Drink of the day once again
Tea is back in vogue and it’s big business. Elliot Wilson reports on how the English cuppa has become a passport to sales success. Raschid Gibrail is your typical tea trader and entrepreneur: his family history is almost impossibly exotic. His company history neatly encapsulates the rise and fall of the tea industry and, in recent years, the cultural and financial revival of the most English drink of them all.
Gibrail’s Somali father Ismail arrived in London in 1920, demobbed from the Royal Navy after serving alongside Lawrence of Arabia in the First World War. He opened his café in Blackpool and by 1938 his company, Ismail & Co, was blending and brewing coffee and tea for the Duke of Westminster. Raschid took over in the 1960s, but by 1991 Britain was in love with coffee. Tea was out, and Ismail & Co closed its doors.
Yet in recent years, something odd has happened to the British cuppa. While sales in ‘black’ tea, the sort you find in your standard supermarket-brand bag, have been falling for years, sales of herbal, fruit and, most notably, green teas – the latter packed with antioxidants and good for the immune system – are booming. In July 2007, Euromonitor tipped UK green tea sales to jump 61 per cent in the five years to 2011, to £24.3m, even as black tea sales declined nearly 8 per cent to less than £600m.
The chief beneficiaries have been fast-growing tea traders and blenders – companies such as London-based Newby Teas, Jing Tea and Postcard Teas. They tend to be run by entrepreneurs who wouldn’t be out of place on the clipper ships and trading routes of the 19th century. ‘This new industry is being created by people with a real passion for tea, who have given up working as a teacher or a civil servant,’ says Jane Pettigrew, a leading authority and writer on the subject.
Fast-growing companies with chunky margins inevitably attract the attention of larger rivals, and niche British tea makers are increasingly being targeted by acquisition-hungry foreign companies, many from the Indian subcontinent.
This is not new, but the process is speeding up. India’s mighty Tata Group started it, buying up Tetley in 2000 for £271m. Three years ago, Apeejay Surrendra group, also from India, bought Typhoo for £80m. Earlier this year Tata was at it again, bidding £30m for Clipper, a speciality producer of fairtrade and organic teas and coffees based in Dorset. Tata failed and Clipper, founded in 1984 by husband-and-wife team Michael and Lorraine Brehme, was sold to the financial firm Fleming Family and Partners.
Tata was not the only Indian firm to throw its hat into the ring. Mumbai-based Sapat International lodged a £24m bid for Clipper, which also fell short of the mark. But Sapat’s owner, Nikhil Joshi, has not given up. He has a kitty of £20m to spend on a British tea brand and told The Observer he has two companies in his sights: Whittard of Chelsea and Taylors of Harrogate.
What makes Sapat, founded 110 years ago by Nikhil’s grandfather, RH Joshi, and with an annual turnover of over £100m, so desperate to make it in Britain? The answer is in the brand. Being seen as ‘British’, or, more specifically, ‘English’ in the tea business is, if not a passport to success, then certainly an open ticket. Sapat may be one of the biggest growers, blenders and shippers in a country that exported 188,000 tonnes of tea in 2005, but its brand value overseas is nil.
‘If the product says ‘Made in India’, it won’t make the right impression on the customer,’ says Joshi. ‘If you go to the Russian market, for instance, a British label has more appeal. An English brand like Ahmad Tea or Newby Teas may grow their leaves in India, but they are packaged and sold to the Russians as an English brand.’ Hence the scramble to buy up a British tea brand before Tata and Unilever gobble them all up.
Joshi may have to look farther than Newby or Ahmad, both of which profess their determination to remain independent. And while both are London-based firms, each is run by merchants with roots in Persia and India. Ahmad’s name and brand was brought to London in the 1980s by three Iranian brothers, who re-exported the new, ‘British’ product back to Tehran. Newby was founded in 2000 by a British Indian merchant, NK Sethia, who started his career – like Raschid Ismail – as a London tea taster and broker in the swinging Sixties.
Both companies have moved aggressively into the Russian market, which has fast become one of the biggest global buyers of high-quality leaf. According to the International Tea Committee, Russian imports of tea jumped from 111 million tonnes in 1996 to 170 million by 2005, with annual imports to the former Soviet bloc notably Belarus, Ukraine and the Baltic states, up more than 25 per cent over the period, to 64 million tonnes.
Both Newby and Ahmad make much of their adopted Englishness. Ahmad festoons its products with paintings heavy in English antiquity. ‘We portray ourselves as a very English brand,’ says Ahmad’s export manager, Justin Tate. ‘We sell the romantic view of ‘Britishness’ to foreigners – Buckingham Palace, royalty, and so on.’
Other companies go further, even when they are about as British as Stalin. Orimi Trade, based in St Petersburg in Russia, has adopted an English name – and website: Greenfieldtea.co.uk – to appear more Blighty and less Boris.
While some traders export a nostalgic vision of the Empire, others prefer to tempt Brits with high-end teas grown in the fields of the Far East. Take Postcard Teas, based on London’s New Bond Street, a three-year-old company whose sales are doubling each year. Its founder, Timothy d’Offay, spent nearly a decade exploring east Asia’s best tea plantations.
His epiphany was that the finest teas from Korea, China, Japan and Taiwan could be enjoyed by British customers more used to a Tetley drawstring bag. He says the range of customers in his shop has caught him by surprise. ‘There is a new batch of connoisseurs out there, particularly young men, who may not buy expensive wines, but who find a link with a terroir [the French designation for the characteristics of soil and climate that provide a wine with a specific taste or personality].’
Without the recent change in our drinking habits, many of these vibrant young trading firms would not exist. There would be no place in the Kentish town of Tunbridge Wells for Raschid Gibrail’s new firm, Ismail Coffee and Tea. Reopened in 2007, it has proved a hit, and Gibrail’s investors envisage opening up to 25 more Ismail-branded outlets around the country. The customers love it, says Gibrail: ‘Tea is like wine 10 or 20 years ago – people were drinking it, but they didn’t know what they were drinking. That has changed for the better, and the same thing is happening in the tea industry.’
Source: Euromonitor International