Origin Tea: the Brisbane brand doubling down on its supermarket strategy

A Brisbane-based single-origin tea company founded by brothers Chris and Lawrence Seaton has doubled down on its strategy to partner with supermarket giants like Woolworths (ASX: WOW) after recently landing a deal to stock its sparkling iced tea range with the grocer.

It comes almost a year since the brand launched its Sri Lankan whole leaf black tea range into Woolworths and Coles (ASX: COL) – a deal that was struck after the duo had successfully built a cult following for its Sticky Chai brew in thousands of cafes across Australia.

The latest deal is worth more than $1.5 million, and has made two of the brand’s iced tea flavours available in 667 Woolworths stores nationwide.

“It’s a tremendous milestone. From a brand perspective, we were heavily focused prior to COVID on foodservice and cafes. That was predominantly our main business, but now we're able to get our products into more consumers' hands every day,” Chris Seaton told Business News Australia.

“We're wanting to create a healthier alternative to soft drinks, so our main goal is to make the ready-to-drink cans available in 7,000 stores nationally – both in retail and petrol & convenience.”

Founded in 2012, Origin Tea sources its loose-leaf tea from a 16,000-hectare plantation in Sri Lanka, which is managed by Chris and Lawrence’s father. While the brand initially launched with English tea breakfast bags, it has since added lattes, coffee syrup and teaware to its product line.

The Brisbane-based business currently imports around 200,000 kilograms of Ceylon tea annually, with plans to double this figure to 400,000kg by the end of 2023.

When asked about what inspired the brothers to start up the business, Chris explained they saw a gap in the market as most brands focused on launching single-origin coffee.

“Back in 2012…a lot of boutique coffee roasters were opening up in Australia - we call them generation one roasters - that are probably a little bit more mainstream now as well. They were starting to promote single-origin coffee,” Chris explained.

“They were going out and telling people hey: I'm getting coffee from Brazil, Papua New Guinea, and wherever [else]. We saw that as a great opportunity to promote single origin tea from Sri Lanka.”

“If you ask any tea connoisseur in the world, Sri Lanka is renowned to produce the best black tea in the world. The highest point of Sri Lanka is in the middle of the country, and so tea is grown at all sorts of elevation....when you have all these different elevations, it creates all these different characteristics in the flavour profile.”

According to Chris, the brand is available in roughly 5,000 cafes across Australia – the majority of which are based in New South Wales, followed by Queensland, Victoria, and Western Australia.

While those partnerships still account for 60 per cent of sales, the duo turned to pursuing deals with supermarket chains like Woolworths as a way to diversify their revenue stream during the COVID-19 pandemic.

Development for the brand’s iced tea flavours Tropical Kiss and Sneaky Peach took around six months, and involved brewing Ceylon leaves to create a syrup that was tasty enough to drink.

“A lot of iced tea I've seen on the market is using tea extracts - so it's not actually loose-leaf tea that’s being brewed. It's a pretty in-depth process to get the right balance of flavour profile,” Chris explained.

“We have our own in-house tea masters based in Sri Lanka. When we made the decision to launch ready-to-drink iced tea, we had to work out what is the perfect loose-leaf tea to go in our blend.

“We're consistently working on new products all the time.”

Origin Tea employs hundreds of people in Sri Lanka, where an ongoing social and economic crisis has caused shortages of essential goods like fuel, medicine and food.

One month ago, the International Monetary Fund (IMF) approved a USD$3 billion (AUD $4.5 billion) loan to the nation, following a USD$600 million loan the World Bank made in 2022.

The International Finance Corporation (IFC), the World Bank's investment arm, has also committed to giving Sri Lanka a USD$400 million cross-currency swap facility to help fund essential imports.

But Chris noted that while the situation is dire, it is beginning to improve.

“The IMF has a system to restructure this debt - on that on that basis, the economy's significantly improving. One of the other big industries [in Sri Lanka] is tourism. After COVID, there's a lot more people wanting to go back and travel in Central Asia, which is also helping the beautiful country.”

According to tea broker firm Asia Siyaka, Sri Lanka exported 250.19 million kilograms of tea last year – down 13 per cent compared to 2021 and the lowest amount on record since 1997. Exports generated USD$1.27 billion (AUD$1.8 billion) in earnings, a decrease of 4.5 per cent versus 2021.

The decline was due to a combination of factors, including a fertiliser shortage and a ban on agrochemicals, which was lifted in November 2021 following several months of upheaval instigated by an acute food crisis.

To help those in need, Origin Tea is actively working to keep hundreds of its staff employed – an undertaking that is far more manageable now that shipping rates have declined.

“I think most businesses now have resolved a lot of the supply chain issues that were seen during COVID,” Chris said.

“Shipping rates - one of the biggest issues impacting all FMCG companies in Australia - has certainly resolved itself. We haven't seen issues in the supply chain for a while.”

When asked about whether he was keen to roll out more products with Woolworths, Chris said he was open to the prospect of securing further distribution deals.

“Medium-sized businesses always need everyone's support. We've been grateful for the opportunity that was given to launch these drinks against some of the biggest beverage companies in the world. We're looking forward to seeing the results show,” he said.

“At the end of the day is an agricultural product, right? We’re always looking at our blends and making sure that we’re keeping up the standard. Every week, the guys in Sri Lanka are grading hundreds of lots of leaves to maintain the quality and consistency.

“Consumer taste profiles change from time to time, but the main thing that we try and do is stay consistent and follow market trends.”