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Interview with Tea Industry Veteran, Billy Dietz · Specialty Matcha Podcast

0:05
Hello and welcome to the Specialty Much Podcast.
0:07
My name is Ryan. This is Michael Ho Zhongjun, who
0:09
also goes by Sam. Hello And we're the cofounders
0:12
of Sanko Much Products. Yeah.
0:14
We launched this podcast to discuss our learning journey,
0:16
Matcha, share startup stories and interview experts.
0:20
And this episode, we have Billy from Bhd consulting with us
0:24
today to talk about his journey with T and Matcha.
0:27
Welcome, Billy. Hey, Ryan.
0:28
Hello, Sam. Pleasure to be here with you and
0:31
discussing matcha. It's a super exciting category
0:34
at the moment and obviously it's kind of going gangbusters.
0:37
I've done a lot of content work and we get a lot of consulting
0:40
questions about matcha and people trying to get into this
0:43
powder space. So yeah, definitely top of mind
0:45
for the industry, for consumers. Yeah, we'd love to learn more
0:50
about your your both personal tea journey and and professional
0:53
tea journey. Yeah, absolutely.
0:55
I, I mean, starting right at the beginning, I got into tea
0:57
originally. I was, I was an awkward high
1:00
schooler. I was 15 years old and really
1:03
preferred like more natural kind of forms of healing.
1:06
Like I didn't, you know, when I got sick, like I, I, I would
1:09
try, I would try not to take medicine basically is where I'm
1:12
getting AT. And that kind of led me to T and
1:15
very quickly this health and Wellness aspect was the least
1:20
interesting part to me. What became much more
1:23
interesting was the variety, the culture surrounding tea and and
1:29
herbals, the ceremony, this idea that tea can be a catalyst for
1:34
cultural connection. That was really what inspired
1:37
me. The flavors obviously too.
1:38
I was pretty avid to cook even back then.
1:40
And so I think also I was just very interested in the flavor
1:43
spectrum that tea provides. And these as all these
1:47
components kind of came together and culminated into the me just
1:50
exploding with interest in tea, started reading like hundreds of
1:55
books, I kid you not, like hundreds of tea books, whatever
1:58
I could get my hands on. I started reading, absorbing and
2:01
ended up taking professional training through an arm of the
2:05
Tea Association of the US, which was the Specialty Tea Institute.
2:09
And I became the youngest, youngest graduate of that
2:12
program at 17 years old. And so my, so my, my, my passion
2:18
for this goes, goes quite a long way.
2:20
It's been almost 2 decades now that I've been doing and tea has
2:24
been incorporated in my life somehow.
2:25
And yeah, it was pretty, pretty avid that tea was going to be my
2:29
career for the rest of my life, even at that age.
2:31
And so it was really just about stacking things and see where I
2:34
could actually go with it. I became an entrepreneur pretty
2:37
young as well, going through university.
2:39
I was studying business like marketing and entrepreneurship.
2:42
And I ended up by crazy coincidence, there was a fellow
2:47
student who was a year above me, still a good friend of mine by
2:51
the name of Chris Borgia. And he, he actually started a
2:55
tea company. And it's crazy because our
2:58
school was very, very small. There was about I think 2500
3:02
students in these universities, a really small, tight knit
3:04
campus. So just the fact, and it was in
3:07
like rural Indiana, like it was not in like a big city or, or
3:10
anything like rural Midwest. So just the fact that someone
3:14
else even had a slight interest in the same thing as me was
3:18
already kind of bonkers. And then on top of that, he had
3:22
started a business. And so I actually what I ended
3:24
up doing was shadowing him and ended up taking over that
3:27
business and really tried to use that business as like a case
3:31
study almost through my university studies.
3:33
I was never an academic in the sense that like I was not really
3:37
a bookworm except for tea. And so studying business, I was
3:40
like reading marketing research. I was like, well, no, I'm just
3:42
going to go do it. Why?
3:43
Because I have a medium and I was in a good enough position or
3:47
fortunate, fortunate enough situation being in like an
3:50
intimate school that my professors were like, well,
3:52
you're actually doing it. So yeah, you can use this as
3:55
part of, you know, studies and projects.
3:56
I remember having to go out of class and like take sales calls.
3:59
Like it was a really strange university experience.
4:01
But and then I I also helped to Co found a coffee business.
4:04
We ended up merging those later when we opened up a retail
4:08
location and coffee shop and all this was what, a year that all
4:13
happened a year before I graduated.
4:15
So my final year of university, I was working, working that
4:18
business, but I knew I didn't want to stay around that area.
4:20
And so and I yeah, so I came back home at which which then
4:25
was southern New Mexico, and ended up ended up applying,
4:31
reaching out to a bunch of contacts.
4:32
And finally, finally, finally, as I was actually about to sign
4:36
on for a role, Keurig Green Mountain as a coffee sensory
4:40
professional, just because the T job wasn't lining up.
4:42
I ended up getting a Facebook message from one of my still to
4:45
this day, one of my mentors and he offered me a position with
4:50
David's Tea. And so I hightailed it to Canada
4:53
and I landed in February. I think it was like -22°C when I
4:57
landed and I was like, what have I done?
4:59
But I was with them for, I was with them for just shy of, shy
5:03
of a decade, did product development primarily, but there
5:07
was a lot more to it than that. There was a different things
5:10
about supply chain and vendor management relationship and
5:12
marketing research that went under that umbrella of of
5:16
product development and ended up my past there kind of reached a
5:23
natural conclusion. I had felt that still very on
5:26
very good terms with them, but yeah, I had just felt that my
5:30
what I could give them was no longer like, I felt like I was
5:32
basically repeating the same motion over and over again.
5:35
And so I was losing a bit of enthusiasm, which isn't wasn't
5:40
good for the business, also wasn't good for me.
5:42
And so I decided to step out and do something on my own.
5:45
So BDH consultants, I have a business partner in LA and he
5:49
comes from actually a legal background, funny enough, but
5:52
fell into entrepreneurship and fell into T entrepreneurship and
5:55
ended up opening a series of, of specialty like boba tea shops in
6:02
Southern California. And so we so we got connected
6:04
for from that perspective. He had taken classes with me
6:07
when I was teaching for the special TT institute.
6:10
Anyway, we kept that relationship open, but I knew
6:13
that I wanted to go in business with a partner because I wanted
6:16
to focus on the areas where I knew that I can really deliver
6:20
my best to clients, which was primarily in making connections.
6:25
Whether it be funneling people to the right vendors for their
6:28
needs, whether it was product development, certain supply
6:31
chain building, tea product assortments.
6:34
There was a lot of that type of work that really fulfills me.
6:38
So that's where I wanted to stay.
6:39
But I was like, yeah, but businesses also need operations,
6:43
They need HR, even sometimes legal.
6:45
Like there's a lot of other components that because of our
6:49
partnership we can bundle for our clients and we've worked
6:53
with everything from startups to multi $1,000,000 multinational
6:59
tea brands. And it's really projects project
7:01
by our latest venture. We are dabbling in community
7:07
based consulting. And by that I mean we're opening
7:10
up a community for guided learning for tea entrepreneurs
7:14
aimed at pre revenue and early stage tea startups.
7:18
And that so it's it's it's guided moderation.
7:22
It's kind of a paid like closed forum, right?
7:26
Think of it almost like Reddit, but specifically for tea
7:28
entrepreneurs And the resources section with things like
7:32
business plan templates, go to market strategy considerations,
7:35
all of these tools that the members can use to fulfill
7:39
whatever their tea dreams look like.
7:41
But we wanted to bring more entrepreneurs into our fold and
7:45
provide value for them because it's, people need support, but
7:49
it's just a matter of how do you make that support both
7:52
accessible but also lucrative for yourself as a business
7:55
owner. So that's why we started that.
7:57
And, but we still also focus on some pretty large, large scale
8:02
consulting projects for our other clients.
8:04
So yeah, I, I, I spoke for a very long time, but I hope that
8:09
gives you a very good background on me.
8:12
That was part of story. Actually, the thread of tea
8:17
through that story is this makes it even more cool.
8:20
It's it's actually very uncommon for us to find other tea people
8:25
that are very much understand it from business lands, industry
8:29
lens, like and the concept of a tea entrepreneur.
8:33
You just don't hear those words together very often.
8:37
But like that's what the entire industry is, especially when it
8:40
comes to specialty matcha. It's just a bunch of small to
8:43
medium sized businesses all over the world who just can find a
8:47
really great product, talk about it in a way that resonates with
8:51
some people and like builds this audience for this thing that
8:55
just didn't exist, which is it's so cool having like like
9:00
especially this founder circle thing that you're talking about
9:03
is just, I think so needed right now, especially in the space
9:06
that we operate in because those resources are so important.
9:09
It's not just about the product, it's about everything else too.
9:13
And that's it. And tea is is a really
9:15
interesting business because the barriers to entry are very low.
9:18
You can start a tea business for like 500 or 1000 bucks.
9:22
You can start selling tea and build a brand and make something
9:25
happen. Like there's not a lot of other
9:27
industries where that's feasible.
9:30
So that's both a benefit and a curse, right?
9:32
Because then you have a market that's flooded because of this
9:35
low barrier to entry you, But then how do you actually get the
9:38
business acumen to be able to grow, to be able to scale, to be
9:41
able to stand out all of that? My, my absolute favorite quote
9:44
from my, my mentor who actually brought me into the fold of
9:48
David's Tea. It was early on in my education
9:51
through the Special TT Institute.
9:54
And I was asking him just advice because I was like, listen, I'm
9:58
not at the point where I can like work full time in this,
10:01
like I want to go to school, all this stuff.
10:03
But like, if you had one piece of advice to give me about
10:07
getting into the tea industry, what would that be?
10:09
And deadpan. He was just like, the world
10:12
doesn't need more tea geeks, needs people who understand the
10:16
business of tea. And it stayed with me.
10:21
It's stuck because I see it so often now where, I'm sorry, but
10:26
knowing, knowing the history of how matcha evolved in China and
10:31
then spread to Japan is not going to save your business.
10:35
Knowing the differences in the growing regions between Uji and
10:39
Kagoshima, as cool as that is, it's not going to save your
10:43
business. You have to know how to actually
10:45
sell sell the product. Where do you see people like,
10:51
what do they get right and wrong when it comes to team marketing?
10:55
Because we've all seen like a lot of cringe and then like the
11:00
really effective stuff that actually moves the needle.
11:03
I don't know. I'm like a little suspicious
11:05
that it's stuff that's like less mind blowing than you would
11:08
think. Like what?
11:11
How have you seen that? Because you've talked to and
11:13
advised and been a part of so many different companies who are
11:17
doing this, Like what do people get right and wrong?
11:19
Yeah, I mean, it looks very different for for everyone.
11:22
I think one of the some of the first things is Matt was
11:25
speaking about matcha specifically.
11:27
So many of these small time brands just fade into the sea of
11:31
green, right And you become just another matcha brand unless you
11:36
were an early mover, right. Someone like Cha Cha Matcha,
11:39
someone like Matcha Bar, these companies that really helped to
11:43
kind of push and start the matcha boom on the coasts.
11:49
They had the advantage of being early, of being early movers.
11:52
What I think in talking with a lot of different tea
11:55
entrepreneurs, I think most people just don't know their
11:59
audience or know who their niche really is.
12:03
So when we're going through, you know, discussing go to markets
12:07
with, with clients, we, we try and drill into them that like
12:10
know your customer, like is your customer named Alex?
12:14
Are they, what, what age are they between?
12:17
Do they have kids? What's their job?
12:18
What are their hobbies like? Build yourself the person that
12:21
you are trying to sell to, not that it has to be ultimately
12:25
your North Star thing. Things pivot right as things
12:28
happen. You might be surprised by the
12:30
market that you start to get, but go in understanding who your
12:34
customer actually is. If you're selling, I guess it's
12:36
like it's always go in with the mindset of what's on the
12:40
customer's mind. Focus on your customer and put
12:43
all of your effort into satisfying their need, their
12:47
wants, and try and make your business successful on that.
12:49
If you're just running a tea business for your own pleasure,
12:52
that's a hobby. Yes, it can be enjoyable, but
12:55
ultimately it's a hobby, right? Indeed.
12:58
Or matcha specifically, What have you seen being more
13:02
effective in talking to your customer?
13:07
I think both can be effective right?
13:09
Look at one of my favorite examples.
13:11
Not matcha specific but talking like content specific.
13:14
Looking at a company like like Jesse's Tea House, right?
13:18
Really who's Yeah, who's really I?
13:20
And I know Jesse, he's a phenomenal person.
13:21
He's he's wonderful. We've sat down for tea together
13:24
several times. What I think he does very
13:27
differently than a lot of tea companies is he's built a brand
13:31
persona, but he also knows exactly, again, going back to
13:35
the customer, he knows exactly who his customer is and he's
13:38
trying to foster that community of people.
13:40
His customer is first timers that want to explore gong Fu
13:44
tea. That's his customer.
13:45
He's not aiming for the collectors who are who are, you
13:49
know, ordering their stuff from, you know, their their own tea
13:53
guy in China or, or their specialty tea place in Tokyo or
13:59
whatever it might be, right? Like he knows exactly who his
14:02
customer is and he's put all of his effort into building his
14:05
content, his brand persona, his product assortments, everything
14:09
based around that identity. And so it's kind of a mix of
14:13
everything as, as you were saying, Sam, like you, you need
14:16
to have all the pieces together, whether it's the content,
14:19
whether it's that, the education.
14:20
But I think a lot of people don't understand how to balance
14:24
that. I think first and foremost, at
14:26
least what I've seen is communicating benefits
14:30
effectively outcomes. What does your product do?
14:34
That is the easiest thing for customers to connect.
14:38
Frankly speaking, most customers probably are not going to care
14:43
about like I'm talking on masks are probably not going to care
14:46
about cultivar differences between Matcha.
14:48
Some niche brands can go that route and I think there's a
14:51
space for that. But if you're looking on masks,
14:53
like most people aren't going to care about that.
14:55
What are your outcomes? What are your unique selling
14:58
propositions? You're tailoring your messaging
15:00
around that versus around trying to bombard people with with
15:05
education. I'm a huge fan.
15:07
You'll see a thread throughout this.
15:09
I'm a huge proponent of let's make tea accessible.
15:12
Don't gatekeep for no reason. There's absolutely no reason to
15:16
gatekeep whatsoever. I think it's what a lot of the
15:18
specialty coffee places are doing wrong right now is, you
15:21
know, when you go into a coffee shop, if someone looks at you
15:23
and expects you to know what carbonic maceration is, all of a
15:29
all of a sudden you're like, well, I got to get out of here.
15:31
I was, I just wanted, you know, a cortado or I just wanted like
15:35
a nice drip coffee. Like it becomes very
15:37
overwhelming because then you feel like you have to know these
15:40
things to be a part of the club, right?
15:43
No. It's true, Forms is like very
15:46
insular inclusive, non inclusive cultures.
15:50
Yeah, like 1, I guess 1 extreme example for that is Y2T, like
15:56
they are almost like anti education, like the other side
16:00
of education, which is very interesting and they are very
16:03
successful too. Yes, Paul is, he's, he's built
16:07
himself a very, very good business and a really loyal
16:10
customer base. And I think part of his whole,
16:15
like, I don't want to call it a gimmick.
16:17
That's not the right word for this.
16:19
Part of his whole, part of his whole strategy is in a way,
16:22
accessibility. It's accessibility through
16:24
mystery because you're buying a tea, but you don't know where
16:27
the heck it's from. He never tells you really where
16:29
it's from. You know, he's just like,
16:31
listen, this is, this is a really good, you know, Maucha
16:34
that I, that I found in the back of a farmer's shed.
16:37
And I just want to sell it because it was really good value
16:40
for money. Like those are the stories that
16:42
he's telling. It's it's wild, but in a way I
16:46
think that's also something very accessible.
16:49
Yeah, right. Build up the trust somehow.
16:52
Like how does the next white 2T build up?
16:55
Because I remember the first time I saw their marketing, I
16:58
think it was in 2016, it was like a year or two after they
17:01
formed and some people were asking me about it with Sam and
17:05
I were both into poor. We've been into poor for a long
17:07
time. And you know, you learn pattern
17:09
matching and everything about it.
17:12
I don't trust it. Like I don't trust it.
17:14
These rappers are weird. What is this gigantic whale
17:18
doing on this brick of tea? Like you don't tell me anything.
17:23
I don't know who this Paul is like and then like it just
17:28
slowly eroded away. It's like enough people said no,
17:32
man, it's like actually good taste it like and but now that
17:37
like it's a really sticky type of trust, though.
17:40
It's a very like, how do you, how, how do people bridge that
17:44
gap of I don't know who you are? And if you're buying this random
17:48
matcha powder crap or even you don't know where it's from and
17:51
you hire someone to repackage it for you and stick on a label
17:55
versus, you know, turning into someone like a kettle, like a
17:59
Rockies matcha where there's some level of trust associated
18:03
with that brand, you start. With one person who shares your
18:06
values and you stack and it takes a long time.
18:10
Truly though, you have you have to start with one.
18:14
If one person, if one person is going to believe in your product
18:19
and idea and you've built a connection with one person, it
18:22
will be possible to build connections with multiple people
18:24
keeping that thread. That I think is where some
18:27
brands go wrong, where all of a sudden they try and like
18:30
overextend themselves into a bunch of different categories
18:33
and try and expand in ways that don't satisfy their core
18:39
customers or core group of people.
18:41
Because then you start diluting. You do one thing really, really
18:44
well and service this one type of customer really, really well.
18:49
That's a pretty solid strategy. And it's been a it's been a main
18:52
theme even of of different business strategy books that
18:56
I've read from, you know, these famous authors and business
18:59
people, whatever. If you distill it down, that is
19:02
a pretty core theme. Kettle, the kettle is super
19:06
interesting. I really quite like what kettle
19:09
do in in Brooklyn. I'm I'm so excited.
19:12
We so we have a client in Manhattan on the Lower East Side
19:15
that is a customer of so we go and visit them occasionally, but
19:17
I am so excited to see Kettle's new like lab kind of situation
19:22
that they're building. Man, next time I'm there, that's
19:24
one of the first places I'm going to go.
19:26
I have to see what's going on with them, but they remind me of
19:28
early days intelligentsia, early days La Colombe, if we're if
19:33
we're keeping with coffee parallels.
19:34
Yeah, but they've also still done a good job of keeping it
19:37
accessible. It's it's expensive, but they
19:38
don't barad you with, buzz you with information unless you want
19:43
the information. Other than that, it's just darn
19:45
good Japanese tea. How do you view the relevance of
19:49
the traditional matcha blend houses and companies?
19:52
I cannot think of a less consumer centric group of
19:57
companies than the traditional blend houses.
20:00
All of the products have very difficult names to remember and
20:04
pronounce. They don't tell you anything
20:06
about the product. Like where do they fit into the
20:09
future, especially as the practitioner base?
20:13
Like declines, but yet they're super popular, like getting a
20:17
can of Maruku Koyama and is like super hard.
20:21
Even if you like live in Tokyo, it's super hard.
20:23
They're selling out so much. How do you see that like fitting
20:26
in where you have this wave of newbies who are positioning
20:29
things very differently and then you have these very traditional
20:32
companies. How do you see that dynamic
20:34
evolving? And especially because the
20:37
traditional companies are really not customer centric.
20:40
They don't seem to care about the customer at all, actually,
20:42
beyond the tea ceremony practitioners.
20:44
Yeah, man, there's a lot to unpack in your question.
20:48
Wow, I don't even know where to start.
20:50
I'll be quite honest with you, there's so much.
20:52
There too much. No, that's that's fine.
20:55
That's fine. It's it is a lot.
20:57
It's it's forcing, it's forcing me to think.
20:59
And I'll be honest, Ryan, I don't I don't know if I have an
21:01
answer for you. We don't much for As for as
21:05
traditional and old and rooted of a product as it is, it's
21:09
going through a change that I think no one really foresaw.
21:16
And so we can speculate, we can try and make parallels, but
21:20
ultimately we don't know what's going to happen with matcha And
21:24
anyone help who tells you otherwise?
21:26
It's it's it's it's a best guess, right?
21:29
Yeah. Wow.
21:29
So I guess Billy, what when you were talking to all these new
21:33
matcha founders of deep in the business owners, what are their
21:39
perspective towards these like legacy matcha brands from Japan?
21:44
Do they actually, do they see them as a competitor?
21:47
Do they see them as a threat? Do they see them as, do they
21:50
just like ignore them because they don't sometimes often have
21:54
a huge presence overseas? What are their perception to
21:59
these brands? I think some people might view
22:02
them as competitors, some people might view them as the founders
22:04
that pave the way. In my view, the healthiest way
22:08
to view view them is looking at who their customers are, who are
22:13
they catering to, and try and tackle a different niche.
22:17
There's a lot of space for tea. It's not it's not a very
22:22
competitive market until you get to the grocery aisle.
22:25
That's where things become very competitive.
22:28
So these legacy, you know, the legacy brands like if we're
22:31
talking, you know, the Twinings and the Celestial Seasonings and
22:35
these like those grocery brands bringing it back to Matcha,
22:39
we're not at the point yet where it's like a, it's not a dog eat
22:42
dog industry. So viewing your competitors as
22:45
where they're they've targeted and what piece of the pie
22:48
they've cut out and trying to pivot and go somewhere
22:51
different. I think it's a very healthy way
22:54
to view how to how to build your brand or get your brand to to
22:59
stand out. And the legacy companies have
23:01
played a really important role. They built a foundation, they've
23:04
built an association with quality and taste of place.
23:09
But even that is changing dramatically.
23:11
You have some really high end, high quality matcha coming out
23:15
of not just Japan anymore, but you have high quality matcha
23:18
coming out of China. You have high matcha matcha
23:20
quality coming out of Korea. Excuse me, you have high quality
23:23
matcha coming out of Vietnam. Like all these countries are
23:26
starting to produce a because the demand is there.
23:29
People cannot get enough matcha. And so they're stepping to fill
23:35
the fill the gap. But even they're trying to
23:37
figure out where they fit. And if we, if we, you know, even
23:40
go it, go into it, we can start talking about some of the issues
23:44
involved in grading as well. That's another thing, right?
23:47
What is what the what the heck does ceremonial matcha mean?
23:50
Nothing, absolutely nothing. And not going down too much, not
23:54
going down that rabbit hole too much.
23:57
I do think there's value in looking at how we can re
23:59
categorize Masha and understand the grading from a different
24:03
perspective, because I do think grading is important, but not in
24:06
the way that I think most people think is important.
24:09
A more useful framework and lens would be looking at grading
24:12
matcha through end use or use case, right.
24:16
This is this is more for A to be added with milk.
24:19
This is more for the food industry.
24:22
This is more for drinking on its own, like end use case.
24:26
And very bluntly speaking, end use case, I think is one really
24:29
valuable way to view grading and tawa, that's going to be the
24:33
other lens that I think will really impact grading in, in the
24:39
future, right? Because you're going to start
24:41
having more Tawa associations, yes, within Japan itself.
24:46
But then also look at Korea. Is it mainland?
24:48
Is it Juju Island? What area of China is, is this
24:51
coming from? That's going to start to be
24:53
pretty important. But I mean, the, the demand is
24:57
crazy. I spoke, I was speaking with one
25:00
of the largest matcha producers in, in China.
25:06
You know, they supply to like Starbucks and like all these
25:08
global brands. And I was, I was reaching out to
25:11
them on behalf of a, of a client, a North American based
25:15
client. The e-mail back was, hey, we're
25:19
sold out until the beginning of 2027.
25:25
And and even then, people are starting to buy, going to going
25:28
to be buying and putting in their orders for that year.
25:33
That's the soonest that I could get something to, you know, to
25:36
this client of yours would be like maybe the middle of 2027.
25:40
And this was last year. Wow, that's.
25:43
Crazy. Well now I mean the majority of
25:46
the macho volume is coming out of China.
25:49
If you just purely look at the numbers since it's all these
25:53
people who are like so anti China matcha must be made in
25:56
Japan blah blah blah. They should be grateful that how
26:01
much matcha the Chinese are producing because they're
26:04
Japanese matcha would like quadruple in price, maybe even
26:08
more. Yes.
26:09
It's just from a business lens like the and Japan is much
26:15
better off long run in the long run, but just producing higher
26:19
and higher quality because I actually think they're in a bit
26:22
of trouble because I think the Chinese are getting pretty close
26:26
to below the quality out of the water for the mid tier.
26:31
And like all of this very high volume stuff coming out of
26:35
Agashima or she's Woka or you know, places that are less well
26:39
known as compared to like a Yamai or an Uji matcha.
26:43
The Chinese are probably going to be able to produce the same
26:45
quality at half the price. And if you're a Cafe and that's
26:49
where most of that volumes going, they just probably don't
26:52
care, especially if there's no sensory difference.
26:55
It's I don't know. Well, yeah.
26:57
Well, for from a tea buying perspective, like if we're
27:01
looking at, you know, I don't know, let's use luck and coffee
27:03
as an example, right. If they're looking for a matcha
27:05
supplier, they're not going to be going to the tiny farm in
27:10
Kagoshima. They're going to say I need
27:13
consistent quality, consistent volume and consistent price.
27:17
They're going to go elsewhere. I do also think that what people
27:21
may also not realize is some of the larger matcha producers in
27:27
Japan do have some level of presence in China as well.
27:33
So I was speaking, I'm very close with one of the largest
27:36
matcha producing companies in Nishio and they have a very
27:40
strong presence in China as well.
27:43
And they started very early on, I think because they saw ahead a
27:47
little bit and started investing in infrastructure in China as
27:51
well. And I think that's going to be
27:53
so advantageous moving forward, right?
27:55
Well, they're already supplying to places like Costco in North
27:58
America. So bulk, but pretty darn high
28:03
quality stuff, all things considered, because they are
28:06
they know how to how to produce it, facing it.
28:08
China's got more room for expansion and and and output.
28:14
They just do. Yeah, well, the Japanese
28:16
company, I wish everyone would just be more transparent too,
28:19
because we know a lot of tension goes back.
28:21
The flow of tension is not the direction most people think.
28:25
It goes back to Japan and comes out as Japanese matcha.
28:28
And like, this is a very, to use a horrible matcha pun shady
28:32
industry in a lot of ways, both both labeling and like, you
28:38
know, accurate provenance. And the disappointing thing is
28:41
it's not just the big players. It's not like the gigantic
28:45
Nishio companies or the big ones.
28:47
It's it's also like in in Uji, Like this concept of Uji matcha
28:52
is not from Uji at all. Like 1% of the Uji matcha comes
28:55
from Uji. Like it's even at the highest
28:58
end, you can't trust provenance at which makes me worry about
29:02
like a thriving specialty market where terroir and like the taste
29:07
of place or the different production styles and fertilizer
29:11
recipes, they're leading to these different flavor profile
29:14
outcomes and just kind of get like washed out because they
29:18
just get blended out and labeled this generic term.
29:22
It's not specialty at all. Actually, it's almost the
29:25
definition of a commodity product.
29:27
It's and then you can't buy direct from farmers.
29:31
Large parts of this value chain are impossible to access.
29:34
Yes, the transparent, you're right, the transparency is is
29:37
non existent. I'm hoping that certain
29:41
blockchain technologies and smart contract technologies can
29:44
help with traceability. That's something I want to see
29:46
more of in in the tea industry. And I don't, I am not by any
29:52
means a blockchain expert, right?
29:54
But I know that there's certain traceability that can come
29:59
through smart contract tech inserted into the supply chain
30:04
of Agra products. People are already looking to do
30:06
this with cocoa and with other Agra bananas.
30:09
Another good example where they're really trying to better
30:12
track the supply chain for both the customer, but also for
30:16
themselves as a, as larger buyers, right?
30:20
So I, I do hope some of this technology can help to curb
30:24
that. But you're absolutely right,
30:27
Ryan, where understanding how to stand on your own laurels
30:30
instead of try and copy, as you say, a taste of place, that is
30:34
where I think this redefinition of tewar has to make a
30:38
difference because then Chinese matcha can really stand on its
30:41
own laurels. I think that would actually be a
30:44
great thing for the Japanese matcha industry and the matcha
30:48
industry overall if people stop saying, oh, ma, good matcha only
30:51
comes from Japan. And instead the mindset is, have
30:55
you tried this Matra from Japan and this matra from China and
30:59
this Matra from Jeju? That's it's going to open up the
31:02
market, I think a lot. And yeah, just make it more
31:05
accessible. Again, that threat of
31:07
accessibility. But but we see issues in the tea
31:11
industry all the time with this, right?
31:13
Darjeeling in Nepal is another huge example.
31:16
So my is something like 70% or 80%.
31:21
It's a wicked number of all of the Darjeeling tea branded
31:26
labeled as Darjeeling sold in the world is not from Darjeeling
31:30
at all. Typically is green leaf, green
31:33
leaves from Nepal that are imported into Darjeeling,
31:36
processed in Darjeeling and exported as Darjeeling.
31:40
Interesting. And so, so we see this in
31:43
multiple industries and especially with, in places that
31:48
have like a legacy name. Darjeeling is one of is, is one
31:53
of the most, you know, storied places in the in the tea
31:56
industry. And so, yeah, we're seeing,
31:58
we're seeing this in in Japan as well.
32:00
Yeah, in China too, like Long Jing and you know, Dahong Pal,
32:05
it's all tea leaves from like other parts in Fujian or like
32:08
even Sichuan. It's a tea laundering kind of
32:12
business. It's not new.
32:14
No, it's not. I did a whole article about
32:16
counterfeit tea on my sub stack, which is aptly named Steep
32:20
Insights. And so I I did this deep dive
32:23
into counterfeit and yeah, Taiwan, Taiwanese oolong the
32:27
same problem. So much of it is imported from
32:30
Vietnam and repackaged and resold as Taiwanese high
32:33
mountain tea. But I also think what a lot of
32:36
people don't realize is Taiwanese tea growers actually
32:41
help to start the quality like oolong production in Vietnam.
32:46
And so in a way, it was self feeding.
32:49
But I also do see now steps that are being taken to ensure that
32:55
Vietnam as a tea industry can stand on its own and not have to
32:59
be rebranded. I think that is really the key
33:02
here, where if you're just trying to copy and emulate
33:07
something that you're not, yeah, that's not a good recipe.
33:11
Like, understand your tawar, understand what the best you can
33:14
bring out of it is, and focus on that.
33:16
Yeah. I went to a wine conference once
33:19
I think about 8 years ago. Association of East Coast US
33:23
wine producers can imagine how good this their products were.
33:28
And I think there was some winery in Virginia that came to
33:31
France. Brought back tons of like
33:32
classics and said, you know, had their whole staff taste them and
33:37
said this is the goal. This is like the North Star for
33:39
us. Like this is the top of the top.
33:41
We need to produce stuff that tastes like this.
33:44
And this was this whole speech was about this.
33:46
And I remember thinking, no, like, why don't you just try
33:49
making the best that you can with what you have?
33:52
You're never going to make that Bordeaux Blend.
33:55
Like it's never going to be anywhere close to that.
33:58
Like you're a Virginia winemaker.
34:02
Yeah, it's it's weird how people call this emulation culture.
34:06
Yeah, well, it's if you're copying someone, you're trying
34:09
to, trying to snag a piece of the pie that like is not even a
34:13
pie that you like the flavor of. I don't know, like it just
34:16
doesn't make sense. It makes absolutely no sense.
34:19
Yeah. Well I guess the the biggest
34:23
reason behind This is Money right?
34:25
Like you can obviously sell for higher price if you tag it with
34:30
a different name, but I feel like the ultimate solution is
34:34
that, you know, people can end up making like similar amount of
34:38
profit using their own GI or BE themselves and I think that will
34:43
be the hardest problem to solve. It's a demand problem.
34:47
There is no demand for, let's say like Kagoshima Matcha or for
34:52
Shizuo. Yeah, a little bit.
34:53
Now with all of these new vendors highlighting or Nishio
34:57
matcha or Toyota Aichi matcha, these names are super new.
35:02
Maybe you hear not all consumers know it's even from Japan.
35:06
If they do learn a place, it's probably Ujiriyama.
35:09
And then like it just everything else gets washed in the, you
35:14
know, gets lost. And actually that's this word
35:16
specialty I think can really kick in.
35:19
It's it's cool. Like if you go to a place like
35:21
Bangkok with a really advanced matcha scene, you'll find places
35:25
that have like 3 different products from Toyota IG like
35:28
that's super cool. Or from Nagasaki or from like
35:32
all of these places you don't commonly hear about.
35:35
And it's exciting to see that kind of evolve.
35:38
But the Japanese don't make it easy to buy.
35:40
I guess newcomers coming in, getting access to this material
35:44
in those places is so hard. What advice do you have to like,
35:48
you know, new matcha companies in sourcing, especially in Japan
35:54
and trying to get their foot in the door and some of these more
35:57
off the beaten past places. Gosh, yeah, direct sourcing is
36:03
as a hard game. It truly it's it's it's a hard
36:06
game both from the, you know, available quantities, import,
36:10
export, things like that. My my advice to new
36:14
entrepreneurs typically is start with a trusted wholesaler or
36:20
distributor in your locality, right.
36:24
So I won't name names, but there's some wonderful
36:26
wholesalers of really good like transparent high end Matcha in
36:31
North America. It saves you time.
36:33
You start to understand your own consumer better first.
36:37
And you can test products from multiple companies, dial it in,
36:42
and then get to a point in volume where it makes sense for
36:47
you to start going and talking with these people.
36:50
Because if you go to Japan to a farmer and you know, I'm a start
36:54
up, I don't have any revenue. Like they're probably not going
36:56
to sell to you, not because they don't believe in you, but just
36:59
because they don't know you. Like it's a it.
37:02
Takes a while to develop this relationship of trust because
37:06
that's really important when when buying and approaching
37:10
people is is developing that trust.
37:12
And yeah, part of that trust is going to come with money in
37:15
consistent orders. It just is.
37:18
Yeah, that makes sense. Just build up that transaction
37:22
history and, you know, keep showing up.
37:25
Yeah, and see all these. And don't get me wrong, you can.
37:29
Don't get me wrong, you can do it.
37:31
You can start your company by direct sourcing.
37:33
I'm not saying you can't, but there is a lot of a lot more
37:36
friction than I think people might realize because then you
37:41
become the source, the sourcing person, the logistics person,
37:46
the customs and duties and testing person.
37:50
On top of that, you're trying to market your product, you're
37:53
trying to build your website. You're trying like one person
37:56
can really only do so much. Truly.
37:59
Really. Yeah.
38:01
Indeed, totally agree. You know, we, we've seen, we've
38:04
been seeing like a lot of these, you know, new founders going
38:07
into Japan trying to like even talk to anyone.
38:11
It's really not happening these days unless you are extremely
38:14
lucky or you end up knowing someone that gives you an
38:17
introduction. That's it.
38:20
Knowing and having a network is vital that that can that can
38:24
move mountains in not just the matcha industry, but in the tea
38:27
industry in general. Truly, I know even for my own
38:31
business, there are some vendors where just because they know me
38:35
and trust me. And if I believe in, let's say
38:40
I, you know, I believe in my clients, I'm like, they're going
38:42
to go places. Let's bend your typical rules a
38:45
little bit and get them in the door because I know that they're
38:49
going to grow and have a trajectory.
38:51
And that is all word of mouth. It's all word of mouth like and
38:56
trust in through, you know, down the chain.
38:59
So yes, this that example I think is a is a really valid 1
39:02
cent. It your time in David's Tea and
39:05
product development and working with all of these tea companies,
39:08
how do you think about like consumer preference acquisition
39:11
and building ladders? Like how does someone go from
39:13
drinking a marshmallow flavored blend to wanting to have a
39:20
longing or an uji matcha? And like, what are like really
39:24
successful ways in building these ladders to move people
39:27
from, you know, maybe a matcha latte to a new sucha to a single
39:32
cultivar, single origin kind of thing.
39:34
I love that question, Ryan. The term that I love to describe
39:40
this consumer behavior is graduation.
39:44
You're you're, you're, you're graduating, let's say to the
39:46
next level. And I'm not trying to say it's a
39:48
hierarchy, it's not that at all. But there is an upward
39:51
trajectory both in quality and typically that's directly
39:55
related to price as well, right? So we can also think of it as a
39:59
price graduation. The higher up the ladder you go,
40:02
typically the more money you're going to pay for your product.
40:05
I think first coming in with a perspective and understanding
40:08
that not everyone is going to graduate and be realistic about
40:13
that. I think that's that's first and
40:14
foremost. The second thing is do you want
40:17
to be everything to everyone? That's another big question,
40:21
right? Dilution of customer was and I
40:25
think still is a big issue for a lot of tea brands.
40:30
So in the case of David's Tea, just because I know that
40:33
customer, I know the type of market that they that they
40:36
service. And if we're Speaking of from
40:38
matcha directly, David, she's one of the largest retailers of
40:41
matcha in North America. That is huge volume and it all
40:45
comes from Japan, from Nisha specifically.
40:47
They first started by selling straight matcha and the quality
40:52
was pretty darn good. Even the lowest grade of matcha
40:55
that they started with was the stone ground entirely and but
41:00
they positioned it both in price and to consumers as latte able.
41:04
What I think changed the game was when they started
41:07
introducing flavored machos on the market.
41:10
So matcha either mixed with sugar and flavoring or just with
41:14
flavoring itself or with other powders.
41:17
Because then you start to build that more entry level category,
41:20
right? Getting someone into matcha by
41:22
offering a strawberry flavored matcha is a pretty easy gateway
41:27
for many people that are brand new to matcha.
41:30
And there was definitely a, a certain amount of customers that
41:34
did graduate as, as we'll say up to their highest tier matcha.
41:39
They may not buy it all the time just because of, of of price,
41:43
right? It was like a special occasion
41:45
kind of a thing actually that there's some funny story about
41:47
that, that matcha was one of the highest redemption products on
41:55
people's loyalty points. So people would reach like a
41:57
certain amount of loyalty and be able to have like credit or
42:01
whatever. And there was a huge number of
42:03
people, even non matcha drinker, surprisingly, but that were
42:06
like, I want to spend my loyalty points on this because it's one
42:10
of the most expensive things that this company sells, right?
42:14
So we found that super interesting where there was this
42:16
like prestige element, but then there are some that's it.
42:22
But then there are some customers that just buy, you
42:25
know, bags and bags and bags of flavored matcha and just stay
42:28
there. I think Macho was or I guess is
42:30
a category still within David's Tea that is very surprising in
42:35
that they seem to be able to deliver to a wide spread of
42:40
customer without diluting this perception of quality.
42:44
I don't know if I would say the same about their about their
42:48
leaf tea assortment. Just not, not because the
42:51
quality is, is bad, but I think it's just over diluted.
42:54
It's there's like 170 different skews like it's, it's how does
42:58
someone navigate that? How, how do you how do you go
43:00
through that? Matcha as a separate category
43:03
does not have that many skews. It's a lot easier for customers
43:06
to navigate. So I think graduation is about a
43:09
few things. One, it's about actually
43:10
providing those options, but understanding your customer
43:14
journey and if you and positioning if you even want to
43:19
capture that whole journey. Some brands do not care about
43:23
capturing upward momentum, this idea of graduating to next
43:27
levels. And I also think that's totally
43:29
fine and totally valid. Why?
43:31
Because you're focusing on a niche that you know, you serve
43:33
really, really well. The type of customer typical of
43:37
David's tea in terms of revenue was what we classified at one
43:41
point as the hedonist customer, right?
43:43
It was these customers that wanted Big Bang Big impact.
43:47
They wanted to drink the S'mores tea, they wanted to drink the
43:50
strawberry lemonade tea. They wanted all of these
43:52
flavors, but stuck there. And it was a massive, massive
43:56
revenue driver for that. And I think as tea people, the
44:01
team was always trying to like, maybe get them to evolve when
44:06
they didn't want to. Yeah, yeah, right.
44:11
It's more of a push than a pull. The customers pulling it was
44:14
like, like, you want the better thing, climb up the ladder.
44:18
Exactly, exactly. So I, I think it comes down to a
44:22
few things. One it's yeah, do you even want
44:24
to be the company that supports that graduation?
44:28
And that is a very valid question.
44:29
And then and then what was the other one?
44:33
Oh yeah. So do you want to be the company
44:35
that supports that graduation? But how do you do it without
44:38
over inundating with too many skews and ending up in decision
44:42
paralysis? Yeah, it's a confusing piece.
44:44
And also I feel like from a consumer perspective, you know,
44:49
it's the same product, can be a graduation point at different
44:51
time. I feel some people just go back
44:54
to simpler product that they started with and stayed there
44:58
after you move through the whole app.
45:01
Yeah, so let's say I'll take myself as an example.
45:05
I drink some really high end tea, right.
45:07
So funny enough, I'm not actually a regular matcha
45:09
drinker. I love tasting matcha.
45:11
Surprisingly, I don't drink a lot of matcha, but I do a lot,
45:14
you know, a lot of Kung Fu or teapot or, you know, grandpa
45:16
style, whatever. But I am that I am absolutely
45:19
that customer where I can go and buy the, you know, really
45:24
expensive yancha. But then I'm also like, yeah,
45:28
but I have this like immunity tea bag with like zinc in
45:31
Echinacea. And so I'm going to go throw one
45:33
of those in my cup because that is serving me at that moment,
45:36
right. With matcha drinkers, I think
45:38
we're going to see this as well. They're going to be people that
45:40
want to go to this kettle bar and order the single cultivar
45:44
matcha, you know, whisked as koicha, but then can go back and
45:49
be like, yeah, but that lot, that matcha latte from this one
45:52
place, that Maple matcha latte that this one place did was
45:55
super good. I want to go back and and have
45:56
that. And we're going to see that a
45:58
lot more, in particular with Gen.
45:59
ZI just finished an article for Stir Coffee and Magazine about
46:03
Gen. Z preferences.
46:04
And it's super experiential. And both of those are two
46:08
different experiences that satisfy two different needs at
46:11
two different times. And you can still be the same
46:13
customer and do that, right? Yeah, they just doing two
46:17
different jobs, Yeah. Precisely.
46:20
Makes so much sense. Just as a last question to wrap
46:23
up, what gets you excited? You are like super plugged into
46:27
the tea world and the tea industry and new companies, new
46:31
positioning like what what's what's cool that's happening or
46:34
that's going to happen, but just in general in the next couple of
46:37
years. Yeah, that's a fun question.
46:40
Well, what what excites me #1 the people excite me.
46:42
I am so network driven. I love the people in this
46:47
industry. It's an industry that my
46:49
colleagues and people that I work with and have, you know,
46:52
the hard discussions with are also some of my best friends.
46:57
So first and foremost, I think that is always going to be my
47:01
anchor. Yes, I love the product without
47:03
question. I love the product.
47:04
But at heart, like I just, I love the community that tea has
47:08
developed. People are the best.
47:10
Tea people are. They really are, yeah.
47:13
And so, you know, you asked what energizes me, That's what
47:16
energizes me about this, What energizes me about what we're
47:19
going to see down the road. I there, Oh my gosh, there's so,
47:23
so many things that I think are really exciting right now.
47:25
There's some amazing stuff happening with ready to drink
47:28
tea at the moment, and in particular with the sober
47:32
curious movement where tea, I think, has an opportunity to
47:37
capture a huge market space of people that want to enjoy
47:42
experiential products without the alcohol.
47:46
Because historically alcohol was always the like the
47:50
sophisticated product. Oh, you want to taste the, you
47:53
know, you want to taste Palmas al region of France.
47:57
Oh, you're going to have to taste that in a wine, right.
47:59
Like that was always the, the idea was always attached
48:01
alcohol, whereas tea offers something completely different.
48:04
And there are some amazing companies that are doing
48:06
sparkling teas and botanical infusions, different fermented
48:10
products using tea, not just kombucha, but all over the
48:13
spectrum that cater to a customer that is looking for
48:17
something super high end. I was in New York a few years
48:20
ago and had the privilege to go to a restaurant called Atomix,
48:26
which I think was actually rated #1 restaurant in North America
48:29
not long ago. Phenomenal dining experience and
48:32
we got their mixed pairing. So it was an alcohol and alcohol
48:35
free pairing. I was with my business partner
48:38
and the alcohol stuff, great. It's truly what left a bigger
48:42
impression on me was some of the non alcoholic pairing options
48:46
that they had, and a couple of them were very it was like it
48:51
was tea based to some degree or it had botanicals included.
48:54
And so if you're asking really what is what I think is a a big
48:58
frontier, the the non alcoholic space is something to watch.
49:02
Even if relating this back to matcha, I see a definitely see a
49:05
place for some kind of sparkling single single origin matcha
49:11
poured out of a champagne bottle.
49:13
You know, like they're, they're, that is going to be something
49:16
that consumers will be keen on, not just tea consumers, but
49:20
people that are looking for experience based beverages that
49:23
don't want to drink but want and want that occasion, right.
49:27
If someone can nail doing that but for Masha and and other
49:33
Japanese teas, that would be pretty killer.
49:36
Yeah, it would be cool. Actually, someone earlier today
49:38
just forwarded me a link about some guy in Kuala Lumpur who's
49:42
throwing matcha raves that are all sober raves.
49:46
Yeah, pretty cool. It is Max, Max Falkowitz.
49:51
Yeah, Max Falkowitz, who's a pretty prolific tea writer based
49:56
in the New York area. He just did an article on on
50:00
like sober bars or non alcoholic spaces, whether it's events or a
50:04
restaurant or bar or whatever. And tea is such a common thread
50:09
in these places and I'm so excited to see where that goes
50:13
and who else it will bring into the fold of tea because that is
50:18
is lateral movement, I think, and market acquisition.
50:21
So there's so much potential, so much potential.
50:24
The alcohol how how much bigger is the alcohol industry than the
50:27
tea industry? Massive If you can pull even an
50:31
eighth of that industry into your fold.
50:33
The tea industry explodes with new customers and new revenue
50:36
opportunities. Totally.
50:38
And it you know, the alcohol free options need things that
50:40
aren't sweet. Like what adult wants to have a
50:43
soda when everyone else is like it's it's like you don't turn to
50:47
a CSD or a juice. They're alcohol free options are
50:50
like for children, like mostly. So it's I think that's a perfect
50:55
vacuum for tea to fill. Yeah.
50:57
And and it's it's coming. It's it's definitely coming.
51:00
Europe is really the hotspot I think right now for these tea
51:04
based beverages. There are a lot of brands out of
51:06
Europe that are doing some really cool non alcoholic tea
51:08
stuff. Yeah, I had one from at the
51:10
Berlin Tea Festival from a company called EST.
51:13
It's in champagne bottles. It's all caffeine free.
51:17
Wow. They mastered the acidity.
51:19
It had just enough sweetness to give it body, but it wasn't
51:22
sweet and it had just a beautiful aromatic profile like
51:26
it. Honestly I think if I wasn't
51:28
paying attention I wouldn't have realized it wasn't alcohol.
51:31
Like it was just a well crafted beverage that you could sip
51:34
slowly like just like you would in those use cases.
51:37
So absolutely super exciting to see.
51:40
Well, someone's got to do that with with some matcha, and
51:43
that's the next product I want to see on the shelf.
51:47
Same. Well, thank you so much for your
51:49
time. I know we are a bit over but
51:52
really appreciate it. All good.
51:54
Next thing on my agenda is a haircut.
51:56
So all good. Seriously, Sam Ryan, huge
52:01
pleasure speaking with both of you.
52:02
I'm going to keep thinking about that question that you asked
52:04
Ryan. The one that's that kind of
52:06
stumped me. I think it was it was definitely
52:08
a definitely a good one. And we'll have some some further
52:11
conversation about that. Sounds great.
52:13
Thank you so much for coming on and thank you, dear listener, if
52:16
you enjoyed this, please consider sharing the friend and
52:19
we'll see you in the next one. Thanks.
52:21
See you in the future.