DavidsTea Announces $14 Million Minority Investment


A $14 million minority investment by Highland Consumer Fund will propel expansion of Montreal-based DavidsTea making it the second largest pure-play tea retailer in North America.

Atlanta-based Teavana operates 200 stores to 77 owned by DavidsTea but the profitable mall venues quickly pay for themselves and the cash infusion will increase the store count to 100.
The specialty tea retailer’s first store opened in August 2008 in Toronto and steadily expanded to 75 stores in every province despite the economic downturn. Two new stores opened recently in New York City

Herschel Segal and nephew David Segal remain at the helm with Herschel as chairman but the new funds also bring on Chip Wilson, founder and former CEO of Lululemon Athletica. Tom Stemberg, Managing General Partner at Highland and founder and former CEO of Staples, will also be joining the Board of Directors.

Also on the board are David Segal, Jane Silverstone Segal, Sarah Segal (David’s cousin and interim President) and Javier San Juan, President of L'Oreal Canada.

“Their strategic investment in the business will be used to continue the company's strong revenue gains and help fuel the growth of retail operations across North America,” according to the company which announced that DavidsTea will establish a U.S. headquarters.  The location was not disclosed.

Highland has extensive experience founding, growing, operating and investing in successful consumer companies. It is known for its hands-on guidance and active involvement of its consumer domain experts with firms including City Sports, Guitar Center, J.McLaughlin, Pharmaca Integrative Pharmacy and Pinkberry.

DavidsTea is privately held but similar mall-based tea merchants earn approximately $750,000 to $1 million per location. Startup costs for a new venue range from $350,000 to $500,000. New stores open a year generally generate sufficient returns to pay off their build-out, freeing additional money for continued expansion. 
From its inception David Segal described the goal of DavidsTea “is to demystify loose leaf tea for its customers, while presenting the beverage in new creative formats such as tea cappuccinos,
tea lattes and tea martinis.”

"We want everyone from the first-time tea drinker to the tea connoisseur to explore tea in new ways and get involved," he said. "You don't need to be an aficionado to enjoy tea and the many health benefits it can provide. Tea is like wine in the sense that there are a multitude of flavours and grades. We in North America have until now been drinking the equivalent of box wine. DavidsTea will fill the void with dedicated retail stores on the main streets of the continent."

Teavana will open 60 new shops in 2012 after opening 54 in 2011. DavidsTea is more likely to expand by 25 to 30 which will size it well beyond its nearest competitor, Toronto-based Teaopia. Teaopia operates 50 stores in Canada and anticipates opening 10 to 20 in 2012. Stores are operator owned.

DavidsTea offers more than 150 varieties of teas, including traditional straight teas, as well as unique exclusive blends and limited edition seasonal collections and is dedicated to community involvement.

Teas are sold in 50-gram pouches for $5-$20. The sleek stores are also stocked with a large selection of teapots, mugs, infusers, filters, travel mugs, and pitchers.

To learn more visit www.davidstea.com, DavidsTea on Facebook.com/davidstea or twitter.com/davidstea.

Source: DavidsTea

Dan Bolton

About Dan Bolton

Dan Bolton edits STiR Tea & Coffee Industry International. He was formerly editor and publisher of World Tea News and former editor and publisher of Tea Magazine and former editor-in-chief of Specialty Coffee Retailer. He is a beverage retail consultant and frequent speaker at industry seminars and conferences. His work has appeared in many beverage publications. He was a newspaper reporter and editor for 20 years prior to his career in magazines. Dan is the founding editor of Natural Food magazine and has led six publishing ventures since 1995. He lives in Winnipeg, Canada.