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Tea Garden to Tea Shop: How to Transition to Growers Direct Tea

John Grams

Many of us rely on tea brokers to open and establish our business. In 2020, we can see challenges on the horizon from tariffs to weather and political disruptions. Our global business is becoming more complex, pressuring margins.

Sixteen years ago, The Jasmine Pearl Tea Company in Portland, Oregon transitioned from broker to grower direct. Georgie Rhein of Mana Organics spoke with Chuck and Heather Agosta, the founders of The Jasmine Pearl.

“When we started The Jasmine Pearl, we purchased month-to-month from a few stateside tea importers/brokers. We paid more per carton and set our pricing accordingly,” said Chuck. “We didn’t worry about shipping or inventory or keeping the tea fresh.”  

Heather of the Jasmine Pearl Tea Shop in an organic Tea Garden.
Heather Agosta of the Jasmine Pearl Tea Shop in an organic Tea Garden.

Heather and Chuck started wondering if they could improve their prices by working more closely with growers. In the Direct Market, pricing has three components: Grade, Volume and Transport. Retailers can earn a lower cost by buying by the pallet, roughly a ton, and shipping sea freight.

“Importing our own teas would give us more control over quality and supply but it required substantial cash for each purchase. We hadn’t faced that kind of cash outlay when ordering month-to-month,” Heather explained.

So how was The Jasmine Pearl able to make that transition?

“Our catalog pricing was set according to tea costs from brokers. Our customers were happy with those prices. Importing directly from growers cut our costs 30-to-60%, depending on origin and tea grade. That savings initially financed the large imports we began organizing,” said Chuck. Such substantial savings can offer a huge difference for both customer prices and business margins.

Heather shared another benefit. “We hadn’t visited many origins. Having a direct relationship with growers made us better representatives of the tea. They were happy to share what they knew about growing and producing teas. They shared stories. Explained how what they did was a little different. Answered our questions.

We better understood the practices they had implemented to become more sustainable. We never received this kind of information from our
broker. Becoming closer to the tea made our work more fun and satisfying for ourselves. We now have friends that manage the tea gardens we buy from all around the world!”

Georgie asked about the logistics their shipments required.
“We quickly learned what an import broker can do to help simplify things. We’ve learned about insurance and bond requirements,” said Chuck.

One quick tip on importing that Heather shared, “If your business is based on the west coast, make 100% certain that your consignment is routed through a west coast port, not east coast. Think about that truck transport! That can be an expensive and time-consuming lesson to learn.”

Chuck says the Jasmine Pearl tea shop supports USDA Organic Certification to promote sustainability
Chuck Bauman at the Jasmine Pearl office in Portland, Oregon

Heather and Chuck used to have a broker help with Vendor Selection. Georgie asked how they make those decisions now?

“We feel organic certification is very important for the health of our planet (humans included!). We emphasize organic certification and quality. After that, price is negotiated,” Chuck told us.

“Once a relationship is cemented with a supplier, we don’t often change it. There’s a lot to be said for stability and trust in a vendor relationship,” Heather explained. “We’ve only changed twice in the past few years: Our supplier of jasmine pearls
seemed to be increasing pricing for no discernible reason, so we searched for – and found – one who has proven to live up to their price-stability word."

“The other change we made was actually from our previous organic Assam supplier, who was quite slow and non-responsive. Communication is key in a service business like ours”.

It sounds like it pays to order directly. So how do you order now?” asked Georgie.
“We plan one big order to economize tea and freight costs. It saves us from having to continuously run projections. Like everyone in our business, we wear many hats. Supply chain is one of them,” said Chuck.

“We run projections based on usage for the past 4 years. Then I’ll break a tea’s usage down quarterly. Fluctuations happen seasonally, so I might need more detailed information to understand the things that affect our business,” Chuck continued.

“Quality small-batch teas like the FTGFOP1 from Mana, sells well in our Tea Shop. We purchase enough to last a year. But what we love most, is we know the folks at Mana well enough – if we run short, there will probably be a few cases available in St. Louis. That is the best part of dealing directly with the grower,” Heather added.

“Production lead times vary greatly by origin. It’s important to do everything we can to help clients understand long timeframes,” said Heather. “We service kombucha companies, restaurants, cafes, coffee shops, yoga studios, grocery stores, co-ops, and all sorts of unique businesses,”

“We communicate regularly so clients know what is happening with their harvests. It is the same for small-production, boutique origins like some Japanese green teas or high mountain oolongs. The key is close communications,” she explained.

“It is so important our clients get teas on their sales calendar. We’ll discuss their sales projections six months or more in advance. Ordering that far in advance, we’re confident they will have the teas when they need them, regardless of what happens with politics or climate change around the world,” said Chuck.

Georgie asked how they keep the teas fresh for the 9-12 months.
Heather responded, “Our warehouses have control factors for light, heat and humidity. But I learned early that keeping teas in the OEM packaging substantially increases their freshness and lifespan. We break down chests, sacks and cartons as-needed. But the remainder of the pallet maintains its integrity.”

“We are very disciplined with the small things like pressing all the air out of pre-pack bags and keeping them away from heat,” Chuck added.

The transition from broker to grower direct has certainly paid dividends for The Jasmine Pearl in terms of growth and profitability. For more information on how Mana Organics Grower Direct services can work for you, give us a call!

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