Tea Time

These aren’t shops serving tea and crumpets. They’re sophisticated businesses that source, package and distribute loose-leaf, bagged and ready-to-drink tea through wholesale, retail and Internet channels. And, thanks to trends in U.S. tea consumption, these companies are growing.

“The United States recently exceeded Britain as an export market for tea,” says Dan Bolton, editor and publisher of both World Tea News, an industry publication, and Tea Magazine, a bimonthly for tea enthusiasts. “More tea is coming here, and more of it is being sold at a premium price.”

Why are Americans turning to tea? According to Bolton, it’s for health—and for taste. “People have heard the persistent message that tea is good for you,” he says. “We’re also seeing legions of ‘conscious’ tea drinkers, who sit down and order a particular type of tea the same way they’d order a particular type of wine.”

Our local tea companies are capitalizing on these trends in true North Bay style—with passion, innovation, sustainable practices and a commitment to the local and global community.

Revealing the “wow” in tea

Take Gary Shinner and Jill Portman, the husband-and-wife team who founded Mighty Leaf Tea in San Rafael. In the early 1990s, the two were exposed to fine teas through their jobs in investment banking and real estate. Quickly, their personal interest in tea deepened into what’s now a passion for bringing a quality tea experience to the public.

“The thought dawned on us that if we could be transformed by tea, then others would feel the same,” says Shinner, Mighty Leaf’s CEO. “So, in 1996, we opened our own tea shop on Fillmore Street in San Francisco.”

That venture was successful but also limited in its ability to reach a large audience. In 1999, Shinner and Portman closed the shop and launched the Mighty Leaf brand of full-leaf, artisan teas. The company first sold its products to upscale hotels, restaurants and cafés, adding the retail channel in 2007.

“From our roots in the tea shop, we knew what the food service market needed to upgrade its program,” he says. “We decided to branch out into retail when people who had enjoyed Mighty Leaf teas in restaurants and cafés began to ask for our products to enjoy at home.”

Today, the company sells its packaged teas and tea ware via its website www.mightyleaf.com and in more than 11,000 retail outlets. Mighty Leaf also has a strong wholesale division and is served in more than 25,000 high-end food service establishments, including in Kimpton hotels and on Virgin America flights. The company has 60 employees and annual sales in the “double-digit millions,” according to Shinner.

A key factor in this success is Mighty Leaf’s use of whole tea leaves in both loose leaf and bagged products. How does Mighty Leaf get whole leaves into a tiny tea bag? It turns the bag into a larger pouch.  

“The tea bag was invented 90 years ago,” explains Shinner. “It offers convenience but compromises quality.”

Most tea bags are made from paper, which can impart an unwanted taste, and are filled with ground tea leaves, which dilutes flavor. The Mighty Leaf Tea Pouch, in contrast, is big enough to accommodate the whole leaf and made from a compostable, corn-based fabric that lets the tea’s flavor shine through.

“The Mighty Leaf tea pouch lets us offer full leaf, artisan-crafted teas in a portable, convenient form,” says Shinner. “It’s helped us revolutionize the tea category globally.”

The pouch also exemplifies the couple’s focus on quality and innovation, as well as their commitment to replicate the “wow” factor with every cup of Mighty Leaf tea. “We’ve grown the company with a strong degree of our own passion and loyalty from our customers,” says Shinner. “It’s a quest for excellence in tea.”

Restoring rainforest while building a business

Against many odds, you get Sebastopol-based Guayakí (GWY-uh-kee) Sustainable Rainforest Products, which makes tea from organically grown yerba mate, a tree native to South America’s Atlantic rainforests.

Established by the five friends in 1997 in San Luis Obispo, the company faced tough challenges early on. Among them: the fact that yerba mate is traditionally served hot and sipped from a communally shared gourd through a metal straw. “It was a hard business to start from scratch,” recalls Chris Mann, Guayakí’s CEO. “Yerba mate was new to the United States, and neither the product nor the company had English in its name.”

But the five co-founders had a powerful motivator: a shared dream to steward and restore 200,000 acres of South American Atlantic rainforest and create more than 1,000 living wage jobs by 2020.

The company adopted a grassroots model, selling first directly to consumers and then eventually moving into stores. The focus was on creating awareness and building relationships, even if it was, in Mann’s words, “at the pace of a pyramid.

“We were consistent, and we offered a level of integrity people were longing for,” says Mann. “That helped us parlay ties made at individual stores into relationships with regional and then national buyers. Everyone could see we were a company that stayed true to its mission.”

Today, Guayakí employs 40 people and boasts about $17 million in annual sales. And that’s not just because of the sweat equity invested over the years. It’s also because of smart business decisions made at critical times in the company’s history. For example, the co-founders began packaging yerba mate into market-friendly tea bags as it moved into retail stores. Then, recognizing that ready-to-drink beverages comprise 85 percent of the tea market, they launched several bottled, and later canned, yerba mate drinks that combine brewed tea with fruit juices and other natural flavors. In 2009, they also introduced energy shots.

“At first, we were nervous about how an energy shot would fit into our brand,” explains Mann. “We approached Whole Foods Markets with the idea and they were so excited, they wanted us to launch it as an exclusive for the first year.”

Guayakí sells its products online at www.guayaki.com and in a wide range of retail outlets, including independents like Oliver’s Market and in national chains like Trader Joe’s. Guayakí’s loose-leaf tea is even served on college campuses, brewed in a hotpot and served like coffee.

Guayakí moved to Sebastopol in 2006 and immediately embraced its new community. It set up a mate bar in its headquarters and eventually helped to establish the Sonoma GoLocal Cooperative.

“Sebastopol offers us a rural lifestyle within a conscious community, and it’s in the middle of one of our biggest markets,” says Mann. “It offers us the best of both worlds.”

Bringing whimsy to the tea trade

Founded in Mill Valley in 1992, The Republic of Tea is known for bringing a little bit of whimsy to the tea business. There’s fanciful artwork on its packages, clever names for its tea lines and a quirky lexicon that designates employees as ministers and customers as citizens.

“We emphasize a ‘sip-by-sip rather than gulp-by-gulp’ lifestyle,” says Eva Wong, minister of enlightenment at The Republic of Tea. “Our purpose is to enrich people’s lives through premium tea, education and innovation, and our whimsical approach helps us achieve that mission.”

CEO Ron Rubin purchased The Republic of Tea in 1994 and has grown it into a leading purveyor of premium teas with 250-plus products. The company distributes nationally through gourmet retail outlets, online at www.therepublicoftea.com, and through a catalog available at (800) 298-4TEA. It also sells select products, including bottled iced teas, to fine restaurants and hotels.

About one dozen employees work at The Republic of Tea’s corporate headquarters in Novato, with another 100 employees based in Illinois. A focus on quality is a cornerstone of the company’s success. “We purchase only the best teas and herbs and test them rigorously to ensure they meet our quality standards,” says Wong. Specially designed, airtight tins help maintain the freshness of the teas and herbs, which are packaged in loose leaf form or in round, unbleached tea bags.

The Republic of Tea keeps its brand fresh—and, of course, fun—by continually introducing limited-edition teas and new product lines. More than 16 new products were introduced in 2012, including two teas to honor the company’s 20th anniversary, a tea inspired by the Disney movie “Brave,” and U·Matcha, a line of powdered green teas that includes the industry’s first flavored matcha product.

But along with the whimsical approach is a serious commitment to what Wong calls the company’s goodwill umbrella. The company is a member of the Ethical Tea Partnership and supports the Rainforest Alliance. It sponsors employee volunteer days and contributes a portion of sales from specially branded tea lines to charitable organizations. For example, Marin County’s Sunny Hills Services, a nonprofit organization serving vulnerable youth and their families, benefits from sales of The Republic of Tea’s Decaf Strawberry Cherry Tea.

“We’re a progressive, socially conscious business,” says Wong. “This is reflected in our business practices and in our support of charitable organizations.”

With annual sales in the $20 million range, The Republic of Tea has found that combining goodwill with premium tea is a great formula for success.

Pioneering herbal self care

Sebastopol-based Traditional Medicinals—maker of Organic Smooth Move, Organic Throat Coat and nearly 50 other teas—is an industry powerhouse. The company pioneered the herbal medicinal tea category in the United States, and today is the leader in that segment. It’s the number one brand of organic tea and the number one brand of herbal fair trade tea in the United States. And, it’s the seventh largest bagged tea brand in the United States.

All this might surprise those who remember the company’s beginnings nearly 40 years ago in Guerneville. Back then, three young idealists offered herbal infusions that tapped the wisdom and efficacy of traditional herbal medicine. Now the company has 118 employees and a payroll of $7 million. But its purpose remains constant.

“Our mission is to provide affordable herbal self care and to do so in a socially and environmentally sustainable manner,” says Blair Kellison, CEO of Traditional Medicinals.

The emphasis on sustainability comes through in multiple ways. Traditional Medicinals is jointly owned by its employees, the Traditional Medicinals Foundation and cofounder Drake Sadler to ensure the company can never be sold. It manufactures its tea in a solar-powered Sebastopol facility that obtains water from a well on the property and features a beautiful herb garden that also serves as a regenerative septic system for waste water. And the company adheres to exacting standards in creating its teas.

“Most other teas are classified as food, but Traditional Medicinals’ teas are dietary supplements and regulated as such under strict FDA guidelines,” explains Kellison. “We rely on pharmacopoeial-grade herbs, the highest grade available in commerce, to ensure consistent quality, safety and efficacy in our teas.”

This level of rigor gives Traditional Medicinals a competitive advantage, according to Dan Bolton of World Tea News and Tea Magazine. “Other tea companies can suggest their products have health benefits, but Traditional Medicinals conducts the scientific research to prove it’s put in sufficient amounts of an active ingredient to produce a desired effect,” he says. “It was the first in the market to do this, and it’s been rewarded for its innovation.”

Traditional Medicinals typically doubles in size about every seven years, and Kellison expects this growth to continue well into the future. He credits intensive, long-term strategic planning with stakeholders as a way to keep the company on track fiscally and in terms of its mission. And he points to Traditional Medicinals’ home in Sebastopol as an important part of the company’s growth strategy.

“Given its rich natural beauty, readily available workforce and community values, Sonoma County is the perfect location for Traditional Medicinals,” says Kellison. “It’s where our employees want to live and work.”

Small but vibrant

Several smaller North Bay companies keep the tea industry energized both locally and globally. Ross-based Longevité Tea, for example, specializes in organic and fair trade teas. The company was founded in 2007 by Wendy McPhee, a former coffee lover who turned to tea for its health benefits. McPhee brings passionate advocacy for the environment to the tea business: Longevité Tea was one of the first companies to offer organic teas and, in 2008, McPhee spoke at the World Tea Expo on the need for environmentally friendly packaging.

As she works for change in the tea industry, McPhee acknowledges the numerous ways tea has transformed her life, from influencing her MBA project to fine-tuning her taste buds. “Now I can pick out subtleties in the flavors of different teas,” she says. “And I prefer how tea keeps me focused in a calm way, not the ping-pong effect I used to get with coffee.”

David Campbell of Napa’s Tillerman Tea promotes the many facets of tea at educational events and tea tastings—called "cuppings"—in his retail shop in the Oxbow Public Market.

Campbell acquired his affinity for tea while traveling the Far East for the wine industry. Now he travels twice a year to select rare teas from China, Taiwan and Japan. He sells the tea directly to consumers through his shop and his website, and also manages thriving wholesale and food service accounts.

Campbell appreciates the intellectual challenges of the tea business, as well as the personal connections he makes in selecting and selling tea. “I like interacting with the growers, some of whom have been producing tea for generations,” he says. “And I like watching people discover tea for the first time.”

Ned and Catherine Heagerty, owners of Silk Road Teas in San Rafael, are similarly passionate about the tea trade. “We take tremendous pride in our business,” says Ned. “There’s a huge payoff in bringing in a wonderful tea and having a customer tell us, ‘I just tasted your tea, it’s unbelievable.’”

Each year, Ned travels to China in search of rare and unusual teas. What he hand-selects is sold to upscale restaurants like Chez Panisse, high-end retailers like Whole Foods Markets, well-known tea companies that package the tea under their own brands and a loyal following of tea lovers who purchase Silk Road Teas’ products online or by phone.

Like its many counterparts in the North Bay, Silk Road Teas demonstrates integrity inside and outside the tea industry. For several years, the Heagertys have employed disabled adults through a partnership with a nearby nonprofit, Integrated Community Services. The couple also donates tea to San Rafael’s Ceres Community Project, and plans to launch a packaged tea to support that organization.

For Ned, the mindset at Silk Road Teas reflects the essence of the tea business in the North Bay: “It’s the product, the people we meet and the connections we make,” he says. “All these things put together make this a very interesting business.”