Taiwan's tea dynasty strives for markets and cultural presence

At one time, the only brand of tea that most Americans had heard of was Lipton’s, served either hot or iced. Thankfully, American tea drinkers today have become more sophisticated and educated about the art and culture of quality teas from Asia. At the same time, people in Taiwan have discovered a love for premium coffee that would have seemed very foreign even twenty years ago. Between the two cultures, businesses have had to adapt to satisfy the taste buds of both cultures and to compete in an increasingly niche markets.

Ten Ren Tea establishes strong brand image

In the United States, one of the biggest tea importers is Ten Ren Tea. Founded in 1953 in Taiwan, the business has grown steadily to include snack foods, ready-made drinks, ginseng and loose teas. Ten Ren Tea was started by Lee Rie-ho, whose father also grew and sold tea. The family has been in business for four generations now, since Lee’s grandfather began growing tea. Under Lee, the business grew to become Taiwan’s biggest tea company with 74 stores. It also includes the Lu Yu Tea Art Center that works to preserve Taiwan’s tea culture.

In 1980, Ten Ren established it first US store in Los Angeles. Lee's brother and sister-in-law, Ray and Lily Lii, would open a San Francisco store two years later. Located in San Francisco's Chinatown, the store continues to be a strong presence. A New York City store would follow in 1984, set up by Lee's nephew and wife, Mark and Ellen Lii. Today, Ten Ren has a solid brand recognition and operates 61 stores in the United States, Canada, Japan and Malaysia.

Family buisness prospers

In its San Francisco store (http://www.tenren.com/), the bulk of Ten Ren’s early earnings were not from tea sales - as would be expected from a tea company - but rather from selling ginseng. Known throughout Asia for its health benefits, quality ginseng was being grown in Wisconsin, but very few pharmacies or health stores sold American ginseng in the early 1980s. When Ten Ren began stocking it, the store became a regular stop for tour buses carrying Singaporean, Malaysian and Chinese tourists.

With the growing popularity of bubble teas in the late 1990s, the company began to add tea stations to its stores, preparing hot and cold teas to-go. These tea stations now account for a large percentage of each store’s profits in the United States.

Still, the tea stations and traditional tea are very different businesses, according to Henry Lii, general manager of Ten Ren Tea (San Francisco). Lii learned the business from seeing his parents run the San Francisco store, and worked elsewhere before joining the family business. Customers who enjoy a particular loose tea are usually very loyal to that tea and are willing to travel long distances to purchase their favorite tea. It is a business that takes time to build up. Whereas a bubble tea might cost US$2 to US$3, traditional tea can range anywhere from US$5 to US$5,000 a pound. And, the cost often depends on how the tea is processed, according to Henry.

The flavor or scent of a traditional tea is very much a matter of personal preference, he explained, and is related to where the customer is from. While Taiwanese tea-drinkers enjoy Oolong teas, people from Beijing prefer Jasmine tea. Somebody from Hangzhou would probably drink Dragonwell (Long Ching), but if they come from Fujian, then they might select a Green, Jasmine or Iron Buddha (Tie Kuan Yin) tea.

The scenting of a quality Jasmine tea is dependent on the layers of Jasmine flowers used. The tea could be scented several times and use up to five pounds of Jasmine flowers simply to make one pound of Jasmine tea, Henry said.

“Each cousin has different recipes”

Tea is a beverage that has been around since 350 AD, and yet according to the Henry Lii, “the tea industry is still in its infancy.” He sees it as a business with great growth potential. One of the biggest factors is the research on green tea, especially over the past five years. “Lots more people are showing an interest. Tea bags used to be all people knew, but they are working on trying more,” Lii said. Ten Ren Tea also makes a range of snack foods, many of which include tea as an ingredient.

The younger generations in this family business are also making their mark. The “cousins,” as Lii calls them, have opened new stores selling Taiwanese food and tea. In Southern California, they include the 11 Tea Station restaurants (www.teastation.us) and three Cha for Tea restaurants (www.chafortea.com). Unlike Ten Ren, the majority of its business is food, not drinks. According to Lii, “Each of my cousins sort of manager an area and each one of us will have our own recipes and menus which are different from one another.”

However, to Lii it is clear that the most growth potential in the family tea business comes from Ten Fu, Ten Ren’s sister company in China. Also founded by Lee Reiho who early on recognized the vast potential of the Chinese market, Ten Fu now has 987 tea stores. Lee has also established several production facilities throughout China along with two museums. The company is currently working to open a Ten Fu Tea College in China.

Other businesses compete for American markets

Another Taiwanese business offering a refreshing treat for Americans is 85° Celsius (http://www.85cafe.com/85cafe.us/html-us/about.htm), so named because this is the perfect temperature at which to enjoy a cup of coffee. The company opened its first bakery two years ago in Irvine, California, and has been phenomenally successful. In order to be a customer at 85°C, one must have the patience to wait in the long line that normally stretches out of its front door. The bakery offers inexpensive baked goods with a Taiwanese twist.

Like other Asian bakeries, 85°C sells baked goods with taro and red bean paste fillings. But, unlike other bakeries, they also sell a wide selection of gorgeous cakes and a few products unique to their stores, such as a dark bun made from squid ink, and also sea salt coffee. You can still get a regular Tapioca Milk Tea, but also specialty drinks such as Coffee Jelly Milk Tea and drinks for more adventurous taste bud. The bakery tries to keep the price of its buns at around one dollar yet still uses top quality ingredients.

The first 85°C bakery opened in Taipei in 2004 and quickly expanded around the island. Currently there are 325 85°C cafes in Taiwan. The Irvine store served as the test store of the US market, and to help the team iron out any kinks. The bakery is already planning to open more stores, with rumors of an IPO due later this year.

If Ten Ren Tea epitomizes high quality tea, then Quickly (http://www.quicklyusa.com/) dominates the market at the other end with its tea-flavored drinks. With 2,000 locations in Asia, Africa, Europe and North America, Quickly has introduced Tapioca Milk Teas to the world in a big way. Started by Nancy Yang in Taiwan, the Quickly corporation in California has gradually expanded to include Asian-style fast food and Wi-Fi internet access. Instead of using steeped tea in their products, the drinks are usually made from powdered mixes. This allows Quickly to sell their tapioca teas at almost half the cost of other tea stations.

There can be little doubt that a taste for Taiwanese snacks in all their guises is rubbing off on today’s American foodies. Gone, thankfully, are the days when the only choice was Lipton’s hot or cold. Yet in a market where there are literally hundreds of products from hundreds of tea companies competing for the American tea dollar, Taiwan’s Ten Ren dynasty with its four generations of experience is continuing to show a drive and entrepreneurship that will give the best of them a run for their money.