In 2004, a lanky, young software salesman named Charlie Cain wandered into a tiny tea shop in Bad Godesberg, a small town near Bonn, Germany. What he saw there, at TeeGschwendner, made an indelible impression: 300 different leaf teas for sale! Cain had just read Howard Schultz's “One Cup at a Time,” in which Schultz recounts his coffee epiphany as he watched Italians drinking espresso. (“This could be a real business!”) Now it was tea.
“My Howard Schultz moment,” Cain said Tuesday at the opening of Seattle's new Teavana store at University Village. He said goodbye to software, hello to tea and eventually joined Starbucks.
Tea is the world's second-most consumed beverage, after water. And it's not as if Starbucks had never heard of tea. It was, after all, originally called Starbucks Coffee Tea & Spices and sold two dozen loose-leaf teas at its first stores before turning to the dark-roasted side and emphasizing coffee.
What goes around comes around. Earlier this year, Starbucks bought the Teavana chain (over 300 retail outlets, all in malls, no seating) for $620 million.
“With Evolution Fresh, Starbucks got into juice; with La Boulange, we got into baked goods — food of all sort, really,” Cain says. “And now, again, tea.” But this time, the tea will have its own, separate locations. It's a different mind-set, after all. Coffee is seen as an energy drink, tea as a relaxing beverage. Even the name, Teavana, suggests Asian mysticism.
Just as a wine aficionado can wax on (and on and on) about grape varieties and legendary vintages, a devotee of tea can cite literally hundreds of varieties of camellia sinensis leaves (white, green, oolong, black), and their methods of “withering” (steaming, pan-firing, shaking, bruising, rolling, drying, oxidizing). Then there are the tea-like drinks that don't contain Camillia sinensis, like prepared herbal infusions, rooibos (red teas) and the green-powdered matés.
You thought coffee had gone overboard? Hah!
But speaking of coffee, the coffee biz isn't in trouble, is it? No, quite the contrary. The price of coffee beans reached a wholesale price of $3 a pound in 2011, but coffee growers around the world have been investing in trees, fertilizer and better growing techniques. So yields per acre are climbing and prices are heading back down. Those lower costs are boosting margins for Starbucks, along with the rest of the coffee-house chains.
But even as cheaper coffee beans mean that coffee drinks will become an even more profitable cash cow for Starbucks, it's an even bigger deal for its rivals. To compete in the saturated coffee-house market, Starbucks needs new products. Yes, their stores sometimes look like a teenager's bedroom, littered with lipstick, curlers, sweaters and shoes that all represented some passionate “gotta have this” moment. Hard to forget Vivanno, launched as a response to Jamba Juice; or Tazo. gulped down as a response to Stash Tea. Evolution Fresh, acquired last year, was put in place as a free-standing alternative to competitors like Odwalla. Now Teavana, with its calming, Asian name, and its bits of pseudo-Oriental wisdom stenciled on the walls (“the leaves have stories to tell even before they are plucked for your cup”).
And, just as Starbucks energized the whole coffee shop category of retail, so Teavana is expected to revitalize the genteel world of tea rooms. The first “new” Teavana opened in midtown Manhattan three weeks ago and was an immediate hit. U Village is the second.
How many? Up to a thousand, says Charlie Cain, who's now a Starbucks vice president. There's no timeline, though. One cup at a time. They are, after all, the world's leading retailer in terms of traffic: Well over 50 million customers a month visit the Mermaid. So what else does Howard Schultz have up his sleeve?
Starbucks pays attention to its customers, noting that the stores fill up over the lunch hour with customers who buy a beverage, then move on to different store for their sandwich or salad. Slipping away! The answer: more food items. Better food items. To counter the impression that food was an afterthought, Starbucks earlier this year began rolling out baked goods from La Boulange, a Bay Area bakery chain they bought for $100 million.
The big Starbucks at U Village is getting a makeover shortly, by the way, adding more “afternoon” items like flatbreads and small plates, more wine and beer. The target market: married women with kids who want to meet up with friends but wouldn't be caught dead in a bar.
There's a traditional beverage counter at the Teavana in University Village, but the main attraction is the “wall of tea,” which features over 100 loose leaf teas in colorful containers. A “tea authority” is on hand to describe each one in detail. For the opening this week, Naoko Tsunoda, the company's Director of Tea Development, flew in from Atlanta. What does she have to say? An encyclopedia, it turns out.
The white teas (peachy, silky, delicate, refreshing) include Youthberry, açai berry and hibiscus. And a White Ayurvedic Chai scented with cinnamon, pepper and cloves. The green teas (some are toasted and grassy, others fresh and vegetal) include Gyokuro Imperial Reserve (dark green with chlorophyl, the finest of Japanese teas) as well as Moroccan mint. Oolong teas include “monkey-picked” leaves gathered from the tip-top of wild tea trees at the highest elevation. They're flavored with strawberry, coconut and chocolate.
The unit of sale is two ounces, with most teas $10 and under. The full-bodied black teas include the familiar Darjeeling, Earl Gray and English Breakfast, but the very best ($20 for a two-ounce sachet) is called “Darjeeling de Triomphone, Special Finest Tippy Golden Flowery Orange Pekoe-First Flush” or SFTGFOP1 for short. Kid you not. You see where this is going?
The beverage bar will prepare a pot of “signature” tea from the tea wall for $4.45. Add a couple of bucks if you want one of the rare ones. There's what we might call the Full Starbucks Experience, but with Tea Lattes ($3.45 for 12 oz, $4.45 for 16 oz.), iced teas and craft tea infusions. This might take some getting used to.
“I'll have a large Sparkling Dragonfruit Devotion, please. Hold the guava.”