Per Sundmalm’s Tea Shop has developed a reputation for exclusivity, quality, variety and service. For twelve years the Tea Shop’s sales have improved and the company has grown in popularity in Spain. Per has single handedly brought a new respect and appreciation for tea among the residents of Spain. Admittedly the Spanish tea market was a difficult one to break and since Per has succeeded, his plan for further expansion is likely to be successful.

Per’s plan for expansion is limited by his fear of growing too large and losing the Tea Shop’s exclusivity. He wants to increase the supply of Tea Shop tea by distributing the product to top-of-the range restaurants and hotels. His plan also includes the opening of additional shops through out Spain and quite possibly in other countries.

Spain has some of the world’s finest restaurants. Visitors from neighboring European countries often patronize Spain’s top-of-the range restaurants and many Europeans enjoy a hot cup of brew following a satisfying meal. Per’s plan to distribute his tea to top-of-range restaurants in Spain should include a list of the restaurants more likely to be used by tourists. The French, British and the Dutch are very loyal tea consumers. (The Facts of Tea) Together with the Tea Shop’s established customers Per has a hopeful market among the patrons of Spain’s finest restaurants.

The plan to distribute to Spain’s top-of-the range restaurants should involve a careful selection of cities. Per should be careful to avoid creating competition for The Tea Shop. By doing so, the restaurants he chooses should not be located in close proximity to his own outlets. If they are, his established patrons may lose the incentive to visit The Tea Shop for an after dinner cup of tea. Per should also only provide his top selling brands to the restaurants he selects and then gradually increase the quantity of brands as his tea catches on in the restaurants.

In order to promote sales of his tea in restaurants, Per will be required to commence an advertising campaign. This can be accomplished by a joint advertising plan with the restaurants selling his tea. The ad campaign should include T.V. commercials, news paper ads, magazine ads and notices posted at all of The Tea Shop locations. The resulting ads, while primarily focused on The Tea Shop’s tea will state the brand of teas available at the selected restaurants. Per’s tea will enjoy more success in this venue if he made provision for the tea to be available on the restaurant’s menu and also available for purchase in its unprepared state.

The plan to distribute the product to Spain’s top-of-the range hotels is also a good financial strategy for growth. Like restaurants, neighboring Europeans who are heavy tea consumers are habitual residents of Spain’s hotels and the hotel industry would be a good market for expansion. The tea should be offered on the room services menu as well as in each room.

An advertising campaign is unlikely to make a difference unless it is conducted on an international scale. However, a poster of some sort ought to be displayed in the hotel’s lobby or outside of the main restaurants. The poster ought to be a promotion not only for The Tea Shop, but also for the tea currently available at the hotel.

Another viable venue for expansion should include airlines. Spain enjoys the world’s second most visited destination in the world, second only to France. Spain hosts approximately 52 million visitors annually. (Tourism in Spain) The airline likely to produce better results for The Tea Shop is Iberia, Spain’s national carrier. This venue would have the effect of introducing visitors to Spain to The Tea Shop and its product.
With the introduction of The Tea Shop’s tea in Spain’s hotels and restaurants the plan for expansion to other countries is well on the way. Visitors to Spain will become familiar with The Tea Shop via the restaurants and hotels serving the product. In planning which countries are better markets for the tea it is necessary to take a look at Spain’s tourism industry.

The majority of Spain’s visitors come from the European Economics Community countries with a greater influx coming out of France, Portugal, Britain, and West Germany. Although American tourists comprise less than 2 per cent of Spain’s visitors, they spend more per person than the European visitors. As a result the United States accounts for the second source of tourist receipts after Britain. ‘The average expenditure per foreign visitor increased only 2.4 percent in 1987.’ (Tourism)

This is important data for considering which markets to introduce The Tea Shop’s outlets. This data is important because visitors coming to Spain will have some knowledge of The Tea Shop, especially if they are from countries that are substantial consumers of tea. Together with the tourism data, Per would be in a better position to determine which countries would be better markets for his tea shops.

The United Kingdom enjoys the notoriety of being the ‘largest per-capita consumer of tea averaging 3.5 to 4.0 cups per day.’ (Tea Consumption) North Americans are also catching on to tea. The American tea industry witnessed an increase in wholesale purchases of tea by some 13 per cent representing an annual increase of 4.6US$ billion in the last ten years, up from 2US$ billion. Canadians consume about US150 million in tea annually. Worldwide the best markets for tea are reflected in the table below.

(Factors Effecting Development of Tea Industry in Hawaii. 2004) MORE…