12 years, 11 months ago-
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I thought this was interesting, particularly that Sara Lee such a household name, is entering into the higher end tea market. Plans are to split the business “into an international coffee and tea unit and a North American company that includes the Jimmy Dean and Hillshire Farms brands.” Now why is the North American company the one that includes the sausage, and not the tea?
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A link to Sara Lee’s “international Coffee and Tea” branch:
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I’ve always found Tea Forte to be an interesting company, they are a good example of how perceived value affects revenue. Of course, because they’ve successfully negotiated a sale to a major multinational firm, one has to assume a certain level of success in their operations.
Tea Forte clearly understood their market (restaurants, hotels, catering events) and focused strongly on that since those were the markets where the value they add to the tea is appreciated.
Their tea bags and packaging are unique and special (if one can think of tea bags as special…), though the tea itself is easily substituted by consumers looking for teas with similar flavor profiles. The packaging is what makes Tea Forte different, without that they are any other company and it is that element alone that differentiates it as a luxury brand. Remember, this is a company that charges $24.00 for a 20-pack of English Breakfast tea, at $1.20 a cup it seems way overpriced for something that doesn’t get rave reviews.
Anyhow, I suspect that if Tea Forte didn’t work the food service industry and get their teas out that way, there is no other way to approach it. I don’t think that direct-to-consumer sales is a strong point for a brand like that (grocery stores, online sales) and I wonder if Sara Lee will attempt to move the brand into those channels and what impact it will have. It will be interesting to see what direction they take it, if any, beyond the channels and distributions the brand already uses.
Either way, congratulations to Peter Hewitt and company for the successful sale, I understand they will be staying on for a transition period until Sara Lee takes over control of the brand.
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@Peter – I think your analysis is excellent. I’ve gotten to know this company quite well and am happy for Peter Hewitt. Hewitt is a designer at heart and clearly that has influenced their product and markets. It is why teaware was also a substantial part of their business model. What many do not know is those pyramids are made by hand and that TF actually grows its own tea in China, in addition from purchasing elsewhere. Hewitt and his team are VERY intent on making sure that the tea IS the priority, not just the packaging and they have put more emphasis on looseleaf tins lately and even released “single steeps,” individually packaged looseleaf servings to make it easier to travel with. For me, the product I was disappointed to see was traditional paper filter bags. I don’t like them and I felt like it cheapened their product line. I now see it exactly as you have suggested – an effort to develop lines more suitable for food service and grocery.
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@@xavier – Peter mentioned their gardens and factory in Hangzhou to me when I was interviewing him. It’s referenced very briefly in this Tea Forte blog post – http://blog.teaforte.com/2010_06_01_archive.html
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Interesting, there is something I took away from Mr Hewitts blog post that speaks volumes about the operational success of the company:
“I spent time in our workshops, talking to our staff as they crafted and filled each tea pyramid with amazing care and artistry.”
I always wonder how such a non-standard shape was created, filled and prepared. They don’t make machines for that, so I always thought that the reason for the expensive tea was because Tea Forte had to invest in a custom-built packing machine, or, they were doing laboriously by hand. It seems that the latter is more true. Chinese labor is notoriously inexpensive (and is one of the great advantages of doing business with China). I don’t point this out in a colonial/empire-building sense (oppressing the poor and all that) – I highlight it, because it illustrates that Hewitt did something clever to make his business operate efficiently.
He bought a farm in China and used it as a base of operations to assemble his tea products. It certainly makes for expensive tea since he still had to import that product to the US, but the flipside of it is that it is no doubt more cost-efficient than buying a custom-tooled machine to handle a non-standard item and produce those filled tea bags in the states.
That one statement gives an interesting look into how he runs his operation that I didn’t know before. It also means something else that is highly significant. I’ve often criticized Fair Trade as not doing enough and once said, “shortening the supply chain is the best fair trade”. Even if he buys the majority of his teas from other sources and has them shipped to the farm in Hangzhou for packaging (a single farm cannot provide all the quantity he needs for his inventory), then he has created a more vertical supply chain than most small tea companies around. These vertical channels are more efficient than broad, spread-out, horizontal ones (but they are also more expensive and come with their own set of problems). It also cheaper to ship teas to the farm, than it is to aggregate them into the US from a variety of places. But by doing so, he has employees (not contractors, or suppliers) in China who he is directly affecting with his business decision.
Interesting how it is possible to infer so much from a single sentence by a CEO….
Its no wonder that Sara Lee set their eyes on the operation. As a company, Tea Forte was certainly doing something exceptional. Well done, Mr Hewitt.
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@On the very surface of this topic (as I can’t really dig too deep into TeaForte since I am not too familiar with this company), it is great seeing how much attention tea is gaining from businesses in other markets. This definitely shows the upward trend of the product, which is exciting for someone who is getting into the business!
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