Teavana, A Distant Analysis

by Denis Shumakov 9

Teavana Closing Analysis

The news that in 2018 Starbucks will close its Teavana shops (more than 350 in all, there is no other such tea chain in the US), raises before tea specialists questions as to why the project is scaled down and how Teavana’s experience can be best utilized. We will try to answer these questions from Russia, relying on the old and established consumer tea culture existing in our country and making analysis based on Teavana’s online store (in this contemplation, we are not touching the issue that Starbucks has sold its other tea brand Tazo to Unilever).

It’s reasonably safe to suggest that Teavana sells ‘home tea’. The basis of their tea assortment is loose-leaf tea, intended for brewing in teapots. Tea bags are next to none. There is also a lot of teaware and it is very diverse. So, it looks as if the store offers its clients to buy tea and utensils, bring them home and start brewing tea there.

At the same time, home tea-drinking is the most conservative segment of consumer tea culture. If the tradition of such tea drinking exists in the country, it guarantees the demand for tea and utensils for home tea brewing. If there is no tradition of such a tea drinking, then the formation of demand for such products requires a large amount of time and resources.

In the US, the large scale tradition of home tea drinking does not exist, which means that Teavana is trying to sell far and wide a non-mass market product. The chosen sales strategy (malls with high probability of spontaneous purchases) and wide marketing opportunities allowed to count on the effect of the avalanche — that is, that the first purchases of tea and the experience of preparing it at home will quickly turn tea neophytes into regular buyers and connoisseurs of tea. However, we have reasons to assume that a significant part of buyers were puzzled with the taste of the self-made tea.

This is indirectly evidenced by the dominance of teapots and similar items of tea utensils in Teavana’s teaware bestsellers. It is possible that, being unsatisfied with the taste of self-made tea, buyers assume that they are doing something wrong and buy other tools for making tea. That is, other teapots; and, perhaps, more than once. And only after a few failed attempts, they come to the conclusion that tea is not their drink. Or that tea is too difficult for them.

For a non-traditional tea market, such a situation is natural — getting pleasure from the taste of tea, especially pure tea, requires from the consumer more training or background than enjoying other mass produced drinks (coffee, soda, wine, juices). Which are not only easier to understand, but also often have a more pronounced physiological effect.

And this means that Teavana is selling home tea-drinking, which almost no one needs (because there is no tradition), and very few people understand (because they mostly do not like tea). At the same time, Teavana almost completely ignores the aspects related to tea’s influence on the well-being and mood of a person in the description of the tea they sell, and does not specify simple consumer tea-drinking formats (try to find images of set tea tables or staged tea parties on their website). That is, they’re trying to play only on the taste and aroma of tea, without even an attempt to integrate it into the gastronomic culture.

Thus, Teavana should be viewed not as a pure business project, but as a project to create a new consumer home tea culture in the United States — and of fairly high level at that (judging by the prices on their tea) — based purely on the taste of tea. Moreover, the project is realized almost from scratch (without a base in the form of mass tea culture), for unprepared consumers, practically without references to a healthy lifestyle and without direct borrowing from old consumer tea cultures (primarily Chinese and English). In fact, Teavana offers Americans the ability to brew and drink tea at home, because it is delicious. And Americans do not believe it.

In our distant view, Teavana’s failure is very weakly related to many mistakes. Focusing on malls, which are losing customers, high prices for tea, deficient description of goods, standard treatment of an non-standard (for the US market) product — all this, of course, can be criticized in detail. But the main reason for the failure of Teavana is not in these details, but in the fact that the project has set itself a task of extremely high complexity. A task which requires a huge amount of resources (we do not even venture to suggest the needed amount) and a lot of time (perhaps, another 5-10 years).

At the same time, it would be a shame to lose the groundwork put in place by Teavana in the formation of a high-level taste-oriented home tea culture in the US. Of course, there is a risk that such a culture is impossible in the US at all. Of course, even after all the efforts made by Teavana, the task of creating such a culture remains very complex and resource consuming. But…

If such a culture is created and becomes widespread and strong enough, then for all of us — for tea lovers and tea professionals — a vast field will open for a wide variety of very interesting and very profitable activities. So it makes sense to be optimistic. And to thank our colleagues from Teavana for their enthusiasm.

Note: I am grateful to Olga Nikandrova for collecting and analyzing information which was used in this article

Correction: The previous version of this post stated that Teavana retained online sales, but the online store shuttered in December of 2017.

Featured Image Credit:Phillip Pessar

Denis Shumakov

More than 25 years of experience in tea and tea promotion. Chairman of Advisory Board of TMC International, judge TMCI 2013-2017. PR-manager, Turquoise Tea Company (since 2004, Russia, Taiwan). Owner and author of Teatips.ru web-site (since 1999, Russia). Co-author in TeatipsBrief news project (since 2017, international, ). Tea and wine consultant at Pokrovki guest house (since 2009, Russia). Member of Editors board of Coffee and Tea International in Russia and Coffee and Tea International magazines (since 2014). Person of the year in Russian tea industry (2013). Author of numerous articles and videos about tea, co-founder and methodologist of a tea school, one of the most well-known tea popularizers in Russia, organizer of tea festivals, working most actively in the sphere of gastronomic tea-drinking.

Comments (9)

  1. I believe the reason why Teavana stores have closed, is that they were sited in shopping malls and less people are visiting these places. There are successful tea shops/tea rooms in the town that I live, they are small independent establishments and they have their own distinctive character. Shopping malls are faceless sanitised places, and the act of drinking tea should be in an environment which is homely and comfortable.

  2. I think it’s important to note that a coffee business isn’t good in running a tea business. If a wine company would’ve run Teavana, I think it had a better chance to succeed. It would focus more on quality, terroir, and authenticity of tea. It would perhaps sell less than what Starbucks imagined, but it would be a stable and sustainable business in a growing specialty tea market.

    1. Dear Sheng,

      I also think that the tea culture is much closer to the wine one than to the coffee culture. But I don’t think that the Starbucks’s coffee background significantly influenced the work of Teavana.

  3. Interesting analysis. Looking at Teavana on the face of it, everyone said its failure was because prices were too high. But I think your comment on the homebrew analysis is interesting.

    Maybe for specialty tea, homebrew is not as prevalent but I don’t think this is true of the tea bag culture. America does not have an entrenched tea culture like European and Asian countries it’s true. But there are pockets developing specialty tea culture.

    I believe we will see an increase in specialty tea culture in America as Americans become more exposed to specialty tea. Teavana was actually doing that for awhile.

    The learning curve beyond tea bags is a little higher which may explain the slower growth. American specialty tea culture needs champions, and there are a many, but not enough.

    I think as we see universities develop tea education and farmers develop tea growing, specialty tea will expand. I only know of two universities with tea education and a few tea farms in the making.

    I also think as more specialty tea stores become available and known to consumers the more it will spread.

    Coffee still remains supreme but it doesn’t have to be an either-or concept. I do think specialty tea will eventually find a great home here in the US.

    It took a long time for Americans to become red wine drinkers but with education and promotion, this did happen. As with anything – education is key. That is one of the reasons I started my website Life Is Better With Tea. To introduce and educate newcomers to specialty tea in all its forms.

    1. Mary Anne, I think you’re right. Right now, a common consumer tea culture is shaping in the USA. Despite the fact that tea phenomena have existed in America for several centuries, none of them has gone beyond the local subculture level. And now these phenomena, together with new tea trends, and the general growth of interest in tea are combined into a new, large-scale and interesting phenomenon. In which there’ll be enough place for both industries with mass market tea and enthusiasts with rare tea.

      As for Teavana, their main mistake, in my opinion, was that they tried to saddle a market that did not yet exist. Everything else — prices, staff qualifications, etc. — are little things and details.

      Interesting site, thank you.

  4. I think your insights are generally correct, but I suggest considering a couple of observations from the perspective of Teavana’s ideal customer. I have disposable income and live within walking distance of a mall that once housed a Teavana store.

    The experience of a Teavana store better for capturing new tea drinkers than can be appreciated from a distance. Teavana offered samples of unique blends of teas that were, at their best, wonderful and (and the blends that tasted like cough medicine could be discarded easily enough).

    Beyond the actual tea, the employees were enthusiastic evangelists of tea and the free samples were good. The instructions for brewing tea were much more precise than those offered by any other company I have found. They specified the optimal steep time, ratio of water to tea, and temperature. Any novice could leave the store and begin producing pretty decent tea.

    I did.

    Before Teavana, my exposure to tea culture was limited to the dreck served at most East Asian restaurants and spending a few months in Moscow as a college student with my host family’s grandmother instructing me to dump massive amounts of sugar in black tea and exclaiming “the brain needs sugar!”

    I now have several thousand dollars of loose tea in my cupboard, a few hundred dollars of tea-making gadgets on my counters, and a detailed log charting hundreds of experiments with various types of tea on my computer.

    My enthusiasm reveals how Teavana’s strategy sewed the seeds of its own demise. It failed even as it succeeded. You concluded that customers stopped buying from Teavana because they came “to the conclusion that tea is not their drink. Or that tea is too difficult for them.”

    For me, the opposite process killed my interest in Teavana. The enthusiasm that Teavana generated prompted me to learn more about tea. As I learned more, I became more willing and able I became to buy better tea for less money. I have not purchased anything from Teavana for several years. Teavana could not capture the enthusiasm that it generated.

    This process would not have been as quick if Teavana’s marketing strategy had not opened a gap between a tea drinker’s experience in its store and the same person’s experience at home.

    Consider this article:

    http://archive.jsonline.com/newswatch/191252151.html

    It describes how Teavana intentionally provided samples that were much more concentrated than the tea that customers would produce at home if they followed Teavana’s instructions. Teavana could claim “great taste and a low price” when the reality was “great taste OR a low price.”

    I experienced the same deception. When I returned to a Teavana store to question why the tea I made at home was less enjoyable than the samples in the store, I was advised to double the concentration of tea at home. It worked. My tea at home was as good as the tea in the store, but it was also twice as expensive per cup as Teavana said it would be. This deception broke my loyalty to Teavana and accelerated my exploration of other vendors.

    Finally, I think the role of Starbucks should be considered. Teavana was growing for 15 years until Starbucks bought it. Five years later, it’s gone.

    Certainly, the decline of malls in America was the most significant factor, but I never saw Starbucks even trying to maintain the Teavana brand through its stores. I don’t understand why Starbucks never bothered to brew Teavana tea with something as simple as an industrial version of the Breville One-Touch Tea Maker or Teforia tea robot. Instead, anyone who ordered Teavana tea received a bag dropped into haphazardly heated water for a random amount of time. This disrespect for tea makes me wonder why Starbucks purchased Teavana in the first place.

    1. Ben, I think I know this grandmother 🙂 Thanks to her, I still drink tea with sugar in the morning, using it as an energizer. And in the afternoons and evenings I proceed to normal tea-drinking.

      Thanks for the interesting details, they are not noticeable from Russia 🙂 But you know, there is one nuance. The fatality of all the mistakes Teavana has made depends entirely on the dynamism of the market, which in turn depends on the development of the consumer tea culture. Exaggerating a little, I can put it like this — if the trade is sluggish and without a drive, then it’s easier to ignore a disgruntled consumer, and it’s easier to ignore own mistakes, because it requires resources to correct them, which a sluggish market, even if it reacts favorably, does not compensate. And if the market is boiling, then there is a financial impetus to quickly respond to such problems.

      It may sound paradoxical, but I consider all the mistakes of Teavana that you mentioned (or rather, the company’s lack of reaction to them) signs of the general problems of the project, but not their cause.

  5. “In the US, the large scale tradition of home tea drinking does not exist,” is a statement totally ignorant of the US market and tea traditions. In the southern part of the US, iced sweetened black tea is one of the top home-made beverages, and has been a tradition since the 1800’s. Every grocery store here has large sections to buy tea….The reasons I can see why Teavana failed is that Starbucks increased the prices on tea 50% after they bought the stores. Part of the reason Teavan was loved by the non-tea connoisseurs was because of its flavorings, which were ALL NATURAL from actual flowers and dried fruit pieces, and spices, and herbs…Starbucks came in and started adding artificial flavors, so in addition to higher prices, they cheapened quality. They also stopped selling unique tea ware, like Yixing teapots, and iron Japanese tea kettles…that made great gifts…And they probably stopped educating their employees about tea, though I’d always found, from the time of the founding of Teavana, that the staff was fairly ignorant about unflavoed teas and proper brewing times and temperatures, depending on the size of leaf of different varietals. So Starbucks succumbed to corporate greed and tea ignorance, and probably lack of tea love, when it came to Teavana. They also didn’t need quite so many stores in the same market, at EVERY mall….

    1. Leila, thanks for the information. I will essentially repeat the answers to the other two comments. The tradition of drinking cold tea is a noticeable and important but local (not all-country) phenomenon. And in the case of Teavana, this phenomenon only partially intersected with the niche in which the shops operated.

      As for the mistakes of Teavana that you mention, they seem to me an indicator of the problems of the project, but not their cause. If the high price, quality of the product or the training of personnel are dissatisfying for ten buyers, eight of which are accidental visitors, then it is more rational to neglect their complaints. If there are a lot of such buyers and their discontent leads to financial losses, then the company starts to react. Teavana did not react — that means I did not see any rational sense in it. This is possible only in a sluggish market.

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