By Nettie Boivin
September 22, 2008
Phuong and Viet Le’s ONO Tea is carving a niche in the $6.85 billion tea industry by creating Lifestyle Teas-¢ – custom collections of specialty teas targeted at 10 different lifestyle segments including creatives, professionals, athletes, men and even kids.
The Young Entrepreneurs
Like the unique combinations that make up ONO Tea, Phuong Le, 31, and Viet Le, 25, created the fledgling business by mixing cultural traditions from their Asian heritage, a curiosity for culinary arts, and a passion for healthy lifestyles. Raised in Grand Rapids, Mich., Phuong spent nearly two years in Hawaii before launching ONO Tea with her brother Viet. Both now reside in the Detroit area.
The Company
A graduate from Schoolcraft College’s culinary arts program, Phuong dreams up ONO Tea’s exotic blends of blossoms and fruits, sends it to her blenders, who then return it to her for tasting before the product becomes a reality. Her various importers and blenders are primarily based in California, Canada and Connecticut. However, Phuong and Viet just came one step closer to localizing all fulfillment and packaging through a recent agreement with Pirrone Produce, a large distributor located in Capac, Mich.
ONO Tea currently has five employees. Phuong, CEO, and Viet, COO, handle all sales and marketing. Their sister, Phi Gerbers, recently joined as managing director for Hawaiian accounts. And Viet calls on two other trusted creatives to assist with web site updates like image perfection and video production.
Wholesale accounts with high-end hotels and food markets comprise the majority of ONO Tea’s current business including The Townsend Hotel in Birmingham, JW Marriott in Grand Rapids, Signature Market in Detroit, Revitalize Day Spa in Birmingham and the retailer Plum Market located in Ann Arbor and Bloomfield Hills with another store set to open in West Bloomfield next spring. Phuong is thrilled to call the exclusive Grand Wailea Resort on Maui their newest customer; the business coming from the hotel’s managing director after he discovered ONO Tea’s impressive web site while researching fine teas online.
Some direct-to-consumer sales resulted from their exhibit at the World Tea Expo this summer with buyers popping up from such health-conscious states as California and Florida. One customer segment that is growing at a surprising rate is the male client. Phuong credits this success to their lifestyle line “Real Men Drink Tea,” in addition to the one-on-one communication and education happening on “The Tea Chick,” a blog she created to demystify tea, share recipes and promote the benefits of tea drinking.
The Numbers
Phuong and Viet launched a beta site that focused on the yoga lifestyle in November 2007. Then, in January 2008, they launched ONO Tea’s full site including all their lifestyle-targeted teas and ONO’s own line of teaware. Viet and Phuong invested $30,000 into the company and handled all creative, marketing, sales and site development instead of outsourcing in this first year. Phuong notes that they are on track to profit by the end of 2008 with plans to triple revenue in 2009 then double in each subsequent year.
The Market
According to the Tea Association of the United States, 2007 was the 16th consecutive year that consumer purchases of tea increased standing as a $6.85 billion industry. Retail supermarket sales alone surpassed $1.95 billion dollars last year while the specialty segment exceeded $1 billion. Ready-to-drink tea will continue to grow in popularity with annual dollar increases in the range of 12 to 15 percent. A long-term increase in consumer demand for specialty tea is projected with annual dollar increases in the area of 8 to 10 percent.
Challenges and Opportunities
Phuong says the company has already met many of the goals that she anticipated taking at least two to three years to accomplish. They’re even fielding calls from interested investors and weighing the pros and cons of taking on partners.
The brother/sister team’s primary goal for 2009 is to launch a full-force online marketing campaign to build ONO Tea’s direct-to-customer business. As the campaign grows, they may consider working with an outside agency to assist with PR/Marketing services.
The pair will also work throughout 2009 to develop plans to enter the Ready-to-Drink market, a move to bottle their unique brand of imagery and flavor without loading on the sugar, a common ingredient in most easy-to-grab teas and sport drinks.
Advice from Business Advisor Prafulla Pande
Pande is a former entrepreneur and founder of Pande Associates, a business advisory and coaching firm in the Detroit area.
“Regarding the move to localize vendors, ask yourself: Is this an economical or emotional choice? What is the best for the business? What are the long-term implications?”
“As for investors, I tell people that they should make full efforts to grow their businesses through their internal cash flow. If they can do without investors, don’t have them. It is difficult to value new businesses and you invariably end up giving up more than you need to. If you must have outside investment, the first thing is to understand the investor’s intentions. Why are they investing and what do they want? Second, how involved will they get in the business and can you live with their involvement? The third thing to look for is how they will constrain you from moving in your desired direction.”
Final Thoughts by Viet Le
“We are in the process of optimizing the site by adding much more content, making it search friendly, and adding a lot of value by building an online community at iloveono.com.”
“Besides our desire to support local business, joining up with Pirrone Produce for distribution and quality control offers everything we need to expand our company at the rate we want to.”
“Finally, we agree with the advice about investors, and we plan on expanding using our internal financial streams. As we move forward with our business, we feel that there is much more to learn. And the only way to learn is to retain full control of our company.”
