not the only one) commodities to be sold that way.

This means no futures (to be simple and unfair to what was supposed to be an insurance product about bad crops, let’s say that it is a way for the financial markets to speculate on the prices of commodities but if you want a more impartial definition, just follow the link Futures Contract) and therefore no speculations, only the good old supply and demand meeting each other and deciding for a price.

The perfect dream of any economist, no?

Don’t be afraid, I won’t try to find out if there is speculation on the prices of tea but I will try to find out if it is true that prices are high.

To do this, I needed data (yes, economists can live on a diet made mostly of statistics, data and figures but not without a drink, which for me is obviously tea) and I was lucky to find two online sources: one with the monthly prices (in US cents per kg) of the last 360 months (starting for me in November 1981) at the London and then at the Mombasa auctions (Monthly Commodity tea price from IndexMundi) and the other with the weekly average prices of tea at the weekly auctions of Sri Lanka, Indonesia, Kenya and Malawi from December 1999 to June 2002 (Dharmasena, Kalu Arachchillage Senarath Dhananjaya Bandara (2004). International black tea market integration and price discovery. Master’s thesis, Texas A&M University. Texas A&M University. Available electronically from International black tea market integration and price discovery)

Then I had to cross check the data to see if it was usable for me and the answer was that the first set of data was usable while the second wasn’t.

Why? Because according to the methodology from the author, he had to make some guesses and assumptions (that might be right but I wanted fully reliable data) and second because I had no easy way to know when these auctions were hold, making the second step of my analysis a lot harder to do.

So what does these sets of data look like?

To be as complete as possible, you will find below both of them (for the second one, I put everything at 100 in the first week so as to compare the evolutions of different prices labelled in different moneys) but I will only use and comment the first one.


Click to view


Click to view

You will all see that after a kind of bubble in 1983-1985 and another in 1997-1998, the price was moving around a central value of more or less 200 cents per kg and this until 2005 when it began to rise to reach a little over 350 cents per kg in November 2011, meaning a rise of 175% between 1981 and 2011.

Not bad?

So now, you will begin to wonder why did it rise like that? That is a good question but one I will not answer here as there are several plausible explanations and one set of data even over 30 years might not be enough to find the good one (or good ones).

The next thing you will begin to say is that the good old popular wisdom was right and that we are all sheep waiting to be sheared.

Since you know me a little by now, you can easily understand that the answer might not be as easy as it seems.

Why? I hear them (you know them, the guys sitting at “Le Café du Commerce”) say, “the data is here, you must recognise that we are right.”

I am sorry guys but there is still a little something I need to check before telling you that you are right or wrong.

What do I have in mind exactly? A simple thing : nominal vs. real values.

You are probably thinking this is another strange concept but it isn’t.

You all know that the value of money changes overtime or put it in another way, for 1$ today, you don’t buy the same amount of a given product than 20 years earlier.

You might argue it is just a trick to make things more complex but it has more to do with inflation than with tricks, ie prices go up and down each year following inflation or from time to time deflation, so 1$ of 1991 would be more or less worth 1.6$ of 2011 (I said more or less because I didn’t bother what should be written after the point).


Click to view

So, what do these new figures tell us?

We see that the same bubbles over the years but what is more important is that tea prices have decreased.

Yes, you read me right. In the last 30 years, the price of the auctioned tea has become cheaper in constant money.

You should feel lucky to live nowadays, shouldn’t you?

The First Tea War: a History

From The First Tea War: a History

The following extract is a transcription in modern English of a poem found in the wreckage of the HMS Aeolus, following the first border skirmishes between Great Britain and China during the First Tea War

O you, Robert Fortune,
For Queen, the City and Country,
You went in a far away country,
To look for the bringer of joy and fortune.

A lady called Camilla,
That turns mere water
Into a drink subtler
Than the mighty Mocha.

When you left with the fog behind you
For the Kingdom of the Sons of Heaven,
Did you see the men that would follow you
To the Greater Heaven?

In the middle of still unexplored mountains,
Looking for the tea fountains,
Claws and flames against steel and powder.
Each trying to bring order.

Our mighty ships in the sky,
Big, shielded and moving so slowly,
Facing the true masters of the sky,
Beautiful, yet agile and deadly.

Several times, did we face them
These mighty beasts stronger than a boar
But they were just glowing in the sun like a gem
Meaning “Cry “Havoc!”, and let slip the dogs of war”.

 

Category: Writings  8 Comments

Is bigger better?

If you ask this about blogging, the answer is obviously no.

You want an example? I have several files, articles and so on about Teavana IPO, finances and such (this is the nice part when a company goes public) but I have tried to analyse all of it in depth and I have been stuck in nowhere, unable to go anywhere but unwilling to let it go.

How does this connect to tea?

When I asked myself what I should do and found the question I asked myself at the beginning, the answer came to me: What is the growth strategy of Teavana? Where do they do make their money? Where do they make their profits?

I don’t know if I will be answer to answer all these questions but I will focus on them (this means I won’t cover everything but perhaps I might come back to it later).

Teavana is a rapidly growing specialty retailer of premium loose-leaf teas, authentic artisanal teawares and other tea-related merchandise.”

I will come back to the growing part later on, so let’s focus on the sales mix.

Here is Teavana’s sales mix over the last years.


2008 2009 2010
Tea 51,00% 54,00% 56,00%
Merchandise 44,00% 42,00% 40,00%
Beverage 5,00% 4,00% 4,00%

Tea is the biggest part of it but not by much (only between 1 and 6% more than the two other categories put together) but its importance is growing while Teavana is experimenting a rise in their sales (from 63, 86 millions $ in 2008 to 124,70 in 2010), so when you mix the two of them, you see that tea is really important for Teavana.


2008 2009 2010
Tea 32,57 48,74 69,83
Merchandise 28,10 37,91 49,88
Beverage 3,19 3,61 4,99

So important, that their tea sales were in 2 years multiplied by more than 2.

This is coherent with Teavana’s strategy as “A primary driver of our expected margin expansion will come from the continuation of our sales mix shift away from tea-related merchandise towards higher margin loose-leaf teas that our stores generally experience as they mature. In general, this trend is consistent with the evolution in our customers’ buying patterns as they graduate from purchases with a greater focus on merchandise with which to prepare and enjoy tea towards transactions centered more on replenishing their favorite teas and experimenting with new blends.”

To sum it up, they aim at opening more and more new stores but they also aim at bringing the consumers to the world of loose-leaf teas where their margins are higher.

Does it work or is their future growth the result of a growing number of stores?

Here is a first hint to see if it works.

The graphics provides us with a first analysis: the growth in the number of stores is obviously linked to the growth in revenues and also to the growth in profits (even if it takes time to get a return on investment, even if Teavana claims to do it rather quickly with a payback period of 1.5 year) but it is only one of their main components (I checked also using statistical formulas but I don’t want to bother you here with them).

So it seems that Teavana figures are in line with their strategy :

expand the number of stores,

  • increase the same-store sales,

  • expand the online presence.

 

Will this strategy work? Perhaps and since I don’t read the future in tea leaves, I won’t answer that question. However, what I know for sure is that perpetual growth is an unknown phenomena.

If we get back to Teavana, from all the weaknesses they have identified in their strategy, I think the most important one is the potential problems with the new stores (suitable locations, lease terms, cash to invest) and the personal (train and retain it).

Why?

Simply because quality is not enough, you need to have the right people able to create a specific relationship with the buyers, allowing them to come back and to “upgrade” their experience.

You also need to be visible, meaning being in the right place, which comes at a cost.

So is bigger better? Only up to a certain point.

What point? It all depends on how a company is able to evolve and make the best of its size but sometimes, it just becomes too big to fail, which usually leads to a failure.

But one thing I know is that for now, Teavana is not going the Starbucks way and comparing the two is like comparing broccolis and carrots, they are both vegetables but that’s all. Teavana and Starbucks are both beverage companies but that’s all.

 

Of competitive intelligence, letters and tea

We live really interesting times.

Thanks to the Internet I can chat with people from all over the world about tea or any other topic I might be interested in.

I can also find a lot of surprises while looking for other things (which is probably my favourite part of the Internet) and I can also have access to a whole set of data and figures on tea trade, tea consumption, tea whatever you might think of.

Now, you are probably wondering if I have lost my mind somewhere over the rainbow or if the Mad Hatter took it to make one of his special teas.

The answer is none of the above.

When I read a book on trade or spying in the old times, I am always amazed by how they informed themselves about prices, products, competitors…

The whole process might surprise a few people that think that we (those of the modern era) invented everything but let’s look more closely at a modern concept: competitive intelligence.

What is it?

According to Wikipedia, “a broad definition of competitive intelligence is the action of defining, gathering, analyzing, and distributing intelligence about products, customers, competitors and any aspect of the environment needed to support executives and managers in making strategic decisions for an organization.”

Now, let’s go for a few lines in the mind of one of the tea merchants from earlier and see if this definition would fit.

Let’s say you belong to a big company, perhaps the East India Company and you want to know if you can still sell tea, how, to whom and at what price (you know that you want to sell tea, don’t you?).

Surprise, you just defined your intelligence needs about your customers, competitions, needs that will allow you or more likely the board of directors to decide what is the best sales strategy for tea.

The next step is to decide who are the people able to answer your questions.

First, accountants to let you know how much it costs, where you make a profit, how much tea you sale each year and other mundane things.

But then, comes the tricky questions regarding competitors, foreign markets.

What do you do?

Today, you would probably look all over the Internet for raw data, chat with people for qualitative information, give a few phone calls, look at the press… But apart from the press, none of these tools were available during the time of the East India Company.

So the only option would be to take your most beautiful feather and write letters (or make others write them after all you are the boss here) to selected consuls and gentlemen to ask them to collect data on the local/national market (depending if there is a thing like a centralised state or if it is more a balkanised one).

You would probably ask the same questions to several people so as to be able to double or triple check their answers (you never know).

Now, gathering and analysis are likely to be done (it was not done as quickly or easily as I might make it sound but still) and this is when distribution of the collected and analysed data would be useful.

If you were in the Middle Ages, you would probably write it down in some obscure language but now in the 19th century, you are civilized, so you probably print it since His Majesty ordered the East India Company to do so.

And guess what? Years later, the Bayerische StaatsBibliothek made a copy of it and put it on the Internet, so enjoy the Papers relating to the trade with India and China including information and prices of tea, in foreign countries.

To help you to read through it, I gathered every tea related information I could find in this book and put it under Google Docs (file here)

Just to show you how serious these people (you know them, they are you) were with tea and competitive intelligence, I must tell you that each file has something like 18 tabs filled with data.

For one hour, I thought I was Johnny Depp

Hamburg is a charming and quite busy city in Northern Germany and according to many sources, one of the biggest tea ports in Europe.

I went there for the weekend and after reading carefully Lahikmajoe’s post, we decided with my friend to go to the Hotel 4 Seasons.

To be honest, I was a bit intimated as I didn’t have trendy clothes on me but only the casual ones I had in the night train and during my morning stay in the city but I thought that it really didn’t matter (I looked at their website while I was writing this post and I saw that the dress code was Smart Casual, which I wasn’t for sure) .

This Hotel is famous in Hamburg and really upper class.

We were early (around 13h30) and as we looked around, we were greeted by a butler that said we were a bit too early for the cakes but that we could have a tea and that the cakes would come in a little while.

They had a decent choice with around 12 different loose leaf teas and they had a really nice card with small samples of each tea and a description in German and English (for those unfortunate enough not to read properly German).

While waiting for the cakes, we looked around and saw that the whole place was really like one of these English gentlemen club where you don’t want to disturb anyone and with the paintings on the walls looking at you with their gloomy eyes.

We didn’t speak about business and politics but about poetry, literature and other topics.

This (after all, poets are known not to care about their clothes, they are artists) together with the “if I was Johnny Depp, my clothes would be trendy” attitude helped me get better in a few minutes about this whole setting and enjoy the place and the tea.

The following day, we went to Blankenese, a charming little town all built around stairs, with a lot of former houses from captains and fishing people (for the old part of town).

Apart from finding a lot of pharmacies there (one every 100m in the new part of town, perhaps the people there are ill all the time), we were also looking after the first name to appear on the Internet when you look for Teestube (a close translation of tea salon in German) in Hamburg.

We found it in the newest part of the town, some 200m from the train station and it was like a piece of England in Germany with some Queen Elisabeth II objects (some were really kitsch like a small statue of the Queen waving the right hand in her royal way) and other posters/maps.

I was surprised by the number of teas available and we decided to go for a Blankense mix (Ceylon and Assam) and a Black Vanilla tea.

Both of them were good and after some inner questions regarding if they were using loose leaf teas or not, we found some proof that they were, which delighted us.

I sent a mail to the owner asking some questions and she told me they had 42 different teas from a German company that has been in the tea business for 120 years.

Checking if this is true could be the reason behind a next trip to this place (apart from the good teas and huge cakes).

A really interesting tea trip mostly thanks to Lahikmajoe and Internet.

Next time, we might also try the Chinese House.

Category: Market  6 Comments
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