ITO EN expands lineup of ready-to-drink teas
Company named in Top 50 list of companies that are changing the world
The rich history of tea dates back to when it first was used as a medicinal drink in East Asia. As globalization progressed, tea drinking has become an international phenomenon, spreading across multiple cultures throughout thousands of years. Yet, as consumers’ tea tastes have evolved, Brooklyn, N.Y.- based ITO EN (North America) Inc., a division of Tokyo-based ITO EN Ltd., continues to build on its strong innovation heritage by introducing healthy, organic and non-GMO tea varietals while maintaining a strong focus on new product development, sustainability and authenticity.
With a history spanning five decades, ITO EN is a vertically integrated purveyor of award-winning, premium and sustainably grown green teas. Along with its portfolio of natural, ready-to-drink (RTD) teas — Oi Ocha, TEAS’ TEA and matcha LOVE — the company manufactures loose-leaf teas, teabags, matcha powders for ceremonial and culinary use, as well as coffee products.
Noting that ITO EN’s commitment to authenticity, innovation and sustainability are key aspects of the company’s success, President and Chief Executive Officer Yosuke J.O. Honjo says that the company is guided by five principles: natural, healthy, safe, delicious and well-designed.
Preserving the Japanese culture and “always putting the customer first” have been part of the company’s mission from the beginning, Yosuke J.O. Honjo says.
ITO EN Ltd. was founded in 1966 by Yosuke J.O. Honjo’s father, Masanori Honjo, who started in the automobile business, and his uncle Hachiro Honjo, who currently serves as chairman of its Japanese-based operations, “as a way to reflect and embody the Japanese culture,” Yosuke J.O. Honjo says.
He explains that ITO EN, which means “in the garden of ITO,” comes from the surname ITO, originating from the largest tea-producing region in Japan.
A unified approach
Reflecting back on the company’s emergence in the retail market, Yosuke J.O. Honjo notes that ITO EN was able to separate itself from its competition.
“The food business was easy to enter in Japan in 1966, with supermarkets and convenience [stores] popping up everywhere. Each local area had many, many tea companies,” he explains. “But only ITO EN had a unified approach, which enabled us to stand out from the rest. In order to sell into the bigger supermarkets, we had to create new products that were shelf stable. In 1966, we developed vacuum-sealed packaged green tea leaves allowing us to distribute this new tea concept throughout Japan. This positioned ITO EN as Japan’s No. 1 green tea brand.”
Today, the ITO EN Group manufactures much more than loose-leaf and unsweetened RTD green tea. Among the companies operating under the ITO EN Group umbrella are ITO EN (North America) Inc., which was founded in May 2001; ITO EN Hawaii; Mason Distributors Inc., which makes vitamin supplements; and Distant Lands Trading Co., a vertically integrated specialty coffee company.
ITO EN Group’s broad portfolio includes RTD teas and coffees, matcha powders, sports drinks, yogurt, juices, and beverage mixes.
The company is doing “very well,” Yosuke J.O. Honjo says, with $4.27 billion in sales in 2016, an 8.1 per-cent year-over-year increase compared with April 2012, he says. He adds that 85 percent of sales are from its beverage portfolio, with its premium and unsweetened green teas comprising 30 percent of its revenue and loose-leaf teas making up 15 percent.
Packaging innovations, like putting its brewed teas in cans, also have contributed to the company’s growth and expertise, says Jim Hoagland, chief operating officer for ITO EN (North America) Inc., which is headquartered in Brooklyn’s Dumbo neighborhood.
“The company started out producing loose-leaf tea, and as demand was growing, ITO EN developed the technology to put teas in a can in 1981 — we were the first ones to do that,” he says. “This was really revolutionary. The first one was a canned oolong tea followed by a canned green tea in 1985. It all started with an unsweetened oolong tea with no preservatives made with very simple ingredients — tea, water and vitamin C.
“Then we added to the lineup four years later, and in 1990, we launched the world’s first green tea in PET bottles, again constantly innovating,” Hoagland continues. “I think the key message is our history of innovation, starting with the vacuum packaging of loose-leaf tea and our ability to distribute it to a broader market as consumer behavior was changing in Japan. All of the sudden, people could shop at supermarkets, go into convenience stores and they wanted that portability.”
Rona Tison, senior vice president of corporate and public relations, adds that the company’s packaging innovations were brought on by the increasingly mobile lifestyles of the younger generation.
“People were not staying at home as much, nor brewing tea in the traditional manner like their parents,” she explains. “They were much more mobile and on-the-go. ITO EN really wanted to create a product that had the taste integrity of a brewed tea but in an on-the-go format. We decided to focus on developing this technology, since it had been impossible to bottle green tea since it would oxidize.
“Oi Ocha really revolutionized tea-drinking in Japan,” Tison continues. “The young people were reintroduced to their traditional Japanese green tea, since they were shifting to drinking sodas. Oi Ocha was a big break, since it had been said that green tea could never be bottled due to oxidation.”
The company’s flagship product, Oi Ocha, an unsweetened green tea that means “Tea, please!” was an integral part of ITO EN’s first products, but initially it only could be purchased in two specialty channels in the U.S. — natural, specialty stores and Asian market stores, Hoagland says.
Today, Oi Ocha is available nationwide packaged in 16.9-ounce, BPA-free PET bottles. The tea is offered in six flavors: Pure Green, Bold Green, Jasmine, Oolong, Hojicha and Genmai. “This is our flagship product,” Hoagland says. “We produced over 100 million cases of this product alone in 2016.”
During the past 50 years, the company’s portfolio has grown from three products to more than 100 SKUs. The portfolio now includes a TEAS’ TEA lineup of 16 SKUs of RTD unsweetened and slightly sweetened teas that were rebranded organic at the Winter Fancy Food Show in California and matcha LOVE, a line of energizing green tea powders, bagged teas, RTD shots and bottled teas.
This year, ITO EN debuted two new product lines — matcha LOVE Cold Brew and TEAS’ TEA Organic Cold Brew — at Natural Products Expo West. Matcha LOVE Cold Brew is available in two organic varieties: Matcha + Green Tea (unsweetened and Non-GMO Project Verified) and Lemon Matcha + Green Tea. TEAS’ TEA Organic Cold Brew is available in two varietals: Pure Green Tea (unsweetened and Non-GMO Project Verified) and Raspberry Black Tea.
As cold-brew coffee continues to expand throughout the United States, ITO EN was one of the first companies to release cold-brew teas into the market, Tison says.
“It’s interesting because we knew there was a buzz with cold-brew coffees. In Japan, we had been using a cold-brew technique with teas called Mizudashi, literally translated as ‘draw with water,’ that has been around in Japan for hundreds of years,” Tison says. “We actually had one of the bottles and said, ‘we should bring this here’ and the timing was right to do that.
“In the tea world, the nuances and subtle flavors of taste is everything,” she explains. “We have the expertise to bring out the pure taste of a tea, a high-quality [and] really refined flavor. We’ve elevated the simple essence of our tea leaves and created a more delicate taste with a smooth, clean finish.”
As demand for ITO EN’s teas has grown, the company has expanded its production outside of Japan’s 900,000-square-foot facility to include plants in Thailand and Taiwan. “The same quality-control team oversees each of the locations, ensuring the tea-brewing process and bottling of our teas meet our stringent quality standards, including taste, which is most important,” Hoagland explains. “… Products are then transported 250 miles to the port in Yokohama. Shipping takes about three to four weeks.
“To get it from there to here requires a lot of coordination, and, fortunately, over the past 15 [to] 16 years that we’ve been here, we’ve developed an expertise in that,” he continues. “We’ve got a great team in customer service, logistics and production planning.”
ITO EN products are available in more than 20,000 stores nationwide, including Kroger, Whole Foods Market, Sprouts Farmers Market, Albertsons, The Fresh Market and CVS. In addition to partnering with UNFI and KeHE, ITO EN recently inked a distribution deal with Dot Foods to expand availability to more than 4,300 distributors.
“We started in the natural channel, really bringing a high-quality product to the market,” Hoagland says. “Flash forward to 2017, our products are available in all 50 states in everything from conventional grocery, specialty grocery, natural grocery, foodservice, eCommerce and mass market.
“In North America, we had $280 million in sales,” he continues. “We’re seeing strong double-digit growth of close to 30 percent with grocery really leading the way. Specialty is at around 20 percent growth. … Natural has been a little more sluggish but they’re also losing business, quite frankly, to conventional grocery, which is doing a much better job of stocking better-for-you products.”
Explosive growth in eCommerce and expanded opportunities in foodservice also are driving sales. “Every year, we set a budget, and every year, we exceed that budget and do more,” Hoagland notes. “… We have a heavy product, so to ship a case of our product, it’s about 15 pounds — but most of these companies offer free shipping.
“Consumers want convenience, especially millennials, so they see the product and they just order it on their mobile devices and have it shipped directly to their homes and businesses,” he continues. “… Our customers are really looking for healthier beverages, and we’ve got the perfect product for that.”
Building on the success and innovation of products in Japan, ITO EN (North America) Inc. launched the original TEAS’ TEA brand in 2002 with a singular mission — to create “Ocha no naka no Ocha” or “The Tea of ALL Teas,” the company says.
“We developed the TEAS’ TEA brand for the U.S. market, first launching with three unsweetened flavors of Pure Green, Jasmine and Hojicha, a roasted green tea ,” Tison says. “But they just didn’t perform as the company envisioned at the outset. It was just too early as the consumer was not ready for an unsweetened green tea.
“… There was a lot of buzz around this idea of green tea — consumers heard it was healthy but there still was a lot of wincing,” she continues. “Yet, we’ve seen the market evolve to where now it is a welcomed beverage. The timing could not be better for us, especially with our new organic lineup.”
To drive acceptance of the initial TEAS’ TEA lineup, ITO EN introduced new flavors that weren’t available in Japan and created some green teas that were “more unique and fitting to North American consumers’ palates,” Tison says. Among these flavors were a lemongrass tea, a rose green tea and a mint green tea.
A commitment to organic
As consumer demand for better-for-you products has proliferated, ITO EN has continued to innovate by switching its original TEAS’ TEA lineup to USDA-certified organic in a process that took about 18 months, Hoagland says.
“It’s basically the same product, the same process but the key difference is that we’re now using organic green tea and it is packaged and designed for the U.S. market,” he explains. “Because we didn’t want to compromise on quality, we shifted the existing TEAS’ TEA lineup from non-organic to organic [and] challenged our production team with ‘OK, we can do this, but the market is very competitive so we can’t raise our price, and we also don’t want to give the consumer something that doesn’t taste as good.’ So we challenged them with going out and sourcing and matching the same high-quality taste profile. It’s been successful.”
Available in 16.9-ounce and 2-liter BPA-free bottles, the TEAS’ TEA Organic unsweetened lineup is available in nine flavors: Pure Green, Pure Black, Lemongrass, Jasmine, Green & White, Oolong, Mint, Chamomile, and Rose. They contain zero calories, are vegan, gluten free and free from artificial preservatives. The organic slightly sweetened lineup contains 80 calories in each single-serve, 16.9-ounce bottle and is available in six flavors: Mango Yuzu, Fuji Apple, Hibiscus, Pomegranate Blueberry, Sweet Peach Ginger and Lemon Mint.
In addition to the new flavor lineup, the TEAS’ TEA Organic lineup debuted a brand refresh at Natural Products Expo West featuring a new logo that incorporates organic as a key message.
“We had them all lined up in a cooler,” Tison says. “People knew TEAS’ TEA, but it was the first time we could proudly say that ‘everything was organic,’ all with a clean and updated design. It exceeded our expectations in terms of the response we got.”
The use of matcha tea also is proliferating in the marketplace, and ITO EN is No. 1 in the matcha category, Hoagland says. In 2013, the company launched its matcha LOVE lineup with the goal of making the benefits of authentic, premium matcha available to a widening consumer base.
The matcha LOVE lineup includes bagged matcha green tea in Traditional, Ginger, Jasmine, Lemongrass, Peppermint and Chamomile varieties; the aforementioned matcha RTD cold-brew teas; ceremonial matcha powder packaged in 0.7-ounce tins; culinary matcha, which is available in 3.5-ounce tins and in bulk for use in foodservice; along with sweet powder, which is used for hot or cold lattes and is packaged in 17.5-ounce re-sealable bags.
Native to Japan, matcha is created from a finely milled powder made from whole leaf green tea called tencha, a shade-grown leaf that embodies the “umami” flavor of matcha. Matcha has the nutritional benefits of 10 cups of regular green tea and 137 times more antioxidants than regularly brewed green tea, the company says.
“Matcha contains L-theanine, an amino acid that provides ‘calm alertness’ and catechin antioxidants that may help improve cardiovascular health, weight loss and many other health benefits,” Tison explains.
Yosuke J.O. Honjo adds: “Compared to black tea, green tea is healthy, but matcha is even healthier than brewed green tea because it is actually ground to a fine powder that is using the entire tea leaf. It’s a superfood.”
From tea farm to consumer
As sustainability continues to be a growing issue for beverage manufacturers, ITO EN is no different. Maintaining a secure supply chain to meet consumer demand and creating sustainable, scalable approaches to address social problems are core to the company’s philosophy and corporate social responsibility initiatives.
The company has sustainable tea farms in Japan, China and Australia, and is exploring new farm locations. “We are taking our plants and establishing partnerships with the farmers,” Yosuke J.O. Honjo says. “Supporting them and educating them is crucial to our operations. We give them the technology and resources they need to be successful.”
Beginning in 1994, ITO EN started to convert abandoned tobacco farms in Australia to tea farms, Tison says. “ITO EN became a very big part of the community,” she explains. “It took about 10 years before we were able to harvest our first crop, but now there’s a great supply of quality green tea. We received an award from the Australian Government for our sustainable business efforts.”
Understanding where the tea comes from is pivotal to ITO EN’s mission, Hoagland says. “A lot of other companies in the tea market buy their tea and may or may not know where it came from,” he says. “That’s not our style.”
Through its Tea-Producing Development Project, ITO EN is committed to revitalizing dormant farms and putting unemployed workers back to work, it says. The company procures raw tea leaves, brings in technological assistance to revitalize dormant farms and annually transforms 49,000 tons of used tea leaves from its beverage production to make 50 million cardboard boxes, which the company uses for its own packaging. Using an environmentally friendly synthetic resin created from the tea leaves, the company also has developed more than 30 eco-friendly products in partnership with companies manufacturing building materials, vending machines, public benches and household goods.
ITO EN’s sustainability efforts are being recognized across the globe. Last year, it ranked No. 18 on Fortune’s “50 Companies that are Changing the World” list, which is based on three measurable criteria: social impact, business results and degree of innovation.
That accolade and the company’s growing success has made Yosuke J.O. Honjo and the entire ITO EN Group incredibly proud. “We are a vertically integrated company that takes pride in the responsible sourcing of our products — from the tea farm to the consumer,” he says. “We check and control all facets of our business. It’s good for our corporate culture, but it’s also good for society. We feel even more responsibility.”
In an effort to continually evolve and meet its customers’ needs, ITO EN is relocating its blending facilities and opening a new 6,000-square-foot Tea Innovation Center in Brooklyn. The center will focus on innovation, give customers the ability to experiment with unique blending ideas and expand the company’s direct-to-consumer online business, Hoagland says.
“We’ve been in the market with unsweetened tea in Japan for a very long time and in the U.S. since 2001, and I feel like it’s our time,” Hoagland says. “… Today, we’re going up against the Cokes, the Pepsis, Nestlé and Starbucks, companies that have … extensive distribution systems and supply chains, so we know that we need to be faster on the innovation side.
“We need to work harder and be smarter, so products like the cold brew, our organic or matcha LOVE have been crucial to our success,” he continues. “We’re positioned perfectly. I really feel like it’s our time.” BI