No one would dispute that US-style coffee shops are one of this decade’s marketing successes, with UK consumer expenditure rising from 4m in 1994 to 35m in 1998, according to recent Mintel International estimates.
But the jury is still very much out on whether tea – a beverage drunk daily by 75.5 per cent of the population, compared to coffee’s 52.6 per cent, and in almost twice the quantity of coffee per capita – can successfully be translated into branded cafÃ© chains.
Tea manufacturers are simultaneously encouraged by the coffee outlets’ success and fearful of the impact the trend could have on tea sales in the long term.
Many have introduced new flavours to pull in additional consumers, but they are approaching the cafÃ© issue with caution.
As yet, only Whittards of Chelsea is operating in the branded-cafÃ© market, launching its T-bar concept last August, created by Carte Blanche and Bostock & Pollit (DW 14 August 1998). And the T-bar sells coffee as well as tea.
Next week Whittards will launch T-zone in London’s Carnaby Street, a variation on the T-bar, also created by Carte Blanche.
Other manufacturers appear to be biding their time.
“We have been considering setting up tea shops for around ten years, but we haven’t yet given the nod. But we are looking at the issue, yes,” says Twinings UK commercial director Ian Dewar.
The manufacturers’ tardiness arises from doubts over whether tea’s core values can be translated to a branded cafÃ© format. “My gut feeling is that there is far less scope for tea than coffee. Coffee chains are successful because they add value; they are more exotic,” says one equity analyst.
The demise of Williamson & Magor’s three-strong tea-house chain two years ago gives the tea manufacturers further cause for caution.
According to Mintel International leisure analyst Chris Butcher, because tea is essentially hot water and a bag, it can be made just as easily at home. This makes it difficult to charge the premium that the coffee shops can get away with, because the cost of the coffee-making equipment is prohibitively expensive. Mintel International will release a new report on the tea market at the end of this month.
The case of Unilever, which at around 20 per cent has the largest share of the UK tea market, serves as a useful guide to the manufacturers’ anxieties.
Unilever has operations across the globe and tea brands which vary from market to market. These are managed by different subsidiaries in different countries, which act independently from one another and ultimately report to Unilever head offices in the Netherlands or London.
However, a closer examination of their activities reveals a pattern – Unilever is unsure what to do about the cafÃ© issue.
Last year Unilever subsidiary Van Den Bergh Foods appointed Design House to look at a tea cafÃ© concept for one of its main tea brands – thought to be Brooke Bond D or PG Tips. Van Den Bergh is responsible for Unilever’s tea brands in this country.
Nearly a year later, no cafÃ© has appeared, suggesting it has either run into complications or has been scrapped altogether. Neither the client nor consultancy will comment on the project, or whether it is still going ahead.
The situation in the UK appears to tally with Unilever’s experience in Belgium. Hartog-Union, the Unilever division responsible for the Lipton range of teas in Belgium, confirms it has ditched plans to open a Lipton-branded tea cafÃ©.
“We did consider the option, but the project has been stopped,” says Hartog-Union marketing manager of beverages Alain Moffroid. He will give no further details.
Hartog-Union’s decision follows an in-depth research project, believed to have been conducted by UK consultancy Cato Consulting. Cato managing director Emma Fric declines to comment on any involvement in the project, which is understood to have contained a proposal to roll out a tea cafÃ© concept across parts of Europe.
Globally, Unilever currently does have one branded tea cafÃ©, named The Lipton Tea Shop. This was launched about 18 months ago in Pasadena, Los Angeles, and was created by New York consultancy Donovan and Green.
Director of tea buying for Lipton in the US Peter Goggi says the company has no plans to roll out the concept. Lipton is responsible for Unilever’s tea brands in the US.
Goggi says much of the knowledge gained from the cafÃ© will be incorporated into its latest venture – a new “turnkey” refreshment service available in the US in seven formats, to be launched gradually from Spring.
The formats have been developed by Atlanta consultancy Ritchie International Branded Resource Group, in conjunction with the Lipton in-house design team.
The formats will come in a range of sizes and will include a small branded counter unit to be installed in existing cafÃ©s and a self-service “in-line” wall unit (see News, page 3). These will be aimed primarily at colleges and offices. Goggi says initial feedback has been “overwhelming” and hopes to push the concept into Europe and the UK.
It could be that in this concept, Lipton has come up with the unique selling proposition tea has been looking for. With the emphasis on taking-away rather than drinking-in, overheads will be lower and premiums likely to be below those of the coffee shops.
It is also possible that customers will consequently not expect the powerful brand which is offered by the coffee houses.
And if its main competition is the traditional office vending machine, how can it lose?