SMB Market Award 2017

Tiesta Tea
Chicago, IL
Founders: Patrick Tannous & Dan Klein

Presented to a small or mid-size company that best utilizes technology to achieve significant growth. 

“The iPhone. That’s a nice tool,” says co-chief executive officer Patrick Tannous, when asked what technologies have helped blended loose-leaf tea maker Tiesta Tea expand its retail footprint to more than 6,500 U.S. stores (and counting) despite having only 14 employees on the payroll.

That comment is just one of the many indications that 8-year-old Tiesta Tea is not a traditional consumer goods company — even though its knack for scoring distribution deals with the likes of Safeway, Costco and now Target would make any old-school packaged goods manufacturer envious.

Tiesta also makes ample use of cloud-based collaboration tool Slack for internal communication and utilizes Salesforce “quite religiously” for operations and account activity, say Tannous, who began developing Tiesta with University of Illinois friend and now co-ceo Dan Klein in 2009 after the two fell in love with loose-leaf tea while studying abroad in Prague.

“And we’re very savvy with the marketing aspects of technology” available through social media like Facebook and Instagram, Tannous adds. One example is targeting free samples to ZIP codes around specific store locations, which “always gives us a leg up” when talking to new accounts.

“We’re one of the few Millennial companies in the tea category, so we’ve got to use technology to our advantage,” he says.

The impressive growth ($5.1 million in 2016, before Costco came on board) will continue next month, when Tiesta will launch a ready-to-drink line of bottled tea into 950 Target stores. “We’ve been working directly with Target all year to develop the products,” says Klein. The mass merchant will have an exclusive six-month window before the line — an entirely new direction for Tiesta — expands to other channels.

But that doesn’t necessarily mean the employee ranks will be growing exponentially anytime soon. Tiesta’s founders are content to continue outsourcing ancillary functions “that you’re not the best at,” like accounting, finance and HR, explains Klein. “It’s not really about headcount. It’s making sure that your core capabilities are being covered by your own people.” Social media is one of those, he contends (again sounding like a Millennial). “You can’t outsource your own voice.”

“Every employee understands there will be days when they wear hats they did not sign up to wear,” like when the operations director stepped in to manage a key account after a sales team departure, says Tannous.

“It’s about finding people who believe in what you do and want to be part of something that’s more than just work,” he continues. That’s why social causes and community outreach are integral to the overall company mission. Efforts like “Spread the Warmth,” which delivers tea and winter apparel to the indigent in hometown Chicago, are another example of the Millennial mindset at work. Tiesta also is devoting a portion of sales to build water wells in Nigeria, from which it sources hibiscus.

Staying small also lets Tiesta stay nimble. The company jumped at the chance to join a one-store test of bulk merchandising that Safeway was planning after learning about the effort at an industry trade show. The bulk tea sold well, and within 12 months Tiesta had rolled out a branded “Scoop Station” across seven Safeway retail divisions. “Sometimes, the ideas that can take you to the top are the ones you never thought of,” Klein says.

“There’s no book for any of this. There’s no book for creating a tea product, no book for getting into grocery stores. You need to surround yourself with people who have the experience,” Klein says, noting that other, more seasoned entrepreneurs are often willing to pass on the learning. “Don’t be shy. Get out there and talk to them,” he suggests.