CODE Hospitality: More than a storm in a tea cup

Henrietta wrote this for the hospitality industry, published by our good friends at CODE Hospitality for their cracking long reads section. With their kind permission we've republished this on our journal.

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I want to tell you about a rather indecent proposal made to me in an expensive hotel. It’s not what you might be expecting. This isn’t about me being a woman. But it does affect women across the globe, and their children and their communities.

Not too long ago the Food & Beverage director of a historic, highly successful and very luxurious five-star hotel in the heart of London invited me to talk about becoming their tea supplier. In a room panelled in ancient oak, a room that had undoubtedly seen some historic action that changed the course of history far beyond its walls, this man in an expensive suit told me proudly:

"What I want, Henrietta, is a Rolls Royce for the price of a Ford Cortina."

Yup. That is exactly what he said. It took me a moment too. What was he actually asking me for?

His guests, of course, would be expected to pay for a solid-gold angel, hand-stitched leather seats and diamond-encrusted dashboard kind of experience. I know this, he knows this, you know this. So, I smiled at his joke and said, “We can help you serve your guests significantly better quality tea than you have now, tea sourced direct from the farms, and you will still be able to make margins of around 90%. And that’s without charging any more than you currently do.” And his reply: “You need to make it cheaper. I can get it for less.”

He did get cheaper tea. Not from me but from a company (very quietly) owned by a vast multi-national. I kicked myself then, and I’m doing it again now, that I wasn’t quick enough to ask him for a night at his hotel for the price of a Travelodge.

It’s never the small independent coffee shop, or the chef-led restaurant that tries to drive down the price of tea. Why would they? They can choose the best tea and charge very healthy margins without overcharging their guests. I did some research for the TV programme Secrets of the Restaurant Trade and found that Starbucks could sell Rare Tea, at their current prices, and make a 90% margin. Not our rarest or most precious teas, but beautiful leaf nonetheless.

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So why is there this obsession with price when it comes to tea? Do wine suppliers compete only on price? Butchers? Cheesemongers? There the margins are far smaller, and yet price is only a small part of the supplier selection criteria. Isn’t it about the best quality? Provenance? Reliability? Good relationships? Excellent customer service?

No one ever tells me my company falls down on any of those. I have a brilliant, very hard-working team and we work with some of the best tea farmers in the world. But we are constantly asked to offer prices that would allow something in the region of a 98% margin on sale. It begs some important questions:

Would a restaurant expect a margin like that on wine? Or food? or coffee? How can it be so cheap? Wouldn’t you suspect there was something wrong? Is the customer being overcharged? Is the tea community being under paid? Perhaps the real question here is- How could I offer cheaper tea?

I could buy it cheaper – industrially processed, mechanically picked and processed. That’s fewer jobs, less skill and lower quality. And I could buy from a broker, not direct from the farmer. This cuts out the manifold costs and efforts of shipping from small mountain farms; all the people and time the logistics involved (most of my Rare Tea Company team work in ops not sales); the heavy costs of bulk warehousing and the up-front cash commitment for an entire harvest. And here is the real kicker – not pay a price set by the farmers themselves- but pay the price they are forced to sell at, by the brokers.

Around seven large players control about 90% of the tea traded into Europe and North America (according to The Ethical Consumer’s analysis of the industry). The farmer has no control at all. Imagine if your menu prices rose and fell every season with the arbitrary fluctuation of a commodity market?

It’s what Alex, a tea farmer in Malawi calls “a race to the bottom.” Brokers drive the price ever down. Quality falls. The price drops. The knock-on effect on tea communities is devastating: life expectancy can be as low as 40’s.

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You can put organic and fair trade and rainforest whatnot on your packaging, but the status quo is still the same. The only way I can see a way out of this is to work directly with the farms. Pay the price they ask, directly to them, and find them a route to market outside the brokered/agribusiness-controlled stronghold. It does cost more. But I wouldn’t have a 17-year-old business if I hadn’t been able to make it work for my customers.

It does cost more to serve tea in a big hotel with all the overheads – and guests are happy to pay for that. they can choose the most expensive teas. Small, leaner, humbler operations are able to charge less. The margins are consistent across the board. It works. Haven’t we proved it for long enough now – from Kaffeine coffee shop to Claridge’s; from The Modern to Momofuku; Hart Bakery to Noma?

I can’t tell you how frustrating it is when the man in the suit says to me, there is a problem with your business. Your tea is too expensive. The problem is with my business? Couldn’t it be that expecting to make margins far in excess of 90% for a product that has long been associated with poverty and exploitation might be a problem with his business?

Yes, margins have been high like this in tea for long careers in Food & Beverage. I’ve heard people say they need to make margins where they can. But should impoverished tea communities be expected to prop up less lucrative areas of a restaurant? Isn’t that exploitation?

There are going to be hard choices ahead within hospitality – how do we go forward? How do restaurants work?

I want to ask, beg, please maintain your support of those who face hardships even greater than our own – like marginalised tea communities. We have all been hit hard – hospitality and your suppliers alike. But think of the farmers who have also faced closures, and lost business, with no furlough schemes or government support of any kind. Sustainability is not just environmental, it’s financial. And might we dare to look beyond survival to see tea communities thrive like vineyards? We can’t pretend our choices, or our voices don’t matter. Please, call it out where you see it.

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Let’s move forward with kindness and hope and mutual respect and support. Let’s be proud of everything we do and make and serve. There is no value in cheap tea. Not to a restaurant and not to the guest. And certainly not to the tea community. We really can afford to serve decent tea.