James Fayal has always liked caffeine. But he didn’t love coffee or the prospect of chugging sugary sodas all day. So he and his roommate, Rickey Ishida (who happened to be a biomedical engineer), began experimenting with high-caffeine tea blends to get charged up for the workday back in 2013. They crowdfunded $10,000 and in 2014 Zest Tea was born.
Now, almost three years later, Zest Tea has hit retail shelves and is about to break the million-dollar sales mark. It won Best New Product at the 2015 World Tea Expo and enjoys a loyal customer base, as evidenced by its hundreds of 5-Star reviews on Amazon. How James got here carries lessons for entrepreneurs building consumer businesses in crowded categories around the country.
1. Start local.
Tea is big business -- $11.5 billion in sales in 2015 alone in the U.S. In such a big market it’s hard to know where to begin. James started small. He gave samples to local companies in Philadelphia and Baltimore. He sold online, running targeted Internet campaigns. He did live demos at tradeshows and personally delivered the product to buyers. He took any opportunity to get Zest Tea into people’s hands because he figured they’d love the flavors and the sustained energy of the product and tell their friends.
Today, though Zest has customers around the country, it has a devoted following particularly in and around the Mid-Atlantic region where the company is based. Building a customer base in one place is a lot easier than trying to build it everywhere, even for a company doing most of its business on the Internet.
Early on, investors asked James why there wasn’t a ready-to-drink version of Zest Tea available. They figured if there was any market where people would want a different way of getting caffeine, it would be in coolers in convenience stores.
James realized that getting into stores would require a lot of costly branding and distribution. It would have been a mammoth risk for a young company. He figured they’d be better off building a strong following among early adopters -- the hardcore tea community and startup employees -- rather than pursue casual buyers in stores.
The biggest way that Zest focused on hardcore fans was in its flavor selections. Zest let its early adopters vote for what flavors they wanted and followed suit with Pomegranate Mojito Green, Blue Lady Black, Earl Grey Black and Cinnamon Apple Black. No English Breakfast or Chamomile even now.
Cultivating a devoted fan base has paid off. Zest Tea estimates that over half of its sales come from referrals. Now, the company is entering stores with people clamoring for them to arrive and fans they can direct to particular retailers -- driving up their appeal in new channels.
3. Standing for something.
Zest Tea as a young brand had a few things going for it. Its essence is about energy and enthusiasm. James and the team were themselves twenty-somethings trying to rev up a new category.
They figured that they would double-down on what their company naturally stood for. They marketed to start-ups. They sponsored hackathons. They emphasized the health benefits of tea to young professionals. And of course they adopted robust social media to spotlight and reward fans.
James thinks that their brand has been a huge driver of their reorder rate of 50 percent, which is more than three times the industry average. “Our customers don’t just drink our product because it tastes better than other teas. Our customers love our product because it gives them energy and fulfills a need our competitors don’t even recognize.”
Sounds like a recipe for success that will keep Zest Tea growing for years to come.