Economics Of Tea

Selling premium tea is great business idea

During our many years of marketing premium teas, we’ve seen countless customers considerably boost their business and profits by adding tea to the retail lineup.

Loose tea is a high margin product.

Premium loose tea is a hard to find, premium product that appeals to the increasingly gourmet tastes of today’s consumers. Compared to pre-packaged tea-bagged teas, properly marketed loose tea can allow a retailer to double profits while providing a more exclusive product. It’s win-win!

That said, there are many reasons to include packaged teas in the mix as well.

Pricing loose tea

Pricing is easy. Follow this general rule of thumb.

• Depending on the location of your store, simply multiply the cost of the raw tea by 3.5 - 5 times. (Depending on your location and clientele.)

The markup is large but so is customer value:

• 2.2 lbs (1kg) of loose tea will produce roughly 500 cups.

• An analysis of the above pricing structure will show that the price per cup for your customers (when preparing a cup of tea at home), is equal to or less than the cost of preparing a cup of coffee.

• Amazingly, this is true even for ultra-exclusive premium teas that could be compared to the world’s finest vintage wines, (that sell for hundreds of dollars a glass!). The unique pricing structure of luxury teas means that even these teas break down to mere pennies per cup.