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Retailer Profile:
Tea Gschwendner
A German Tea Company with Chicago Flair
Staff Report

Proving tea’s international following, TeaGschwender successfully made the transformation from European tea shop to American phenomenon. Charles Cain, director of operations tells us of the strategies and passion behind the international tea empire.

T & C: How did you begin?
Charles Cain: Our passion for tea began in 1978 when Albert Gschwendner opened a small, family tea shop in Trier, Germany. His goal was simple: to share the finest teas in the world with a select circle of connoisseurs. From those humble beginnings, our company has blossomed into what it is today - a global leader in tea retail.

In the U.S. - Seeking to build upon the success and sterling reputation of a global leader in tea retail, TeaGschwendner USA first opened its doors in Chicago’s illustrious Gold Coast in March 2005. The goal was simple - to share the finest teas in the world with a cultural awakening to an ancient passion.

T & C: Why did you decide to open a shop? How many shops do you have?
CC: We see a tremendous opportunity to capitalize on the current trends in the U.S., including increased consumption of tea, rapid movement “up-market” to higher quality loose teas and the trend towards specialty shopping and away from big box and department stores.

TeaGschwendner has two stores in the U.S. In total we have more than 140 stores in eight countries on four continents.

T & C: Why did you choose your particular locations?
CC: We are looking for flagship locations that offer high population density, affluence and foot traffic. The State Street retail store is actually the base for our franchising model in the U.S. We are now offering franchises in the U.S., as we do overseas.

T & C: Please give us an estimate on foot traffic
CC: Extremely high. That said, it is rather the nature of foot traffic than the numbers that matter. Commuters on their way to work and tourists on their way to the beach are unlikely to stop in a retail store. The State Street location boasts a local population of more than 13,500 within one quarter mile of this shop. This local, high income population offers a tremendous customer base in addition to the traffic from tourists and those working in the area.

T & C: What are the demographics of your customers?
CC: The average tea drinker in the U.S. is slightly older than average, slightly more female and slightly more affluent. So in short, our target demographic is average. We do choose shop locations in higher income areas to target the additional disposable income and to establish our brand as a high quality option in the world of specialty tea.

T & C: What tea product lines do you feature?
CC: TeaGschwendner features its own brand of tea and tisanes sourced directly from around the world. Our teas and tisanes are blended and flavored at our own facilities near Bonn, Germany. At any given time our private collection includes between 250 and 300 teas. Last year we sold a total of 389 different teas. We also carry: A select group of premium, micro-lot teas in our Edmon’s Collection; A wide assortment of high-quality loose leaf teabags in our Masterbag collection; And several key accessories such as filters and porcelain teaware produced under the TeaGschwendner brand.

T & C: Do you have any signature drinks?
CC: We will prepare any one of our 300+ teas in either hot or iced form for the customer.

T & C: What is your most popular Product?
CC: Our most popular tea by dollar sales is our Japanese Gyokuro, which retails for $40 for 100g/3.53 oz. While our teas average just over $10 per 100g/3.53 oz, we have found a tremendous market opportunity in the premium teas. Many of our best sellers are on the higher end of the price range. After all, people are not going into specialty shops to find the same quality levels they can find in grocery stores.

While we do carry several lines of bagged teas (classic and premium sachets) More than 90% of our tea sales are loose leaf teas.

T & C: What is your preferred method of brewing? Special instruments?
CC: Reverse osmosis water with added calcium carbonate; 1.5-liter glass pot; Tea weight measured by scale according to recommendation; Timer used to ensure proper steep time according to recommendation; Thermometer used to ensure proper temperature according to recommendation; Tea steeped loose in the pot, poured through own-brand 18/10 stainless filter into a second pot or cup for serving.

T & C: Can you offer any promotional ideas?
CC: Sampling (free drink samples and loose tea samples); Tastings Local business partnerships; We do offer gift certificates, purchase with purchase promotions, etc.

We have found the only truly effective form of advertising to be word of mouth. We have invested over the years in a variety of traditional media campaigns but the return on investment has not been high enough to continue these. We do offer discounts for purchasing larger quantities of tea, but in three years have only marked our tea on sale once.

T & C: Describe your store’s layout.
CC: We have approximately 600 sq. ft. of retail space with about half dedicated to accessories and pre-packaged teas (to allow for browsing alone) and half dedicated to our wall of tea and sales counter where the true fun can be had smelling and tasting through our collection with a trained tea consultant.

T & C: How do you recruit and retain employees?
CC: Once the store was opened and established the employees came to us looking for a job. We have not had to advertise. This location has a staff of six, all off which have been with us for at least one year. While we’ve only been open a little over three years at this location, the average stay for our current employees is over two years on the job.

T & C: What sort of training is given in tea selections, brewing methods, etc.?
CC: We train extensively and continuously on the history of tea, science of tea, culture of tea and the accessories that accompany the product. As the learning and sharing process is quite fun for us, the initial orientation and training that covers the first few weeks of employment is really only the tip of the iceberg.

T & C: What problems do you experience in your training?
CC: The only real issue we’ve encountered is the abundance of incorrect information that is regularly published online and even in popular books on tea. The more our staff reads the more likely they are to pick up bad information. While tea is an ancient beverage, the focus on understanding how tea is made and why it does what it does is new. The controls are not yet in place in the U.S. market to stop the spread of completely inaccurate information on the product.

T & C: How are your teas displayed? Do you take into account the effects of lighting and temperature on the freshness of the tea?
CC: Our teas are stored in custom made brushed aluminum boxes separated from each other by glass and wood. The leaves are protected from air and light, and sales are such that we rarely have to worry about the freshness of the tea on the wall.

T & C: Do you have your own brand of tea?
CC: Yes. Our entire line is exclusive to TeaGschwendner and packaged in our own packaging and sold under our own label.

T & C: Is there anything you would like our readers to know about your shop/business?
CC: At TeaGschwendner we pride ourselves on carrying only the finest teas sourced direct from the gardens and the growers themselves. We test each tea in our collection for pesticides and other contaminants to ensure that, whether organic or conventionally grown, the teas are of the highest purity and quality. By controlling each step in the supply chain we are able to dramatically decrease our costs while virtually eliminating the uncertainty that comes from sourcing internationally through brokers and distributors. These savings and efficiencies are passed along to the customer in the form of higher qualities and lower prices than are available through most U.S. retailers of premium loose teas.

Tea & Coffee - August, 2008

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