There is a Holy Grail for the tea industry, but it isn’t what you think it is.

Some folks in the tea industry say that in order for tea to get the recognition it deserves someone is going to have to become the Starbucks of Tea. Believe it or not, it’s a phrase that is tossed around in trade journals and at trade shows. A shop on every corner, in every town across America. Each one situated across from your friendly, but aging, Starbucks store in a true standoff of American brands.

The American message about tea will be revitalized and modern. Images of wrinklies, china cups and Zen enlightenment will be buried. The image of tea will be updated and everyone will be stopping off for a cup. There will be glitz and glamour, and somebody is going to make a hell of a lot of money. All for the benefit of the American consumer.

It will be a great day for tea drinkers and for American industry. A new, shiny brand, selling a wonderful product that deserves the limelight after so many years in the shadows. It will be proof of American ingenuity and perseverance. It is the future of American tea, the story of how one small company took advantage of a growing demand for tea and took on a global giant in true, underdog fashion. It will be talked about in business schools for decades.

But what does it really mean? Only more overpriced tea. Just like it is now, some things will never change.

The Holy Grail of tea is far more mundane and far more boring.

The coffee industry has been doing something for years that the tea industry virtually ignores. Walk into your local grocery store, with its endless aisles and elevator music. Wander into the coffee section. You’ll find bags and bags of coffee. Whole bean, ground, usually at least 2-3 major brands plus 6-7 smaller ones. Big 12-ounce bags of coffee. The whole setup offers competitive pricing and a choice of brands. All very nice. Better stores will even have a display where you can save a dollar by dispensing any one of 6 or 8 whole bean coffees into a bag yourself. And it all makes for a damn good cup of Joe that you can brew in your own kitchen–at a great price.

Now, once your envy has abated, take a few steps farther down to the tea aisle and try to keep your jealousy in check. Granted, most grocery stores in the last 2-4 years have nearly doubled the size of their tea section. The tea, with its shelves of cool and pretty boxes filled with individually-wrapped tea bags has been the image of America grocery-store tea for decades. And the worst part of it? It’s horrendously expensive.

Let’s do the math!

Currently, in America, the ways to buy tea are less than ideal. You can buy it online, or in the grocery store. Let’s compare.

We’ll start with the one that most dedicated drinkers use first; online shopping–virtually the only source, outside of major cities–to buy loose tea in America.

Currently, at a popular online tea retailer, the total price for 4-ounces (about 113 grams) of loose leaf English Breakfast Tea is $15.75 (this includes your costs for shipping).

A level teaspoon of tea can weigh between 1-3 grams on average (you can measure this at home too.) If you, like most people, round your teaspoon when making a cuppa (in a mug, for example), you’ll easily exceed 3 grams. When we run the numbers on an average 3 gram serving, that 4-ounces of English Breakfast tea that you paid $15.75 for is costing you about 42-cents a cup. This is nearly double what that company advertises on its website (they display 24-cents a cup). Where is the value in that?

Now, if you want to save yourself the cost of shipping, you’ll head to your grocery store. What you will find is tea bags. Bagged tea is packed by weight, but because it’s in little paper sacks, it’s sold, and used by quantity. A standard box can contain anywhere from 18-25 teabags, and measurements inside the teabags vary. Typical boxes might contain as little as 35 grams total, and goes up to 50 grams. The average price is about $4. Calculate that out for four ounces and you get $12 and $9 respectively. That’s expensive for the lower quality “dust” tea used in teabags. Amazingly, one brand even charges up to $8 for 45 grams of tea! That gets close to $20 if you wanted to buy 4 ounces.

Overall, among teabags, there is no size, or weight standardization like we see in the coffee section. The amount of variation demonstrates that each tea company tweaks their bag count and tea weight to precisely squeeze out every cent, and minimize the amount of product they use.

The other downside; one teabag per mug might simply be too weak and there is the argument that you give up quality in teabags for a lower price. However, for the moment, we are dropping the quality issue, because we can prove that the price per cup can go down even further than teabags, even with standard-quality loose tea.

Run the numbers on that $4 box of 20 English Breakfast teabags and you get right about to 20-cents a cup.

The tea consumer’s Golden Moment

This is where we begin to look for the real future of American tea, and the development will bring value to consumers in an industry that seems to virtually lack it. Bulk tea; packaged and sold on the supermarket shelf. We aren’t talking about prized Yunnans, Oolongs and 10-year old Pu-erhs. We are still talking about that everyday-drinkable breakfast tea.

There are a few supermarkets that already sell bulk tea, however, for most of America it remains elusive and totally unavailable. When we begin to see bulk, loose-leaf tea on supermarket shelves across the country, tea drinkers will finally begin to see real value when buying tea.

Half-pound bags of tea would be a good measurement; tea is lighter than coffee so higher quantities may make for packages that are too large for store shelving. So, for our argument, we will use the example of an 8-ounce bag (227 grams.)

Let’s say that the 8-ounces of loose tea has a seemingly steep price of $10. A price like that puts it out of the currently accepted price-range of supermarket tea and risks never being purchased, but we’ll leave it there for now and pretend the importer hasn’t been able to bring costs down yet .

We’ll bring back that 3-gram serving for a mug of tea. Running the numbers on that $10 bag and the cost our mug of everyday tea comes spiraling down to about 13-cents. That’s over 3 times less than buying half the amount from that expensive online retailer. The best part? The quality is likely to be about the same.

It gets even better when the competitive importer eventually starts putting efficiencies into the operation trying to push the consumer’s price lower. If the importer gets the price down to $8 ($1 an ounce) we hit 10-cents a cup. Even if $12 for an 8-ounce bag is the only price point we ever see, that is still 16-cents a cup, cheaper than bagged tea and far better quality.

The future of American tea

We would like to think that bulk tea in every grocery store is inevitable, how long it will take before it is realized may be the disappointment. Right now, tea drinkers only have expensive, over-priced options for tea. Either it is low quality tea bags or pricey specialty tea. As long as loose tea is treated as a specialty product, and not a grocery item, consumers will continue to loose out.

Tea is not a luxury, but loose tea vendors would have you think it is. They use expensive packaging, tins, boxes and labels that drive up the single unit price. They sell in small quantities driving the price up further. There is a segment of the premium loose tea market that deserves that kind of treatment, but in no place but the Queen’s palace should an ordinary breakfast tea be considered a luxury product.

Perhaps the widespread availability of bulk tea in supermarkets will not happen until that glamorous Starbucks of Tea emerges off the back of some hard-working Americans. Such a development will drive further demand. Remember that it took the development of the expensive Starbucks brand for the coffee aisle to improve too. Consumers were fed up with only being able to get really good coffee from coffee houses, this forced the supermarkets to improve their lines in order to provide a cheaper way to have great coffee at home.

Tea’s Golden Moment (at least for consumers) is not going to be a brightly lit café. While a nationally-branded tea café will be nice, and many tea drinkers will spend time and money enjoying it, it won’t bring real value. Real value will come when tea drinkers can run down to the local supermarket, and buy a bag of loose tea at a fair price.

How do you feel about the prices you currently pay for tea? What about the wait from online shopping? Are you so organized that you never run out of tea, or do you have to wait three days for that shipment that you sadly forgot to order? Do you stop by the grocery store on your way home from work to grudgingly pick up some teabags to hold you over?

Tell us your experiences with buying tea and how often you find a good value.

peter

Peter Davenport is one of the founders of Tea Trade. In addition to building, enhancing and supporting Tea Trade and its members, he studies Business Administration and Management at American Public University with a focus on Entrepreneurial Studies and Enterprises.