container of tiesta tea loose tea displayed with herbs and flowers
The team at Tiesta Tea credits its success to offering high quality, affordable teas, placing value on its employee culture and giving back to the community. — Tiesta Tea

Sometimes, getting out of your everyday surroundings is enough to spark a new business idea, which is what happened to Dan Klein and Patrick Tannous — the co-founders behind Chicago-based loose leaf tea company, Tiesta Tea.

During a semester abroad, the two college friends observed the popularity of tea drinking in Prague and the variety of tea houses that met this local cultural desire. They asked themselves: “Why aren’t Americans drinking more tea?” and the idea of Tiesta Tea was born.

Best friends with ‘little to no experience’

The pair were enrolled in an entrepreneurship program while at the University of Illinois Urbana-Champaign, which offered them the opportunity to present their business idea — a loose leaf tea retailer that could offer high quality tea at reasonable prices — to Jimmy John Liautaud, the founder of Jimmy John’s sandwich chain.

Klein and Tannous told CO— that Liautaud’s best advice was, “Listen to your customers and outwork your competition.” The pair believes that continually following this advice will bring success to the business.

Along with their COO, Alex Sosnov, the co-founders told CO— that there have been many times throughout the process where each has felt like giving up.

Starting a company while still in college poses many challenges, they said. Lack of access to capital and having little to no experience in the business world were two of the biggest challenges they faced early on. Fortunately, their friendship helps to balance each other out, push each other to grow and alleviate the stress.

While it took them approximately two years to determine their aim and get started, Tiesta Tea came to fruition in 2010 and its products are now distributed in 8,000 stores nationwide.

When asked how Tiesta Tea is serving an unmet need in the market, the team told CO— that the secret lies in two parts: the quality of the ingredients in their products — sourced from over 30 countries and triple-tested for pesticides; and the prices at which they provide them — two-to-three times more affordable than their competition.

 tiesta tea co-founders and COO group headshot
The Tiesta Tea team from left to right: Patrick Tannous, co-founder and president; Alex Sosnov, COO; and Dan Klein, CEO and co-founder. — Tiesta Tea

‘Building a brand for people to love and understand’

The inspiration for Tiesta Tea came from learning about tea’s wellness benefits. The team’s intention was to create a tea customized for what their target customer wanted and needed.

In addition to having varieties of tea ranging from green and black to white and oolong, Tiesta Tea also categorizes its loose tea blends into five functionalities — Energizer, Slenderizer, Immunity, Eternity and Relaxer — so the consumer can work backwards, purchasing the tea they want based on the effects they desire from drinking it.

“At the start of Tiesta Tea, most people were asking, ‘What does this taste like and what is it going to do for me?’” they said. “So, coming up with the five functions helps the consumer better understand tea and how it will help their body and mind.”

Peter F. Goggi, president of the Tea Association of the U.S.A., Inc., echoes this consumer desire for functionality and wellness in his 2018-2019 report. “There continues to be a focus on foods and beverages with functional benefits and naturally healthy offerings,” he said. “Many consumers understand the functional health benefits of tea and reach for tea as a better-for-you alternative to sugar-laden beverages.”

In fact, while the Tea Association finds that sales of traditional market teas are on a mild decline ($2.58 billion in sales in 2017, compared to $2.33 billion in 2018), other types of tea — including whole leaf and naturally flavored teas — are experiencing a continuing uptick in popularity, particularly among millennials.

Goggi’s research also found that this functional benefits trend in the food and beverage industry is encouraging more consumers to choose tea as a beverage, predicting sales to likely grow through 2019.

 tiesta tea bottle of cold brew tea
Tiesta Tea's offerings range from black, white and oolong tea blends, functional tea blends, cold brew teas and tea beer. — Tiesta Tea

Find the right people around you. You have to have people believe in you, and the product.

Dan Klein and Patrick Tannous, co-founders, Tiesta Tea

A company that thrives on ‘living loose’ and ‘warming people up’

Culture and morale are also a big part of the company’s mission, making it a point to participate in three initiatives where the team gives back to the community — one local, one national and one international.

The local initiative, called Spread the Warmth, happens yearly in the company’s hometown of Chicago. Every winter, the team collects warm clothing for donation and brings the items, along with hot cups of tea, to homeless shelters and to people on the street. “We share a hot cup of tea, bring them warm items and share conversation,” they said, with the hopes of being able to ‘warm people up’ both mentally and physically.

Nationally, Tiesta Tea is partnered with ExtraSpecialTeas (EST), a nonprofit tea house in Great Barrington, Mass., where young adults with special needs are brought together with the community and are given vocational opportunities. Internationally, Tiesta Tea realized that the location in Nigeria from which it purchases its hibiscus was also in need of easier access to clean water. The company now takes a percentage of sales from each bottle of cold brew tea and puts it toward building a water well each year in a new location.

Not only the slogan for the actual tea, the team at Tiesta Tea makes it a point to “live loose,” as well. This includes collaborative meetings across all departments, monthly team bonding events (featuring Tea Brew, Tiesta Tea’s own line of beer created through a partnership with Shipyard Brewing), and an emphasis on employees’ personal development as well as career growth.

Fulfill a need

The co-founders of Tiesta Tea tapped into a major consumer trend with their loose leaf tea: wellness. For more health-focused business ideas, read more here.


Cheers,
CO—

‘Find the right people around you’

With giveback initiatives at the helm of their company’s mission, Klein and Tannous recommend that all business owner consider brainstorming ways that they can incorporate their own methods of doing good in their community.

Additionally, the co-founders emphasize the importance of surrounding yourself with a team of supporters. “Find the right people around you,” they said. “You have to have people believe in you, and the product.”

Already sold on the shelves of several major retailers including Target, Walmart and Costco, the trio admits, “There will always be competition that are bigger than us. We are also always looking for our next big win that will boost us to the next step. We are building a brand for people to love and understand.”

CO— aims to bring you inspiration from leading respected experts. However, before making any business decision, you should consult a professional who can advise you based on your individual situation.

Published September 26, 2019