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Tea houses brew big gains
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July 10, 1997: 5:50 p.m. ET
Specialty tea shops are becoming the trendy alternative for the coffee-sated
From Correspondent John Defterios
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NEW YORK (CNNfn) - The hottest retail restaurant concept these days is the specialty tea house. Gourmet tea is heading mainstream, as tea houses are turning up as alternatives to coffee shops. For millions of health conscious Americans, a hot cup of tea may replace that next cup of java.
The tea business is booming, up 130 percent to over $4 billion in the last five years. Tea is also the most profitable drink a retailer can sell, costing just five to ten cents a serving. With numbers like this, a race is on to see who can grab a share of the tea shop market.
Riding this wave are Gary Shinner and Jill Portman, who opened Tea and Company in San Francisco right across the street from a Starbucks Coffee Shop.
"We offer the change. People are looking, they are tired of the one dimensional aspect of coffee and how hard caffeine is on their system," said Shinner.
A big tea house chain doesn't exist yet; most are still one-store operations. But there is one giant in the industry brewing fresh ideas - the consumer products behemoth Unilever has been operating its Lipton Tea House since December in Pasadena, Calif..
"They are the only player that has deep pockets to expand. It takes a lot of money to operate new stores, and Lipton at least has it," said Rick Gallagher, vice president of the National Retail Federation.
Lipton says it hasn't decided whether to expand, but the company admits the potential is huge.
"It gives us an unprecedented opportunity to sit down face to face with our customer and understand their needs, try to develop new products for them," said Peter Goggi, the director of tea buying for Lipton.
Like coffee houses 10 years ago, the tea shop trend is spreading across the U.S. from out West. With almost seven times as many coffee shops as tea houses nationwide, tea entrepreneurs who have set their sites on the Starbucks market have a long way to go.
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