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Home > Information Index > Setting the Stage

Fall, 2005 Newsletter - "Capturing the Retail Market for Tea"
 

A receipt from a Tea Importer and Distributor in Philadelphia, dated July 1, 1869.  (From the collection of Upton Tea Imports)


Part I: Setting the Stage

   Historians and tea aficionados already know that Camellia sinensis has played a role in politics and commerce for centuries. The monopoly of the English East India Company, the tea boycotts of Colonial America, and the trade imbalance that eventually lead to the Opium Wars are often cited as extreme examples. Some accounts of these events would equate the thirst for tea during the eighteenth and nineteenth centuries to that of oil during the twenty-first! This would certainly be a stretch, but it is safe to say that the commerce of tea is, in many ways, a paradigm for international commerce.

   Over the centuries, the commerce of tea has evolved in many ways. Sri Lanka and Kenya had no indigenous tea two centuries ago. Now they are the two largest exporters of tea, with Kenya having overtaken Sri Lanka as the world’s largest exporter of tea. China, once the primary source (along with Japan) of tea for the Western world, lost nearly 90% of the market during the twentieth century. Today, China is regaining its well-deserved status as a major supplier to the specialty tea trade, and the growing interest in green and white teas is certain to further that trend.

   Changes in the retail marketing of tea over the past two centuries have been no less significant. Tea was the most popular non-alcoholic beverage in Colonial America, a preference that lasted well into the twentieth century. The early settlers were, by necessity, largely self-reliant, but products like tea, coffee, cocoa, and spices were only available as import items and, as such, the prices were relatively high. This was compounded by the fact that competition for some of the more common staples, like flour, sugar, and butter, was very stiff. Tea became one of the more profitable items on a grocer’s shelf, generally selling for over a dollar per pound. This provided an opportunity for Jacob and Joseph Stiner, who arrived in New York from Bohemia in 1855 with limited savings and no particular plan on how to make a living.

   Shortly after their arrival, the Stiner brothers discovered that they could purchase a few teas directly from a shipping captain on the docks of New York, bypassing the normal wholesale resellers and speculators, who always added their sizable markup to the cost of the tea. They spent their life savings on their first purchase of tea, reserving just enough to open a small tea shop at 64 Catherine Street. Selling all of their teas, regardless of cost, for one dollar per pound brought instant success. Within a few months they opened a second location and by 1860 the Stiner brothers were Manhattan’s largest tea merchants, operating five stores and planning several more.

   The rapid success of the Stiners was not unnoticed by the competition, which included a young man named George Huntington Hartford. George’s older brother, John, had a small tea route in a rural area at the outskirts of New York, an area that would one day be mid-town Manhattan. When John’s health failed, he convinced George to take over his small, horse-drawn tea cart. George had no problem selling tea, and he quickly learned all there was to know about the business. The problem was, he had to spend the entire day in his horse-drawn cart, traveling from house to house, making only the occasional sale. George Hartford was far too energetic and ambitious to last long in such a slow-paced venture, so he quickly abandoned the tea business in favor of something a little more exciting – at least for a few years.

   Hartford’s next venture was entirely different from the tea business. He got a job with a New York leather company, owned by George F. Gilman, and was sent to St Louis to procure hides for the New York leather market. While Gilman made most of his money dealing in leather, he dabbled in a number of other businesses, including shipping and importing. Gilman occasionally imported small consignments of tea, which he sold to wholesalers and distributors.

   Gilman and Hartford were both from Augusta, Maine, and took a liking to each other from the start. Although Gilman was older and more experienced, he respected Hartford for his creativity and drive. The topic of greatest mutual interest was the retail tea market and the opportunities that they might explore as partners. Hartford was ambitious, hard working, and had learned a lot about selling tea. Gilman had capital, and was well versed in shipping and importing. Together, they would start a company that would reshape the tea market.

   At the time, tea often sold for over one dollar per pound at the retail level. Some sold for as much as two dollars. Part of the success of the Stiner brothers was the attractive price of one dollar, regardless of the tea. To Gilman and Hartford, one dollar per pound was still much too high. They reasoned that, by eliminating all of the middle-men in the distribution cycle, they could offer teas well below this price and give the Stiners some serious competition. Moreover, with railroads now connecting the major cities of the East, and soon to reach the farthest settlements in the West, it would be possible to sell teas to a much wider customer base. This was the underlying premise on which The Great American Tea Company was founded in 1863. It was located at 51 Vesey Street, next door to the newest shop of J. Stiner and Company.

   George Gilman has been referred to as the P.T. Barnum of the grocery business. His flamboyant style and bigger-than-life personality added drama to the hard-working, even style of George Hartford. From the start, the team of Gilman and Hartford proved to be tough competitors, determined to make a major statement in the tea trade. An advertisement published in an 1865 issue of the New York Tribune stated that The Great American Tea Company had five branches in New York City, including the largest tea store in the world, located at Broadway and Bleeker Street.

   1865 was also the year that fourteen-year-old Thomas Lipton bought a steerage ticket from Glasgow to New York for eighteen dollars, leaving him less than eight dollars for spending money upon arrival.

   Lipton would return to Glasgow in 1869 and apply what he learned about marketing and retailing in New York to his parents’ neighborhood grocery store in Glasgow. Concurrently, Gilman and Hartford started another tea company, operating in parallel with the Great American Tea Company, called The Great Atlantic & Pacific Tea Company (A&P), which became the world’s largest retail chain. Thomas Lipton, who was in himself a combination of the flamboyant Gilman and the hard-working Hartford, would create his own grocery store empire in the United Kingdom. The commerce of tea, as well as that of retail grocery marketing, was about to change forever.

   We will explore the success of Gilman and Hartford, as well as that of Sir Thomas Lipton, in the next issue of the Upton Tea Quarterly.


References:

Walsh, William I. The Rise & Decline of The Great Atlantic & Pacific Tea Company. Ontario: Musson Book Company, 1986.

Hoyt, Edwin P. That Wonderful A&P. Ontario: Hawthorne Books, Inc., 1969.

 Related Information:
   Part II: From Mail-Order to Retail Giant
   Part III: Lipton Enters the Tea Market
   Part IV: Lipton's Crowning Achievement
   This current newsletter's homepage
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"Upton Tea Imports was founded in 1989 with the objective of providing the North American tea drinker with the finest teas available. We purchase teas from reputable brokers and estates worldwide, dealing only with sources who are capable of providing top quality teas. We sell directly to the consumer, thus ensuring the freshest product and fairest pricing."