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Tealet: Startup in a Cup

Tealet connects growers and tea lovers to save tea farms around the world. Pretty ambitious for a four-person startup that’s not even two years old.

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Photo: David Croxford

When you think of innovative startups, what usually comes to mind are tech companies that create something new – a mini-revolution.

Instead of high-tech, think about tea, one of the oldest drinks on the planet. That’s what Elyse Petersen does: She thinks about tea day and night, and she, too, is planning a revolution. Her tools are digital innovation, traditional values and experimental marketing. Pretty heady stuff for a Honolulu-based startup that’s only a year and a half old, but if you hang around Petersen and her team long enough, it seems entirely possible that they will transform the growing and selling of the world’s most popular drink after water.

A good place to find Petersen is Honolulu International Airport, where she’s frequently taking off or coming home. This time, she has a fresh tan on her face that wasn’t acquired in Hawaii and her usual wavy brown locks have been braided into a hundred microbraids. Within an hour of landing, she’s heading back to her temporary office at Blue Startups in downtown Honolulu.

Photo: Courtesy of Tealet

She is returning from Burning Man, the edgy festival in the Nevada desert, where she served tea and shared the mission of her startup company. Tealet is an online distribution website for independent tea growers to sell high-end, loose-leaf tea directly to wholesalers and retail customers around the world.

As with many other young entrepreneurs, idealism powers the 30-year-old Petersen. Her goal for Tealet is ambitious: creating a network of independent tea farmers, wholesalers and retail customers that aims to transform global distribution of tea.

“Food systems in the U.S. and around the world are extremely unhealthy,” Petersen says. “The way products get moved around and the connection between the consumer, agriculture and production needs to be restored. A lot of that has to do with distribution.”

Tealet co-founder and cultural consultant Jane Gonsowski, 37, believes that customers deserve to know where their tea is coming from and how it is grown, and the farmers’ personal stories. “Tealet’s website provides all of that information and is pioneering the introduction of tea farms directly to consumers,” she says.

“We’re building a revolutionary brand where our customers can be a part of the solution,” says Petersen. “They can be a part of the change to improve the distribution system of tea, how tea is made and how business is done with growers.”

Petersen hopes one day to reform the entire global food system, but now she’s just focused on tea. In 18 months, Tealet has developed a base of more than 600 customers in 28 different countries. But, as with most startups, little went according to the original plan, changes are still constantly being made and the future is about as clear as mud.

Of course, money is always an issue, and despite working 12-hour days and accumulating more than $100,000 from investors, the founding team has not yet paid themselves a dime.

Photo: Courtesy of Tealet

Where It Began

Onomea Tea Farm, Hamakua Coast, Hawaii Island.

Petersen was introduced to the tea industry four years ago while working as a food scientist at the green tea maker Ito En in Japan. “I started learning about the global distribution of tea and started realizing that the system where raw ingredients come from is really broken,” she says.

Farmers around the world make only a minimal profit – if any – on their crops, so young people are leaving the family farms to find better job opportunities, she says. “That has huge consequences on our food systems. Who is going to grow our food if we don’t have farmers?”

To be able to pay farmers more, she simplified the distribution system. “With technology now and the niche growers we found, we just have to pass tea through two hands, and those two hands deserve fair compensation.”

By eliminating some middlemen, Petersen says, Tealet can pay farmers 60 percent of the selling price, while keeping the other 40 percent. “I think this will encourage a whole new generation of people to go back to the countryside and start farms.”

Petersen eventually left her job at Ito En to return to the MBA program at UH’s Shidler College of Business. There, she launched a study on the feasibility of a Hawaii-grown tea industry with Gonsowski. They found that tea could not be grown profitably in Hawaii if it was simply sold as a commodity, but it could succeed as a higher-priced specialty product.

“There’s a huge $1.4 billion opportunity for the growers of high-end, specialty, loose-leaf tea here in Hawaii,” she says.

Marketing chief Michael Petersen, CEO Elyse Petersen, wearing the signature colors of the tealet mascot, and co-founder Jane Gonsowski.

Business Opportunity

Petersen and Gonsowski feared their report on Hawaii-grown tea would collect dust on someone’s desk, and they needed entrepreneurs to implement the report’s recommendations. Then they realized they were those entrepreneurs. “That was when we first got our inspiration that, ‘Wow, this is what entrepreneurs look for when they are looking for an opportunity and we need to do something about it,’ ” Petersen says.

To complete her MBA program, she flew back to Japan for an internship at Kyoto Obubu Tea Farms. There, she met independent growers involved with a project called the International Tea Farms Alliance that was struggling to connect directly with U.S. customers. She called Gonsowski from Kyoto and got her support to create a website on which these farmers could sell their tea.

“Elyse saw the potential in tea and had a passion to give back to tea farmers,” says Stuart Nakamoto, a professor in UH’s Department of Human Nutrition, Food and Animal Sciences. “I think it’s a great combination of more traditional farming ideas with the technology to make it work. Tealet brings the farmers market to the Internet.”

Before she returned to America, Yasuharu Matsumoto, founder of the International Tea Farms Alliance, gave his blessing. “You know we need help, so what are you going to do? Take our secret weapon, the best tea in the world.”

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