The Mighty Leaf Tea company was founded in 2000 by Jill Portman and Gary Shinner.
The couple was inspired to enter the tea industry while shopping for engagement rings in 1990. The company is known for pioneering the whole leaf tea pouch, filled with whole tea leaves, herbs, and fruits. “The company’s goal is to bridge the gap between quality and experience of the whole leaf product with the convenience of a bag,” states co-founder Jill Portman (Wollman). Mighty Leaf Tea initially bloomed in the high-class market, becoming popular in high-end hotels, restaurants, and specialty food shops.In 2007, the company was faced with the decision of going mass market by selling its premium whole-leaf teas in supermarkets. In any major company decisions such as this, it is important to consider the company strengths and weaknesses, as well as the opportunities and threats faced in expanding. A major strength of Mighty Leaf Tea is the company’s unique bag design. Tea lovers themselves, co-founders Portman and Shinner opted to move away from the unbleached paper tea bags of old, because they did not bring out the full flavor of the tea, imparted a paper taste, and often had chemical byproducts (Wollman).
Mighty Leaf Tea trademarked their new teabag, which acted as a roomy mesh pillow stitched with natural cotton thread. It maximized the flow of hot water to the leaves and created the rich taste of tea made from loose leaves. They also changed the contents of the tea bags as well. Many other tea brands were filling their bags with indistinguishable bits, the detritus left after tea leaves were sifted and graded. Instead, Mighty Leaf Tea opted to use full tea leaves instead of just partial pieces or “tea dust” (Fabricant). One of the weaknesses of the Mighty Leaf Tea company was the price of their product.
Although they had gained a significant share of the high-end market, they hadn’t experienced success in major supermarket chains. Uneducated consumers and average tea drinkers may not be willing to spend $8 for a box of 15 teabags (Park 2). Mighty Leaf’s comparatively higher prices in supermarkets might turn off cost-conscious shoppers, it’s presence in major chains could possibly alienate the company’s upscale consumers.
Another weakness was the financial capabilities of Might Leaf Tea. As a newcomer to the mass market, the company would need to fight for the customers’ attention.A national sales staff would need to be hired and in-store promotions could cost about $1. 2 million. This would require outside investors to be brought in for the first time (Park 4). Gary Shinner and Jill Portman had already helped Mighty Leaf Tea gain rapport with upscale consumers, and now believed it was the time to go mainstream. Lipton, a major competitor in the tea industry, had already been promoting their new Pyramid line of natural teas at major events like the Sundance Film Festival.
Lipton’s new line had also been written about in the New York Times’s food section (Park 2).This was an opportunity for Mighty Leaf Tea, because it showed that supermarket chains were willing to give shelf space to this niche product. Consumers tastes were evolving, and major chains were being forced to adapt to these new wants. Although it seemed that the time was right to move into the mainstream market, Mighty Leaf Tea was faced with the threat of competitors. Other popular brands, such as Lipton and Highland Tea Company, were pushing new whole-leaf tea products.
Also, the recession of the economy posed another threat to Mighty Leaf.Consumers had less money to spend, hotel vacancies were on the rise, restaurants were closing, and gourmet food stores were struggling (Park 5). It would be difficult for Mighty Leaf Tea to market their high quality product during a recession. Initially, Mighty Leaf Tea’s strategy was to gain recognition in the high-end segment of the market. This grouping includes upper class restaurants and hotels, as well as natural food-stores. They targeted their product towards the affluent and America’s growing foodie class (Park 2). Both groups were willing to spend more money for a premium and hip new tea.After establishing itself as a high quality tea brand, Mighty Leaf wished to expand its business to mainstream customers by making their product available in supermarkets.
The decision was made to go mainstream in 2007, when the company hired Rich Clark as their first national sales director. In February of 2008, Mighty Leaf won its first supermarket account. By October of the same year, it had its product available in many Safeway, Kroger, Publix, and Stop ; Shop stores. Company sales had gone up 25 percent, and by 2008, they were expected to hit $20 million.Co-founder Gary Shinner expects supermarket sales to account for at least 40 percent of company revenue within a few years (Park 4).
Going mainstream was a major move by the Mighty Leaf Tea company. Entering supermarkets was a shift away from the exclusive and affluent market they originally attracted. However, it was in the company’s best interest to increase revenue and gain more market share.
They were successfully able to do this by making their unique product available to more customers. Mighty Leaf Tea is a company that is moving forward and looking to expand their market share.Currently, their products are available in many grocery stores nation-wide. However, they need to establish a strategy to pursue in the future. One strategy would be to rebrand their product. The case notes that customers may not be willing to spend a premium on tea in the midst of a recession.
Mighty Leaf may wish to produce a less expensive tea, while marketing it under a different name. MontGras, a Chilean wine company, was successful with this strategy when they began offering their wines in supermarkets in the United Kingdom.Their wines, like Mighty Leaf’s teas, were originally only available in high-end restaurants and hotels. The top four leading supermarket chains accounted for 60% of wine sales in the United Kingdom (Arnold 6). MontGras wanted to enter this market but did not want to hurt relations with restaurants and at the same time lose their business.
To avoid this, MontGras rebranded the wine sold to on-premise locations as “DeGras,” and kept the MontGras label only for premium market channels (Arnold 7). MontGras was able to successfully sell their wine in more than one market.Mighty Leaf Tea has successfully entered into supermarket chains, making its product more available to more consumers. They created a unique product that had differentiated them from other brands. Their teas were initially sold to only the high-end customers, creating an upper-class brand image. When their product became available in supermarkets, more consumers were able to feel as if they were a part of this upper-class.
While the original high-end customers may feel snubbed that their product has gone mainstream, Mighty Leaf was able to increase revenue by changing their target market.SourcesArnold, D. Stevenson, H. , & De Royere, A.
(2005 November 15). MontGras Export Strategy for Chilean Winery. Harvard Business School Case Study, 1-11.
Fabricant, F. (2006, September 13). Tea’s Got a Brand New Bag. The New York Times, 1-2.
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html Park, A. (2009, January). Mighty Leaf is a Darling of Upscale Restaurants and Natural-Food Stores. Inc. Magazine, 1-5. Wollman, C.
(2003, October 10). Entrepreneurs see a lifestyle in their teas leaves. San Francisco Chronicle. Retreived from http://www. sfgate. com/cgibin/article. cgi? f=/c/a/2003/10/10/NBG6Q270KQ1. DTL