Capital Teas is maneuvering for a bigger piece of the U.S. tea market. The Annapolis, Md.–based chain, which has been in business since 2007, currently operates 23 stores and has plans to boost that to 40 by the end of 2018. Capital Teas sells about 200 varieties of premium, organic and natural teas, ranging from such staples as chamomile and Earl Grey to specialty flavors like almond cream biscotti and figgy pudding. Most of the teas are USDA-certified as organic. It is this focus on high-quality organic and natural teas that the company expects to leverage successfully against the bigger, more-established chains, such as Teavana and David’s Tea.
Capital Teas says it is targeting the top 100 malls in the U.S. and that it has no qualms about locating in a mall that already has an existing tea store. Indeed, the company operates a store at The Mall at University Town Center, in Sarasota, Fla., which also has a Teavana. “Just like when you go into the grocery store and go down the cereal aisle, there are the Fruit Loops and the Kashi cereal,” said Peter Martino, co-founder, president and CEO of Capital Teas. “I would equate the … Capital Teas experience being closer to Kashi, since we are naturally and organic-tea-inclined in everything we do.”
Martino says he sees huge opportunity for store growth both here and abroad, though the chain’s primary focus for the near term is the U.S. market. Overall U.S. tea sales, including grocery stores and restaurants as well as specialty tea shops, has surged from about $1.8 billion in 1990 to $11.5 billion in 2015, according to estimates of the Tea Association of the USA.
Capital Teas opened 13 stores in 2016 and now has a presence in eight states, with the initial concentration on its mid-Atlantic home base having been extended to such states as Florida and Colorado. Capital Teas stores typically measure about 1,000 square feet, and the company prefers malls that generate at least $500 in sales per square foot and favors locations near upscale retailers.
The company will open its 24th store in February at The Mall at Green Hills, in Nashville, Tenn., after which it plans to put a hold on store openings for about six months to focus on strengthening operations. “Over the last two years, we have grown almost 400 percent in terms of the number of stores we have,” said Martino. To help accommodate that growth, the company will hire a construction manager, some district and regional managers and similar personnel, he says. The company also intends to build a more robust e-commerce platform.
When the store expansion program resumes, in August of the coming year, it will proceed at this past year’s rate of roughly one opening per month: Five or six stores are to open in 2017 and 12 more in 2018. “When those are done,” said Martino, “we will be looking for another wave of new stores, because we intend to keep growing the Capital Teas brand into a nationally recognized provider of specialty, organic teas.”
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