In this ongoing column, The Digest, Entrepreneur.com News Director Stephen J. Bronner speaks with food entrepreneurs and executives to see what it took to get their products into the mouths of customers.
Linda Appel Lipsius's company offers a product that may as well be millennial bait: it's tasty, all natural, has compostable packaging and even has a social mission behind it. Seems like branding gold, right? Not so fast. The problem is that the product is bagged tea, and most Americans only drink tea when it's cold and bottled.
"Tea is growing in grocery and food services, but when you think about it, especially hot tea, it's still a grandma drink," says Appel Lipsius, co-founder and CEO of Denver-based B-corp Teatulia, a company that distributes bagged hot and cold teas. "It's something you sip, it's something you have when you're cold. With its reputation, it's got a ways to go."
And while more than half of Americans drink tea every day, totaling about 3.8 billion gallons in 2016, about 80 percent of that consumption comes in the form of iced tea, according to Tea Association of the U.S.A. The group says most of that tea is in cans and bottles.
This matches the reality that Appel Lipsius experiences every day, and speaks to her company's top challenge.
"Our biggest challenge is probably just sort of the basic understanding of tea," she says. "Most people don't even understand that tea comes from a plant. I ask people if they're tea drinkers -- 'no.' Then I ask them if they drink iced tea -- 'oh yeah.' It's the same thing. American consumers don't make that connection that iced tea is tea."
But as mentioned above, Teatulia has a lot of elements that work in its favor, and Appel Lipsius's background is steeped in entrepreneurship. Her parents are the creators and founders of Orange Glo, makers of the eponymous cleaner as well as OxiClean and Kaboom. (You may also know the company for its infomercials starring the late Billy Mays.) After working at nonprofits, Appel Lipsius ran the company's European operations until Church & Dwight, the company behind Arm & Hammer, acquired Orange Glo in 2006 for $325 million.
Appel Lipsius was then looking for her next opportunity.
"I kind of fell into this business," she says. "I was not a tea geek."
On the other side of the world, in Bangladesh, Kazi Shahid Ahmed wanted to open a business that gave back to the land and the people, according to Appel Lipsius. So he opened a tea garden. But unlike the terrible conditions of workers in the tea industry, Ahmed sought to do things differently. This is where the social aspect of Teatulia comes in.
The tea farm only employs women, pays them 36 percent above the industry standard and, to give you a sense of how dire worker conditions in the tea industry are, they can go home at night. It also provides education for the women and their children. Since the garden is organic, it also uses cow dung as a natural fertilizer. And the way it gets the fertilizer is interesting: the garden loans cows to women in the community, who then have fresh milk and in exchange hand over the dung.
Back in the U.S., Ahmed's son Anis met Appel Lipsius's husband years ago in a New York City bar. When seeking an American partner for the tea business more than 10 years, the younger Ahmed asked Appel Lipsius.
Teatulia products are available in stores such as Kroger, Safeway, Foodtown and Wegman's, on college campuses and in certain restaurants. The company has seen its retail and grocery distribution increase by about 30 percent in 2017, and its food service business has grown on average by 50 percent in the past two years.Click through the slides to see Teatulia's ingredients for success -- and what you can learn from the company.