In his own words, Arsen Avakian has been vindicated.
Since founding Argo Tea in Chicago in 2003, Avakian has seen his business model for natural, premium-priced beverages go from niche to mainstream. Having entered the beverage space promising a drink with a “transparent” supply chain, Avakian hedged his bets that American consumers would eventually recognize better-for-you was in fact better. Today, the company operates cafes in 20 cities and four countries, as well as marketing loose leaf teas, tea sachets and ready-to-drink teas, the latter of which are sold in nearly 60,000 locations nationwide.
Speaking with BevNET, Avakian explained the company’s teas have established a presence across channels, from Whole Foods to convenience, by appealing to a younger generation that values wellness and transparency from brands
“We always thought of ourselves as the new kid on the block, but today we’re looking back and realizing we’re a 15-year-old company,” Avakian said. “We’re by no means a startup, but we’re behaving as [a startup] and we are as progressive as any startup today.”
Early on, Avakian said, Argo was able to sell retailers on its $2.50 to $3 premium price point by highlighting its all-natural ingredient profile, working with the mindset that consumers would rather have a better-for-you product than another tea filled with chemical flavorings. Capitalizing on consumer research that shows younger shoppers prefer tea to coffee or soda, Argo is pursuing a generational strategy.
According to Avakian, the company’s “x-factor” is its 30 cafes located on college and university campuses which he said gives him “a pulse every single moment of every single day” on how younger consumers are spending. Avakian said he expects Argo’s college strategy to create another generation of regular tea drinkers as Generation Z comes of age.
“There something of a built-in inertia when it comes to vision, strategy, and innovation among big CPG companies,” he said. “I’m afraid that these guys have been sleeping at the wheel and will continue to sleep at the wheel. As someone point out to me recently look at the Fortune 500 companies 10 years ago today — half of them don’t exist anymore!”
Most recently, Argo Tea has announced a line of Single Estate Cold Brew Tea, which features First Flush Darjeeling, First Flush Gyokuro, and Armenian Mint flavors. The line, which retails for an SRP of $2.49-69, launched in Whole Foods this month.
Whole Foods has been a longtime retail partner for Argo, and Avakian is excited for the grocer’s recent acquisition by Amazon.
“I think it’s pretty clear that the value of Amazon is not one-sided, it’s a comprehensive view of where the future of retail is going,” he said. “The convergence of digital strategies with a traditional brick-and-mortar is an inevitable evolution. For young, progressive brands like Argo that is welcome, because we don’t have the marketing budget of a Coke, or Pepsi, or Nestle. ”
Whole Foods is only a small part of Argo’s business model, only making up under 500 of its total points of distribution. However, the natural channel remains essential as a launching pad for premium products, Avakian said.
“We learned that America was far readier than people give it credit,” he said. “When we walked into the convenience store channel or the drug store channel, we quickly realized the consumers were ready. The truck driver is hearing his daughter and understands he needs to have a healthier life.”
Looking ahead, the company plans to launch an almondmilk-based line extension for its Teapuccino products. Avakian hopes he can grow Argo’s RTD sales by 30 to 40 percent, with a continued focus on expanding its presence on university campuses. continued expansion.
“We’re barely at 10 percent of the market share,” he said. “But we’re just scratching the surface of how many more retailers, how many more shelves we’re going to get to, how many more consumers we’re going to touch. And the retail partners, like Walgreens and Whole Foods are firmly behind us. The numbers speak for themselves.”