Tea chain T2 sells to Unilever: Four lessons from the company's loose-leaf success

Australia is often thought of as a nation of coffee drinkers, but as entrepreneur Maryanne Shearer is about to find out, tea can not only be incredibly tasty – it's also incredibly profitable.

Shearer's tea-focused retail chain, T2, will be purchased by tea giant Unilever. Although the price hasn't been disclosed, T2 generated $57 million in sales for the 2012-13 and is profitable.

Unilever – which owns the Lipton brand – was contacted by SmartCompany this morning, but no reply was received prior to publication. The purchase was confirmed in a statement on late Friday afternoon.

Shearer founded the T2 business with a single store in Melbourne back in 1996, and now the company has grown to over 40 locations across the country. It's been a tough road, too – Shearer couldn't access bank finance at the beginning and didn't turn a profit for four years.

But Shearer has been able to do what many entrepreneurs cannot – create an iconic brand. The company's loose-leaf tea products are fitted with the recognisable T2 logo, turning a basic drink into a premium product.

The company's stores are a lesson in themselves, creating a type of experience-based space where customers can try different flavors of tea in dozens of combinations.

Unilever president for refreshment Kevin Havelock said in the statement the company has "great potential", and called T2 a "premium tea business".

Shearer said in the statement she will stay within the business, while Unilever pointed out the company has been experiencing double-digit growth.

So what's made T2 such a success? We've put together five lessons fellow businesses can take away from Shearer's retail expertise:

Excellent and consistent branding

The T2 logo has become almost an icon in supermarkets and in office buildings across the country. It's thanks to the company's excellent branding – and an understanding of what a good logo can do.

The company's name is broadcast on tins of tea in bold lettering. It's basic, colourful and bold, giving the customer an instant knowledge of what the company is and what it does.

The secret here is that the logo is visually appealing: different flavours of tea carry different coloured tins, so while browsing the customer isn't assaulted by garish imagery. All in all, the logo is just pleasing to look at.

Having replicated the logo across all of its products, T2 has created a market in which its name is instantly recognised by customers – and easily spotted by newcomers.

A store experience

With retail transforming, it's always important to keep customers engaged in an "experience". T2 does exactly that by inviting customers in to have as many samples as they want before buying.

The T2 stores all feature various tables with flavoured teas ready for pouring, complete with plates showing a small sample of the loose-leaf components of the drink.

T2 has successfully created not only a welcoming atmosphere, but a store customers actually want to visit again and again.

Premium product at a premium price

Tea is a cheap product, but given the premium quality of the T2 brand, selling at a loss doesn't help anyone.

The company has been able to not only train its customers into buying different flavours of tea, but actually paying significantly more for it than they would in a supermarket.

It's the Apple strategy – sure, you could get a similar product elsewhere for cheaper. But presented with quality branding, in an excellent store format, with good service and a package that displays visual flair? People will pay more for it, every time.

Start a trend

Back in 1996, drinking premium tea was not exactly popular.

But in creating a store specifically focused on tea, Shearer was able to start her own trend. Now, the company doesn't just sell tea, but pots and various accessories as well.

While it's not necessarily easy to say Shearer started a trend of premium tea drinking, the company certainly helped make it "cool". And now she's reaping the rewards.

Source: Smart Company, 9 September 2013