10 years on, TWG sips on global ambitions

Singapore

FROM the day TWG Tea was founded in 2008, it had ambitions of making it as a global brand.

In just 10 years, the Singaporean company has done exactly that, establishing itself as an Asian luxury tea brand distributing fine tea leaves from every tea-producing country to customers in 42 countries around the world.

The company might have met with defeat, however, if not for a timely intervention by massage chair manufacturer OSIM International in 2011, when TWG Tea was an ambitious but struggling brand with three stores, incurring a loss of S$2 million.

Following an initial investment of S$31.4 million for a 35 per cent stake, OSIM helped restructure TWG Tea's entire operations and reverse its fortunes to report S$7 million in profit before tax last year.

It has established 70 tea salons and boutiques, as TWG Tea calls its concept outlets, in 19 countries, and distributes its products to a total of 42 countries through partnerships with top airlines and five-star hotels.

"TWG was very lucky to have a company that put it on the right track," TWG Tea's chief executive officer Taha Bouqdib tells The Business Times.

"After 2012, the company completely reached another level in growth, numbers, stability of the team and speedy expansion, because of all the hard work we did from 2011 until today.

"When OSIM came in 2011, it was the most important point in the history of TWG Tea. At that point, TWG Tea had the ability to say, 'We are really going global.' It was no longer just thinking about it. It was ready to act to be a global brand."

TWG Tea has set its sights on becoming a travel destination in major cities around the world, providing a premium "experience of lifestyle and emotion" that today's consumers actively seek out in their travels, Mr Bouqdib says.

OSIM chairman and CEO Ron Sim says he decided to invest in TWG Tea because he saw great potential in its brand and positioning in the luxury sector. However, he was startled to discover a lack of business structure when he began looking more deeply into his new investment.

"There weren't proper policies, be it HR or operational," says Mr Sim, who is also TWG Tea's chairman. "You couldn't get a full financial account, and many things were in disarray."

One thing TWG Tea did have to its advantage was a willing learner in Mr Bouqdib, who led the company in rebuilding, Mr Sim notes.

Mr Bouqdib embraced the restructuring process as his "practical MBA" and an opportunity to tap OSIM's and Mr Sim's expertise, especially for expanding into North Asia, including China, Hong Kong and Taiwan.

Working together with OSIM, TWG Tea made improvements such as rebuilding its back-end operations and creating a scalable business model that could be expanded quickly overseas.

The TWG Tea Institute was also established to train staff to deliver a consistent experience at every outlet, from tea-serving techniques to sharing the company's knowledge and passion for tea with customers.

Over the last seven years, OSIM also grew its stake in TWG Tea to 69.9 per cent, making the tea brand a subsidiary of the larger business. Both are housed under Mr Sim's V3 Group of lifestyle, wellness and specialist fixture businesses.

As for TWG Tea's marketing, branding and products, Mr Sim has confidence in Mr Bouqdib and his team's ability to keep building the brand with their innovative ideas that had attracted him to the business in the first place.

Mr Sim sees potential for the company to open up to 500 stores worldwide, a target which he estimates would require an additional investment of S$50 million.

As TWG Tea expands, Mr Bouqdib wants to target major cities such as Paris and New York, creating destinations where travellers can enjoy the full TWG Tea experience no matter where they are.

While each outlet would be designed slightly differently, they would all provide the consistent TWG spirit and experience.

Mr Bouqdib points to the two London outlets opened this year as evidence that the TWG Tea experience can win customers even in a country that prides itself on its taste and expertise in tea.

He says: "It's a really mature market, the people there know tea, and we showed them that we are capable of delivering an Asian luxury tea brand. I think this confirms that TWG Tea has global potential today."