OolongLily said

Teavana Competition?

I was looking over Teavana’s IPO filing, touting their substantial profits and plans for huge growth, and I’m curious. Where’s the competition? Do they have any serious competition? I haven’t seen any in the Portland area, but that doesn’t mean it doesn’t exist elsewhere.

If not, why not? Is there some serious barrier to entry? Is it too difficult to secure capital right now?

40 Replies

I can’t think of anyone that is as widespread as Teavana. Here in Portland, though, I’d recommend going to Townshend’s tea – I absolutely love it. Steven Smith has a tea shop on Thurman Steet.

I’ve not been to Tea Chai Te on 23rd Avenue – so I don’t know what their shop is like. There are a few tea companies based in Portland like The Jasmine Pearl, The Tao of Tea, Tazo, Stash, and Strand Tea. But I don’t think any of them have mall locations like Teavana.

OolongLily said

Haven’t been to Townshend’s, Smith’s, or The Jasmine Pearl yet. On my to-do list. Tea Chai Te is a cute little tea store. Been awhile since I was there though. I like The Tao (except for the parking on Belmont). Stash’s “store” over by Bridgeport is possibly the most boring presentation of tea I’ve seen.

I’m curious from more of a business standpoint though. I think it’s great that Teavana exposes a lot of people to loose tea, but it’s terrible that they have such high pressure, cutthroat purchasing experiences. It seems like there’s an opportunity for someone to do things a little differently and create a more positive experience while still remaining lucrative. Perhaps more positive exposure could also be good for small scale specialty tea stores.

OolongLily said

Also, “Hello!” Didn’t realize you were in the PDX area. :D

Lily intriguing thought, I’ve some opinions but not enough time to write them all tonight.

However I did want to say that Tea Chai Te is positively brilliant, it has been some years since I have been there, I don’t make the trek down as often as I like, so I can’t state to the quality of their teas, I do remember last time I was their they had a very nice Lapsang Souchong. But their atmosphere is quite wonderful, its what I think of when I think of the ideal tea gathering place. It’s on the second floor and it has the feeling of a cozy intimate living room and all the employees and many of the clientele are crazy college hippies that love tea. Sorry to rant but this is one of my favorite tea rooms.

OolongLily said

No worries. I really need to go back now that I’ve got a greater appreciation for teas. In fact, I believe that last time I was there was yeeeears ago with friends for bubble tea. Killer bubble tea though. “Liquid candy, liquid dessert, liquid bliss”, is right. I’ll check out their Lapsang Souchong. Looks like they’ve got oolongs on sale right now too…

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Cofftea said

Their “lack of competition” lies in the ignorance of tea drinkers. Now it’s fine if you genuinely love Teavana’s products (I like a few blends but several of their unflavored teas), but some claim it the “best” tea out there and that’s the only company they’ve tried.

I agree. If you couple that with Teavana’s B&M locations and heavy online and print campaigns, they are able to capture most of the of the “new-to-tea” class in the market.

Let’s face it, their teas may not compare to others but they know how to market their company and products very well.

Cofftea said

I wouldn’t completely agree- they know how to market to the ignorant… their marketing doesn’t work on me.

That’s because you’re not in the “new-to-tea” class. Consumers generally pursue brand name if they don’t know anything about the industry. In this case, Teavana is the biggest name in the specialty tea market.

TeaNewbee said

Exactly! I have been searching today to find somewhere else to buy tea. Teavana is literally the only place i have ever been to that has sold loose leaf tea, maybe its just because I live in Minnesota but I honestly have never been anywhere like it before and I just quit my job there… after a month and a half..

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At the moment, Teavana’s closest competitors would be Adagio, MightyLeaf and Tavalon. But as LiberTeas mentioned no one is as “widespread” as Teavana. They currently have three revenue generating divisions that I know of- B&M, distribution and ecommerce, in addition to heavy marketing campaigns that require a lot of capital on all three fronts (check S-1). Meanwhile, for most tea consumers, Adagio, MLT and Tavalon teas are only available for purchase via their site with minimal online marketing campaigns.

If you have a great product, proven management team and a solid marketing plan, raising capital through a consumer focused VC shouldn’t be difficult. Therefore I don’t think it’s an issue of being able to raise capital but more they’re not ready to expand their business on a larger scale. However, if I had to choose, I’d say Tavalon is the closest due to their presence in Korea and Brazil, distribution arm and two B&M locations in downtown NYC.

OolongLily said

Yeah both companies look like they have much better B&M designs and ideas than Teavana. I hope they’re successful.

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I think it all boils down to marketing and timing. I call Teavana the Starbucks of the tea world, though I agree with Starbucks as a business, not so much with Teavana. But think how did Starbucks become big? They exploited human nature, same with Teavana. People like to be trendy and on the cutting edge of things. Coffee has been popular for quite awhile and has ceased to be the new cool kid on the block. It was time for something new.

Teavana picked a good time to throw some capital into expanding their empire. Coffee was old news and people were becoming hungry for the next “fad”, Teavana also plants their B&M footprint in malls, where the clientele tends to be (sorry to say and hope none take undue offense) but more vain, they are willing to overpay for things with big labels just so they can be trendy and cool. Honestly Teavana appeals to the vain, I’m not saying all their customers fit this category mind you, but they put their foot in the door to that market.

Again similar to Starbucks they are the first “big name” on the block, mind you Starbucks wasn’t the first coffee shop nor is Teavana the first tea retailer, but they were the first ones to become nationwide household names. Once you become the known trendy place to go its hard for a new small company to compete with vanity.

Dunkin’ Doughnuts is also famous for their coffee but someone who drinks Starbucks is most likely not going to drink at Dunkin’ Doughnuts. Starbucks doesn’t make the best cup of coffee their is, but it is higher quality. Same with Teavana, they don’t carry the best tea’s are available but it is true they the tea that they stock is decent upper-end (for what is readily available in the States that is) and while its overpriced, that usually doesn’t bother their clientele that probably also shops at Neimen Marcus. So the mass marketed CTC teas such as Stash and ect are also not competition.

As I see it our only choice is to bomb Teavana’s corporate office, then we can stop the plague. :)

And yes I realize there are other factors at work as well, these are just some of the main ones I attribute to Teavana’s celebrity status.

OolongLily said

Time for a field trip to Atlanta! That’ll put a kink in their cast irons.

Yeah if Teavana was the Starbucks of tea then I’d like them a little more. Their top-down selling tactics definitely appeal to the vain. “Oh… You just have a ceramic teapot. Haha.” They even belittle their own teas. If you’re not buying monkey picked oolong or some similarly uber expensive it’s, “oh… well I suppose we have other teas…”’

You think another store could be successful without milking the vain Neimen Marcus crowd?

Successful? with some re-education work then potentionally, adagio sure seems to be the best bet.

But a competitor to teavana? nope.

I think your Teavana/Starbucks analogy is the closest approximation. It’s actually one I’ve used myself. The main thing I think about it is that Starbucks became what it is and started getting people addicted to their coffee drinks by first bastardizing coffee.

What I mean by this is that any hardcore, dedicated coffee drinker will be the same as us hardcore, dedicated tea drinkers. We want to know where the product comes from, determine the actual quality, and taste the subtleties.

Only recently in the coffee industry has it become more widespread that people want single estate coffees, they want specialty beans roasted in special places… There has always been a market for that, but it’s been smaller.

Now tea is in the same place coffee was, oh… 10 years ago. It’s starting with a big chain that is accessible to most people… Teavana. And this big chain is bastardizing the idea of tea (a statement that you can feel free to disagree with, but I stand by it). We’re unfortunately not to the point in the tea drinking future where the dedication that we feel towards tea is widespread. But we sure are trying to make that happen.

And to be perfectly frank, I want tea to move into this range more quickly than coffee. With the right ingenuity, I think we can do it. :)

you can tell u guys arent fom new england ….lol. dunkin donuts is king up here. I wish there were more options for me up here other than teavana. i have one small local tea shop about a half an hour from me…were as i can hit ip at least three teavanas in the same radius. i have an aversion to buying tea online if i havent already have tried there products.

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There was a lot of talk about this at WTE this year. I agree with All Things Tea about Tavalon and Adagio…but I think Adagio will be the first to really give Teavana a run for their money. Adagio is so smart about where they are putting their stores, providing a much better in store experience, and higher quality tea.

On the funding side of things, even in this economy tea has continued to gain and I would think that, given the right plan, solidifying funding would be possible. They showed all sorts of stats about tea gaining on coffee because of the large number of soda drinkers that are switching to RTD teas. Nice stepping stone into the better stuff…and a huge group of people! Should be really interesting to see what happens…

OolongLily said

I watched Adagio’s video from their grand opening and it looks great! Smart design.

So if funding is possible, what are the other major obstacles that stop entrepreneurs from starting chain similar to teavana – a high traffic store for tea newbies?

Glory said

I imagine that raising the >300,000+ dollars for ONE store let alone having more than one location is probably the biggest thing. Other than that it would be the usual business checklist. Getting an Experienced team accustomed to running a chain/larger store operations, attaining further investment, correct branding and marketing, supply chain, product quality, competitive advantage, staff training etc. The list is never ending.

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TeaNewbee said

I just quit my job working for teavana and i am dying to find another place to purchase my tea from. I live in MN and teavana was the first store I had even seen that sold loose leaf tea and i fell in love…that is with loose leaf tea but I have no where else to get my tea. If any one has any suggestions that would be awesome.

Well it depends on what kind of tea you are looking for. There are so many tea retailers to choose from.

These are my favorites
Verdant Tea – for Green,Blends,and pu’ers, I also love their Laoshan black tea

Asha Tea house for-oolong’s (He has the freshest and best oolongs I have tasted)

Rishi,Samovar,Den’s,Teavivre,and Red Blossom Tea are also great. There are many great places to buy tea, it just depends on what you are into. DavidsTea to me is like Teavana but better and cheaper (just my opinion) if you are into flavored teas.
Steepster Select has opened me to other tea retailers that I have never heard of. For $19.00 its a great way to expand your horizons.

Ian said

There are TONS of places online.
DAVIDsTEA has a great selection of flavored blends, as does Adagio and as BTVSGal said above me, Verdant is great for straight up tea, if that’s what you prefer. My favorite company is Harney & Son’s (harney.com), as they offer numerous flavored and unflavored blends and pretty much all of it is excellent quality. I don’t know about Minnesota, but here Harney has loose leaf sachets in the natural/organic food aisle at my grocery store, so they probably have them at yours!
I would recommend DAVIDsTEA, Harney and Sons, and Adagio if you’re looking for a good beginner selection of tea, and then I would expand outwards towards Teavivre (excellent quality), Verdant, and other companies that specialize in high quality loose leaf tea

TeaNewbee- you’re in Minnesota? Me, too! Where are you based? If you’re near the Twin Cities, there’s TeaSource (good source for Indian teas). They’ve been operating the longest, and the wholesale their tea to lots of places.

We used to also have Infinitea in Uptown, but they recently moved back to Wisconsin. :(

There’s Verdant Tea which is awesome, even though they’re based online. They do host tastings and events in the Twin Cities, so it could be good to check them out or sign up for the mailer.

In Winona, there’s Mandala Tea. Love them, too- the owner is a sweet-heart who just loves tea from Yunnan.. especially shu pu’er. Mandala is also a wellness center with every kind of massage and stretching training, etc; worth a trip if you’re nearby.

Sorry about the Teavana thing lasting such a short time. Which location were you at? We knew a couple of people who worked at the Golden Valley location; they used to come in and hang out at Infinitea in Uptown all the time before it left town.

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I discovered loose leaf tea at Teavana in October and did fall in love. Until a couple months ago, I didn’t even know there were other loose leaf tea sellers! lol I am now expanding my horizons and participating in tea swaps to try some new stuff.

I was the same way. I used to get jasmine tea from a local asian shop and a friend of mine told me about Teavana in a nearby mall. I fell instantly in love and was completely unaware of any other tea sellers. About two years ago I went to a few restaurants one had Mighty Leaf and another had Tea Forte and I enjoyed those. I flew home and in an airport (I think it’s the one in Chicago, but I’m not 100% certain anymore) there was an Adagio tea stand, and with all that combined I started realizing there’s more good tea sellers than Teavana. Today, I still shop from Teavana, but not nearly as much as I used to.

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Seems to me like Teavana really does have a corner on the Loose-leaf-tea-stores-in-a-mall angle. The other main competitors for tea dollars are either online (many mentioned here) or in the grocers aisle. Or iced tea. It seems like the grocery store and online are places where specialty vendors are pushing their teas harder than tea-houses-in-malls, probably because the overhead is so much lower. Plus, people pick up their tea with their bread and milk.

Just an anecdote: in the Mall of America, the biggest mall in the country (Canada, I know who have a bigger one!) there are only four places to get tea.
TWO are coffee shops (Starbucks and Caribou)
ONE is Teavana
ONE is a local place called the Tea Garden, which focuses in the mall mainly on bubble tea and on brewing tea. Loose leaf tea is served as an aside, and this loose leaf is probably Rishi.

So there you go: the four angles covered as far as on-site physical location tea places.
Teavana is its own niche: selling loose leaf and accessories
Then there’s the Bubble tea/to-go place in the food court
Then there’s the coffee places that offer tea as a coffee alternative.

None compete with Teavana directly.

I think it’s a little more accurate to say that no one competes with Teavana directly on the same level. Teavana is more like Lowes or Home Depot, but it’s only real physical competition is local hardware stores. (Pardon the weird analogy, this is the industry I work in….)

Yep- totally agreed. Though at least Lowes and Home Depot have each other (and then other regional chains like Menard’s, etc).

I suppose for Teavana there are places like Samovar, which is becoming a real regional chain, but they don’t target the same client-base. As others have mentioned in this thread, I feel like no other brick and mortar place focuses tne majority of their efforts on reeling in beginners. Sure, other places want to educate, but they are also there mainly serving those who are already “in the know.” It is this practice of Teavana that guarantees they will remain a force in the market, and that force will not wain until they encounter direct competition.

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I’m kind of amazed no one’s spoken up on this, but in Canada, where Teavana is trying to crowd in, there’s tons of competition, from both Teaopia (which is basically the same thing), but also DavidsTea (who is slowly creeping down into the States). I think they’re going to have a much rougher time of it when they come north of the border.

That’s good news to me, aisling of tea! All I can say is that I hope Teaopia and DavidsTea decide to encroach on their southern border so that we can have them here in the US!

I was thinking the same thing reading this! If Teavana comes up here and pulls the same nonsense they do in the States, they shouldn’t expect to succeed, DT and even Teaopia will blow them out of the water.

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Teavana and Davids Tea finally has competition. Steeped Tea is an award winning Canadian company which recently launched in the US. Steeped Tea offers nearly 100 different custom blends, and unlike both Teavana and David’s Tea, uses only natural ingredients. Steeped Tea is affiliated with the Ethical Tea Partnership. As a Steeped Tea small business owner, I enjoy educating people about the wonderful world of loose leaf tea. I especially enjoy working with schools for fundraisers. (Through the corporate sponsered fundraiser, schools earn 40% of sales). I love hearing children say “Wow, this is good!” while sampling iced rooibos. There are currently approx. 3000 Independent Consultants in Canada and 400 in the US. It is predicted within a few years this number will be near 10,000 in the US. For more information on Steeped Tea please see www.mysteepedteaparty.com/TheFlavorfulTea

Christina said

This is the second time this user has made a post promoting Steeped Tea. And this user has made no tasting notes, has no followers, and doesn’t follow anyone else.

It’s pretty obvious this user is a spammer promoting Steeped Tea. Can we get an admin in here to take care of this?

Actually, I’m not spamming. I’m tying to learn all I can about tea because it has changed my life. I’m new here. Do you know what it’s like to suffer from debilitating allergies all your life and thanks to tea I feel better. I stumbled on this site while researching everything I can about tea. You see, just a few months ago I was a tea bag drinker. I enjoyed the relaxing effect of my afternoon tea, but found it needed milk and sugar to make it palatable. I had never tried loose leaf tea… In February I jumped at the chance to become an Independent Consultant with Steeped Tea, mainly because I viewed it as a terrific business opportunity. Since then I have learned tea is so much more. I want to learn everything I can. I love having the opportunity to go into schools and have children sample non-sweetened iced rooibos saying “Wow, this is good.” They have no idea how good it is for them. I never realized how tea has a magical way of bringing people together. I also had little knowledge of the wonderful health benefits of tea, outside of knowing it is good for me. Currently, the pollen count outside is extremly high. For the first time in my life, I am not suffering a severe allergic reaction as a result. Thanks to tea, I feel perfectly fine. This is like a dream come true. I am no longer a pill popper searching for relief, but never finding it. I also love knowing as I sip my tea I am no longer ingesting pesticides and artificial ingredients. I had no idea what I had been ingesting into my body all those years. I can certainly taste the difference of natural ingredients. As I write this I am sipping on a cuppa Nettle Greek Mountain Organic Herbal Tea. So yummy, no sweetner needed. This is the life…

Dustin said

Wow, sounds kind of like a pyramid scheme, but with tea and little bit of snake oil testimonials wrapped in.

Cavocorax said

Yeah. I’ve had a few of these teas as gifts and found them to be really disappointing. Not my cuppa.

Dustin said

You mean it didn’t cure your cancer?!!? /snark

Lynxiebrat said

@Relaxwithtea,I admit I kind of agree with Cavocorax, Dustin and Christina, even though I hate assuming things. You see, everytime someone does exactly what you have done..(Constantly mentioning/promoting 1 brand of tea, either no tea reviews/tea reviews of 1 tea and/or bad reviews of other teas.) it has turned out to be a company undercover. There are much better ways of promoting your teas, with just alittle bit of looking around the discussions pages, you will find plenty of excellent suggestions.

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