Sweet Leaf Tea
Giving the RTD tea category a Southern accent
If the South had a signature product, it would probably be sweet tea. Sweet Leaf Tea takes that homemade sweet tea taste, usually found only in local restaurants or grandma’s kitchen, and bottles it, much to the delight of consumers craving the flavor of the South.
Frustrated by not being able to find a bottled tea as good as homemade and inspired by a tea-tasting road trip through Alabama and Mississippi, Clayton Christopher launched Sweet Leaf Tea in 1998. Enlisting the help of friends, Christopher built a special tea hut in Beaumont, Texas, where he brewed the original batches in large crawfish pots using pillowcases as teabags, filled bottles with a garden hose and applied labels and caps by hand. Today, the now Austin-based company has 11 full-time employees and distributes its product line in 38 states.
Original Sweet Tea is the line’s flagship product; in total, eight 16-ounce SKUs and four 64-ounce SKUs are available in flavors including Mint & Honey Green Tea, Peach, Hibiscus and Raspberry, with some in diet versions. Sweet Leaf is currently switching all of its products over to all-organic ingredients; two of the eight flavors are currently organic, with four more converting by the end of the first quarter.
“One of the main things that makes Sweet Leaf unique is that we use pure cane sugar to sweeten our teas, and we brew all our teas from real tea leaves. We don’t use any tea solids or concentrates,” says Sweet Leaf Co-Founder and Vice President of Sales David Smith. “We use all-natural, organic ingredients and no artificial colors or flavorings. Our goal, all along, has been to make the best-tasting product we could and the use of natural and organic ingredients stems from that.”
The learning curve
As Sweet Leaf has grown, it has evolved beyond its original do-it-(all)-yourself approach in two critical areas, marketing and manufacturing. As a start-up with a limited budget, Sweet Leaf generated consumer buzz with samplings in stores and at events like marathons, bike races, music events and outdoor festivals. With its growth, Sweet Leaf has added more traditional marketing vehicles such as print and radio advertising.
On the product formulation and manufacturing side, Sweet Leaf sticks to its start-up roots, dreaming up new ideas in its kitchen, rather than employing an army of product developers.
“It starts in the kitchen with us just brewing regular tea bags and adding natural ingredients,” Smith says. “A lot of times we’ll go to Whole Foods and buy different ingredients, brew up some tea with those ingredients and get it to where we think it tastes great.”
Once Sweet Leaf’s in-house testing yields a solid product idea, it works with a flavor house to refine and formulate the recipe. The recipe, ingredients, packaging and labeling materials are then sent to the plant, where it is produced and shipped to stores.
“The first few years, we did all of our manufacturing in-house, but it really didn’t give us time to actually get out and sell and market the product,” Smith says. “At that point, you’ve got to define what your business is – are we in the manufacturing business or are we in the sales business? After about three years of doing it ourselves, we found a co-packer and now we outsource everything. It was a costly learning experience doing it ourselves, but it definitely gave us the right foundation to know how the plants work and what to expect from them. We were able to speak their language and understand their challenges a little better since we had done it ourselves in the past.”
Building distribution and reach
Sweet Leaf is most widely available in the grocery, natural foods and convenience store channels, but can also be found in some mass merchandise and club stores; it hopes to expand into the foodservice channel this year. The product line is available nationally in Whole Foods and Wild Oats natural food stores. Outside of those chains, Sweet Leaf’s distribution is most heavily concentrated in Texas and Colorado, with additional strong presence in the Northeast, Southeast and Midwest, though it hopes to increase its West Coast market penetration.
Like many smaller beverage-makers, Sweet Leaf has worked hard to create a distribution network. “It definitely takes a little bit of time to get the relationship going and get the distributors to bring in the product. It’s a three-part sale – you’ve got to sell the distributor, then you’ve got to sell the retailer to get the distributor to start moving it and then you’ve got to sell the end consumer,” Smith says.
Getting shelf space is tricky, too, since major grocers often require payment of expensive slotting fees that are out of the reach of most start-ups. “Being a small company, it’s pretty difficult to cough up a hefty slotting fee with no guarantees of how long you’ll be on that account,” Smith says. “We have done it, but we’re real cautious about it. If the retailer wants too much money, we just wait until they want the product more. Typically if you can get their consumers to demand the product, the retailer will eventually listen to the consumers.”
The future looks even sweeter for Sweet Leaf. It plans to introduce at least one new flavor this year, and will concentrate on its Texas and Colorado markets, as well as building its reach nationwide.
“We’re really trying to focus a lot of energy on pulling more product out of our existing business and focus a lot of time on our main markets,” Smith says. “But at the same time, we’re still trying to get into the rest of the grocery store chains we’re not already in. Once you establish the foundation in the grocery channel, which is probably the most successful arena to deliver your products to the consumer and build awareness, you can then jump into more competitive channels like the convenience store business.” BI