Tea Business: How to Start, Grow, and Profit
The tea business is a promising niche, driven by growing interest in healthy living and the diversity of tea varieties and consumption formats. It's up to the entrepreneur to decide whether to open a brick-and-mortar store or establish online sales. Either way, getting started is possible with minimal investment.
What does it take to open a tea shop?
Building a successful Chinese tea business requires a challenging journey, from official registration to preparing your retail outlet for business.
Step 1: Find a supplier
The foundation of a successful tea business is a product that won't disappoint customers. Therefore, choosing a supplier is the first and perhaps most important step toward starting your own business.
However, traveling to China on your own is not the best idea:
- flights and accommodation eat into the margin;
- without knowledge of the language and cultural peculiarities, it is easy to make the wrong choice or overpay;
- Without experience it is difficult to distinguish a decent sheet from a mediocre one.
A reliable partner in Russia isn't a compromise, but a smart decision. Wholesale companies have already built relationships with farmers, established logistics, and monitor product quality at every stage.
The main thing to pay attention to when choosing a supplier is:
- assortment;
- transparency of origin;
- availability of certificates;
- terms of cooperation .
Step 2: Business Registration
- The following OKVED codes are suitable for this area:
- 47.29.1 — trade in tea (main activity);
- 47.40 - beverage trade (for the sale of bottled iced tea);
- 56.10 — restaurant activities (if we open a tea shop with the possibility of tasting the drink on site).
Step 2: Selecting a format
The easiest option is an online store:
- minimum investment (for website development);
- the possibility of promotion through social networks;
- wide sales geography.
A brick-and-mortar shop is the choice for those who want to build a business "in person." While opening a tea shop from scratch is slightly more expensive (due to the space required for rent), it offers several advantages:
- the visitor can smell the sample and immediately take his purchase;
- Once a customer is convinced of the product's quality, they are more likely to buy an expensive or unfamiliar variety.
Step 3: Finding a Premises
When choosing, it is important to consider:
- passability - an area with active pedestrian traffic is needed;
- area - 15-30 sq.m. is enough for the sales area;
- Availability of communications - electricity and ventilation must work without interruptions.
If you're starting a tea business from scratch and planning to sell through an online store, make sure you have a dry, odor-free storage space for your products. You can start in your own apartment, and eventually rent a heated storage unit.
Step 4: Licenses and documents
The good news is that selling tea as a business does not require any permits or licenses.
However, you will need to ensure you have the necessary documentation for the purchased product and request a Certificate of Conformity and a Sanitary and Epidemiological Conclusion from the supplier.
If you plan to purchase the product wholesale and package it yourself, you'll need to study the labeling regulations. You also need to register your tea production business with Rospotrebnadzor (the Federal Service for Surveillance on Consumer Rights Protection and Human Wellbeing)—this can be accomplished by simply submitting a notification of commencement of business.
Step 5: Purchasing equipment
For online business it is enough:
- equipment for packaging goods;
- camera for creating high-quality images.
But owners of physical stores will have to purchase:
- shelving and wall-mounted display cases;
- sealed containers for samples;
- cabinets and a refrigerator for storing supplies;
- tables with chairs for the tasting area.
Tea Shop Business Plan: Budget Planning
Is the tea business profitable or not? You can only answer this question after comparing your monthly income and expenses.
First, let's calculate how much it costs to open a tea shop:
- online store development — from 300,000 rubles;
- bench renovation and equipment purchase – from 700,000 to 1,500,000 rubles.
At the same time, don’t forget about monthly costs:
- premises rent - from 20,000 to 60,000 rubles per month;
- employee salaries - from 40,000 to 80,000 rubles;
- advertising and marketing – from 15,000 to 30,000 rubles;
- utility bills - from 5,000 to 10,000 rubles;
- Purchase of goods and taxes depend on turnover.
As for marginality, it all depends on the product:
- mass blends - 100-150%;
- elite varieties and signature blends – 200-300%.
On average, selling tea as a business yields a gross margin of 60-80%. This means that a small shop with good traffic and an average order of 500-1,500 rubles can generate between 150,000 and 300,000 rubles in revenue.
So, if you open a tea shop with minimal investment, the payback period for the business will be 12-24 months for an offline shop and 6-12 months for an online store.
What assortment should there be to open a tea shop?
The golden mean is 100-150 items. The key here is not the number of varieties, but the ability of the assortment to meet the needs of different audiences:
- 50% are elite Chinese teas. These are the items that shape the store's expert image and attract connoisseurs. These include, for example, Chinese oolongs (Tie Guan Yin, Da Hong Pao), aged pu-erh teas, white teas (Bai Hao Yin Zhen), and rare Japanese varieties (Gyokuro, Matcha).
- 20% are classic and flavored varieties. This category appeals to a broad audience and helps attract new customers.
- 20% — herbal, fruit infusions, and functional blends. An excellent addition for those looking for an alternative to caffeine: rooibos, hibiscus, herbal infusions (mint, chamomile, fireweed), fruit blends, vitamin and calming blends.
- 10% — accessories and related products. These items increase the average order value: teapots, cups, strainers, beautiful tin or ceramic storage jars, and gift sets.
How to start a Chinese tea business?
Specializing in a narrow niche is one possible strategy based on creating a community of shared interests. And it's truly profitable:
- the markup on good pu-erh or oolong tea can reach 200-400%;
- connoisseurs are willing to pay for quality and almost always become regular customers;
- Only a few people delve deeply into this topic, which means competition is minimal.
But before you open a tea shop, you will have to:
- understand the characteristics of the product (not just the varieties, but the growing regions and years of collection);
- establish contacts with suppliers (preferably directly with farms in China);
- think over the format of a “tea club” (for holding theme nights and paid tea ceremonies).
Now you know where to start a tea business and how to calculate its payback period.