A Complete Guide to Start a Profitable Tea Business

These are the critical aspects you should evaluate when launching your tea business:

1. Define your niche — Decide on the types of tea you will offer, such as loose-leaf tea, tea bags, herbal teas, specialty blends, or ready-to-drink bottled tea.
2. Food handling permits — Secure necessary health permits and ensure compliance with local health department regulations regarding food safety and handling.
3. Sourcing suppliers — Establish relationships with reliable tea suppliers and growers. Ensure they meet your quality standards and ethical sourcing requirements.
4. Blending and recipes — Create unique tea blends and recipes that cater to your target market’s tastes.
5. Packaging — Choose high-quality, attractive, and sustainable packaging that protects the tea and aligns with your brand identity.
6. Register your business — A limited liability company (LLC) is the best legal structure for new businesses because it is fast and simple. Form your business immediately using ZenBusiness LLC formation service or hire one of the best LLC services on the market.
7. Legal business aspects — Register for taxes, open a business bank account, and get an EIN.
8. Production setup — Set up your production facility with the necessary equipment for blending, packaging, and labeling.
9. Online store — Set up an e-commerce platform to sell your teas directly to consumers. Use secure payment gateways and offer various shipping options.

Step 1: Decide if the Business Is Right for You

Pros and cons

Starting a tea business has pros and cons to consider before deciding if it’s right for you.

Tea industry trends

Industry size and growth

• Industry size and past growth – The global tea industry is valued at around $230 billion in 2022 and has more than doubled in the last decade.((https://www.statista.com/statistics/326384/global-tea-beverage-market-size/))
• Growth forecast –  The global tea industry is expected to grow by 16% from 2022 to  2025.

Trends and challenges

Trends in the tea industry include:

• Wellness teas, including weight loss tea blends, and relaxation blends are gaining popularity as health consciousness rises.
• Online tea sales increased sharply during the pandemic, and that trend is continuing.
• Eco-friendly packaging is in demand, including biodegradable tea bags and packaging.

Challenges in the tea industry include: 

• The tea plant is vulnerable to climate change.
• Tea plantations are finding it too difficult to find workers. 

Popular products

Consumer spending

• Average consumer spend – In 2019, Americans consumed 84 billion servings of tea.((https://www.teausa.com/teausa/images/Tea_Fact_Sheet_2019_-_2020._PCI_update_3.12.2020.pdf))
• Potential customer base – Nearly 80% of US households have tea in their kitchen.
• Average prices – The average price of one tea bag is $.40.

How much does it cost to start a tea business?

Startup costs for a tea business range from $3,000 to $7,000. Costs are mainly for a website and the manufacturing of your initial inventory.

Start-up Costs	Ballpark Range	Average
Setting up a business name and corporation	$150 - $200	$175
Business licenses and permits	$100 - $300	$200
Insurance	$100-$300	$200
Business cards and brochures	$200 - $300	$250
Website setup	$1,000 - $3,000	$2,000
Initial inventory of tea	$1,000 - $2,000	$1,500
Initial order of prototypes	$500 - $1,000	$750
Total	$3,050 - $7,100	$5,075

How much can you earn from a tea business?

Prices for a 20-count box of specialty tea bags range from $8 to $20 or more. These calculations will assume that your price will be $15. After manufacturing costs, your profit margin should be about 70%.

In your first year or two, you could work from home and sell 100 boxes a week, bringing in $78,000 in annual revenue. This would mean $55,000 in profit, assuming that 70% margin. As your brand gains recognition and you get repeat customers, sales could climb to 1,000 boxes a week. At this stage, you’d rent a commercial space and hire staff, reducing your profit margin to around 20%. With annual revenue of $780,000, you’d make a tidy profit of $156,000.

What barriers to entry are there?

There are a few barriers to entry for a tea business. Your biggest challenges will be:

• Creating a unique product that will stand out in the market
• Finding a reliable tea producer and co-packer

Step 2: Hone Your Idea

Now that you know what’s involved in starting a tea business, it’s a good idea to hone your concept in preparation to enter a competitive market.

Market research will give you the upper hand, even if you’re already positive that you have a perfect product or service. Conducting market research is important, because it can help you understand your customers better, who your competitors are, and your business landscape.

Why? Identify an opportunity

Research tea businesses in your area and online to examine their products, price points, and what sells best. You’re looking for a market gap to fill. For instance, maybe the market is missing an herbal tea that soothes, or a bubble tea business with unique flavors.

This could jumpstart your word-of-mouth marketing and attract clients right away.

What? Determine your tea flavors and offerings

Your products will be the tea flavors that you develop. You can decide whether to specialize or offer a variety of teas. You’ll also want to come up with unique branding and packaging.

How much should you charge for tea?

Prices for tea vary greatly. Specialty teas range from about $8 to $20 or more for a 20-count box. You should aim for a profit margin of about 70%.

Once you know your costs, you can use this Step By Step profit margin calculator to determine your mark-up and final price points. Remember, the prices you use at launch should be subject to change if warranted by the market.

Who? Identify your target market

Your target market will be broad – anyone that enjoys drinking tea. You should spread out your marketing to include sites like TikTok, Instagram, and Facebook. 

Find your suppliers

To find suppliers for a tea business, start by researching online B2B marketplaces like Alibaba, TradeIndia, or ThomasNet, which offer a wide range of tea suppliers globally. Attend industry trade shows and expos, like the World Tea Expo, to network and discover quality suppliers.

Leverage social media platforms, particularly LinkedIn, to connect with industry professionals and get recommendations. Consider local or regional tea growers for a unique or specialized selection, and always request samples to assess quality before making bulk purchases. Finally, check out industry forums and online communities for additional insights and supplier reviews.

Where? Choose your business premises

If your primary sales channel is online, focus on a functional space for packaging and shipping. For a physical store, consider a location with high foot traffic and visibility. You can find commercial space to rent in your area on sites such as Craigslist, Crexi, and Instant Offices.

Step 3: Brainstorm a Tea Brand Name

Here are some ideas for brainstorming your business name:

• Short, unique, and catchy names tend to stand out
• Names that are easy to say and spell tend to do better 
• Name should be relevant to your product or service offerings
• Ask around — family, friends, colleagues, social media — for suggestions
• Including keywords, such as “tea” or “specialty tea”, boosts SEO
• Name should allow for expansion, for ex: “Tea Haven” over “Green Tea Oasis”
• A location-based name can help establish a strong connection with your local community and help with the SEO but might hinder future expansion

Once you’ve got a list of potential names, visit the website of the US Patent and Trademark Office to make sure they are available for registration and check the availability of related domain names using our Domain Name Search tool. Using “.com” or “.org” sharply increases credibility, so it’s best to focus on these.

Finally, make your choice among the names that pass this screening and go ahead with domain registration and social media account creation. Your business name is one of the key differentiators that set your business apart. Once you pick your company name, and start with the branding, it is hard to change the business name. Therefore, it’s important to carefully consider your choice before you start a business entity.

Step 4: Create a Business Plan

Here are the key components of a business plan:

• Executive Summary: Outline your tea business’s mission to provide a diverse range of high-quality teas, highlighting unique blends and sustainable sourcing practices.
• Business Overview: Describe your tea business, focusing on the sale of loose-leaf teas, tea bags, and related accessories, with an emphasis on variety and quality.
• Product and Services: Detail the types of teas offered, including black, green, herbal, and specialty blends, along with tea brewing and tasting events.
• Market Analysis: Assess the demand for tea products, identifying target markets like health-conscious consumers, tea enthusiasts, and gift buyers.
• Competitive Analysis: Compare your offerings to other tea retailers, focusing on your unique selling points like organic certification, exclusive blends, or direct sourcing from tea estates.
• Sales and Marketing: Outline your strategy for reaching customers, using methods like e-commerce, wholesale distribution, and in-store or online promotions.
• Management Team: Highlight the expertise of your team, particularly in areas like tea sourcing, retail, and e-commerce.
• Operations Plan: Describe the operational aspects, including sourcing, packaging, inventory management, and customer service.
• Financial Plan: Provide an overview of financials, covering startup costs, pricing strategy, and revenue projections.
• Appendix: Include supplementary documents such as supplier agreements, product catalogs, or customer testimonials to support your business plan.

If you’ve never created a business plan, it can be an intimidating task. You might consider hiring a business plan specialist to create a top-notch business plan for you.

Step 5: Register Your Business

Plus, registration is exciting because it makes the entire process official. Once it’s complete, you’ll have your own business!

Choose where to register your company

Your business location is important because it can affect taxes, legal requirements, and revenue. Most people will register their business in the state where they live, but if you’re planning to expand, you might consider looking elsewhere, as some states could offer real advantages when it comes to tea businesses.

If you’re willing to move, you could really maximize your business! Keep in mind, it’s relatively easy to transfer your business to another state.

Choose your business structure

Business entities come in several varieties, each with its pros and cons. The legal structure you choose for your tea business will shape your taxes, personal liability, and business registration requirements, so choose wisely. 

Here are the main options:

• Sole Proprietorship – The most common structure for small businesses makes no legal distinction between company and owner. All income goes to the owner, who’s also liable for any debts, losses, or liabilities incurred by the business. The owner pays taxes on business income on his or her personal tax return.
• General Partnership – Similar to a sole proprietorship, but for two or more people. Again, owners keep the profits and are liable for losses. The partners pay taxes on their share of business income on their personal tax returns.
• Limited Liability Company (LLC) – Combines the characteristics of corporations with those of sole proprietorships or partnerships. Again, the owners are not personally liable for debts.
• C Corp – Under this structure, the business is a distinct legal entity and the owner or owners are not personally liable for its debts. Owners take profits through shareholder dividends, rather than directly. The corporation pays taxes, and owners pay taxes on their dividends, which is sometimes referred to as double taxation.
• S Corp – An S-Corporation refers to the tax classification of the business but is not a business entity. An S-Corp can be either a corporation or an LLC, which just need to elect to be an S-Corp for tax status. In an S-Corp, income is passed through directly to shareholders, who pay taxes on their share of business income on their personal tax returns.

We recommend that new business owners choose LLC as it offers liability protection and pass-through taxation while being simpler to form than a corporation. You can form an LLC in as little as five minutes using an online LLC formation service. They will check that your business name is available before filing, submit your articles of organization, and answer any questions you might have. 

Step 6: Register for Taxes

The final step before you’re able to pay taxes is getting an Employer Identification Number, or EIN. You can file for your EIN online or by mail or fax: visit the IRS website to learn more. Keep in mind, if you’ve chosen to be a sole proprietorship you can simply use your social security number as your EIN.

Once you have your EIN, you’ll need to choose your tax year. Financially speaking, your business will operate in a calendar year (January–December) or a fiscal year, a 12-month period that can start in any month. This will determine your tax cycle, while your business structure will determine which taxes you’ll pay.

It is important to consult an accountant or other professional to help you with your taxes to ensure you’re completing them correctly.

Step 7: Fund your Business

Securing financing is your next step and there are plenty of ways to raise capital:

• Bank loans: This is the most common method but getting approved requires a rock-solid business plan and strong credit history.
• SBA-guaranteed loans: The Small Business Administration can act as guarantor, helping gain that elusive bank approval via an SBA-guaranteed loan.
• Government grants: A handful of financial assistance programs help fund entrepreneurs. Visit Grants.gov to learn which might work for you.
• Friends and Family: Reach out to friends and family to provide a business loan or investment in your concept. It’s a good idea to have legal advice when doing so because SEC regulations apply.
• Crowdfunding: Websites like Kickstarter and Indiegogo offer an increasingly popular low-risk option, in which donors fund your vision. Entrepreneurial crowdfunding sites like Fundable and WeFunder enable multiple investors to fund your business.
• Personal: Self-fund your business via your savings or the sale of property or other assets.

Bank and SBA loans are probably the best options, other than friends and family, for funding a tea business. You might also try crowdfunding if you have an innovative concept.

Step 8: Apply for Licenses/Permits

Starting a tea business requires obtaining a number of licenses and permits from local, state, and federal governments.

Federal regulations, licenses, and permits associated with starting your business include doing business as (DBA), health licenses and permits from the Occupational Safety and Health Administration (OSHA), trademarks, copyrights, patents, and other intellectual properties, as well as industry-specific licenses and permits.

You may also need state-level and local county or city-based licenses and permits. The license requirements and how to obtain them vary, so check the websites of your state, city, and county governments or contact the appropriate person to learn more. 

You could also check this SBA guide for your state’s requirements, but we recommend using MyCorporation’s Business License Compliance Package. They will research the exact forms you need for your business and state and provide them to ensure you’re fully compliant.

If you feel overwhelmed by this step or don’t know how to begin, it might be a good idea to hire a professional to help you check all the legal boxes.

Step 9: Open a Business Bank Account

Before you start making money, you’ll need a place to keep it, and that requires opening a bank account.

Keeping your business finances separate from your personal account makes it easy to file taxes and track your company’s income, so it’s worth doing even if you’re running your tea business as a sole proprietorship. Opening a business bank account is quite simple, and similar to opening a personal one. Most major banks offer accounts tailored for businesses — just inquire at your preferred bank to learn about their rates and features.

Banks vary in terms of offerings, so it’s a good idea to examine your options and select the best plan for you. Once you choose your bank, bring in your EIN (or Social Security Number if you decide on a sole proprietorship), articles of incorporation, and other legal documents and open your new account.

Step 10: Get Business Insurance

Business insurance is an area that often gets overlooked yet it can be vital to your success as an entrepreneur. Insurance protects you from unexpected events that can have a devastating impact on your business.

Here are some types of insurance to consider:

• General liability: The most comprehensive type of insurance, acting as a catch-all for many business elements that require coverage. If you get just one kind of insurance, this is it. It even protects against bodily injury and property damage.
• Business Property: Provides coverage for your equipment and supplies.
• Equipment Breakdown Insurance: Covers the cost of replacing or repairing equipment that has broken due to mechanical issues.
• Worker’s compensation: Provides compensation to employees injured on the job.
• Property: Covers your physical space, whether it is a cart, storefront, or office.
• Commercial auto: Protection for your company-owned vehicle.
• Professional liability: Protects against claims from a client who says they suffered a loss due to an error or omission in your work.
• Business owner’s policy (BOP): This is an insurance plan that acts as an all-in-one insurance policy, a combination of the above insurance types.

Step 11: Prepare to Launch

As opening day nears, prepare for launch by reviewing and improving some key elements of your business.

Essential software and tools

Being an entrepreneur often means wearing many hats, from marketing to sales to accounting, which can be overwhelming. Fortunately, many websites and digital tools are available to help simplify many business tasks.

You may want to use industry-specific software, such as ACC, Angler, or Tayana, to manage your inventory, ordering, invoicing, and payments.

Accounting

• Popular web-based accounting programs for smaller businesses include Quickbooks, Freshbooks, and Xero. 
• If you’re unfamiliar with basic accounting, you may want to hire a professional, especially as you begin. The consequences for filing incorrect tax documents can be harsh, so accuracy is crucial. 

Develop your website

Developing a website for your tea business is crucial in establishing an online presence and reaching a wider customer base. You have the option to use website builders like Shopify, Wix, or Squarespace, which offer user-friendly templates and e-commerce functionalities tailored for beginners, or you can hire a professional web developer for a more customized solution.

A well-designed website should be visually appealing, reflective of your brand’s identity, and easy to navigate. It’s essential to optimize your e-commerce store by ensuring fast loading speeds, mobile responsiveness, and secure payment gateways. High-quality images of your tea products, detailed descriptions, and customer reviews can significantly enhance user experience. Incorporate clear calls to action (CTAs) like ‘Shop Now’, ‘Learn More’ to guide visitors towards making purchases or engaging with your brand.

Marketing

Here are some powerful marketing strategies for your tea business:

Online Store Strategies

Maximizing online visibility and engagement is key for the success of your tea business’s e-commerce platform.

1. Social Media Marketing: Leverage platforms like Instagram and Facebook for visual storytelling. Share high-quality images of your teas, brewing tips, and customer testimonials. Utilize targeted ads to reach potential customers based on interests and demographics.
2. Content Marketing: Create engaging content like blog posts and videos about tea varieties, health benefits, and brewing techniques. This positions your brand as knowledgeable and trustworthy.
3. Email Marketing: Build an email list to send newsletters, promotions, and personalized offers. Use email campaigns to inform subscribers about new products, sales, and tea-related events.
4. SEO Optimization: Optimize your website for search engines to increase visibility. Use relevant keywords, maintain a blog with regular updates, and ensure your site is mobile-friendly.
5. Influencer Partnerships: Collaborate with food and lifestyle influencers to reach a broader audience. Influencers can create authentic content that resonates with their followers.

Physical Store Strategies

For your physical tea store, creating a unique, community-focused experience is essential to attract and retain customers.

1. Local Community Engagement: Participate in local events and farmers’ markets. Sponsor community events to increase brand awareness.
2. In-Store Events: Host tea tasting events, workshops, or tea brewing classes. These events can attract new customers and create a community around your brand.
3. Loyalty Programs: Implement a loyalty program to encourage repeat business. Offer rewards like discounts or free products after a certain number of purchases.
4. Collaborations with Local Businesses: Partner with local restaurants, cafes, or bookstores to offer your teas. This can introduce your products to a new customer base.
5. Attractive Storefront and Signage: Ensure your physical store is inviting with clear signage and an aesthetically pleasing interior. Your store’s ambiance should reflect the quality and ethos of your brand.

Combined Strategies

Integrating and harmonizing your online and offline marketing efforts will ensure a cohesive and impactful brand presence.

1. Cross-Promotion: Promote your online store in your physical location and vice versa. Offer exclusive online discounts to in-store customers and encourage store visits through online channels.
2. Customer Reviews and Testimonials: Showcase customer reviews both online and in your store. Positive testimonials can significantly influence potential customers.
3. Consistent Branding: Maintain consistent branding across both platforms. Your online presence and physical store should complement each other, offering a seamless brand experience.
4. Omni-Channel Experience: Ensure a smooth transition between online and offline channels. For example, offer options like online ordering with in-store pickup.

Focus on USPs

Unique selling propositions, or USPs, are the characteristics of a product or service that set it apart from the competition. Customers today are inundated with buying options, so you’ll have a real advantage if they are able to quickly grasp how your tea business meets their needs or wishes. It’s wise to do all you can to ensure your USPs stand out on your website and in your marketing and promotional materials, stimulating buyer desire. 

Global pizza chain Domino’s is renowned for its USP: “Hot pizza in 30 minutes or less, guaranteed.” Signature USPs for your tea business could be: 

• Delicious specialty green teas – drink to your health
• Luxury specialty teas to enjoy anytime
• Wellness teas in flavors you’ve never tasted before

Networking

You may not like to network or use personal connections for business gain. But your personal and professional networks likely offer considerable untapped business potential. Maybe that Facebook friend you met in college is now running a tea business, or a LinkedIn contact of yours is connected to dozens of potential clients. Maybe your cousin or neighbor has been working in tea for years and can offer invaluable insight and industry connections.

The possibilities are endless, so it’s a good idea to review your personal and professional networks and reach out to those with possible links to or interest in tea. You’ll probably generate new customers or find companies with which you could establish a partnership. 

Online businesses might also consider affiliate marketing as a way to build relationships with potential partners and boost business.

Step 12: Build Your Team

If you’re starting out small from a home office, you may not need any employees. But as your business grows, you will likely need workers to fill various roles. Potential positions for a tea business include:

• Tea Packagers – prepare tea for shipping
• General Manager – ordering, accounting
• Marketing Lead – SEO strategies, social media

At some point, you may need to hire all of these positions or simply a few, depending on the size and needs of your business. You might also hire multiple workers for a single role or a single worker for multiple roles, again depending on need.

Free-of-charge methods to recruit employees include posting ads on popular platforms such as LinkedIn, Facebook, or Jobs.com. You might also consider a premium recruitment option, such as advertising on Indeed, Glassdoor, or ZipRecruiter. Further, if you have the resources, you could consider hiring a recruitment agency to help you find talent.

Step 13: Run a Tea Business – Start Making Money!

Tea is a hot commodity – literally and figuratively. The market is growing fast, and already worth around a quarter trillion dollars globally. You can start your business from home and sell online. But with an online shop, you can even reach that global market and make a pretty penny. Eventually, you could open a tea stall in a farmer’s market, or even your own tea shop, selling your brilliant branded teas. 

Now that you’re prepared to be an entrepreneur, it’s time to start blending up some tea flavors and get your business off the ground!

Help Section

How profitable is a tea business?

Profit margins for tea are high, so a tea business can be very profitable. The key is to come up with a unique concept and flavors so that your products will stand out in the market.

How can I learn to make tea?

You can take tea classes and get various certifications through the World Tea Academy. Courses take about 3 weeks each and cost a few hundred dollars. Alternatively, you can take inexpensive tea classes on Udemy.

Can I make my own tea and sell it?

Yes, you can make your own tea and sell it. Starting your own tea business involves sourcing high-quality tea leaves, developing unique blends or flavors, and ensuring compliance with local regulations and licensing requirements for food and beverage production and sales.

How can I market and promote my tea business effectively?

Create a visually appealing and user-friendly website or online store to showcase your tea products. Utilize social media platforms to share engaging content, including tea facts, brewing tips, and photos. Collaborate with influencers or bloggers in the food and wellness niche to reach a wider audience. Participate in local farmers markets, food festivals, or specialty tea events to connect with potential customers. 

How can I provide a memorable tea tasting experience for customers?

To provide a memorable tea tasting experience for customers, focus on creating a cozy and inviting atmosphere in your tea shop or tasting events. Train your staff to be knowledgeable about different tea varieties and brewing methods. Offer a diverse selection of teas for tasting, allowing customers to explore various flavors and aromas. 

What is the healthiest tea?

Green tea is often recognized for its high antioxidant content. Matcha tea is prized for its concentrated nutrients and potential energy-boosting properties. Herbal teas, such as chamomile or peppermint, can offer soothing effects and aid in digestion. White tea is known for its delicate flavor and potential anti-inflammatory properties.