Friday, May 18, 2018

Tea and the concept of experience economy

I recently attended an Adobe software conference tied to the theme of experience business or experience economy.  The general idea behind that concept is this:  as economies evolve people go from demanding basic goods (agrarian and then industrial based economies) to demanding services and specific forms of experiences (service and then experience based economies).  The higher the level of value the more that can be charged; “experiences” can command higher pricing than typical services.

It’s not necessarily simple to tie this back to tea.  A bestseller “The Starbucks Experience: 5 Principles for Turning Ordinary Into Extraordinary” outlines how that company built an empire by shifting themes and adding more value. 

Of course we’ve now seen that approach not work related to being duplicated for tea sales.  This World Tea News article from January 2016 explained how all the Teavana cafes were closing, but the retail stores were doing fine, and then in July of 2017 Starbucks announced they were closing all those shops.  I won’t try to interpret that, since related factors were surely complicated, but it probably works to say that sorting out the best approach to selling tea isn’t simple.

Former NYC Teavana café (photo credit)

I’m noticing a divide in experiences related to this theme and tea.  By far the most popular teas sold in Bangkok are bubble tea, or other flavored, sweetened, milk-based take-away versions that might as well have tapioca pearls at the bottom, even when they don’t.  It’s a beverage item and that’s it.  Tea enthusiasts are at the other end of the spectrum.  There can be secondary emphasis on ceremony or collecting gear but it’s mostly about the overall experience.

Of course it’s still about the tea, right?  Discussion arises about teaware, preparation methodology, and even subjects like health concerns, in places like online groups or at events, but in the end it comes back to liking aspects of the brewed teas.  That’s where the experience is, there is just plenty of room left for framing that.

Related to this split there might be a normal experience or preference curve of sorts, as people shift from floral blends, Tazo tea bags, and matcha lattes onto Gongfu--style brewing something like Dan Cong oolong or aged sheng pu’er.  True to the theory, as the demand transitions to a different focus it’s much less about price. 

Focus on minimizing level of cost can even invert.  Someone recently claimed in an online comment to have only spent under $200 on a sheng pu’er cake once this year, quickly qualified as a smaller 200 gram cake.  Bulk order photos are a different form of demonstrating status in consumption level.  $200 orders can look impressive, but then a single cake can cost more, and name-dropping decades old version references trumps any quantity.  A foreign tea enthusiast recently upped even that ante, describing commitment level as best expressed by a percentage of overall income spent on tea.

Wuyi Origin Mi Lan Xiang Dan Cong; better teas don’t need to cost a lot

It seems all this really isn’t describing a general trend into expanding tea as a service-based experience versus a commodity.  The priciest local café here in Bangkok charges over $20 for a pot of tea, for a scant few grams; that’s at least back to purchasing an on-site experience. 
How to build that into the next version of a Starbucks, or did that prove to be a flawed goal?  Are these people focused as much on experience or on displaying status instead, or can the two really not be split?  It’s a bit of a tangent, but I’m reminded of a far more absurd topic coming up in an article about a golden taco:

The world's most expensive taco is specially prepared at Grand Velas Los Cabos resort…  Ordering it will set you back $25,000 — almost the price of a new car.

The taco's foundation is a gold-infused corn tortilla, which is then layered with Kobe beef and lobster. Toppings include black truffle Brie ($100 per ounce) and a dollop of Beluga caviar ($700 an ounce). Then, more layers of gold are added on top to finish… 

I'd take a cheap Tex-Mex version over this any day

Complaining about a $30 pot of tea and people spending enough to buy a car for a taco seem worlds apart.

These diverse threads make it hard to stick to the train of thought of what experiences people might want next related to tea, or what will become popular, and how expenses would factor in.  Seeking out traditional, quiet, feng shui designed cafes doesn’t seem likely to catch on.  Even the committed tea bloggers I read sometimes speak of setting aside the better teaware and complex brewing processes due to just getting busy, maybe taking up a grandpa style approach instead.

I drank Tazo ages ago; I have no hate for tea-bag based blends

All the while in beginner oriented tea groups I keep finding myself arguing the merits of basic, plain, inexpensive loose teas.  In one recent discussion someone asked if mixing peanut butter powder into tea might work (and it might, I guess), and I wondered if that person ever tried a Tie Kuan Yin of any quality level before, or a single example of Chinese black tea.  It turned out they were really looking for Thai iced tea (which can be nice). 

Plain, simple teas can be amazing experiences, but it’s only easy to package and sell the leaf.  It’s not as simple to bring the rest of the experience to everyone.


  1. Interesting article, John, and it's nice to talk about the elephant in the room sometimes. We're all trying to share more tea, but how can we do it when the giants like Teavana could not? These days, I wonder if it's more about the people at the tea table than the tea itself, sometimes... I can never get a Thai tea aficionado and a high-end sheng pu'erh collector to talk tea, but I can at least get them to sit at the same table and talk about life, while drinking tea. Both come away loving tea even more, in any case... What do you think? And how is the Starbucks book, is it something worth reading for us trying to crack the code in the tea world?
    Thanks again for the thought-provoking post. -Rie

  2. So nice to see a thoughtful comment here, especially from you. I didn't read that Starbucks book, that part was just about explaining what "experience" meant in this context. I'd expect it to be interesting, but the second part about why Teavana didn't duplicate the success would be something else. It's not just about tea not working for that model, of course, since Teavana never was the same kind of cafe, even the cafe versions. Tea interest being fragmented into groupings is a main recurring theme. It's funny how little middle ground evolves from that, as you described in the two standard cases. For media coverage it's always one or the other too, duck shit Dan Cong or cheese tea.

  3. I think the history of T2 tells us a lot about how tea sales mix with corporate themes too. I first visited a branch around 5 years ago (in Sydney), and bought some nice teas, a bit expensive, but good versions. I've seen their website since Unilever bought them and those better versions are gone, mostly replaced by blends. It's easy to imagine why; the mark-up is higher. The blends were selling at a better return, keeping inventory costs low, so why not lean into that. Here's why not: it alienates part of the customer base, and ignores that in some cases preferences for teas evolve towards better plain versions. Either way it's hard to compete with online channels, which face much lower overhead. A consumer learning curve leads them to more options there. Providing your own online channel can only help when it really makes sense to sell the same thing both ways. Or when bundling online content and products works out well. One vendor--who I won't nam--does this better than the rest of the industry, along with ripping people off by making false claims and selling teas at double or triple a standard retail rate for that quality level. Funny how it all works out.