Tea Business Overview

The tea business focuses on producing, selling, and distributing tea in various forms, catering to a diverse audience that values tea for its flavor, cultural significance, and health benefits.

This industry encompasses several business models, ranging from large-scale manufacturing to boutique tea shops, each serving a unique market segment. Tea businesses often thrive by offering quality products, creative blends, and engaging customer experiences.

Related: Checklist To Start A Business

How Do Tea Businesses Make Money?

The tea industry represents a huge market with many paths for generating income. Some opportunities to make money in the tea industry include:

• Bagged Tea Sales: The biggest source of income comes from selling tea bags to stores and customers. This brings in the most money because consumers find tea bags simple to use and convenient to store.
• Bulk Tea Distribution: Selling large quantities of processed tea to food service businesses, restaurants, and hotels creates steady income through long-term contracts.
• Specialty Tea Products: Providing premium loose-leaf teas and rare blends to tea shops and high-end retailers increases profit per unit.
• Private Label Services: Making tea products for other companies to sell under their brand names creates reliable income through ongoing manufacturing agreements.
• Online Direct Sales: Selling tea products through company websites allows businesses to reach customers nationwide while keeping more profit per sale.
• Wholesale Supply: Providing tea in large quantities to other manufacturers who use it as an ingredient in their products creates steady business relationships.

Industry Statistics

Tea production involves blending and packaging tea products sold to retailers and consumers. This industry operates under NAICS code 311920: Tea Manufacturing. Here are some facts about the tea production business landscape.

Tea Production Industry Size & Growth: The industry generated $1.3 billion in sales last year. Revenue has decreased slightly, falling by 0.7% annually over the past five years. Growth is projected to improve as market conditions stabilize and export opportunities expand due to expected changes in currency exchange rates. (IBISWorld)

Tea Production Profit Margin: Tea Production Profit Margin: The net profit margin varies based on the business model and scale of operations. Tea manufacturers typically achieve gross margins of 12.9% on their products.

States with Most Tea Producers: Tea production facilities tend to cluster near major ports to minimize transportation costs for imported tea leaves. The highest concentration of tea producers can be found in coastal states with major shipping ports. (Bureau of Labor Statistics)

Costs To Start a Tea Production Business

Starting a tea production business could range from $2,000 to $500,000, depending on the business model. Small-batch specialty producers and online retailers can begin with minimal investment, while full manufacturing operations require substantial capital.

Here are some of the main costs to consider when starting a tea production business:

Processing Equipment: Equipment needs vary significantly based on your business model. Small batch producers can start with basic blending tools, storage containers, and packaging supplies for around $1,000, while industrial manufacturing systems can cost up to $200,000.

Location and Setup: Many tea businesses start from home, requiring only dedicated storage space and a clean preparation area. For larger operations, a commercial space with proper ventilation, storage, and clean room facilities requires first and last month’s rent, security deposit, and renovations, ranging from $15,000 to $100,000.

Initial Inventory: A small specialty tea business can begin with a few varieties of quality tea leaves and packaging materials for $1,000 to $5,000. Large-scale manufacturers need substantial raw material inventory ranging from $10,000 to $75,000.

Food Safety Certification: Small batch producers working from home need basic food handling certifications and permits costing $200 to $1,000. Commercial manufacturers require comprehensive certifications, inspections, and safety protocols ranging from $5,000 to $25,000.

These estimates serve as a general guide, and actual costs will vary based on the size and scope of operations.