Marketing Lesson

TWG TEA

TWG Tea from the Wellness Group is the name in the tea business. Started in 2007 by Hong Kong-born Indian, Manoj Murjani, and Frenchman, Taha Bouqdib, this Singapore-based company is the titan of luxe in the teadrinking industry. In a beverage industry that has seen more people drinking gourmet coffee, thanks to Starbucks and other coffee chains, TWG Tea wants to be revolutionary. It boasts the finest and largest collection of tea from every producing country in the world. It all started when Murjani was strolling in Paris and was attracted by the display at a teahouse that Bouqdib was the charge de mission. The two men hit off immediately as they shared their passion for tea. By then, Murjani was already living in Singapore. Bouqdib, of Moroccan descent, and his American wife, visited Singapore and liked it. Thus, TWG Tea was born on Murjanis expertise in business and branding, and Bouqdibs knowledge of tea. Why Singapore? The city is close to the five teagrowing capitals of AsiaChina, India, Sri Lanka, Taiwan, and Japan. This ensures that the tea leaves can be quickly delivered for freshness. Moreover, the fact that Singapore does not produce tea means that these countries cannot impose an export duty on their leaves. What strategy does Murjani and Bouqdib have for TWG Tea? They aim to make tea an affordable indulgence. Just like spending a large sum on a bespoke or limited

edition bag at Louis Vuitton, TWG Tea wants consumers to likewise, be willing to pay a relatively higher sum for gourmet tea. It offers gourmet blends of loose tea leaves that costs from $4.50 to $4,500 for 50 grams. Its tea bags are easily three times the price of Twinings or Lipton. Just like haute couture fashion designers, Murjani and Bouqdib choose their tea leaves very carefully, and spend lots of time creating various blends. TWG Tea buys its teas from 36 countries, including places like Zimbabwe, Mozambique, and Myanmar. They cultivate good relations with their suppliers. Bouqdib has worked in the tea business since he was 23 and has fostered strong relationships with tea gardens and estates worldwide. As an example, the Da Hong Bao leaves from the Wuyi mountains in Chinas Fujian province are highly coveted by tea aficionados and are generally reserved for the government. However, with its good relations, TWG Tea has some quantities of it. Thus, it is not surprising that even some Chinese tea connoisseurs come to Singapore to buy the Da Hong Bao from TWG Tea. The founders travel regularly to sample hundreds of teas at the source. They choose the best and bring them back and build blends from them. In blending, Murjani and Bouqdib live in a world of their own. They create more than two dozens of flavors each year. They see tea like fashion, introducing every season with a collection. Accompanying these exotic blends are equally intriguing names like Silver Moon, Magic Flute, Weekend in Moscow, and Singapore Breakfast Tea. The latter is served on all Singapore Airlines first and business-class flights. The idea behind these different blends and interesting names is to create a voyage-like experience when customers walk into its boutique. TWG Tea wants its customers to feel that they are traveling to a different place with their palate and that the tea will evoke memories of these different flavors. Today, TWG Tea carries more than 1,000 single estate fine harvests and exclusive tea blends, including the first flush of Darjeeling from the best garden in India. Says a Euromonitor International researcher, TWG Tea is well positioned to take advantage of the positive health associations of fruit and herbal teas. Indeed, sales of tea is on the rise. In the U.S. alone, total sales of tea was almost $7 billion in 2007, four times from 1990. Sales of specialty tea, which TWG Tea is in, was $1.1 billion in the U.S. that year. By 2009, 1.8 million tons of tea are consumed as hot beverages. This is expected to increase. In its full year of operation, TWG Tea sold 650 tons of tea, bringing in sales of $30 million. It became profitable in 2009. Besides the Singapore Airlines coup, TWG Tea is carried by the upscale Dean & Deluca food chain in the U.S. and Harrods in London. In Singapore, its tea salons in business area Raffles Place and high-end shopping malls, Ion and Marina Bay Sands, are elegantly decorated,

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offering an intimate and relaxing atmosphere. Set amidst designer shops such as Harry Winston, Louis Vuitton, Cartier, and Giorgio Armani, the TWG Tea salon in Ion has been described as a bejeweled showcase of tea and culinary treats. There is a Tea Book that explains the intricacies of each tea. Besides tea, food and wine are also served. TWG Tea ensures that tea is woven into different aspects of the meal in creative and subtle ways. Theres sauted veal served with asparagus and apples drizzled with a rich sauce infused with Pink Garden Tea. Its Roast Apricot Cod dish has potato puree sprinkled with Matcha Tea and a Apricot Tea-infused sauce. It even has tea-infused vinaigrette for the salads and tea-infused chocolates. Other than food, the salons also sell accessories for the perfect tea experience. There are teapots insulated with 18-carat gold, tea cups made to ensure that the tongue can savor the rich blends without bitterness, tea-infused

candles. As one observer puts it, At TWG Tea, youre not just buying tea. Youre buying into the experience of the brand that promotes the lifestyle that is evocative of luxury. Retail sales make up 66 percent of revenue in 2011. It has 17 salons and boutiques in Japan, Hong Kong, U.S. and U.K.; and is sold in 34 countries. TWG Tea sees its wholesale revenue expanding and the direction for growth. Besides SIA, TWG Tea also supplies to various hotels, including all the 5-star hotels under the Starwood chain. TWG Tea is looking for expansion. In 2011, lifestyle group, OSIM International, better known for its massage chairs, acquired 35 percent of TWG Tea. The partnership is to expand to the Asian markets of China, Hong Kong, Taiwan, and South Korea where OSIM knows well. LVMH is also said to be interested in having an equity stake in TWG Tea.

Questions
1. Evaluate TWG Teas strategy to be a fashion designer tea brand. 2. Do you think the concept of experience can be extended to tea beyond consumption at tea salons? 3. What expansion plans do you think TWG Tea should engage in? What factors might limit its expansion? 74 PART 1 Understanding Marketing Management
Sources: Jessica Tan, TWGs Ritzy Tea, <www.forbes.com>, 14 December 2009; Tea for Two and Me and You, The Straits Times, 20 October 2009; Grace Millimaci, Tea Salon is a Sensory Invitation, <www.au.news.yahoo.com>, 14 September 2011; Ron Sims Tea Break, The Business Times, 18 April 2011; Interview with Taha Bouqdib, CNBC Managing Asia, 25 February 2012; <www.twgtea.com>.

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