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Tea Gone Latte
How Milk Fits Into a Cup of Tea
by Karen Foley

Not many consumables slip into the American mainstream without American adaptation. Think about it: pizza, donuts, espresso-just a few edibles eagerly imported Stateside only to become crossbred versions of their former compositions. So why should tea be any different? After all, not everyone wants a cup of jade oolong straight up. Many consumers-particularly those new to the world of premium tea-prefer their tea with equal parts milk and sugar. Which brings us to one of the latest developments in American tea menus: tea lattes, a category fast becoming a popular and lucrative option for purveyors of tea.

What's in a Name?
In a broad sense a tea latte can be defined as any beverage combining tea and milk, hot or iced. This could encompass bubble tea-a drink whose tea base is engulfed by frothy milk, sweetener and, often, gooey tapioca pearls-and chai, that creamy, spiced, Indian tea Americans have come to love. Add to this the sundry "just add milk" powders and mixes being marketed as instant tea lattes and you'll see that the term has pretty much become fair game.

   But this type of loose categorization doesn't sit well with some tea professionals, who would rather see the tea industry adhere to a clear set of distinctions. "As larger companies popularized their chai, they basically put an umbrella over the category and said anything that is steamed and has tea in it is a tea latte," says Brian Keating, president of Seattle-based Sage Group International, which publishes the U.S. Tea Is "Hot" Report. "What if I have apple cider and tea and it's steamed? Is that a tea latte? I don't think so. I think it's important as an industry emerges to have categorizations. But frankly, I think it's too late. I think the nomenclature has been swept up and become anything to do with steamed tea."

   If it were up to Keating, the definition would be as specific as it is in espresso terminology. In other words, "from a purist standpoint, a tea latte is simply tea and steamed milk of some kind," he says. "But I'll leave it to historians and readers of this article to decide if that's important or not."

The Latte Gamut
According to the U.S. Tea Is "Hot" Report, the first American tea latte was concocted by a Seattle tea retailer (unnamed) in 1993. The drink consisted simply of concentrated tea and steamed milk-no sweeteners, no spices. Today, many retailers still offer this traditional version of a tea latte. For example, A 'Cuppa Tea Bar in Berkeley, Calif., invites customers to choose any of its 30 teas for inclusion in a latte. Java & Cha, a retailer in Allen, Texas, also offers traditional tea lattes, such as "Cha Lattes," which combine fresh-brewed tea and steamed milk, and "Chappuccinos," which have less steamed milk and more foam (for people who want a stronger tea taste).

   Increasingly, however, retailers are offering a selection of signature lattes with a myriad of tea bases, milks, syrups, and spices. Take The Coffee Bean & Tea Leaf, a coffee and tea retail franchise that serves Chai, Moroccan Mint, English Breakfast, and Tropical Passion Tea Lattes in addition to custom-tailored lattes to suit specific customer preferences.

   And in addition to serving "house" lattes, many retailers sell preformulated tea latte products that can be quickly prepared and sold for a sizable profit. There are a number of products available, from Mocafé's bubble tea to the chai latte creations of companies like Java Frost, Oregon Chai, Cappuccine, and Caffe D'Amore.

   Many such companies also offer helpful gift packages, sampling kits, point-of-sale materials, equipment programs, cost analysis information, and start-up kits, like Mocafé's Zenfreze Bubble Tea Kit. The Zenfreze Kit consists of the makings for 150 16-ounce drinks, including a cocktail shaker, tapioca pearls, five different flavor mixes, and straws (the kit also includes two posters).

Hone Your Technique
In many ways, tea lattes have followed the path of their espresso counterparts. For example, some retailers, such as The Coffee Bean & Tea Leaf, employ their espresso machines not only to steam and foam milk, but also to "pull" a tea "shot." This process entails using a predetermined amount of tea and running it through the machine as you would coffee. The tea goes through a 25-second extraction, and according to David DeCandia, production manager and tea buyer for The Coffee Bean & Tea Leaf, the water temperature (205 degrees) is hot enough to infuse the leaves and yield a smooth extract.

   Other retailers, like A 'Cuppa Tea Bar, employ a modified espresso machine specifically designed to quickly and consistently brew tea on the go. The "Affinitea" brewing system, manufactured by Seattle-based Affinitea Brewing Technologies, looks and works like a traditional espresso machine, except that inside one of the group heads is an adapter with a long tube and a flow rate valve for brewing a tea to the proper strength in less than a minute.

   Some retailers take yet another approach, choosing to use house-made tea bases prepared specifically for lattes. Java & Cha, for example, prepares tea bases daily using proprietary in-house brewing methods. Once the base is brewed, hot latte preparation follows traditional steps of steaming and foaming milk on an espresso machine and adding syrup to order.

   Iced lattes simply require combining a tea base with cold milk, ice and any add-on item, like syrup. If you choose a preformulated latte mix, you can also purchase blending equipment (often provided by the beverage manufacturer) specifically designed to prepare that drink, hot or iced.

   The method you choose to prepare tea lattes should be dictated by your store setup, your menu and your customer preferences. So carefully examine your situation before committing to any one preparation method.

Do the Math
For many retailers, tea lattes represent an appealing profit center. For example, A 'Cuppa Tea's regular teas range in price from $1.95 to $2.65, while tea lattes command a $3.00 price tag. What's more, chai lattes comprise about 50 percent of the store's sales. Java & Cha's tea lattes sell for between $2.30 and $3.75, compared to the average $1.70 for a cup of tea. Tea lattes account for between 50 and 55 percent of the company's tea sales, and between 25 and 35 percent of its total annual sales.

   When Ron Faruqui, co-founder of Java & Cha, decided to introduce tea lattes to his customers, he started with the Margaritea, a blended latte combining the company's own tea base and a pure juice concentrate. In the first month, the drink accounted for 20 percent of Java & Cha's sales. The following month Faruqui rolled out the Verde Latte, a combination of matcha and milk that claimed 17 percent of his sales.

   Preformulated products cut down on labor and preparation time, increasing profit potential. For instance, Mocafé's Zenfreze Kit costs $159, and the hope is that after a retailer sells 150 bubble teas at the recommended $3.75 per drink, profit rounds out to $403.50. Similarly, Caffe D'Amore calculates that a retailer using a case of its chai latte mix (enough for 128 hot lattes) can clear a profit of $2.31 per 16-ounce drink priced at $3, and a net profit of $296. For iced Caffe D'Amore lattes the profit increases to $2.48 per drink and $421 per case. Most companies will provide this type of cost analysis information, so find the package that best suits your needs.

Lure Them With Lattes
As much as purists spurn sweeping beverage adaptations, many admit that drinks like tea lattes can serve as an entry point to more sophisticated, unembellished teas. "A lot of American specialty tea consumers are not ready for straight-up Keemuns, complex oolongs or grassy green teas," says Keating. "Tea lattes capture the palate and imagination of would-be specialty tea consumers. By doing that, people say, 'Wow, this tea is not bad-in fact I love it. What else do you have?'"

   Kathryn Huhn, foodservice marketing manager for Oregon Chai in Portland, Ore., adds that tea lattes fill a void in the tea category for consumers seeking a more indulgent beverage. "Long gone are the days when consumers just expected the standard teabag or brewed tea," she says. "Today's tea consumer is seeking a specialty tea beverage and is willing to pay a higher price for a premium tea product."

   Many also believe that tea lattes can help free tea from its stodgy stereotype. "When you ask people who haven't been exposed to new-concept tea beverages what they think of when you say 'tea,' they think of drinking it when they're sick, drinking it with lemon and honey, drinking it with grandma, or drinking good ole 99-cent Texas tea," says Faruqui. "Introducing tea through a creamy, sweet medium is critical to getting rid of that image and showing people how versatile tea is."

The Milky Way
If you study the growth of chai and bubble tea in America, you can bet that the tea latte trend is primed for similar success. According the U.S. Tea Is "Hot" Report, chai sales climbed from $24 million in 1999 to $69.7 million in 2002, and that number is projected to reach a staggering $136 million by 2005. Similarly, bubble tea sales skyrocketed from $5 million in 1999 to $30 million in 2002.

   Why have Americans embraced these tea trends so fervently? "We like milk-we like ice cream, we like milkshakes, we like frappes, we like lattes," says Richard Principale, national sales manager for Mocafé. "Until chai came along, tea was like drinking boiling water for most Americans. They jumped on chai, because it was milky tea, and it suddenly hit them in a way that hadn't happened before."

   If you ask Keating, tea lattes have a promising future. "It's very similar to what happened with coffee lattes and cappuccinos," he says. "As soon as there is more exposure, [tea lattes] will reach critical mass, because they're not a fad, they're a trend."

This Issue: $5 U.S.

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