Question

U.S. Tea Grower is in hot water: Charleston Tea Plantation struggles to brew up enthusiasm for brand. Wall Street Journal. September 13, 2000.

WADMALAW ISLAND, S.C. -- Wal-Mart Stores Inc. boasts brisk sales of its house-branded tea from America's only tea plantation, but business at the growers isn't exactly boiling.

Charleston Tea Plantation has been trying to make a name for itself in an industry dominated by overseas competition and huge names like Unilever NV's Lipton and Tetley USA Inc. Despite a tea craze and a bag full of marketing efforts, the company just hasn't been able to sell consumers on the notion of American tea.

With slim profit margins and little financial backing, the plantation on this low-country island near historic Charleston has spent the past 13 years struggling. These days, money is so tight that the company's 25 employees, most of them natives of the island and loyal to the plantation, sometimes voluntarily skip work during not-so-busy times to save payroll.

"I thought we would buy the plantation and make a fortune," says co-owner Bill Hall. "I'm more of a pessimist now."

Mr. Hall, a third-generation tea taster, was taken with the notion that no one in the U.S. commercially grew tea, the second-most popular drink in the world after water. He says his tea tastes fresher than most on the supermarket shelf because it gets from field to store faster and because the plantation doesn't use insecticides and fungicides. (Most tea is grown in India and China.)

The company markets black tea and raspberry-flavored black tea, and is planning to produce green tea. It renamed the popular Earl Gray flavor Governor Gray. "We couldn't very well have a British tea," Mr. Hall says, defending the swap of titles. "That's not very American."

Confident the novelty of a homegrown brand would virtually sell itself, he and business partner Mack Fleming didn't put a lot of money into advertising. Absent the big bucks it would take to make their tea a household name, the company found it hard to lure consumers away from the brands their mothers bought.

The plantation's roots go back to 1986, when Mr. Hall helped found a Lipton research farm here and met Mack Fleming, a horticulturist who led a team in the development of Lipton's Cold Brew Blend tea -- tea bags that infuse in cold water.

A year later, the two raided their nest eggs to buy the 127-acre tract of land. They named their product American Classic Tea and began trying to persuade supermarket chains to stock the company's yellow-and-orange boxes on already packed shelves.

Messrs. Hall and Fleming offered coupons with discounts of up to 50% to shoppers as incentives for stores to carry their teas. The price cuts took a healthy bite out of profits, but succeeded in getting the American Classic Tea label in about 1,000 supermarkets and specialty stores nationwide.

The company had to resort to a more in-your-face approach with Wal-Mart, based in Bentonville, Ark. Charleston Tea courted executives from the world's largest retailer for more than a year. Countless phone calls, letters, tea samples and presentations eventually paid off -- somewhat. The tea is now sold as Wal-Mart's own Sam's American Choice label. The store, however, is famous for its tough negotiations with suppliers: A three-year-old contract accounts for about 30% of the plantation's $2 million in annual revenue, but profit margins are thin.

"If you're hanging on a cliff and someone offers you a rope, you take it. You don't say, `This rope isn't thick enough,' " says Mr. Hall, as a shiny steel tea kettle in his office bubbles.

Charleston Tea has jumped on all the latest tea trends to try to heat up sales. It offers an 18-page mail-order catalog, including "tea" shirts, tea jelly, tea soap with lemon (not made with tea), tea wafers and tea honey.

The company began offering its own ready-to-drink tea line in 1996 in an attempt to lure some of the consumers that buy names like Snapple, AriZona and Nestea iced teas. Sales of the 16 oz. glass bottles, however, slumped three years later and the line was dropped.

The company also tried generating interest by giving free 45-minute tours of the secluded plantation. But only about 1,500 of Charleston's 3.7 million annual visitors found their way to the tea company. The tours were suspended this year because the plantation couldn't afford to hire a full-time guide.

Messrs. Hall and Mr. Fleming push on. After learning of studies touting green tea's health benefits, they plan to spend $250,000 on a boiler to produce green tea. Black and green tea come from the same plant, but green tea requires steaming.

Returns from their ventures thus far, however, have left the two tea growers cold. Mr. Fleming, 57 years old, declines to give figures on his advertising efforts to date, but says the budget clearly wasn't big enough. "Call it entrepreneurial stupidity," he says.

Mr. Hall, 51, dropped out of high school at 16 to drive a forklift at a Baltimore tea factory. After a year, he moved to England to study tea tasting, the profession of his father and grandfather. After four years, he moved to New York, where he began importing and exporting teas -- and learned that tea wasn't grown in America because the crop needed high elevations and costly labor.

The plantation offers the sandy soil tea plants need for drainage, even though it's low land. Lipton farmed the island to see if U.S. tea could be commercially successful and concluded it wouldn't work, says Bill Franke, Lipton vice president of scientific and regulatory affairs. He said South Carolina was the best U.S. location to grow tea but that the climate was unstable and the land and labor costs were prohibitively high.

Mr. Fleming, who worked on Lipton's farm for more than 10 years, came to another conclusion. He already had invented a tea harvester that eliminated the need for most hand labor, and spent a decade testing everything from propagation and harvesting to disease resistance and heat tolerance.

He was confident he could make the farm profitable. Lipton agreed to sell him and his partner the land, the harvester and 320 proprietary clones of tea plants. Mr. Fleming also received a five-year consulting contract with Lipton. Neither side will disclose terms of the deal.

Now, as Mr. Hall sits in a beat-up leather chair in his office sipping tea, he admits he may have misread the tea leaves. If the company survives, he thinks Lipton or another large company might offer to buy them. "We're just trying to hold our heads above water," Mr. Hall says.

Need a conclusion for the article

Answer 1

Conclusion of the article may be the official implementation of the 360-degree various strategy to bring the sales figure into the limelight. Let the company work in the guidelines it has prepared secretly for 5 years with another consulting firm with a hope to restore its tea identity in the American market. More study will be given by the company regarding the finest location for tea grows, cheaper labour cost and suitable and conducive environment to grow the tea. All the variety and flavour of the tea may confuse the buyer, hence let insist on market research and identify the actual tea popularity among the consumers to reshape the business with a broader vision. Lacking funds for business expansion is a prime huddle for any entrepreneur, but that doesn't mean the business will come to standstill due to the paucity of funds. The founders of the company should more aggressive to sell their business concept and philosophy to a few financial houses which will definitely come for a helping hand which I feel can save the employees salary.

Besides above a few strategical decision, the owners of the company should be optimistic that their venture will run for the long run.