A Tea Entrepreneur: from Rags to Riches

An Argo Tea Shop in New York City. (screenshot)

How a rags-to-riches entrepreneur made it big

15 years ago, when Arsen Avakian received a Fulbright scholarship to study business administration in the US, he only had $360 in his pocket. Today, at age 35, Arsen is the founder and CEO of the Argo Tea Company, with high-end tea chain stores in the Midwest and North-East generating $15 million dollars of profit in 2010.

Recently, he introduced a new line of fruit flavours into 3000 grocery stores, including the Whole Foods Market. With continuous expanding sales, Arsen estimated that the profit would be up to $20 million by the end of 2011.

Arsen’s business idea probably was imbedded in his genes, because his father Yuri is an alternative energy engineer, holding a number of wind and solar power technology patents. Arsen came up with the idea of selling tea during a business trip when he was sitting in a coffee shop. He said: “I realised that many Americans drink coffee, but very few people in this country drink tea. Americans do not know about tea, except for Lipton tea bags.”

In fact, Arsen’s idea is coupled with our changing of era. Americans are beginning to find a replacement for coffee drinks. According to the Tea Association, tea sales in the US were $1.8 billion in1990 and surged to $7.7 billion in 2010. Daniel Lindwasser, Arsen’s Director of Product Development said: “Our goal is to make tea easier for people to enjoy.”

On June 23, 2003, Arsen and his childhood friend Simonian used their credit card advances to open a 900-square-foot tea shop at Tony Lincoln Park in Chicago, near the Starbucks coffee shop. This tea shop was well-received by customers quickly, selling Earl Grey vanilla cream tea, steamed milk tea, blueberry white tea and a variety of different options.

Unlike most retail tea shops, Arsen sold only loose leaf tea instead of tea bags. The customers would brew the tea at home or enjoy the traditional service of an afternoon tea. He even designed a paper cup, similar to Starbucks, priced at about $4 a cup.

In order to perfect his tea shops, Arsen used the tea shop in Tony Lincoln Park as his first laboratory.

He said: “I like creating a tea drink.”

Once, when he was vacationing at a beach resort in Rio de Janeiro, he gave several hundred dollars to a local shop and they let him do some of his flavour combinations to create new flavours, including mango, milk, iced and hot Madai roasted tea.

Today, there are 26 tea shops in Chicago, St Louis, Boston and New York City. Arsen emphasises quality and flavours.

Among the many flavours, the most popular flavours are from hibiscus flowers, apple juice and caramel blend of hot herb tea, as well as China’s Fujian white tea with white chocolate syrup and peppermint oil. The most notable success was selling bottled iced tea in Chicago’s Whole Foods Market in 2010. 

Today, Argo’s bottled tea is priced at about $ 2.4 for a 13.5 oz bottle sold in the US organic food markets. ,

However, because of many interesting beverage flavour combinations, pairing the taste of tea and fruit juices, such as ginger, white tea, black tea and honey green tea, now the sales of bottled tea in the oval-shaped glass container nationwide accounts for 20 per cent of total revenue for Arsen’s company. 

With the company’s profits being on track, he expects revenue of approximately $20 million for the year 2011. Due to the private ownership of his brand, it is impossible to verify the estimated sales.

Profits form the top six tea chain stores in the US are about $443 million.

Does introducing the tea drinking experience to Americans have a broader appeal? Arsen said: “I succeed because I have never deviated from my perspective.”

Originally, he wanted to be the Coca of the tea sector, but now he thinks that he could become a Starbucks or Apple in this business.

What is the secret of success? He said: “You need to be a little bit off track, to walk a different path and to be brave.”

However, the most important factor, he said: “Passion. Anyone can put something into a tea cup, but you must have a passion to create.”