Top Tea Retail Trends Dan Bolton Editor and Publisher World Tea News www.worldteanews.com Dan.Bolton@WorldTeaNews.com Booth No. 106 Top Tea Retail Trends Friday | Sept. 9 | 8:00 – 9:30 a.m.

Cell Phone Survey Code 32563 Really cool! 54% Poll Everywhere is a simple text message voting application for live audiences. Vote by texting CODES (or Tweet) your answer to questions on-screen. Poll results within the presentation update in real time. Silence your phone. Let’s try it now. Test the system by answering: World Tea East is? Code 32563 Really cool! 54% Text CODE to 22333 | Tweet @poll CODE | Submit CODE to http://poll4.com Code 32595 Really hot! 46% Explain what’s going on “Now I’m going to ask for your opinion. You’ll use your phones to respond just like on American Idol. So please take out your cell phones, but remember to leave them on silent.” “You’ll participate by sending a text message. If you don’t know how to do that, just ask your kids! Or have your neighbor help you figure it out.” Address their concerns “This is a just standard rate text message, so it may be free for you, or up to twenty cents on some carriers if you do not have a text messaging plan.” “The service we are using is serious about privacy. We cannot see your phone numbers, and you’ll never receive follow-up text messages outside this presentation. There’s only one thing worse than email spam – and that’s text message spam because you have to pay to receive it!” Use a demo or practice poll For example, a Free Text Poll like “Let’s Practice: Text in your first name!” Always test your polls in your presentation before your event using the computer that will be projecting your presentation, especially if that computer is not the one you’re currently using.

How To Vote via Texting. Use 22333 and put CODE in message. EXAMPLE 32563 32595 22333 This slide is for display to the audience to show them how they will vote on your polls in your presentation. You can remove this slide if you like or if the audience is already comfortable with texting and/or voting with Poll Everywhere. Sample Oral Instructions: Ladies and gentlemen, throughout today’s meeting we’re going to engage in some audience polling to find out what you’re thinking, what you’re up to and what you know. Now I’m going to ask for your opinion. We’re going to use your phones to do some audience voting just like on American Idol. So please take out your cell phones, but remember to leave them on silent. You can participate by sending a text message. This is a just standard rate text message, so it may be free for you, or up to twenty cents on some carriers if you do not have a text messaging plan. The service we are using is serious about privacy. I cannot see your phone numbers, and you’ll never receive follow-up text messages outside this presentation. There’s only one thing worse than email spam – and that’s text message spam because you have to pay to receive it! 32563 or 32595 Standard texting rates only (worst case US $0.20) We have no access to your phone number Enter CODE in message line (not subject line) TIPS

How To Vote Online via www.Poll4.com EXAMPLE 32563 32595 32595 This slide is for display to the audience to show them how they will vote on your polls in your presentation. You can remove this slide if you like or if the audience is already comfortable with texting and/or voting with Poll Everywhere. Sample Oral Instructions: Ladies and gentlemen, throughout today’s meeting we’re going to engage in some audience polling to find out what you’re thinking, what you’re up to and what you know. Now I’m going to ask for your opinion. We’re going to use your phones or laptops to do some audience voting just like on American Idol. So please take out your mobilephones or laptops, but remember to leave them on silent. You can participate by submitting an answer at Poll4.com on your laptop or a mobile phone. The service we are using is serious about privacy. I cannot see who you are or who voted. TIP Enter 5-digit CODE in window, click submit. 32563 COOL or 32595 HOT

EXAMPLE How To Vote via Twitter 32563 32595 @poll 32563 or 32595 TIPS This slide is for display to the audience to show them how they will vote on your polls in your presentation. You can remove this slide if you like or if the audience is already comfortable with texting and/or voting with Poll Everywhere. Sample Oral Instructions: Ladies and gentlemen, throughout today’s meeting we’re going to engage in some audience polling to find out what you’re thinking, what you’re up to and what you know. Now I’m going to ask for your opinion. We’re going to use Twitter to do some audience voting. So please take out your cell phones or laptops, but remember to leave them on silent. The way you will be able to participate is by tweeting a response to @poll. Your followers won’t be bothered by this message. TIPS CODE immediately follows @poll (one space between) Since @poll is the first word, your followers will not receive this tweet

Responses appear in this frame in real time. Poll Everywhere results for World Tea Expo is: World Tea Expo is Hot World Tea Expo is Cool Responses appear in the frame above in real time.

Audience Business Type CODE (50 Show Responses as of June 26) 79706 |Tea Room/House 23% 79860 |Specialty Retailer 27% 79861 |Hospitality/Restaurant 0% 79867 |Mass Merchant 0% 79871 |Spa/Wellness Center 2% 79874 |Coffee House 10% 79882 |Web-based Store 19% 79897 |Supplier 4% 79898 |Distributor 6% 79919 |Manufacturer 8% Introduce idea of Teajectory reports

Responses appear in this frame in real time. CODE 79706 |Tea Room / Tea House 79874 |Coffee House 79882 |Web-only Tea Store 79897 |Supplier 79898 |Distributor 79919 |Manufacturer 79860 |Merchant Specialty Retail 79861 |Hospitality / Restaurant 79867 |Mass Merchant 79871 |Spa / Wellness Center

Overview: U.S. Market Upbeat Tea retail and foodservice sales will top $8.4 billion in 2011.1 Sales of tea and RTD teas grew 31% from 2006 to 2011.2 Tea imports increased 18% to set a record in 2010.3 Thanks to $4 billion in RTD sales, tea gained market share.1 Tea now holds 5.4% share of refreshment beverage market.4 Tea ranks 7th− close behind juice, ahead of sports beverages.4 “… market growth will be driven primarily by an increasing consumer focus on health and wellness, growing consumer awareness of tea and the continuing emergence of epicurean preferences in food and beverages.” Teavana IPO (Teavana S-1filed with SEC on April 28, 2011) Overview Source: 1) Packaged Facts, Tea and Ready to Drink Tea in the US. Sept. 2011; 2) Tea and RTD Teas – US Mintel International, July 2011 3) Tea Association of the USA State of Industry/Tea industry Statistics Feb. 2011; 4) Beverage Marketing Corp. Liquid Refreshment Share 2011, Mar. 2011.

Overview: Channel Growth Convenience Channel: Record $1.2 billion sales, up13.5%. 144,541 stores reported 18.2% increase in volume.1 Natural: RTD tea rose 17%, entire tea category is up 5%. Tea & coffee sales total $465 million2 in natural channel. Mass merchant: $3.9 billion sales, shelf stable teas up 10%.3 Foodservice: $1.02 billion, returning to pre-recession spend.4 All channels: Fair Trade5 sales up 38% and organic tea sales rose 8%.6 Tea & coffee now 60% organic in Natural.2 Overview Sources: 1) Bottled and canned tea sales, National Association of Convenience Stores; 2) SPINs scan natural 52-weeks Mar. 2011, SPINS, Inc. Natural Food Merchandiser, June 2011; 3) SymphonyIRI 52-weeks ending Feb. 19, 2011; 4) Packaged Facts, Tea & Ready to Drink Tea 2011; 5) Fair Trade USA – Tea Impact Report/2011 Almanac; 6) Organic Trade Association Annual Organic Industry Survey.

Overview: Global Global consumption expanded 6.2% in 2010.1 Production is 4.2 million tons (mt) since 2000, green production up 90%.2 U.S. consumption rose 25% in10 years, up 4.7% to a record 127 million kgs in 2010.1 U.S. is now 9% of global market.3 India, China and Sri Lanka are in a three-way race to dominate exports of specialty tea. All three intend to expand their share of U.S. market. China now growing black tea for export. “Despite its relative smaller market size and low consumption levels, tea is slated to score over coffee in the long run in volume terms, on account of factors such as economical pricing, new flavors and ‘healthy’ brand value, as new tea drinkers join the brigade.”4 In 1959, there were less than 1million metric tons of tea being produced in the world. By 2000 that had increased to 3 million metric tons and today it has reached 4.2 million metric tons. A large increase in 50 years, but a massive increase over the last decade. Green Tea production, up by nearly 90% from 700 metric tons in 2000 to 1,200mt today; however exports have only marginally increased over the same period as the bulk of this additional production has been consumed in the producing countries, notably China and Vietnam. Mike Bunston, ITC Sources: 1) Economist Intelligence Unit/2011; 2) ITC 3) Packaged Facts, Tea and Ready to Drink Tea in the US. Sept. 2011; 2) Beverage Marketing Corporation 2011; 3) International Tea Committee May 2011 Web Summary; 4) Global Industry Analysts, Hot Beverages, Feb. 2011

Overview: Value Global market projected at $69.77 billion by 2015.1 Tea prices averaged $2.88/lb in 2010 an all-time record.2 Tea’s growth in value averaged 16% from 2005-10. Increases in volume sales still outpace value sales making the sector ripe for development of brands where health credentials justify a price premium.3 Convenience drives growth. A paradox is that tea in its most convenient forms requires smaller quantities and lower quality leaf. As demand increases, less tea is required. CTC in 2- to 4-gram tea bags yields twice the cuppage per given weight of tea. Blends require one-third the amount of tea leaves served in a cup of orthodox and single-estate tea.4 Overarching trends. Exceptional growth. Tea will one day exceed coffee. Sources: 1) Research and Markets; 2 Economist Intelligence Unit/2011; 3) Euromonitor Hot Drinks , with import statistics from International Tea Committee May 2011 Web Summary; 4) The Tea Market – A Background Study 2002

Overview: Outlook Most of the world’s tea remains unbranded, inexpensive. Coffee commands three times the value per liter. But demand is growing for value-added tea. India, the world’s largest consumer, now supports 300 tea brands.1 Bottled teas and iced tea brands are emerging in Russia and instant tea is the largest branded category in China.1 Even Brazil, the top coffee producer, reports big gains. China and Russia will drive future growth.1 Climate change is a wild card. Harvests are less predictable, drought more frequent. Research is needed into heat resistant cultivars and pest-resilient teas. Overarching trends Sources: 1) Euromonitor/Cultural Evolution is Affecting Tea Consumption, 2010.

Ten Trends for 2011 Availability Boosts Consumption A Million is not a Mirage Differentiated Teas Gain Market Share Export Target: America Gets Noticed Ready-to-Drink Volume Surges Iced Tea Goes Global Money Making Mergers Enhanced Elixirs: Health in a Bottle Convenience is the Starting Gate Grocery Growth I identified ten trends that significantly impact the tea retail segment. The recession lingers as a backdrop, consumer confidence is shaky, but tea proved resilient during the worst days of 2008 and 2009.

I don’t grow, process or or sell tea. STOP Raise a hand to I’m not an expert. I don’t grow, process or or sell tea. I am exposed to a flood of information. World Tea News distills this into business insights. This presentation is fast-paced. Slides are dense. The overview is broad, don’t get lost in the details. Print the handout. We need to make time for an exercise guaranteed to improve retail profits. Availability Boosts Consumption (Thirsting for Really Good Tea) Grossing a Million is not a Mirage (Retail Success Stories) Differentiated Teas Gain Market Share (Certifications Count) Emerging Export Target (America Gets Noticed) We have time for only a third of the slides in this deck. To download the Retail Trends handout visit: www.worldteaeast.com and subscribe to WTN to keep pace. Caution: I am not an expert.

Availability Boosts Consumption Sixty-five percent of U.S. tea is sold in tea bags. Eighty-five percent is served iced, 80% is black tea. Green tea consumption is at19.5% and rising.1 Tea by Type 2007/08 2010/11 Packaged Tea (all types) 83.9% 84.0%  Bagged and Loose Tea 75.4% 73.9% Bagged Tea (only) 72.0% 70.9% Bagged/Loose (to make hot) 56.8% 56.9%  Bagged/Loose (to make iced) 46.2% 46.3%  Ready-to-drink Tea 43.5% 45.3%  Instant Iced Tea Mix 28.4% 27.3% Loose Tea 10.4% 10.2% Tea in Every Pantry 2010 was the 19th consecutive year that consumer purchases of tea increased. Away from home consumption has been increasing by 10 percent per year over the last decade (Tea Assoc of USA) Compiled by Packaged Facts from Experian Simmons National Consumer Survey data, Winter 07/08 and 10/11. Used with permission. 1) Tea Association of the USA, Annual State of the Industry Report Feb. 2011

Consumption Climbs Twenty-eight percent of Americans drink freshly brewed tea (hot or cold) daily. Tea was 5.4% of liquid refreshment beverage volume in 2010. RTD tea is up .2%, and comprises 1.7% of all tea sold.1 Consumption of instant tea is declining in its familiar form.2 Tea made from tea powder (Snapple) represents much of the bottled segment. There is growing demand for fresh- brewed bottled teas (Honest Tea and SweetLeaf ) and foodservice concentrates, like B.W. Cooper’s Ice Brew Tea. Consumption Climbs a Notch Source: 1) Beverage Marketing Corporation/2011 Annual Liquid Refreshment Report; 2) Packaged Facts

Resilient RTD The recession clobbered beverages for a -2.8% decline that is reversing. Hardest hit: value-added water, fruit beverages and soda. Tea prevailed. Volume is steady, value is rising. Americans consume 38 grams (25 tea bags) or 13.4 dry oz. (six 2 oz. pouches) or 157 cups, mostly iced. The British, Turks and Irish consume 200 grams or 5 times more tea per capita. Canadians drink 264 cups a year, about 16.2 ounces, mostly hot. Asians each drink 730 cups. Consumption Climbs a Notch. RTD resilient in recessionThe Chinese green tea is often brewed up many times and so more cups per tea weight. India is something different again. When we used to drink tea with lose leaf, much was thrown down the drain or on the roses. Now with teabags there is much more portion control. In UK the consumption is just under 4 cups per day. Source: Beverage Marketing Corporation.*Includes bottled water, carbonated soft drinks, energy drinks, fruit beverages, RTD coffee, RTD tea sports beverages and value-added water.

Traditional Retail Drivers Taste. Media & marketers keep the health attributes of tea top-of-mind but taste remains the primary attribute cited by 77% of respondents who purchase tea. Others buy it because it is refreshing (68%) and healthy (42%) Convenience. Brands like Honest Tea (Coca-cola); Lipton (PepsiCo-Unilever) and SweetLeaf (Nestle) guarantee tea is present in every possible outlet. RTD now accounts for two-thirds of tea volume. Availability. The more readily available, the greater overall sales. Grocers stock larger selections, advertise tea more aggressively, convenience stores are doing record business and vending machines promote national brands. Traditional Retail Drivers: taste and convenience and availability

Emerging Retail Drivers Ice tea is the darling of top chefs at 5.4 billion servings.1 Surveys show10% of customers ordering more iced tea than two years ago.2 Tea is the trendy base for functional and enhanced lines. In grocery, big brands now embrace premium organic, Rainforest Alliance, UTZ and Fair Trade certified offerings. Nielsen reports 72% of Millennial households drink tea. Young men are exploring tea and drinking less coffee. Tea is an important lifestyle choice but a recent Wi-Fi Alliance survey noted that 75% of Millennials would sooner give up coffee and tea for a week than their Wi-Fi connections. Selections above are testament to tea’s broad appeal. Last August Trump licensed his name and endorsement of four SKUs of Shane Talbott of Talbott’s Tea. Trump blends are $14.50 for a 12 oz. tin. Union Square, a bold black tea with notes of smooth vanilla bean and rich fine cocoa; Mar-a-Lago, a lush green tea mingles with succulent peach and mango; Park Avenue, organic white tea with raspberry and orange; and Westchester, an organic hibiscus tea with hints of elderberry, blueberry and strawberry. Radio host Rush Limbaugh, depicted as Paul Revere, introduced four flavors of Revolutionary Two if by Tea sweet tea. Slogan: From Tea to Shining Tea at $23.76 for 12 16 oz. bottles. Source: 1) SymphonyIRI Foodservice sales of iced tea 2010 2)Technomics 2011 Market Intelligence Report: Coffee and Tea,

Emerging Retail Drivers Tea Celebrities: Lady Gaga, Mel Gibson, Gwyneth Paltrow, Prince Charles, Victoria Beckham, Heidi Klum, Jennifer Aniston, Oprah Winfrey, Dr. Oz and Jennifer Alba. NPD Research shows celebrities influence 3% of customers. Celebrity Tea: Chris Noth, Brittany Spears, Donald Trump, Australian Prime Minister Kevin Rudd Rush Limbaugh… Innovative packaging ranges from rustic Kraft to wood boxes and tins. Elegant designer accessories and giftware contribute up to 40% of sales. Selections above are testament to tea’s broad appeal. Last August Trump licensed his name and endorsement of four SKUs of Shane Talbott of Talbott’s Tea. Trump blends are $14.50 for a 12 oz. tin. Union Square, a bold black tea with notes of smooth vanilla bean and rich fine cocoa; Mar-a-Lago, a lush green tea mingles with succulent peach and mango; Park Avenue, organic white tea with raspberry and orange; and Westchester, an organic hibiscus tea with hints of elderberry, blueberry and strawberry. Radio host Rush Limbaugh, depicted as Paul Revere, introduced four flavors of Revolutionary Two if by Tea sweet tea. Slogan: From Tea to Shining Tea at $23.76 for 12 16 oz. bottles. But how do celebrity tea drinkers help you build your own tea dream? By harnessing the power of common interest you can develop new tea clients each and every day. Here is a thought: Want to loose weight and increase your health? Oprah Winfrey swears by green tea. (immediately you have a common thread with your reader if the potential client is motivated by weight loss, health and likes Oprah.) Are you a busy career mom looking for simple ways to keep your sanity? Gwyneth Paltrow (mother of 2 and busy Hollywood movie star) can be seen regularly sipping tea. Steal this Hollywood hint and pour yourself a cup of revitalizing energy in the form of loose leaf tea.

A Million is not a Mirage Despite these headwinds, grossing a million dollars a year is not a mirage. World Tea News estimates there are at least a 100 U.S. shops earning this sum and the number is growing. The group mainly consists of shopping mall merchants like Teavana in the U.S. and Teaopia in Canada. Success takes many forms: An urban oasis like San Francisco’s Samovar Tea Lounge and The Urban Tea Merchant in downtown Vancouver. Suburban hangouts like Teaism in Washington, D.C. and traditional settings like Seattle’s Queen Mary Tea Room. It’s not impossible, but getting there isn’t easy. A Million is Not a Mirage

A Million is not a Mirage These are not the boom days of 2006. Consumption faltered during the recession and attrition in foodservice since 2009 remains very high. During the past year 9,450 U.S. restaurants closed, of these 8,650 were independents. “The decline in independent units is the steepest we’ve seen,” says NDP Group (April 1, 2010 to March 31, 2011). 1 Tea foodservice annual growth is projected at 1.5% to 2%.2 Setbacks continue as consumers struggle with unemployment and job security. The buying power of Americans is weak. An American Pulse2 Survey in June revealed 89.9% of respondents who currently have a job are not counting on a salary increase in the next year.3 The unemployed number 16.5 million. A Million is Not a Mirage Source: 1) NDP Group ReCount 2011; 2) Tea Assoc. of USA 2011 State of Industry Report; 3) American Pulse Survey 5,242 respondents June 2011.

A Million is not a Mirage An estimated 3,000 specialty tea outlets1 present appealing and diverse choices. Consumers encounter high-visibility, high-traffic tea merchants like Teavana, Teaopia and DavidsTea in malls and suburban shopping centers. Specialty drink outlets like Argo Tea Café, tea lounges and urban tea bars serving alcohol cater to the city crowd. Afternoon tea in upscale hotels and weekend leisure stops in Victorian tea rooms lure tourists. Tea-themed spas and trend-setting resorts cater to young professionals seeking a calming Oriental-influenced refuge. A Million is Not a Mirage Source: 1) Sage Group 6th Edition Specialty Tea Report

A Million is not a Mirage Here is what these retailers share: Great locations, efficient use of retail space. A focus on the taste preferences of customers. A large selection of fresh, premium teas (80% custom blends including classic herbals with 20% orthodox /estate selections). Enthusiastic, well-trained staff focused on retail excellence from quality offerings to customer service. Significant online sales (10% of gross with100 teas on offer). Sophisticated marketing (web presence, active social network). A sharp eye on business metrics using sophisticated technology to monitor business expense and influence loyalty purchases. A Million is Not a Mirage

Teavana is not Typical Teavana Holdings operates 175 company-owned stores in 37 states with 16 franchised locations (13 in Mexico). Expansion: 50 stores (33 built) with 60 in 2012 to 500 in 2015 with franchise growth in the Middle East and Canada. Retail Space: 900 sq. ft. Rent: $76,000 average ($83 per sq. ft.) Stores employ: 11.8 part-time, full-time including region managers. Teavana stores averaged $862,000 in annual sales in FY 2010 and earned profits of $165,000 per location. Sales at several stores topped $1 million. A Million is Not a Mirage Teavana is not typical, but the recent filing with the Securities and Exchange Commission reveals useful benchmarks about the industry. The closely watched IPO has not been funded. Teavana hopes to generate $100 million. Source: Teavana S1 IPO filing (April 28, 2011) Teavana Holdings 2011 S1: NYSE, Ticker Symbol: TEA

Teavana is not Typical Consolidated Statement (abbreviated) Sales: $124.7 million (FY2010) Sales and administrative expense: $50,571,000 Net income: $12 million (126% growth over FY2009) Online sales growth: 56% (7% of net, goal is 10%) Average store net: $82,193 Operating margins: 18.8% Same store sales growth: 8.7% Sales per sq. ft.: $994 History: $63.8 million(FY2008) $90.2 million(FY2009) IPO Asking Price: $17 (July 28 - NYSE) Share Price: $23-$25 ($23.99 9/2 - NYSE) Market Cap: $725+ million Fiscal year-to-date (July 31, 2011) Net Sales: Up 36% to $66.3 million Net Income: Up 74% to $4.4 million Fiscal 2011Revenue: $164 million A Million is Not a Mirage Teavana is not typical, but the recent filing with the Securities and Exchange Commission reveals useful benchmarks about the industry. The closely watched IPO has not been funded. Teavana hopes to generate $100 million. Source: Second Quarter Financials, Sept. 2, 2011, Teavana 2011 S1: NYSE, Ticker Symbol: TEA

Teavana is not Typical Net Sales (by category) Independents Bulk Tea 56% 65% Merchandise 40% 30% Beverage Tea 4% 5% Stores offer 100+ selection of teas. Gross margins: rose to 62.9% from 59.6%. Pricing: $7.80 for 2 oz., $18.80 for 4 oz. and $67.32 for 6 oz. Average ticket: $36. “A primary driver of our expected margin expansion will come from the continuation of our sales mix shift away from tea-related merchandise towards higher margin loose-leaf teas that our stores generally experience as they mature.” S1 IPO Filing Blackberry Mojito Green Tea, Jasmine Strawberry Lemonade Green Tea Blend and Liquid Gold Tea Blend for $7.80 for two ounces, $18.80 for 4 ounces, $67.32 for six ounces, respectively. What's in the Liquid Gold Tea Blend? Three rare teas make a blend of antioxidants, immunity boosters and skin hydrators, according to the Teavana website. It also sells a $170 cast-iron teapot and $70 gift set that includes teas and tea maker. In fiscal 2010, the average amount spent by a customer per receipt was $36. That increased from $33 in fiscal 2009.

American Tea Room is Not Typical This tea bar seats six. A pot sells for $5. Tea service with scones and snacks is $20. Top selling Nirvana, a blend of Japanese Sencha, berries, figs and kiwi retails at $15 for 100 grams. Food is 4% of sales. Yet the American Tea Room grossed $1.5 million in 2010 selling premium loose leaf and teaware. How did they do it? A typical transaction consists of four $15 bags of tea with an accessory. Average ticket from Jan. 1 to June 1, 2011 was $89. Exceptional online sales. Relentless marketing. Ever-changing offerings. A Million is Not a Mirage Online transactions account for a big percentage of sales. His largest order: $50,000.

Retail Tea Trends Takeaways Few shops gross $1 million, but it is not a mirage. Teavana IPO establishes industry benchmarks. Teavana may dominate but will not exclude other tea retailers in the specialty channel. Teavana simply demonstrates one of several ways to bring specialty tea to market. “In July the NYSE enthusiastically funded Teavana at 65% above its asking price of $17 per share. Teavana now will mimic the Starbucks expansion that made specialty coffee the multi-billion business it is today. But the 500 shops they build will not put independents out of business. There is ample room for expansion for rival chains and independents.” – Dan Bolton, Editor/Publisher, World Tea News. A Million is Not a Mirage Online transactions account for a big percentage of sales. His largest order: $50,000.

Retail Tea Trends Takeaways Location and ambiance retain overarching importance. Top earning shops emphasize sales of premium tea to boost margins. Offer an 80% mix of fruit and floral blends and herbals with 20% orthodox and estate teas. Online sales are significant contributors to visibility and the profitability of brick & mortar ventures. Online sales account for 7-10% of daily transactions. Teaware is a critical component contributing 30-40% of sales. Food is complementary contributing 5-10% of sales. Tea-themed restaurants are a different business model that closely resemble QSR, family dining or full-service restaurants. A Million is Not a Mirage Online transactions account for a big percentage of sales. His largest order: $50,000.

Traffic & Ticket Exercise Now that you can see it can be done let’s take a few minutes for an exercise that will help you understand precisely what is needed to boost sales in your own shop. Whether you sell packaged loose leaf, tea bags or operate a foodservice tea room consider these two critical benchmarks. The first is average ticket (average ring or transaction). The second is average daily traffic. These benchmarks are equally important. Shop owners generally benefit most when they concentrate their energy and resources on the weakest. When we last did this exercise 26% of the retail audience indicated an average ticket of $10-14. Another 20% reported average sales of $15-19. Let’s see how this group does.

You Can Vote via www.Poll4.com EXAMPLE 32595 32563 32563 This slide is for display to the audience to show them how they will vote on your polls in your presentation. You can remove this slide if you like or if the audience is already comfortable with texting and/or voting with Poll Everywhere. Sample Oral Instructions: Ladies and gentlemen, throughout today’s meeting we’re going to engage in some audience polling to find out what you’re thinking, what you’re up to and what you know. Now I’m going to ask for your opinion. We’re going to use your phones or laptops to do some audience voting just like on American Idol. So please take out your mobilephones or laptops, but remember to leave them on silent. You can participate by submitting an answer at Poll4.com on your laptop or a mobile phone. The service we are using is serious about privacy. I cannot see who you are or who voted. TIP Enter 5-digit CODE in window, click submit. Ticket CODE RESPONSES ARE ANONYMOUS

How To Vote via Texting. Use 22333 and put CODE in message. EXAMPLE 32595 32563 22333 This slide is for display to the audience to show them how they will vote on your polls in your presentation. You can remove this slide if you like or if the audience is already comfortable with texting and/or voting with Poll Everywhere. Sample Oral Instructions: Ladies and gentlemen, throughout today’s meeting we’re going to engage in some audience polling to find out what you’re thinking, what you’re up to and what you know. Now I’m going to ask for your opinion. We’re going to use your phones to do some audience voting just like on American Idol. So please take out your cell phones, but remember to leave them on silent. You can participate by sending a text message. This is a just standard rate text message, so it may be free for you, or up to twenty cents on some carriers if you do not have a text messaging plan. The service we are using is serious about privacy. I cannot see your phone numbers, and you’ll never receive follow-up text messages outside this presentation. There’s only one thing worse than email spam – and that’s text message spam because you have to pay to receive it! 32563 or 32595 Standard texting rates only (worst case US $0.20) We have no access to your phone number Enter CODE in message line (not subject line) TIPS

Responses appear in this frame in real time. Next, let’s determine this group’s average traffic count. CODE 129298 | < $4 129309|$25 - 29 129334|$50 - 54 129350|$75 - 79 129302 |$5 - $9 129319|$30 - 34 129335|$55 - 59 129351|$80 - 84 129304 |$10 -14 129322|$35 - 39 129339|$60 - 64 129356|$85 - 89 129305 |$15 -19 129323|$40 - 44 129345|$65 - 69 129360|$90 - 94 129308 |$20 -24 129333|$45 - 49 129349|$70 - 74 129365|$95 - 99

Average Ticket (50 Show Responses as of June 26) Code 129302 < $4 Code 129304 $5 - $9 4% Code 129305 $10 - $14 1 Code 129308 $15 - $19 Code 129309 $20 - $24 Code 129319 $25 - $29 Code 129322 $30 - $34 4% Code 129323 $35 - $39 4% Code 129333 $40 - $44 3% Code 129334 $45 - $49 4% Code 129335 $50 - $54 2% 8% 26% 20% 16% 10% Backup slide: Average ticket for a retail tea store should be between $20 and $25. Teavana averages $36.

What is your average daily ticket amount? There is no universal formula to achieve retail riches. Success demands brilliant execution of a million details from scheduling staff to social media marketing. The first step is to consistently deliver great tasting tea. Sourcing well and training are essentials. A retailer’s next priority should be stocking, pricing and displaying offerings that establish a transaction average calculated to return gross margins of at least 75+ percent. A common ticket average for tea retailers is between $20 and $25. The simple exercise that follows invariably helps shop owners boost sales. A Million is Not a Mirage Online transactions account for a big percentage of sales. His largest order: $50,000.

Traffic & Ticket Exercise It is important that you know what your average ticket should be before selecting your teaware line. Veteran coffee and tea retail executive Joe Capp says: “In my experience the average ticket for a specialty tea retail store should be between $20 and $25. If your average tea product sale is, say, only $12, you need to choose teaware products that complement your core product offering in a way that will generate an additional $8 to $13 per transaction.” Next, identify the percentage of transactions that include teaware purchases. You can then use this information to identify what your target teaware product price range needs to be. Use this information to establish a tiered product mix by price.

Traffic & Ticket Exercise Let’s say that you sell teaware in 65% of transactions. You need to generate an additional $8 per transaction to average $20. Better yet, sell $13 worth to average $25. Divide $8 by .65 (65%) and you will see that your average sale of teaware products needs to be $12.31. Price Range Product Mix Product Descriptions $0-$10 20% Paper tea filers, food products, storage tins, utensils, etc. $11-$20 35% Infusers, mugs, cozies, etc. $21-$30 Ceramic tea pots, etc. $30+ 25% Electric kettles, cast iron tea pots, etc. Based on this information, you can establish a tiered product mix by price like the chart in this slide. Source: World Tea News, “The Business Benchmarks of Teaware” Feb. 16, 2011 ($13/.65=$20 average teaware sale)

How many sales do you transact daily? Now let’s look at the impact of traffic on your top line. Frequency matters. Every customer returning monthly brings you $300. That same customer visiting weekly spends $1,300 a year in your shop. You can gross a million on $25 transactions but it requires150 customers a day, or 15 transactions per hour. Teavana averages a $36 sale for every visiting customer. Increase your store’s ticket average to $45 and the traffic count falls to a reasonable 70 customers per day. A Million is Not a Mirage Online transactions account for a big percentage of sales. His largest order: $50,000. A high transaction average enables the American Tea Room to earn $1 million while serving only 35 customers a day.

CODES Responses appear in this frame in real time. 129767 | < 20 Daily Transaction Average ( CODES 129767 | < 20 129815 | 140-159 130813 | 280-299 231853 | 420-439 231862 | 560-579 129768 | 20-39 129816 | 160-179 130816 | 300-319 231856 | 440-479 231863 | 580-599 129773 | 40-59 129840 | 180-199 231840 | 320-339 231857 | 460-499 231886 | > 600 129790 | 60-79 129841 | 200-219 231841 | 340-349 231858 | 480-499 232800 | > 700 129803 | 80-99 130809 | 220-239 231842 | 360-379 231859 | 500-519 232802 | > 800 129807 | 100-119 130811 | 240-259 231850 | 380-399 231861 | 520-539 129812 | 120-139 130812 | 260-279 231851 | 400-219 231862 | 540-559

Average Daily Transactions (May 2011) (50 Show Responses as of June 26) CODE 129767 <20 CODE 129768 20 - 39 CODE 129773 40 - 59 CODE 129790 60 - 79 CODE 129803 80 - 99 CODE 129807 100 - 119 CODE 129812 120 - 139 CODE 129815 140 - 159 CODE 129816 160 - 179 CODE 129840 180 - 199 CODE 129841 >200 45% 19% 12% 0 % 10% 0% 2% Introduce idea of Teajectory reports 0% 0% 0% 2% Not to scale

Traffic Exercise A shop like Teavana grossing $862,000 annually and with an average ticket of $36 does 21,500 transactions annually or about 68 to 70 per day. Teavana’s shop hours are 10 a.m. to 9 p.m. so they need to average 5 to 7 transactions per hour. Teavana does 10% of its business online adding another 6.5 transactions per day to the mix. In the previous sample 60% of the retailers who responded served fewer than 40 customers per day. The ticket average must rise to compensate. Shops with a $25 average ticket can still earn $750,000 annually on 30,000 transactions (5,000 online and 80 in-store daily) but traffic averages of 20 and fewer mean gross revenue of $157,500.

Takeaways: Road to Retail Riches Retailers prosper by getting people to taste great tea. Chains in high traffic areas like Teavana, DavidsTea, Teaopia, Argo Tea Café and Ten Ren Tea, introduce thousands of people weekly to premium blends and tea beverages consistently produced. Chains like Argo that are popular with younger tea drinkers address a critical demographic as they open a window of opportunity to make tea their coffee alternate. It does not matter whether your shop is in a large city or suburb. It does not matter that you earn more online than over the counter. Profitability demands quality offerings, customer service, effective marketing and retail skill. Retail excellence is the common denominator. A Million is Not a Mirage: Takeaways

Quarterly Retail Reports The information you just offered is extremely valuable. A good case can be made for the tea industry to initiate a Quarterly Retail Tracking to establish benchmarks. Anonymous third-party surveys conducted by phone (instead of internet or panel interviews) allow clarification and better control. This proven, unbiased method insures accurate data and the best representation of current market conditions. Projections are based on in-store traffic, online orders and average ticket sales. Core survey questions establish pricing benchmarks, cost of goods averages and labor. Several questions can be used to explore developing trends with an eye for opportunities. Introduce idea of Teajectory reports. George, check wording to make sure commitment is clear.

Tea Certifications: Differentiated Tea Independent certification authorities reassure consumers that production of certified teas benefits the environment as well as the lives of farmers and workers. Customers rely on third-party certifiers to verify that marketers merit a social premium of 10% to 20%. The additional revenue is an incentive to not exploit farm laborers, improve quality and adopt business practices that ensure a sustainable future. Certifications differentiate retail offerings. Tea merchants, restaurants and grocers depend on certifiers to protect their reputations. Manufacturers say that certifications are important to investors and essential in obtaining celebrity endorsements that contribute to sales. Source: Fair Trade USA, UTZ Certified, Rainforest Alliance, USDA Organic, Canada Organic

Fair Trade Certification Fair Trade USA last year certified 9,500 products from 878 producers in 70 countries on offer by 700 industry partners at 60,000 retail locations. The volume of Fair Trade tea grew 38% as highly visible early adopters like Honest Tea and established brands like 300- year-old Twinings made public commitments to support Fair Trade. Since 2001 more than 7.3 million pounds of Fair Trade certified teas has been traded in the United States. In 2002 there were 16 Fair Trade certified tea producers, today there are 46. Only Fair Trade guarantees a minimum internationally guaranteed premium. Last year $631,000 went to tea garden workers. The premium for tea totals $2.5 million since 2001. Source: Fair Trade USA, Tea Almanac 2011.

U.S. Fair Trade Tea Imports Country Pounds Growth India 564,465 32% Rwanda 442,216 46% China 365,402 25% S. Africa 179,755 165% Egypt 119,876 -1% Sri Lanka 93,929 133% Tanzania 20,063 562% Africa 764,556 55% Asia 1,032,454 36% Total 1,889,259 38% Last year 79% or 1.42 million of the 1.89 million pounds of Fair Trade certified tea imported into the U.S. was also certified organic. Blends that include organic spices such as cinnamon, nutmeg, peppermint and chamomile now appear in the mix. South African rooibos is showing strong growth. Source: Fair Trade USA, Tea Almanac 2010

USDA Certified Organic In January USDA/FAS began tracking imports of organic tea for the first time. We knew sales were increasing. The Organic Trade Association reports sales of organic tea among its 15 tea manufacturing members grew 8%. But we did not understood precisely how much imported tea is certified organic. The answer is 12%. The U.S. imported107.5 metric tons of tea this spring (all categories). In the four categories that include organics (green and black, in tea bags and loose leaf) organics accounted for 12.4% of total volume and 20% value. The differential is very pronounced in greens which account for only 8.5% of the volume but 18.2% of value ($9.2 million in the first six months of the year). Source: To access the USDA GATS database visit: http://www.fas.usda.gov/gats/default.aspx Department of Commerce, U.S. Census Bureau, Foreign Trade Statistics, Organic Trade Association, 2011 Organic Industry Survey,

USDA Certified Organic Declared Value of All Imported Tea (in millions) 2006 2007 2008 2009 2010 Jan-June 2011 Change $430 $455 $497 $494 $582 $294,315 $309,569 5% Declared Value of Imported Organic Tea (Jan-June 2011) Type Value (000s) Quantity (MTs) % Volume % Value Organic Green $9,283 876.2 8.5% 17.3% Green* $44,441 9,487.3 Organic Black $7,209 836.3 24.1% 21.9% Black* $25,742 2,627.6 Organic Total $16,493 1,712.5 12.4% 19.0% Total $86,675 13,827.4 *Non certified conventional teas in same format at organic (green loose leaf, green flavored, black in tea bags etc.) Source: To access the USDA GATS database visit: http://www.fas.usda.gov/gats/default.aspx Department of Commerce, U.S. Census Bureau, Foreign Trade Statistics

USDA Certified Organic Tea imports are up 5% in the first six months of the year compared to the same period last year when America passed an historical milestone by exceeding tea imports in Great Britain for the first time. More significant is the availability of organic tea at competitive prices. Choice Organic Tea, for example, is now in 845 Kroger stores. Americans are drinking about the same amount of tea but more expensive tea. This is especially evident in green categories. Blends that include organic spices such as cinnamon, nutmeg, peppermint and chamomile now appear in the mix. Last year 79% or 1.42 million of the 1.89 million pounds of Fair Trade certified tea imported into the U.S. was also certified organic. RTD bottled teas are not included in these figures. Source: Organic Trade Association, 2011 Organic Industry Survey, Fair Trade USA, Tea Almanac 2011

USDA Certified Organic Tea Imports Organic Green Tea (all types) Country Kilograms Value Japan 290,106 $3.764 China 239,663 $2.085 All Others 32,476 $0.881 Total 562,245 $6.730 Organic Black in Tea Bags India 346,889 $2.426 UK 76,306 $1.743 Canada 71,256 $1.413 Sri Lanka 299,301 $1.036 Total* 836,333 $7.209 In this version I use the new USDA numbers through July * All others: Volume-42,581 kgs, Value $591,000. Source: Department of Commerce, U.S. Census Bureau, Foreign Trade Statistics Source: To access the USDA GATS database visit: http://www.fas.usda.gov/gats/default.aspx

Rainforest Alliance Certified Tea The Alliance currently certifies 3.2 percent of the world’s tea from producers in 11 countries. Volume last year rose 53% compared to 2009 topping 120,000 metric tons. Farms with a Rainforest Alliance certification also meet the environmental, social and economic standards of the Sustainable Agriculture Network (SAN). The New York-based organization, founded in 1987, recently certified the first rooibos producers in South Africa. President Tensie Whelan says, “By reaching out to new territories, the Rainforest Alliance’s certification program continues its important growth and further ensures the protection of our fragile environment and the livelihoods of farmers around the globe.” Add countries with rainforest certification. North American details. Source: Rainforest Alliance , August 2011

Rainforest Alliance Certified Tea Lipton, Tetley, PG Tips, Yorkshire, Typhoo and Twinings are just a few of the brands certified since 2007 when the Alliance first instituted its tea program. Unilever has pledged to certify all its tea in bags by 2015. Production of Rainforest Alliance certified tea is expected reach 200,000 metric tons in 2011. The Alliance expects to certify 70% of tea sold at retail in the UK by the end of this year and 20% of the global supply by 2016. Source: Rainforest Alliance , August 2011, Correspondence with Alex Morgan, Sr. Manager North America

UTZ Certified UTZ CERTIFIED (a not-for-profit) developed baseline standards for sustainable tea production worldwide that have since been embraced by the Ethical Tea Partnership. — The UTZ Code of Conduct mandates traceability, social practices and environmentally sound farming. — Buyers pay a premium, UTZ does not interfere in price negotiations. Premium varies widely by growing region. — Pricing structure is transparent to producers with supply and demand analysis support. — Third-party certification provides additional marketing opportunities. Certifiers promote firms exceeding benchmarks. Source: UTZ Certified, August 2011

UTZ Certified Impact is small but growing. A total of 250,000 lbs. of UTZ CERTIFIED tea has been imported this year by North American retail and food service brands. — Tea growers are projected to sell more than 3,000 metric tons (6.6 million pounds) of UTZ CERTIFIED tea. — 1,778 metric tons (3.9 million pounds) already sold as of July 2011 (up 46% from previous year) — Approximately 23,790 tea and rooibos producers are now UTZ CERTIFIED — 47% of the trades are South Africa rooibos 37% Malawi tea 16% Indonesia tea Source: UTZ Certified, August 2011

Overview: Global Export Market Advantages The trees are hardy and grow in terrain otherwise hard to cultivate. Tea is produced year round, providing a steady income. Tea is now commands records prices. Tea consumption is steadily rising. Challenges Tea is highly perishable. Tea processing facilities require capital. Harvests are subject to weather extremes. Competition is fierce. No country dominates the export market. Blends make tea interchangeable. Tea is labor intensive, requiring even small holders to hire workers. Export Target: America Gets Noticed

Overview: Each market wants a different tea UK buys Kenya’s CTC. Asians drink green. Russians and Americans drink black. Germany and Japan pursue Darjeeling. The French and Poles like leafy orthodox. Latin America prefers sweet tropical flavors. The Middle East drinks dark strong brew. Export Target: America Gets Noticed Source: Euromonitor blog (illustration and inspiration ) Euromonitor/Cultural Evolution is Affecting Tea Consumption, 2010.

Overview: Global tea Production Export Target: America Gets Noticed

Overview: Global Export Market Export Target: America Gets Noticed

Export Target: Tea Top Dozen *Reports on producers are twelve-month rolling totals – April 2010 to March 2011 2011 Top Tea Producers* Metric Tons (2,205 lbs) 2010 Top Tea Exporters 2010 Top Tea Importers Metric Tons (2,205 lbs) China 1,387,000 Sri Lanka 298,587 Russia (CIS) 181,618 India 966,733 136,710 Germany 37,656 Northeast India 728,526 Kenya 117,017 Britain (UK) 36,612 South India 238,207 Argentina 102,323 Poland 32,875 372,453 68,132 Pakistan 28,043 334,077 Indonesia 13,145 United States 17,397 60,591 Uganda 12,613 Netherlands 12,788 Bangladesh 59,582 Malawi 9,094 Ireland 10,861 50,835 Tanzania 7,442 Japan 6,319 48,748 Zimbabwe 2,607 Taiwan 5,145 31,095 508 France 3,370 12,787 359 Hong Kong 2,048 Source: International Tea Committee Web Summary May 2011, Import figures include tea arriving for re-export

Per Capita Tea Consumption Data from 2007, 2010 and 2011* Country Kilos Dry Oz. Kuwait 2.86 kg* 100.9 oz Netherlands .8 kg 28 oz Norway .4 kg 14 oz Ireland 2.31 kg* 81.5 oz Australia Swiss Quatar 2.04 kg* 71.9 oz China .76 kg* 26.8 oz Sweden Turkey 2.02 kg* 71.2 oz Germany .7 kg 25 oz USA .38 kg* 13.4 oz UK (England) 1.97 kg* 69.5 oz India .69 kg* 24.3 oz Austria .3 kg 11 oz Iran 1.4 kg 49 oz Pakistan .62 kg* 21.9 oz Argentina Morocco 1.2 kg 42 oz Chile .6 kg 21 oz Finland Egypt 1.1 kg 39 oz Canada .46 kg* 16.2 oz France .2 kg 7.1 oz New Zealand 1.0 kg 35 oz Asia 705 to 893 cups Denmark Poland England (4) 350 cups 70 bn Peru Russia .94 kg* 33.2 oz 264 cups 9 bn Bolivia Japan .9 kg 32 oz America 157 cups 65 bn Italy .1 kg 3.5 oz Canada consumption of tea 79.4 liters, decrease in soft drinks from 76.4 to 73.2 liters (2008) According to the Canadian Food Trends to 2020, a report commissioned by Agriculture and Agri-Food Canada, tea consumption is expected to jump 40% by 2020, as growing consumer interest in health and wellness has lead to increasing awareness of tea’s functional benefits. The Chinese green tea is often brewed up many times and so more cups per tea weight. India is something different again. When we used to drink tea with lose leaf, much was thrown down the drain or on the roses. Now with teabags there is much more portion control. In UK the consumption is just under 4 cups per day. 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BookmarksY! MailYammerYardbarkerYemleYiggYoolinkYorumcuyumYoublrYoubookmarksYouMobYuubyZakladok.netZanaticZicZacZingMeZooLooZootool Done Message sent! Share again. Sending message... AddThis for Internet Explorer Make sharing easier with AddThis for Internet Explorer.Download Don't show these To: (email address) From: (email address)Note: (optional)255 character limit More: SettingsPrivacyAddThis Bookmark & ShareX Make sharing easier with AddThis for Internet Explorer. Don't show these To: From: Note: FacebookTwitterPrintGoogleFavoritesDiggDeliciousStumbleUponMessengerEmail UK Tea Council 66% of population drinks tea daily, 165 million cups a day, or 60.2 billion per year, Ireland drinks more, consumed from tea bag 96%, and 98% taken with milk. England imports 160,000 tones of tea, foil lined paper sacks of 50 to 56 kilos There are 1,500 varieties of Camellia sinensis Source: British Tea Committee (insert); Wikipedia (lots of debate over order Ireland usually listed before England and Turkey. http://www.marketresearchworld.net/index2.php?option=com_content&do_pdf=1&id=208

China Export Target: United States Tea chests from the orient come to mind when Americans discuss imports, but Argentina is far and away the biggest supplier of the black tea that Americans prefer. ITC tallies show the US imported 5,712 metric tons of tea from South America. China is second at 2,471 tons. Unlike Argentina, China exports large quantities of green as well sending 2,661 tons to the US in the past 12 months. The cumulative total of Chinese greens for 2011 is18% ahead of last year, but the real story is China’s renewed emphasis on black teas targeted for export. The United States is a primary export target. China reports 8,857* tons of tea in the pipeline.  China Export Target: America Gets Noticed China Slide  Argentina Source: China Economic Monitoring & Analysis Centre. Reporting discrepancies are common due to lengthy transit times, exports consigned to a particular country that are transferred to another destination in transit and the fact that imports often arrive during the following calendar year.

India Export Target: United States India has a great thirst for tea, consuming 80% of the 966,733 metric tons it produced last year. Per capita consumption is growing at 1.8%. Rising labor costs, falling yields and strong global pricing convinced the world’s second largest producer to undertake a major national program to increase tea exports. This year’s goal of 200,000 metric tons was last attained in 2009. The US is India’s 8th largest export market. By comparison the Russia Federation is five times larger. The combined Middle East market imported 34,330 metric tons of India’s tea last year. 2010 Exports: 136,710 metric tons (12% of all global exports) US: 7,590 metric tons Canada: 1,340 metric tons  India Export Target: America Gets Noticed India Slide. India’s tea bushes are getting old. Thirty percent of the nation’s bushes are no longer in their prime. Many have exceeded their economic threshold and must be removed. India has 300 brands of tea. Country has 516,000 ha under cultivation. . Assam Assam is a major growing area covering the Brahmaputra valley, stretching from the Himalayas down to the Bay of Bengal. There are 655 estates covering some 407,000 hectares. Assam tea has distinctive flecked brown and gold leaves known as "orange" when dried. In flavour it is robust, bright with a smooth, malt pungency and is perfect as the first cup of tea of the day. Such teas are used in everyday popular blends because of the full-bodied richness. There is also an Assam Green tea with an unusual light, almost sweet liquor. First Flush Assam Assam tea bushes start growing in March and the first flush is picked for 8 to 10 weeks, first flush Assams e.g. Bamonpookri, an excellent quality tea with a strong fresh flavour; are rarely marketed in the Europe, unlike first flush Darjeelings. Second Flush Assam The plucking of the second flush begins in June with most of the production taking place from July to September. The second flush Assam is the best of the season and when brewed give a rich aroma, a clear dark read liquor and a strong malty taste. Good examples of second flush assams are, Napuk, displaying all the qualities of a well made Assam and Thowra, which has a strong spicy liquor and lots of body. Darjeeling Regarded as the "Champagne of Teas," Darjeeling is grown on 100 estates on the foothills of the Himalayas, on over 18,000 hectares at about 7000 ft. Light and delicate in flavour and aroma, and with undertones of muscatel, Darjeeling is an ideal complement to dinner or afternoon tea. The first "flushes" (pluckings) are thought to produce the best Darjeeling vintage but all crops are of very high quality. Darjeeling Green is rare tea similar to Japanese Sencha with an exquisite aroma and delicate taste. First Flush Darjeeling The Darjeeling bushes' first new shoots - the first flush - are picked in April. These first teas of the season are the finest and are much in demand, fetching incredibly high prices at auction. Castleton First Flush, has a perfect green-brown leaf and is from one of the most prestigious gardens in the area. It gives an exquisite perfume and taste of green muscatel. Bloomfield First Flush is again from a recognised garden and its subtle astringent flavour is typical of Darjeeling first flush. Second Flush Darjeeling Second flush Darjeelings are picked between May and June and produce excellent quality teas that are considered by some to be better than the first flush as they have a fruitier, less astringent flavour than the earlier teas. The leaves are darker brown and contain plenty of silvery tip. Again good examples of second flush Darjeelings are, Puttabong, which is one of the better second flush Darjeelings available, with a discernible muscatel flavour and Namring, a fruity balanced taste perfect for afternoon tea. Nilgiri The Nilgiri region, situated in southern India, forms a high hilly plateau at the conjunction of the Eastern and Western Ghat mountains. More than 20,000 smallholders grow and pluck tea with some 90,000 hectares under cultivation. Most Nilgiri teas are used for blending, but there is a rapidly growing demand for the specialty tea of the area. Nilgiri has a bright amber color and a refreshing, bright and delicate taste. Nunsch is a typical Nilgiri tea, large-leafed, which gives a fruity, bright and flavorful brew. India Tea A blend of teas from all parts of India, this is often served as afternoon tea or after a meal. It is full-bodied, refreshing and with delicate hints of its regional origins Source: International Tea Committee (May 2011 Web Report)

Sri Lanka Export Target: United States Last November Sri Lanka instituted a billion rupee ($9 million) campaign to promote Ceylon tea. The fund is financed by a levy on exports. Their U.S. goal is $2.5 billion in exports by 2015. “North America was a key traditional market for Ceylon tea that was “lost” as major brands that control the trade moved to newer, cheaper origins,” says Merrill J. Fernando, chairman of the Sri Lanka Tea Council. “Discerning (North American) consumers still appreciate the unique flavor of Ceylon tea and are increasingly focused on ethics, provenance and authenticity,” he says. 2010 Exports: 298,587 metric tons (19% of all global exports) US: 3,312 metric tons Canada: 795 metric tons Sri Lanka  Export Target: America Gets Noticed Sri Lanka Slide "There are certain markets where we will have to advertise to arrest the lost market share,” Hasitha De Alwis, the director of promotions at the Sri Lanka Tea Board told the Lanka Business Report. “Since we have a limited supply the plan is to go into more niche markets where we can demand a high price,” says De Alwis. “We have divided the globe into primary and secondary markets by prioritizing regions and the money will be spent accordingly,” De Alwis told the Lanka Business Report. The regions with priority include the CIS countries, Far East Oceania, West Central, East Europe, Middle East, U.S., and North Africa. De Alwis said the bulk of the money will be spent on aggressively marketing Ceylon tea brands in the Russian Federation and the Middle East where Sri Lankan exporters can demand a premium. As a trading partner, the Middle East dwarfs North America but turmoil throughout the region has severely cut exports. Libya annually receives 10 million kilos or 3.5 percent of Sri Lanka’s exports. Syria is a big customer as well. Neither is receiving shipments. The abundance of tea has focused renewed interest in North America. Dilmah is a prime example. are divided by central mountains so that as each region's season ends, the other begins. Dimbula Probably the most famous of Ceylon teas, Dimbula is cultivated on estates first planted with tea when their coffee crops failed in 1870. Grown 5000 ft above sea level, all Dimbula teas are light and bright in color with a crisp strong flavor that leaves the mouth feeling fresh and clean. Today, it forms part of the high-grown zone of central Sri Lanka which includes Dickoya and Nuwarah Eliya. Kenilworth This tea has long wiry beautiful leaves that give an exquisite, almost oaky taste and good body and strength. Uva Uva is a fine flavored tea grown at altitudes between 2,000ft and 4,000ft above sea level on the eastern slopes of the Central Mountains in Sri Lanka. It has a bright, deep amber color when brewed, with the brisk and crisp, strong Ceylon flavor. These teas are also used in Ceylon blend and make an ideal morning drink or an after-lunch tea. Saint James This is a copper-colored infusion with a very smooth, pronounced taste and a wonderful aroma. It is a perfect breakfast or day time tea. Nuwara Eliya Nuwara teas are light and delicate in character, bright in color and with a fragrant flavor. Their flavor is heightened when taken with lemon rather than milk. Nuwara Eliya Estate This tea has a bright brisk flavor and a wonderful perfume, good to drink at any time of day with just a little milk Ceylon Blend Ceylon teas span the entire spectrum of tea production, from low to high grown teas. By blending teas from different areas of the island, Sri Lanka is able to offer a very wide choice of flavor and characteristics. Some blends are full bodied, others are light and delicate, but all are brisk, full flavored and have a bright color. Source: International Tea Committee (May 2011 Web Report)

Export Target: Dubai, UAE Unilever, the world’s largest tea group, is doubling output of its largest tea processing facility to meet European and Middle Eastern demand for green tea. Per capita tea consumption in the Middle East rivals Britain and Ireland and Dubai is now the major center of tea procurement for the Arab world. Unilever’s Jebel Ali plant is 2,000 kilometers from the nearest tea gardens yet it produces 1.1 million tea bags an hour. The goal is 52.8 million tea bags a day — 19.3 billion a year by 2015. 2010 Imports: 47,963 metric tons Sri Lanka: 29,570 metric tons India: 12,200 metric tons Kenya: 5,584 metric tons  UAE Export Target: America Gets Noticed Dubai Slide Source: International Tea Committee (May 2011 Web Report)

Top Tea Retail Trends Thank you for attending Dan Bolton Editor and Publisher World Tea News www.WorldTeaNews.com Dan.Bolton@WorldTeaNews.com Booth No. 106