Are you getting the best value when you buy tea?

I just posted up a new article talking about fair prices for tea and if consumers are seeing real value when they shop.

The article is rather lengthy so I’m not going to paste it here, you can read it at our site.
http://leafboxtea.com/page/Are_you_getting_the_best_value_with_your_tea/

Leave a comment on the article itself or talk about it in this thread, either way, this exact topic is one of the reasons we went into business. We are consumer advocates, and we feel that tea consumers are getting somewhat ripped off by tea vendors. We also present that there is a future for tea (when demand grows to a large enough point) when consumers will finally get to buy tea at a fair price.

Our standpoint? Tea is not a luxury item, it is nearly cheap as dirt and we shouldn’t be paying premium prices for something that is so cheap.

Discuss it here or discuss it on our article page – this is an important topic and one the Steepster community might find interesting.

Peter
Editor
Leafbox Tea

17 Replies
Atacdad said

I read the article…I’m not sure that I buy the Starbucks analogy. The contention that Starbucks drove up the quality and selection of grocery store coffee’s is, I believe, accurate. But I don’t think they did anything for costs. So, if by “fair prices” or “best value” you mean getting a better quality tea for the cost, then perhaps…perhaps.
The argument about the use of “dust” tea in teabags is misleading in my opinion. I don’t believe in the relationship of the physical form to the quality of the tea. Whole leaf teas taste the same to me as their small, broken pieces versions. There is a difference in brewing them…just as there is a difference in brewing different grinds of coffee, but noone has argued (that I’m aware of) that a finely ground coffee is inferior to a coarse ground coffee (or vice versa).
I think that the mystique of loose leaf tea being better than bagged tea is the largest hurdle to overcome in the pursuit of value. The loose leaf market provides access to a higher quality, more diverse selection of teas, but my local supermarket is now carrying teas, from roobios’, to herbals, oolongs, and darjeelings. The article cited bulk sales at groceries as a method to drive down costs of higher quality teas. I would counter that because tea is inherently a more fragile product than coffee beans, that bulk loose leaf sales are not going to be the answer. Too much bulk and it plays to the myth that loose leaf is better quality. In counterpoint, I think that tea bags play to the weakness of tea and that the answer to value is going to be the mass production of low cost tea bags with high quality tea(s). Lets face it, the standard Lipton [paper] tea bag has been working just fine for decades. all we really need to do is up the quality of what we put into it. We don’t really need silk pyramid bags for English Breakfast…talk about making a silk purse out of a sow’s ear…there’s value for you, not!

Login or sign up to post a message.

Atacdad said

I think the “Starbucks of Tea” is really about raising visibility and awareness of tea with the average consumer. With coffee, before Starbucks there was “Folgers and Maxwell House” and your average consumer probably couldn’t tell the difference. Since Starbucks, we know about African, Mexican, Costa Rican, Sumatra, etc. coffee; mild, medium, bold, and extra bold flavors and light, dark, and Italian roasts. Why? because it was accessible, it was made easy, it was coffee for dummies and we could taste the differences side by side like a wine tasting. And most importantly, I could get that coffee or coffee drink in Chicago, Dallas, Puerto Rico, or Austrailia and it tasted the same…it set consistent expectations that could be used to compare other offerings. Could a Starbucks of Tea do the same thing? Maybe, probably, but don’t think it would have to be a tea shop on every corner. I think an enterprising tea importer that could drive high quality tea into mass market consumer outlets (like Walmart in the US) could do the same thing. I’m backto where I started, its about visibility and awareness; however that is accomplished.

It isn’t a myth that loose tea is better. There is a couple reasons it is: dust can only be used once while many loose teas can be brewed 2-3 times giving you more tea for your money. Tea bags are meant to be thrown away after one brewing.

Loose tea also hold more flavor, especially more nuances. A analogy can be made with the Folger’s and Maxwell House coffees you mentioned, dried coffee and instant coffee, for many people is great, but freshly ground coffee beans hold more flavor and subtleties.

As for the perishibility, tea is not as fragile as some might think. It is a fairly durable product and is shipped at the international wholesale level in large, reinforced paper sacks that weigh over 40 kilos.

Your mention of the Starbucks of Tea raising awareness and visibility is right on target. That is exactly what will happen. It won’t bring better prices, just more demand. It may be that demand that brings prices down as consumers look for better value and a ways to get better tea at home.

Our argument is that we challenge the idea that a major national brand with that kind of visibility is the only way to change the way loose tea is sold. In a way it implies that Americans are kind of slow and need to be hit over the head before they ask for tea at a good value.

We interpret the expansion of the tea aisle in supermarkets is a means to not only meet the growing demand for tea, but also a preparation for significant changes in the way tea is sold. We believe that grocers are seeing it coming, now the tea industry simply needs to get on board.

Atacdad said

I challenge the teabag = 1 steeping. yes, I have had on occassion where that was true, but in general I find that I get 2 steepings. In fact, I find that with loose tea, I get fewer quality resteeps, but that may be because I have higher expectations of loose tea and the quality of resteep doesn’t pass.
" In a way it implies that Americans are kind of slow and need to be hit over the head before they ask for tea at a good value"…yes American’s are slow to act, although we’re quick to react. Starbucks was/is the equivalent of a slap to head of the American coffee drinker and I think it will take something similar for tea to enjoy a similar success.
I guess my point was that I don’t see this invigoration of the market having to come from a small startup outside of the mainstream. To steal your words, “the tea industry simply needs to get on board”. and by “on board” I mean making high quality varietal teas available to the average American consumer for whom tea means a teabag. No matter who does it, the average American needs to be slapped upside the head and encouraged to try different teas. 25 years ago I didn’t know there was anything other than Lipton and Tetley (literally) and the ubiquitous white teabag. To this day, I still have teabags in my pantry (Lipton as it happens) and I always will.

52teas said

Two cents: I think it is erroneous to equate teabag tea with broken leaf or even dust grade tea.

Here’s something to think about: Most tea drinkers will agree that the best teas in the world come from India, China, Sri Lanka (Ceylon), Japan and Taiwan (Formosa). But do you know who the number one exporter of tea to the United States is today?

Argentina.

Argentina produces a dirt cheap, low grade, mechanically harvested tea that all of the big box brands use as filler in their tea bags. And THAT is why you only get one steep out of a teabag and why it is generally inferior to specialty loose leaf teas.

Occasionally, we get reviews here that mention our leaf size is rather small. Well, I still contend that size does not matter (except maybe with women). One of my favorite teas is our RadioactiviTEA which is a blend of Indian CTC teas. It looks like coffee grounds or even finer, but because it is so fine, more of the surface area of the tea comes in contact with the water and it produces a bolder stronger cup.

As far as the overall discussion of value and tea, I will say that I don’t think you are going to see those half pound bags of loose leaf tea in the supermarkets until specialty tea becomes more mainstream.

It is a simple matter of volume. When I opened Zoomdweebie’s Tea Bar three years ago, I was in awe of how much profit margin there was in tea. I could sell pouches of tea and do very well, and I could sell $2 cups of tea and be almost embarrassed by how much margin I was making. What I came to find out is that margin is not everything. I still have to sell 400 cups of tea every month just to pay my rent (and my rent is cheap). That’s not to mention utilities, insurance, employee wages, advertising expenses, and on and on and on.

I started to see very quickly why Star$ had become known locally as 4bucks. It’s not that the tea (or the coffee) is itself that expensive, it’s just a matter of having to figure out how much volume you can really do, and how much profit you NEED to survive. If I’m selling a widget that I make $10 on every sale, I only need to sell 80 of those in a month to make $800 worth of rent. Big difference between 80 and 400. Maybe at that point, if it costs me $15, I can sell it for $25. Doesn’t sound as exciting as a high-90ish% profit margin on cups of tea, but it also doesn’t sound as exhausting (and labor($) intensive as 400 cups of tea).

So, back to your half pound bags of quality loose tea… whoever does this (and they will, eventually) is going to have to invest a crapload of money into infrastructure. They are going to have to be able to receive and distribute truckloads of tea every DAY (which is how the coffee and crap tea companies do it). They are going to need to automate everything and run a squeaky tight ship, because their margins are going to be low and their price point will be low. It is all about economies of scale. And I contend that no one is going to be willing to put themselves to that kind of expense until specialty tea becomes a lot more mainstream.

Incidentally, if any of my comments led anyone here to believe that we are taking advantage of our customers in any way, I would like to say that I pride myself on trying to offer our customers a great value for the unique and amazing blends we create. I would also say that I left a very comfortable job as a controller for a small manufacturer to create my tea business. I have an accounting degree, and I could go get a job tomorrow making $70-80k. Instead, much to the dismay of my wife, I have run this tea business for three years and not taken a single paycheck yet.

52teas – really interesting to hear your perspective! One of the things I don’t like about the whole tea in supermarkets is what you say about automation. I love the fact that the owner of my local tea shop is the one scooping my tea and recommending things, I love that you concoct a different flavor a week for 52 teas, I love reading employee reviews of teas at Upton, I love how nice everyone is at Harney & Sons – even though they are a large company I still get very personal service when I send them a question over email. You just don’t get that human element at the supermarket. It’s why I like to go to the farmers market and talk to the people who grew my food, and why I like to knit my own sweaters, so on and so forth. It often is more expensive to the producer and consumer, but I’m ok with that :) It’s worth it to me.

Login or sign up to post a message.

fcmonroe said

I’m guessing that in England and Australia there are probably boxes of loose tea in the grocery store? How do the prices they pay for tea compare to those Americans pay for tea? I think that would be an interesting analysis. My understanding is that those countries are already places where tea is a staple, so if they’re paying about the same cost as we are, then I think your entire thesis is based on a faulty premise.

It is difficult to talk about your question without mentioning how large the tea industry actually is. England has done great things for tea, but the large multinationals (Brooke Bond, Tata tea, Unilever) has pushed teabags onto market extremely hard. The latest report we read put teabag consumption at around 90%+ in the UK – in other words, they are a tea drinking country experiencing the same thing. 60 years ago loose tea was the norm in the UK, corporate strength and marketing has pushed the tea bags out making them the norm.

The UK is under the control of the multinationals, as is many of the other tea drinking companies in Europe – teabags are a cost effective way for companies to bring tea to the market. The multinationals are buying tea at auction but the convenience factor that works so well in England and Europe doesn’t fly in other countries that the multis sell to that demand loose tea and tea in a more traditional form.

There is a movement in England (Henrietta Lovell, the Rare Tea Lady is an example, and she pushes loose tea not just to promote her company. Her vocal protest against teabags is honest, not commercially driven) to push back against teabags. Loose tea brings better value and better quality to the cup than does dust or fannings.

Our last visitor from London talked about tea prices and it is very cheap, but it is largely teabags. You can make a decent cup, but not a great cup. The poster above you mentioned Maxwell House and Folger’s coffee – that is about the equivalent of teabag tea. Instant coffee and dried coffee are extremely convenient but not of the same quality of whole bean or ground bean.

Login or sign up to post a message.

I have to say that I like the slightly arcane ritual of seeking out good tea shops (local, whilst I travel, and online) and don’t mind that I can’t one-stop-shop for tea when I’m in the supermarket. (In fact, I don’t really like going to the supermarket, and rather visit the produce shop, the butcher, etc. but I know I am not the Average American!)!

As far as value is concerned, most tea shops, online and in person, have inexpensive, everyday drinking tea as well as the more pricey, rarer ones. I know that my staple River Shannon at Upton is $10 for 8 oz/250g bag. At Harney & Sons, 8 oz of many of their basic blends will run you $12 (lovely tin included). My local tea shop also has several $12/8oz selections (even though it caters to “premium” teas).

Most online retailers offer free shipping if you spend over a certain amount, and if you sign up to email alert lists, they sometimes alert you to free shipping offers no matter what you spend.

I’m glad you brought up Upton tea, they are great company doing some great things. Their breakfast blends are priced really well, but your River Shannon doesn’t cost $10, it costs actually costs you $14.28 (and if you live in Massachusetts a little bit more for taxes). Running the numbers on it, your tea comes out to about 17-cents a cup.

The Harney & Sons tea you mentioned actually costs $16.50. That works out to 22-cents a cup.

One thing to think about though is that you and I are dedicated tea drinkers, we look for good teas and search them out. There is absolutely a place in the market for tea shops and really good tea stores, however, tea is a grocery item and there is also a segment of tea that can and should be treated as such.

Buying tea online is great, but it has two inherent problems with it. Shipping costs and shipping time. It is far cheaper for an importer to deliver huge cases of tea to a food broker (and subsequently to the supermarket) than it is to deliver a small quantity to your house. All of the online tea merchants loose money on shipping. They set a standard rate and rely on customers to buy large amounts of tea to make up for it. If you order only one 8-ounce pack of tea from Upton, they actually loose money because of the shipping. Their standard shipping rate is $4.20 but the ground shipping rate for Fedex nationwide is just over $8.00. Upton makes up the loss by relying on customers who buy larger amounts of tea.

Virtually every online tea company we talk to about this says the same thing, they all seem to be using the same model. They charge a flat rate for shipping that entices customers and make up for it with larger orders. Small orders are actually not very good for online tea businesses.

On the local tea shop side, you are to be envied. The majority of America doesn’t even have a local tea shop, and when they do, it is overpriced. In the region where we are established, we are in a city of half a million people, the larger region of 5 cities surrounding has something in the range of 3-4 million people and in that population there is not a single tea shop to be found of any quality. In the last 5 years, there have been 3 tea rooms (bad, frilly and grandmother rooms) that have come and gone out of business.

There is a reason tea is was the 17th ranked beverage in America in 2008 (though it is ranked #2 worldwide – No, Americans are not part of the in crowd). The status quo of selling tea is major hurdle.

Login or sign up to post a message.

Maybe I’m getting my prices in a different way than you. I just looked at River Shannon/Upton this morning and it said that the 8oz packet/250g was 10.08 – I was not including shipping because that depends on how much you order – you’d divide the shipping you pay by the number of packets of tea you buy – which if you order enough to qualify for free shipping, would be zero. I pulled up my latest Upton order, and was not charged any taxes or fees, so I don’t see how I didn’t pay 10.08 for my tea? Let me know if I’m missing something. I didn’t mention any Harney & Sons teas by name in my post 9but if you look at the blends page you can see the prices for many $12 teas).

Could good loose tea be a benefit in the supermarket? Sure! Would it be cheaper and easier for the tea industry? Sounds like it. But I feel that on the consumer side, you can get pretty close to the numbers you cited in your article if you are a slightly thoughtful shopper.

Also, since you mentioned Harney & Sons… the only supermarket that sells bulk loose tea that we’ve been able to find is Wegman’s (for those lucky enough to have one nearby – they are an east coast company) and the last we checked, H&S was the supplier of the tea.

Their setup consists of large tins in a “bag-your-own” display. The upside of this is that it is perfectly acceptable to really smell the tea – perhaps the most traditional and fundamental aspect of buying tea. They have a digital scale/printer present on which you weigh your tea and punch in the inventory code. It prints out the label to attach to the packet. It is a good setup, however, Wegman’s is not exactly the “local” grocer, they are massive and some would argue, upscale. Despite this, they are affordable.

Teas we have have purchased from them in the past have ranged from $8.99/pound for basic teas to $35.99/pound for a particularly good organic roiboos. On our visits to scout it out at different Wegman’s locations, the loose tea was a strong seller always with 2-3 customers bagging up their teas at the counter during peak shopping hours.

It is important to remember that this particular chain of stores is an exception rather than the rule. Wegman’s is an industry leader with unique store layout and shopping models; many smaller grocery store chains have remodeled recently to copy the layout that Wegman’s has been doing for years.

Wegmans is my local market :) 10 minutes away. I did some snooping in the tea department when we had the thread about Real Simple’s article about best supermarket teas. I did notice that some of the loose tea offerings matched almost exactly to the teas Republic of Tea and Zhena’s Gypsy tea offer, and I also read that they source from Rishi and Ito En. I haven’t heard that they stock from Harney and Sons! That’s great. I love that I can get Harney and Sons at Barnes and Nobel bookstore too.

Would love to know it Wegman’s is still doing the “fill-your-own-bag” concept.

Yes, the ones I listed in my previous post were all loose in tins, bag your own, weight it – just like you said.

Login or sign up to post a message.

You are right about your Upton order, they do have deals for shipping (especially when you make a larger order) – we are of course, basing our analysis on a “single unit” price. Single unit being the most purchased amount of items that are readily available. You and I are special because of our probably above average consumption of tea and we know the “tricks” to buying tea on the cheap (given the status quo). Economists and business analysts would also say that you have “adapted” your buying habits to accommodate your desire for value. Businesses routinely manipulate this consumer adaptation to make more money – they are always searching for the highest price point that consumers will find acceptable. In the end, you have become a “savvy” tea consumer.

Our argument is that a consumer really shouldn’t have to apply shopping tricks in order to get a good cup, tea is far too common an item for that. To get more people to buy tea and to increase demand, tea must be available and affordable. That said, shopping for tea at a business like Uptons is for people who know and love tea. I have their Tea Quarterly sitting on my desk right now, and paging through it, one quickly sees that it is not at all a simple shopping experience. It is complex and thorough and one meant for real lovers of tea. Simply interpreting the 40+ pages of tea listings can be difficult. This doesn’t make Upton a bad company – however, it does make Upton an inaccessible company for an everyday, ordinary, novice or non-tea drinker.

Login or sign up to post a message.

Teaspoon said

Ok since my local grocery store chain doesnt carry loose leaf tea I went to their website to write in and request they do when I noticed they had a online ordering section for “speciality items” on which I clicked. There was tea listed , with approx 20 or so brands but only two brands which offered loose leaf. One was twinings and one was adagio teas. Compared in price for a 3oz tin of twinings, online price without shipping was 5.99 for a tin 3oz. I pay 3.23 cents a 3oz tin at another local grocery store which is the only one who carries it. Thats quite a markup, I hate to think what shipping was for the 6 tins that was the minimum order. Then I clicked on adaigo teas and for 18oz of yunnan gold was $85.44 without shipping….on adaigo website its $49.00 for a 16oz bag without shipping..guess it pays to shop around.

Login or sign up to post a message.

Login or sign up to leave a comment.