The outlook for fine teas is on a momentous upswing. Here are some insights from the President of the USA Tea Association, Joseph P. Simrany:

If you are currently selling Specialty Tea then you are already aware of the sales and profit potential of this virtually untapped market segment. If you are in the industry and not currently selling Specialty Tea, then chances are excellent that you soon will be. Why all the fuss over a product segment that is as old as the industry itself?

The answer to this question depends upon your specific perspective. For purposes of this analysis, we will only consider two different perspectives, from the viewpoint of the consumer and from the viewpoint of the seller. From a seller 's perspective the answer is provided in a single word, profit. From a buyer 's perspective, the popularity of Specialty Tea is far more complex to assess. However, this report will attempt to uncover most of the reasons why Specialty Tea is becoming so popular. It will also shed some light on why the entire tea industry, from the producer to the packer, should seriously consider the inclusion of Specialty Tea in their future business development plans.

Describing what we mean by Specialty Tea is perhaps a very good place to start. It is not an easy thing to do because the concept of Specialty Tea is complex and the term encompasses a great many variations with several of them crossing over into other forms of tea. In the broadest sense, the key to defining Specialty Tea is found in the name itself. In all cases the common denominator in identifying a Specialty Tea is found in the word "special" itself. All Specialty Tea 's are special in some sense of the word, either in their rarity, their uniqueness, their taste, their preparation, their overall quality, or in their marketing. While most readers will immediately understand most of the components of this preceding definition, the "marketing" element may prompt a few questions that will be addressed later in this report.

Specifically, Specialty Teas include "single origin" tea as opposed to blended teas. Most commercial packers of tea blend dozens of different teas to come up with a single flavor profile for any given brand. This is done to ensure that the flavor of a specific brand is as consistent as possible on a day-to-day and year-to-year basis. This is no easy task to maintain a flavor profile given the variability of the tea obtained even from the same gardens. It is the reason why all the major packers employ expert tea tasters whose job it is to choose from an infinite variety of teas, to select those that will make up the daily blend.

Single origin also needs to be further defined. In its broadest sense, it refers to teas obtained from a specific country such as Ceylon (Sri Lanka), Kenya, India, Malawi, or China. However, here too, such a simple explanation will not suffice as it may also refer to teas coming from a specific region of a country such as, Dimbula, Kandy, Nuwara Eliya, Ruhuna, Uda Pussellawa, or Uva in Sri Lanka, or Darjeeling, Dooars, Assam, or Nilgiri in India. Continuing to complicate the simplest of the definitions of Specialty Tea, single origin may also refer to a specific Estate in any one of several countries. Estates such as those represented by the Assam Company Ltd.; Bombay Burmah Trading Corp; Cygnet India Private Limited; Goodricke Group Ltd.; Gournitye Tea & Industries Ltd.; or Tea Group Exports (Ambootia) in India; or the Koslanda Organic Tea Garden in Sri Lanka.

Individual Estate teas are perhaps the least exploited of all the Specialty Teas and potentially the most profitable. Like fine wines, there are an infinite number of Estate teas waiting to be discovered. Also like fine wines, not all of these Estates teas will command top dollars. However, it is safe to say that every one of them will prove more profitable than had the same tea been sold into the mass market. The key to determining which Estate teas will command top dollar and which will not is contained in how they are marketed.

The Specialty Tea Registry has a system in place that will help to identify the top tea of the year program from both Sri Lanka and also from Kenya. From this humble beginning, the concept of Estate teas will be born and will flourish. Just as in the wine industry where expert organizations such as the Wine Spectator and others routinely evaluate dozens, if not hundreds, of individual wines, so can similar organizations in the tea industry. Certainly it is not limited to the modest efforts of the Specialty Tea Registry. Any number of organizations can step into the void and perform this essential service if these teas are to become established.

Once a particular Estate becomes established, followers of those teas will eagerly await the next flush as well as the next season 's crop. Over time, the amount of tea that an Estate will devote to this segment of the market versus the mass market will become increasingly large.

Having described what we mean by Specialty Tea our next task is to explore the reasons why this segment is becoming so popular. As we already mentioned the profit potential of Specialty Tea serves as a prime motivator for the seller. The traditional tea industry is rather unique in that the average selling price has changed little in the last decade and in fact in the last two decades. Many supermarkets feature a 100-count package of name brand teabags for $1.69 or less. In some cases these prices are even further depressed as a result of consumers applying coupons towards their purchase. And, in a worst-case scenario, that package of tea declines even further where coupons are doubled.

The price of traditional tea has been so depressed for so long a period of time that it has created an image in the minds of consumers that is difficult to alter. An image that affects not only the perception of what the price of tea should be but also transfers to perceptions of the worth of the product itself. The process by which tea has found itself in this predicament is by no means unique to the category and has affected other industries as well; the most notable of which is the soft drink industry. However, on a price per serving basis, mass-marketed tea has the dubious distinction of being the least costly of any other category of food or beverage. This has led one observer of the industry, affectionately dubbed the "Father of the Tea & Health Movement" to comment that; "It has been so long the Tea Industry has made a decent return that they have forgotten how to spell the word prophet."

While the pricing issues associated with selling mass-marketed teas are obvious the solutions are difficult (although not impossible) to employ. Significant price hikes, for example, will likely be met with consumer and trade backlash that could lead to revenue, share, and profit loss. Breaking out of the low price cycle requires a return to basic marketing and a re-examination of the individual brand profile, or reason for being. If a significant point of difference no longer exists versus competition, then one must be found before the process can begin. The point of difference could focus on any physical attribute, or combination of attributes including taste, aroma, body, astringency, origin, brewing characteristics, packaging, nutritional qualities, or on some other point of difference such as product imagery or positioning.

After identifying the brand identity, the next step is to establish that identity in the minds of your target audience(s). This step is where basic marketing comes into play and could involve any number of techniques involving promotion, advertising, and public relations. Charting a course of action is the easy part, executing those actions is difficult and often requires significant investment spending. Of course the process is complicated by the fact that tea has not been generating the kinds of profits necessary to support that level of marketing attention. And the cycle goes round and round.

There is an easier way out of this predicament that the industry finds itself in and it is called Specialty Tea. By extending their product offerings to include Specialty Teas, a packer can dramatically improve the profitability of selling tea while generating significant funds to reinvest in the establishment of the new brands. Smaller packages selling at higher price points are immediately possible since consumers are not likely to use the mass-marketed teas as a standard for comparison. Even at relatively high retail price points, the Specialty Teas still represent a significant value on a price per serving basis. The smaller sizes also invites multiple purchases of different varieties which further leads to faster shelf turnover and pantry turnover. This translates to improved store relations and better consumer relations. And this cycle goes round and round.

Ideally, the industry will ultimately find a way to improve the profitability of their mass-marketed teas while simultaneously expanding their product offerings to include Specialty Tea. The Tea & Health initiative of the Tea Council is designed to provide the packers with another marketing tool designed to change the consumer perception of regular tea while adding value to the brands. Certainly there is clear evidence that it is working for Green Tea and there is every reason to expect it to have a similar affect on Black Tea as well.

Retailers of Specialty Tea are certainly already aware of the potential for significant profits, as it is a prime motivator for getting into the category. However, it is important for the retailers to keep in mind that there are two basic components effecting the ultimate profitability of a product. One has to do with the pricing versus cost structure and the other concerns turnover (consumer demand). A retailer of Specialty Tea needs to enter the segment fully aware of the need to educate consumers regarding the attributes of Specialty Tea and to aggressively market their products through sampling, promotion, and public relations.

The Specialty Tea Registry is implementing programs this year that will offer merchandising assistance to members to assist in both the educational and promotional areas. Programs such as access to attractive and informative merchandising materials from Sri Lanka and Kenya (posters, brochures and fact sheets). A "tea of the year program" to draw attention to fine Estate teas available from the primary tea growing regions of these two countries. A tea seminar to be run in conjunction with the Fancy Food Shows. And, an orientation trip to Sri Lanka scheduled for January 2002.

Quite obviously, the promise of significant profits is driving the popularity of Specialty Tea from a seller 's perspective, but what about from the buyer 's side? What are the driving forces attracting consumers in ever increasing numbers?

Tea & Health has played a major role in the growth of Specialty Tea, as evidenced by the meteoric growth of the Green Tea category. The promise of significant health benefits from a product that is also pleasurable to drink provides a compelling argument for trial. Closely related to this point is the growing tendency for consumers to gravitate to products that they perceive to be more natural, free of artificial ingredients and low in calories. This is part of an overall trend for consumers to take greater responsibility for their own health which is partly fueled by an increasing distrust of the formal health care system.

The demographics of the typical Specialty Tea Consumer are in line with this population segment that is becoming increasingly concerned with the role of diet, nutrition, and lifestyle choices in the determination of their health. This group tends to be younger, more affluent, and more educated. While Green Tea has been the primary beneficiary of this movement, there is every reason to believe that Black Tea will similarly benefit as more articles and studies focus on that type.

The popularity of Specialty Tea has also benefited from increased awareness resulting from expanded distribution and availability. Starbucks has helped with the addition of a whole line of Specialty Teas from Tazo and the hundreds of free standing tea salons and tea & coffee houses across the country has also helped. The trend is also benefiting from new Specialty Tea Retailers that are operating in big and small cities alike as well as the dozens of Specialty Tea Internet sites and catalog distributors. In addition, the greatly expanded distribution of Green Tea products by new and established packers has done much to prompt interest and sales in this segment.

The relative affluence of American consumers has also fueled the expansion of Specialty Tea over the last decade. Thanks to the prolonged bull market, American consumers flush with cash not only satisfied their basic needs but also indulged their whims and their desires. During this period, real estate sales flourished as did the auto, retailing, travel and foodservice industries. Americans discovered the world of Specialty Foods and developed a taste for the finer things in life. Specialty Tea was no exception and flourished during this period.

The fact that the bull market has become a bit tamer of late should not be reason for concern, as, unlike expensive houses, cars, and trips, Specialty Tea remains an affordable luxury. Similar to Specialty Coffee, consumers of Specialty Tea have demonstrated a willingness to spend a few dollars per serving for high quality tea products. The many free standing tea stores that are opening up across the country in big towns and small towns alike provide clear evidence of this fact. It is also evident in the hundreds of new upscale tea products entering the market every year in both traditional and 21st Century channels of distribution.

Another factor contributing to the growth of the Specialty Tea industry is increased foreign travel and experience with foreign cultures and foods. These American and foreign travelers enthusiastically share their experiences with others with the net result being increased awareness of and decreased resistance to trying something new. The world is literally getting smaller as the foods and beverages once considered to be exotic are now being assimilated into American cuisine. Examples of how this process has effected the Specialty Tea Industry are provided by the growth of Green Tea, Chai, and Tapioca Tea. It is also demonstrated by the introduction of such previously unknown herbal products as Maté and Rooibos tea.

Specialty Tea is likely also benefiting from the relative maturation of other beverage markets such as coffee and soft drinks. The growth of both markets appears to have plateaued and consumers are seeking alternative products. Specialty Tea also appeals to the more sophisticated pallets of an aging population base while also remaining attractive to younger audiences seeking new experiences. These younger audiences view Specialty Tea very differently from the tea their parents consumed to a point where many consider the segments to be mutually exclusive. This is one more example of the versatility of tea; a beverage that appeals to so many people with diverse interests and expectations.

Finally, Specialty Tea has benefited from the creative marketing talents of Specialty Tea purveyors. They are in the process of creating a lucrative market based on not only the traditional attributes of tea, but also on an imagery that they have created that matches their customers moods to a particular tea. No where is this more evident than in the menus offered by these shrewd retailers and in the design of their websites, catalogs, and retail stores. Individually, they are creating awareness for their own businesses. Together, they are a powerful force that is creating a strong new business segment that promises to redefine the term, taking tea, in America.

Specialty Tea has come a long way over the last ten years in the United States and it is poised to go a lot further. So as this report started out saying: "If you are in the Tea Industry and not current selling Specialty Tea, then chances are excellent that you soon will be."