TWG sets sights on annual sales of $1b

Singapore

TWG Tea has grown from a $1 million to a $55 million-a-year business in five years. It's now shooting for annual sales of $1 billion in 10 years.

The Singapore-based luxury tea company wants to hit nearly 20 times its current sales but in only twice the time it took to arrive where it is.

The countdown begins next year when TWG rolls out an aggressive plan to open some 20 tea boutiques and shops in Asia and the Middle East, pumping "not less than US$15 million" into the expansion.

By end-2014, TWG is likely to have 50 outlets globally, up from 27 at end-2013. In five years, the goal is to have a presence in every luxury and fashion capital of the world.

"We're determined to create the No 1 luxury tea (brand) in Asia for the world," says Taha Bouqdib, TWG president and co-founder.

TWG, in which Singapore Exchange-listed OSIM International has a 53.7 per cent stake, is taking on Asia first because it's a harder market to crack than Europe - not because it's the original home of tea.

"After this (building its presence in Asia), the world would be easy (to conquer)," explains Mr Bouqdib, a tea master blender who is French of Moroccan descent.

While Asians have been drinking tea for a long time, paying high prices for high quality tea is still new to many.

Already, they are complaining about paying $1 for a glass of "teh-o" in coffeeshops, where it used to cost five to 10 cents. Many eyes will widen when they see the price list on the TWG menu - even when the boutique's luxury decor is a hint enough that it's not going to be cheap.

A pot of tea starts at $12.50, while a "first flush" Darjeeling, the Rolls Royce of tea, costs up to $27. A kilogramme of premium yellow tea retails for as much as $3,000.

In Europe, where tea boutiques are common in key cities such as London and Paris, such prices won't raise any eyebrows.

While opening more outlets, TWG will also be making a big marketing push to "educate" consumers to embrace tea-drinking as a "unique" lifestyle - and to accept its high prices.

It has started a tea school for TWG's nearly 600 employees to learn all about tea, but this will also be open to the public.

TWG outlets are already drawing long queues, and Mr Bouqdip says that they are making money. The big expansion ahead also reflects TWG's success so far.

Many of the markets where it is aiming are predictable targets: China, Indonesia, Malaysia, Thailand, Japan, Hong Kong, Singapore and Dubai. These are fast-rising and rich markets with money to splurge.

There are also surprises: South Korea, the Philippines and Cambodia.

Cambodia is the least developed market on the target list, but TWG is not eyeing so much the locals; it hopes to "catch" the many Cambodian refugees who got rich overseas but are now returning home to help rebuild the country. Many of them have lived in Europe and have adopted its high-tea culture, says Mr Bouqdib.

TWG plans to open two tea boutiques in Cambodia.

As for the Philippines, there are already enough rich and famous customers to keep four TWG outlets in Manila busy - and crying out for another to open, which Mr Bouqdib says will be in the first three months of next year.

South Korea is a surprise because, while affluent, the rugged Koreans are known to be hard drinkers rather than tea lovers.

Apparently, that's not all true; Koreans also love tea. South Korea is actually one of TWG's 10 biggest markets. And it has room for two more boutiques in the coming year.

"They have a tea culture, they have tea ceremonies," Mr Bouqdib points out.

Tea ceremonies are more reminiscent of Japan, where TWG now has three outlets, including a shop in the banking district of Marunouchi. The company has earmarked a tea boutique in Ginza and has struck an agreement with shopping giant Takashimaya to open outlets in all its shopping malls in Japan.

In China, TWG has budgeted for three outlets in Shanghai, one in Beijing and 12 in Shenzhen next year. TWG teas are already served in 300 five-star hotels in the country.

TWG is targeting up to three new boutiques in Hong Kong, Malaysia, Thailand and Indonesia. In Singapore, it's adding two outlets to take the totalto 11.

In the Middle East, TWG continues to expand in Dubai - it already has two boutiques there - and will open its first boutique in Qatar.

Mr Bouqdib says that the Middle East is a fast-growing market for TWG. In just three months recently, it signed up 25 five-star hotels to serve TWG teas.

TWG is also pushing to build its tea distribution by tying up with upscale hotels, global airlines and speciality gourmet stores.

And this will not be confined to Asia and the Middle East. TWG also has its eye on Europe and North America.

TWG teas are already sold in Harrods in London, Dean & Deluca in New York and gourmet delicatessens in other parts of the world.

TWG recently scored an important breakthrough when it became the only tea brand, apart from Harrod's own, to have a store-in-store in Harrod's celebrated Tea & Coffee Hall. This is likely to pave the way for a bigger presence in Britain, a long-time tea-drinking nation.