It's a Hot Time for Tea

Gene Dunkin, president of Tea Forte, a marketer of specialty brews, discusses innovation and brand strategy for the humble tea bag

"The infuser, as we call it, is not just designed to be beautiful," says Tea Forte President, Gene Dunkin. "Not having to look at the nasty tea bag after brewing is something people really like".

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Although that ubiquitous coffee chain, Starbucks, is seeing a downturn, the outlook for tea sales is anything but tepid. Research firm Packaged Facts forecasts that tea sales in the U.S. will double in five years, from $7.4 billion last year to $15 billion by 2012.

Several trends are at play. Tea, especially herbal infusions, has earned a rep for being good for you, or at least better than coffee, among baby boomers and twentysomethings. News reports boosting tea as a cancer and obesity fighter help. A study published last year in the Journal of the American College of Nutrition suggested that a one-gram drink of black tea may have the potential to stimulate an insulin response and reduce blood sugar levels. Another 2007 report published by the American Journal of Epidemiology found that drinking five cups of green tea a day may reduce the risk of prostate cancer by 48%.

Tea packagers and producers have seized on the interest and spawned ever more flavors and more interesting packaging. Packaged Facts forecasts that by 2012, the specialty tea segment of the market, which currently makes up 36% of the total, will grow to account for more than half of all tea sales in the U.S.

Plunging into this rich-looking future is Gene Dunkin, who took over as president of privately held Tea Forte in late 2007 after a long stint running Godiva Chocolatier. Tea Forte is distinguished in the marketplace by its pyramid-shaped, nylon bags, each in its own similarly shaped envelope. Dunkin talked with senior correspondent David Kiley about expanding a business whose product costs users about $1 per cup. An edited version of their conversation follows.

What made you want to leave the world of chocolate for the world of tea?

Last summer, [company founder] Peter Hewitt kidnapped me at the Fancy Food Show. I first met him five years ago when he launched Tea Forte. I had been smitten with the brand, the delivery system for the tea, the packaging. Godiva is a well-packaged product, but Tea Forte's packaging blew me away. He held up Godiva as a role model for what he wanted to do with the business.

How big is Tea Forte, and how has growth been?

The business has been growing a minimum of 50% a year since its inception. We are comfortable growing at about 50% for the foreseeable future. This year's sales will be about $15 million, approaching $20 million.

What sort of distribution do you have?

The initial distribution has been high-end gift stores, boutiques, and food shops. Recently, we have been branching out into department stores, such as Neiman Marcus, Harrods, Saks Fifth Avenue, Gump's, and Origins. We are going to David Jones in Australia and Harvey Nichols in England. The other channel that is taking off is hotel and spa distribution. We are in Ritz-Carlton and Four Seasons Hotels in 20 countries now. And we have a new global agreement with W Hotels to be in rooms and the restaurants.