Having a cup: Canadian business owners see big growth in tea drinkers

TORONTO – Your grandmother’s favourite beverage has found a new life with retailers who say tea is destined to become the next sought after sip for Canadians bored with the same old cup of coffee.

Whether it’s the traditional Earl Grey or fancy variations, like carbonated teas, or a tea-infused alcoholic drinks, the number of options for afternoon tea is growing at a stunning pace.

“Like wine, people are engaged by the complexities and the intricacies of tea,” said Keith Howlett, an analyst with Desjardins, who watches trends in the retail industry.

“It’s a familiar beverage and I think that’s opened up possibilities.”

During the past few years, more tea shops have established a quiet presence in neighbourhoods across the country, relying primarily on word of mouth to entice new customers, but the buzz is about to become much louder as Starbucks tries grab a taste of the fervour.

Last month, the Seattle-based coffee chain opened its first “tea bar” in New York City, a symbolic step towards expanding its Teavana store base. The company made the biggest acquisition in its history last year when it spent US$620 million to acquire about 300 Teavana stores, including 59 locations in Canada.

The rollout could find a particularly receptive audience in Canada where tea is the fifth most popular beverage, with nearly 10 billion cups drank each year, according to Statistics Canada.

Starbucks wants to corner the tea market by expanding Teavana beyond shopping malls and into major urban centres, with a significant push to begin in Canada next year. Earlier this fall, the company began carrying Teavana products at its coffee shops which exposed more consumers to the fragrant coffee alternatives that range between $3 and $6 per serving.

Canadians’ tea consumption is expected to rise 40 per cent by 2020, according to a government agency report on food trends published by Agriculture and Agri-Food Canada. The increase will be driven by a soaring interest in health and wellness, it said.

“Canada has always been a hot tea drinking country because of our British past,” said Louise Roberge, president of the Tea Association of Canada, a lobbyist group for the industry.

Tea’s popularity hit its peak before World War II but the beverage slowly began to lose its status after the war ended. By 1991, the hot drink had fallen to the lowest consumption level in its history in Canada.

After years of being delegated to the bottom of restaurant menus, tea has began to regain its status, helped by the proliferation of stores dedicated solely to pushing the boundaries.

Several new players brought a heightened level of creativity with concoctions generally called “flavoured teas,” because they’re less traditional and lean more on catchy names and seasonal gimmicks.

David’s Tea, based in Quebec, has a wide collection of exclusive teas, ranging from the Halloween themed Stormy Night — which included pieces of coconut, vanilla and chocolate — to the even stranger Movie Night, a combination of apple pieces, maple and popcorn.

Those strange brews helped David’s Tea build a loyal following at stores across most of Canada and some areas of the United States. Backed by Herschel Segal, the founder of Le Chateau, the cafes opening in 2008 sparked a resurgence of the interest in what could be done to make loose leaf tea unique.

A few years earlier, Canadian entrepreneur Hatem Jahshan and his wife, Tonia, discovered their own fascination with tea, after a casual cup inspired them to explore its varieties while on vacation in Nova Scotia.

The couple learned their family and friends also enjoyed to sample the scents and tastes, and they began to stock up on varieties of loose leaf tea and give them away as gifts. Within months their business intuition had kicked in, and direct sale company Steeped Tea was born, built on independent consultants who hold private tea parties at people’s homes.

What started as a small business run from their garage has blossomed into a successful low-overhead model that operates out of a 20,000 square foot facility in Ancaster, Ont. with 35 employees and more than 3,000 sales consultants across the U.S. and Canada.

The next frontier could be alcoholic beverages, where microbreweries have found huge success with lemon tea-infused beers. Over the summer, Steeped Tea launched its own line of tea bags that can be dropped into a pint, with flavours like Orchard Cider Spice and Berry Mania.

“It has become an adventure to find out what better suits the North American palette,” said Jahshan.

In Toronto, some local bars have responded to the tea sensation with mixed results, including Saviari, a bar in Toronto which “intermingled” tea and alcohol to create a variety of cocktails. While the nightspot shut down earlier this year, it left an indelible impression on mixologists in the city who have kept tea cocktails alive.

All of the activity has left boutique teashops scurrying to satisfy longtime tea connoisseurs while also catering to a younger crowd that wants some pep in their pot.

For the past 13 years, Marisha Golla has run the House of Tea, a traditional shop in a small neighbourhood of Toronto where the walls are lined with metal tins of obscure imported teas from around the world.

While most of her customers still prefer what’s considered a standard cup, Golla said she’s seen an increase in more unusual requests that mimic the bigger chains — and that’s a demand she wants to fulfil.

“When two or three customers come in and ask, ‘Do you have Birthday Cake tea?’ it is not what you want, it’s what they want,” said Golla, who began her career as a tea taster in Sri Lanka.

“They come in for a solution, and if you don’t have the solution, they’re not going to come in again.”

To maintain a competitive edge, Golla installed a section of her store dedicated to more unconventional flavours — she has about 24 of them, even though they don’t necessarily have playful names like “Jumpy Monkey,” one of the most popular selections at David’s Tea.

“I just cannot get those words out of my mouth,” Golla said.

While Golla doesn’t plan to fully embrace the evolving taste in tea, she says traditional tea shops should welcome their newfound popularity.

“I like competition very much because if you don’t have competition you become blunt,” she said.

“You cannot be here alone and be an industry.”

Whether this wave of enthusiasm for tea remains consistent is uncertain, but not everyone is convinced that the hype is enough to tweak their business model.

Tim Hortons (TSX:THI), the country’s largest coffee shop, says it doesn’t plan to expand its basic tea selection into new flavours any time soon.