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The Wholesale-Retail
Tea Relationship


The consumer who buys from an upscale teashop or catalogue may give thought to the exciting origin of the tea, but hidden from the buying public is the wholesale source of the tea that supplies the retail establishment. The consumer, including those knowledgeable about tea, tend to assume the immediate source of the tea is the growing estate. While the estate is at times the supplier, often wholesalers sell the tea to shops, catalogues, web sites, restaurants, and the like. This area of the tea business is perhaps the most obscured from public view. Randy Altman speaks with several wholesalers to find out more about how they operate and the services they provide.

Many of the best teashops purchase most of their teas from a single wholesaler. This saves the small business owner vast amounts of time. Instead of dealing with potentially scores or hundreds of growers, the retail shop executive can rely on the veteran expertise of their chosen supplier to provide for their needs. Without the wholesalers, every growing season would necessitate an entirely new round of testing and sampling when retail businesses need every staffer to service customers. The wholesalers provide such a full range of services that medium companies, not just small, use wholesaler’s expertise.

For the beginner retail shop owner, web site holder, or catalogue publisher, these wholesale companies can be essential. Even if such a novice tea executive were to want to buy directly from growers, the new entrepreneur would lack the skill set necessary to wade through all the samples and fee structures. In terms of price discount, these wholesale companies can buy in tons, when the smaller retail business would buy only in chests.

Wollenhaupt's headquarters in Hamburg, Germany
One of the world’s top tea suppliers is Wollenhaupt, founded in 1881. The full name is Gebruder Wollenhaupt GmbH, the core name I translate as “Wollenhaupt Brothers.” Marco Brinmuhl is head of export sales for the U.S., U.K., Asia and some Mediterranean nations. Wollenhaupt’s top nations by sales are Germany, Russia, U.S., Denmark, U.K. and Japan. This company has a program called “Teeland,” a word I transcribe rhythmically as “tea territory.” Wollenhaupt refers to teeland as a service unit, covering a very impressive 2,500 retail stores.

This service unit does far more than sell tea, and exemplifies the benefits of wholesale suppliers to retail entities. Wollenhaupt physically visits the stores and will perform exhibitions, when such are relevant. The tea delivery service operates 24-hours, which is an amazing and wonderful resource. Wollenhaupt carries approximately 500 different teas. Accessories are remarkably well represented, with about 400 items. Many of the accessories are exclusive designs available only for teeland retail shops.

Wollenhaupt uses a two-tier distribution system outside much of Germany. Rather than negotiate with countless retail shops in many nations, they concentrate on a few intermediate wholesalers who in turn function as distributors to the retail level. Brinmuhl states that these nation-based distributors best know the specific tastes and needs of each country. Wollenhaupt designs custom blends that vary by nation, for both loose leaf and teabag, including for use as private label.

Blending at Wollenhaupt
Wollenhaupt sells well in specialty retail stores that do not serve tea to drink. In the USA, such dry-goods-only stores tend to be the physical bases for specialty businesses that mostly sell by catalogue or Internet. Teashops that sell only tea as a dry good are more common in Germany, Austria, Switzerland and France. Wollenhaupt also sells via coffee outlets, cafés, bars, Internet, catalogue, health food stores, and grocery stores. This full range of venues ares a sign of success and long-term viability.

China is the number one source of tea for Wollenhaupt, followed by Sri Lanka and India. Specific estates mentioned by the business as prominent sellers are Ceylon’s Kenilworth, Darjeeling’s Maharani Hills (a dedicated section of Margaret’s Hope), and Assam’s Hazelbank. Regarding flavored teas that sell well, Earl Grey is the first listed. The second listed may be somewhat unfamiliar to Americans: a fruit infusion with red groats “famous as original to Wollenhaupt.” The company sells other fruit infusions and rooibos with caramel. All of this work requires a sizeable enterprise, and Wollenhaupt employs 120. New this year is a doubling of plant space to equal 30,000 sq. m. The expansion is scheduled for completion this fall.

Storage Section at Wollenhaupt
Wollenhaupt sells 5,000 tons of tea per year, which they estimate yields 2 billion cups of tea. Wollenhaupt is a leader both by tradition and modern business practice. The company was started by brothers Carl and Hermann, and today is run by brothers Jorg and Dirk Wollenhaupt. Additional income comes from their power as the world’s second largest vanilla bean trading company. Their push for more tea sales is a paradigm for the entire trade. Brinmuhl states, “Be trendy, offer hip teas, exchange slow sellers, be innovative.” They develop four new lines of teas each year, mailing them out to retail stores. Recent lines include wellness and functional teas.

The Wollenhaupt catalogue now sells more sophisticated tea packaging, including pyramid tea-bags, bath tea-bags, and start-up packages for countertop presentation. The company encourages in-shop tasting of new tea offerings. An Americanization seems to be taking place, as ice tea is selling more during the summer. Completing this tea wholesaler’s role as a full-service provider, they not only give advice on how to open a retail tea shop, they even have a book on the topic, called “Steps to Success.”

This advice is in addition to tea selection, and includes presentation of tins and display of accessories up to samovars.

Another German company is Cha Do Teehandels GmbH, with four staffers. The amount of tea is surprisingly large, 600-700 tons, which is oriented to the organic and Fairtrade markets. Cha Do can move this tonnage because it mainly is an importer and distributor to packers and wholesalers (but they do have their own brand in Germany). The South India Oothu estate is one source of tea, with Assam as another. Cha Do has a special relationship with China, but also gets tea from Tanzania and Vietnam. This company is in the re-exportation field, selling largely to France, U.S., Canada, U.K., Italy, Scandinavia and Austria. Organic jasmine is their best selling flavored tea. For the future, the owner Lutz Tonnies predicts white tea will gain market share.

Germany, historically, has been a powerful force in tea wholesale distribution to points far and wide. One article cannot cover all the major German companies. An established pattern is for the tea to enter the nation in the North, and many of the companies are based around Hamburg. This means the 2005 Tea & Coffee World Cup at Hamburg on September 11-13 is wonderfully located. Access the web site www.tcworldcup.net for information about this very important exhibition and symposium.

Some businesses have a very long track record. SinAss TeeHandel GmbH is part of J.G. Schuette & Co, founded in 1792. Note the name of a SinAss partner, Michael Schuette. Ortwin Rave is a director and general manager. SinAss sells outside its own nation to Austria, Switzerland, Spain, Scandinavia and Baltic countries. This company provides not just high quality tea, like Goomtee from Darjeeling, but also training to the retail owners. They buy globally: India, China, Sri Lanka, Taiwan, Japan and Nepal. SinAss has 17 staffers who work 2,500 square meters. Their goal is selling the best tea from all over the world to Europeans of higher income.

SinAss has a superb 108-page catalogue designed primarily for retail owners. The cover shows the slogan, “Tea of Exclusive Quality.” The booklet is largely English-German bilingual, and thoroughly educational about all manners of teas, herbals and accessories. The full ingredients of herbals and flavorings are listed. The Trademarked best sellers are (my translation) Ali Baba 40 Sweet Aromas, which is black and green tea, sunflower petal, jackfruit, peach & vanilla; Dublin Cream, which is black tea and roasted coffee bean, jasmine petal, coffee & cream flavor; and MorningMagic, which is green tea, sunflower & rose petals, mango, bergamot & jackfruit. The mixtures are not that common in the U.S. Finally, a comforting comment to the retail owner: “You only have to sell - we will explain to your customer what he is going to buy.”

HTH Hamburger Teehandel GmbH is obviously based in Hamburg. The managing director is Marcus Wolf. They sell to wholesalers, importers, packers, mail order enterprises, and specialty stores. The full range of teas are sold: black, oolong and green. The company is known simply as HTH, superimposed over a teacup, a memorable palindromic trademarked image. HTH is in the fine tradition of the import and export trade. Another skillful Hamburg company is Intertee Handelsgellschaft Gesing. They use the alliterative slogan “The Intertee Team” paired with the brilliant phrase, “the smallest health farm in the world - a cup of tea.” Intertee also helps retail shops display the tea and has a tea of the month program. This company is advancing into Asia with a Shanghai office.

In any mention of Hamburg, concluding with the grand Haellsen & Lyon GmbH is appropriate. This is a fourth-generation family business, with managing directors Dietmar Scheffler & Peter Wieland, and partners Olav Ellerbrock & H.-J. Ellerbrock. The business is famous for an expansive scope and goes by the catchphrase “The World of Tea Under One Roof.” The warehouse can carry 10,000 tons. Their web site is one of the best I have ever seen, a genuine education in so many aspects of tea, much of which they sell. Haellsen supplies a vast range of tea and herbals. Backing their slogan “we offer more than just tea,” Haellsen’s offering includes packaging, procurement, processing and advice for the retailer.

A good wholesale-retail relationship is beneficial for both sides of the equation. The wholesaler and the retailer together move more tea. The wholesaler does much more than merely ship tea in bulk to the venue of consumer purchase. We have seen help to the retailer include displays, presentations, tea selections, tastings, 24-hour delivery service, and on-site visits from wholesale staff experts. Tea wholesalers also may provide accessories that can either remain in the store permanently, or are of smaller types for sale to customers, such as tea tins or tea pots. Wholesalers save retailers from possessing the extra staff to process countless growers’ idiosyncratic business practices (and samples) from around the world.

The relationship is mutually advantageous and thus will endure. For the wholesaler, the benefit is obvious, they are selling far larger volumes than if the product were selling to individuals. This is the essence of economy-of-scale. The retail outfit gets all the benefits outlined above. The tea trade, as a global business, looks very different from the perspectives of the wholesaler and the retailer. The retailer worries about micro-level variables, such as whether the tea shop is getting enough foot traffic, or is the catalogue ink in good color. The wholesaler can have more macro-level variables to also worry about, such as whether producing nations’ governments are acting more or less rationally this year. Both realms, the big and the small, are part of our trade, and make our lives interesting and challenging.

Tea & Coffee - May/June, 2005
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