Jun 19th 2010 Issue
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Getting Started: Packaging Strategy

Charles Cain - Jun 19th 2010

Packaging sells tea - or not

Adagio's new tea pouches

This year's World Tea Expo was awash in entrepreneurs planning new tea business ventures. I had the privilege of presenting to about 200 of them, and talking on the show floor with many more. The simple truth is that there is A LOT of money to be made in tea, but if it were easy to find the perfect path, everyone would be doing it. All of these conversations showed me the need for a series of articles on how to get started in the business. This first installment covers the creation of a branding and packaging strategy.

My first statement would be that if you are launching a wholesale or Internet operation you MUST create a unique offering. Study the competition extensively and make sure that your collection of teas, the design of your packaging, and the story you tell has some unique twist. WHY does the tea industry, and the customer, need your product? If you're just a copycat then you'll have a hard time earning and retaining customer loyalty. Of course a business that is targeting a local market only, like a tea shop, is somewhat less susceptible to competition.

Second, you need to know that custom packaging requires a significant investment. A run of custom tins, for example, will require a minimum order north of 10,000 pieces, and between plates and manufacturing and shipping will cost you well over $10,000, not including tea of course. I'll assume that if you have the funds to hire a packaging designer and purchase custom packaging that you wouldn't be reading this article. The following recommendations are for those of you who are looking to get in the game for something like $5,000 or less as opposed to $50,000 or more.

Third, while there are a host of wholesalers that offer some level of private label services, they typically fall into one of two categories. Most will require large minimum quantities. For example, a VERY SMALL order would be 50 pounds of a single tea, packed in 4-ounce packages for a total of 200 packages per type of tea you carry. Those wholesalers that will do truly small orders (i.e. 5 pounds of tea in 20 packages) will be doing everything by hand and in a fashion that, if you're trying to be cost effective, you should really just do yourself.

Here is how I would recommend going about creating your own line of packaging.

1. Select a stock tin or bag that can be purchased from US suppliers in small quantities on an as-needed basis. Companies like Pacific Bag and TinWerks carry a range of options at prices that are very reasonable given the low minimum orders (I've worked with and can recommend both companies. I would recommend a zip-lock bag option for repeat customers and a tin for luxury and gift buyers.

2. Based on the size of the tin or bag you choose, find a stock label (i.e. Avery Label) that can be purchased from an office supply store. If you use a stock label, it's easy to find the design template (native in many software programs or downloadable from the company website) to print your logo and the specific tea information on each label. Alternately, if you're going to run a little larger quantity or are looking or higher quality, you can have a local printer produce custom label sheets pre-printed with your logo and any color components. These sheets can then be run through your printer to print the tea-specific information in black and white.

If you are selling product online, or are packaging teas in the presence of the customer, your packaging does not need to comply with FDA packaging regulations. If, on the other hand, you intend to pre-package your tea and put it on the shelf in your store or any other, make sure to familiarize yourself with FDA packaging regulations.

3. While most small operations fly under the radar regardless, you can avoid even the potential for issues with the health department by borrowing or inexpensively renting space that is already licensed. Some of the easier to find options include a church kitchen or a restaurant. Both are likely to be completely empty and quiet on a Monday morning (for example). If you can get access to a space that is licensed by the Health Department even a few times each month you can probably package enough product to get you through. Product that is already packaged and sealed can be usually stored in your home (a few areas prohibit this).

With a little creativity and legwork you should be able to create your own custom packaging for a few hundred dollars and be off to the races with a few hundred more worth of product. Many tea wholesalers have minimum orders of only a couple pounds of tea and no minimum dollar value. Dethlefsen & Balk sells in 2.2lb increments and Adagio Teas sells wholesale in 1 pound increments. In addition to keeping your initial investment low, this strategy also gives you tremendous flexibility to adjust your packaging, your product mix, or even your brand, based on customer feedback. There are few feelings worse than making a huge initial investment only to find out that you've somehow missed the mark and need to go back to the drawing board. Make sure you have the perfect design and approach before increasing your purchase volume in an effort to increase margins and profitability.

That's the process. The exact recipe for success depends on your brand, your target customer, and you. For more information on creating a strategy that will succeed in a sea of competition, read Packaging for Premium Teas. Be innovative. Be creative. Good luck!

Check back in the coming days for articles on launching an E-Commerce website, opening a tea café, opening a tea retailer, and launching a wholesale operation, all on a shoestring budget.

Adagio Teas