Specialty Tea – The Yin to Coffee’s Yang in the 3rd Wave

The 3rd wave in specialty tea, just as in coffee, strives to empower people to change the way they drink tea.

The 3d Wave, as part of the specialty coffee movement, is all about delivering the highest quality preparation and serving experience. It is characterized by a purer expression of coffee, with lighter roasts, single origin and single farm sourcing, latte art and revivals of alternative brewing methods. The 3rd wave seeks to bring something new to the coffee experience as opposed to simply bowing to tradition. This intentional focus on quality over efficiency stands in stark contrast to the first and second waves in coffee, which made huge strides in consumer convenience, speed and efficiency. 

The first wave of coffee in the early-mid 20th century is what brought coffee, in the form of either drip or instant, into every American household. The 2nd wave brought on the specialty coffee scene of San Francisco and Seattle in the 1980’s and 90’s. This was the beginning of artisanal sourcing, roasting and blending. It was characterized by fast-paced baristas, the pervasive aroma of drip coffee and queues of caffeinated customers. During this period, one was either a coffee person or a tea person. The 2nd wave of coffee wasn’t a fitting environment for sitting and savoring a cup of fine green tea. It was during this time that the specialty tea movement went quietly, its own way. Tea became an often neglected afterthought on many coffeehouse menus, and the teas represented in that environment needed to be faced-paced commodity tea bag offerings, in order to keep up with the pace of the coffee service. 

So when we consider the relationship between coffee and tea in today’s 3rd wave, and what it has been historically, we see that the 3rd wave is the first time that premium coffee and tea find themselves in perfect alignment. This is largely due to the evolution of specialty coffee in the 3rd wave to slower, more exacting and deliberate preparation styles. The 3rd wave coffeehouse spaces, East-meets-West vibe, and purity of product presentation are far more reminiscent of beautiful, poetic tea ceremonies than they are the frenetic pace of 2nd wave coffee. Pour-over coffee takes three to five minutes on average – the same as it takes to brew a pot of loose leaf tea.

Similarly, specialty tea is also entering a 3rd wave which stands in as stark a contrast with its prior waves. The first wave of tea in the U.S. was in the first few decades of the 1900s. Both iced tea and the tea bag were invented here during that time. These inventions laid the path for how most tea is now consumed in this country: 80 percent of tea is served iced, and over 90 percent of tea sold in grocery is low-grade commodity tea in bags. Tea’s second wave began in the 1970’s and ’80s with the advent of specialty tea. Tazo, The Republic of Tea, and later Teavana, all adopted premium positioning, showing quantum changes in pricing and packaging over Lipton’s tea bags, and even offering some whole leaf teas. 

Whereas commodity tea is mass-produced, machine-made, and looks like dust, made from the tea grades called “dust and fannings”. Specialty tea is handcrafted, grown in small lots, and is identifiable as leaf tea. At a most basic level, specialty tea looks and tastes like an agricultural product. The degree of authenticity and craft shared with the consumer, and care with respect to making the best possible infusion of the tea leaves, all contribute to bringing out the subtleties and full potential of the tea. In the 3rd wave of specialty tea, each tea is able to tell a story – of origin, terroir, tasting notes, and even functional and energetic benefits. The 3rd wave in specialty tea, just as in coffee, strives to empower people to change the way they drink tea. Whether the format is loose, or a spacious pyramid tea bag, specialty tea is always whole leaf. 

Specialty tea is an ideal complement to coffee in the 3rd wave. The 3rd waves of coffee and tea share similar demographics, consumer appreciation and customers who are willing to pay for a premium experience, similar pace and styles of preparation, increased education and similar connection to source and farmer’s stories. In the 2nd wave, tea was a grandma’s beverage. Now, millennials have discovered the 5000-year old tea product, and are the first generation in the U.S. to choose tea as often as they do coffee. This is becoming evident in changes in the marketplace. Grocery tea is still representative of what older consumers are purchasing, and it is still highly dominated by commodity tea. Newer, trendy restaurants, bars and cafes, however, are serving up whole leaf teas in the form of cold-brewed oolongs, tea-infused cocktails and beers, and single origin whole leaf teas. In addition to the trendiness amongst younger foodies, the opportunity for specialty tea in the U.S. has ample opportunity for growth. The U.S. premium tea market is a segment in tea which is growing, both with respect to the domestic tea market and worldwide. Whereas coffee is a mature market here – we are the world’s largest consuming market of coffee –  the U.S. is far below average with respect to tea consumption, leaving tea plenty of opportunity for growth. 

The profit margin on tea service is upwards of 90 points, making the margin on tea more attractive than it is on coffee. Product cost on a single serving of even the priciest tea rarely exceeds $0.15, whereas for coffee it begins at about $0.50 in product cost. The start-up cost for required equipment is minimal because it doesn’t require any costly equipment – only a few teapots, french presses or mugs with infusers.

Getting started with specialty tea doesn’t need to be expensive or a big hit on a coffeehouse’s operations. Starting out with three premium teas – such as wild tree black or pu’erh tea from Yunnan, a shade-grown Japanese green tea, and a functional herbal tea blend – will satisfy most customers looking for a tea option. As staff interest grows and your tea business increases, you can choose to add different origins and tea styles.