Interview with Tea Industry Veteran, Billy Dietz

Ryan · 0:05

Hello and welcome to the Specialty Matcha Podcast. My name is Ryan. This is Zongjun Li, who also goes by Sam. Hello And we're the cofounders of Sanko Matcha Products. Yeah. We launched this podcast to discuss our learning journey, Matcha, share startup stories and interview experts.

Billy · 0:20

And this episode, we have Billy from BDH Consulting with us today to talk about his journey with tea and Matcha. Welcome, Billy. Hey, Ryan. Hello, Sam. Pleasure to be here with you and discussing matcha. It's a super exciting category at the moment and obviously it's kind of going gangbusters.

Billy · 0:37

I've done a lot of content work and we get a lot of consulting questions about matcha and people trying to get into this powder space. So yeah, definitely top of mind for the industry, for consumers. Yeah, we'd love to learn more about your your both personal tea journey and and professional tea journey. Yeah, absolutely.

Billy · 0:55

I, I mean, starting right at the beginning, I got into tea originally. I was, I was an awkward high schooler. I was 15 years old and really preferred like more natural kind of forms of healing. Like I didn't, you know, when I got sick, like I, I, I would try, I would try not to take medicine basically is where I'm getting AT. And that kind of led me to tea and very quickly this health and Wellness aspect was the least interesting part to me. What became much more interesting was the variety, the culture surrounding tea and and herbals, the ceremony, this idea that tea can be a catalyst for cultural connection. That was really what inspired

Billy · 1:37

me. The flavors obviously too. I was pretty avid to cook even back then. And so I think also I was just very interested in the flavor spectrum that tea provides. And these as all these components kind of came together and culminated into the me just exploding with interest in tea, started reading like hundreds of books, I kid you not, like hundreds of tea books, whatever I could get my hands on. I started reading, absorbing and ended up taking professional training through an arm of the Tea Association of the US, which was the Specialty Tea Institute.

Billy · 2:09

And I became the youngest, youngest graduate of that program at 17 years old. And so my, so my, my, my passion for this goes, goes quite a long way. It's been almost 2 decades now that I've been doing and tea has been incorporated in my life somehow.

Billy · 2:25

And yeah, it was pretty, pretty avid that tea was going to be my career for the rest of my life, even at that age. And so it was really just about stacking things and see where I could actually go with it. I became an entrepreneur pretty young as well, going through university.

Billy · 2:39

I was studying business like marketing and entrepreneurship. And I ended up by crazy coincidence, there was a fellow student who was a year above me, still a good friend of mine by the name of Chris Borgia. And he, he actually started a tea company. And it's crazy because our school was very, very small. There was about I think 2500 students in these universities, a really small, tight knit campus. So just the fact, and it was in like rural Indiana, like it was not in like a big city or, or anything like rural Midwest. So just the fact that someone else even had a slight interest in the same thing as me was

Billy · 3:18

already kind of bonkers. And then on top of that, he had started a business. And so I actually what I ended up doing was shadowing him and ended up taking over that business and really tried to use that business as like a case study almost through my university studies.

Billy · 3:33

I was never an academic in the sense that like I was not really a bookworm except for tea. And so studying business, I was like reading marketing research. I was like, well, no, I'm just going to go do it. Why? Because I have a medium and I was in a good enough position or fortunate, fortunate enough situation being in like an intimate school that my professors were like, well, you're actually doing it. So yeah, you can use this as part of, you know, studies and projects.

Billy · 3:56

I remember having to go out of class and like take sales calls. Like it was a really strange university experience. But and then I I also helped to Co found a coffee business. We ended up merging those later when we opened up a retail location and coffee shop and all this was what, a year that all happened a year before I graduated.

Billy · 4:15

So my final year of university, I was working, working that business, but I knew I didn't want to stay around that area. And so and I yeah, so I came back home at which which then was southern New Mexico, and ended up ended up applying, reaching out to a bunch of contacts.

Billy · 4:32

And finally, finally, finally, as I was actually about to sign on for a role, Keurig Green Mountain as a coffee sensory professional, just because the tea job wasn't lining up. I ended up getting a Facebook message from one of my still to this day, one of my mentors and he offered me a position with David's Tea. And so I hightailed it to Canada and I landed in February. I think it was like -22°C when I landed and I was like, what have I done?

Billy · 4:59

But I was with them for, I was with them for just shy of, shy of a decade, did product development primarily, but there was a lot more to it than that. There was a different things about supply chain and vendor management relationship and marketing research that went under that umbrella of of product development and ended up my past there kind of reached a natural conclusion. I had felt that still very on very good terms with them, but yeah, I had just felt that my what I could give them was no longer like, I felt like I was basically repeating the same motion over and over again.

Billy · 5:35

And so I was losing a bit of enthusiasm, which isn't wasn't good for the business, also wasn't good for me. And so I decided to step out and do something on my own. So BDH Consulting, I have a business partner in LA and he comes from actually a legal background, funny enough, but fell into entrepreneurship and fell into tea entrepreneurship and ended up opening a series of, of specialty like boba tea shops in Southern California. And so we so we got connected for from that perspective. He had taken classes with me when I was teaching for the Specialty Tea Institute.

Billy · 6:10

Anyway, we kept that relationship open, but I knew that I wanted to go in business with a partner because I wanted to focus on the areas where I knew that I can really deliver my best to clients, which was primarily in making connections.

Billy · 6:25

Whether it be funneling people to the right vendors for their needs, whether it was product development, certain supply chain building, tea product assortments. There was a lot of that type of work that really fulfills me.

Billy · 6:38

So that's where I wanted to stay. But I was like, yeah, but businesses also need operations, They need HR, even sometimes legal. Like there's a lot of other components that because of our partnership we can bundle for our clients and we've worked with everything from startups to multi $1,000,000 multinational tea brands. And it's really projects project by our latest venture. We are dabbling in community based consulting. And by that I mean we're opening up a community for guided learning for tea entrepreneurs aimed at pre revenue and early stage tea startups.

Billy · 7:18

And that so it's it's it's guided moderation. It's kind of a paid like closed forum, right? Think of it almost like Reddit, but specifically for tea entrepreneurs And the resources section with things like business plan templates, go to market strategy considerations, all of these tools that the members can use to fulfill whatever their tea dreams look like.

Billy · 7:41

But we wanted to bring more entrepreneurs into our fold and provide value for them because it's, people need support, but it's just a matter of how do you make that support both accessible but also lucrative for yourself as a business owner. So that's why we started that.

Ryan · 7:57

And, but we still also focus on some pretty large, large scale consulting projects for our other clients. So yeah, I, I, I spoke for a very long time, but I hope that gives you a very good background on me. That was part of story. Actually, the thread of tea through that story is this makes it even more cool.

Ryan · 8:20

It's it's actually very uncommon for us to find other tea people that are very much understand it from business lands, industry lens, like and the concept of a tea entrepreneur. You just don't hear those words together very often.

Zongjun · 8:37

But like that's what the entire industry is, especially when it comes to specialty matcha. It's just a bunch of small to medium sized businesses all over the world who just can find a really great product, talk about it in a way that resonates with some people and like builds this audience for this thing that just didn't exist, which is it's so cool having like like especially this founder circle thing that you're talking about is just, I think so needed right now, especially in the space that we operate in because those resources are so important.

Billy · 9:09

It's not just about the product, it's about everything else too. And that's it. And tea is is a really interesting business because the barriers to entry are very low. You can start a tea business for like 500 or 1000 bucks.

Billy · 9:22

You can start selling tea and build a brand and make something happen. Like there's not a lot of other industries where that's feasible. So that's both a benefit and a curse, right? Because then you have a market that's flooded because of this low barrier to entry you, But then how do you actually get the business acumen to be able to grow, to be able to scale, to be able to stand out all of that? My, my absolute favorite quote from my, my mentor who actually brought me into the fold of David's Tea. It was early on in my education through the Specialty Tea Institute.

Ryan · 9:54

And I was asking him just advice because I was like, listen, I'm not at the point where I can like work full time in this, like I want to go to school, all this stuff. But like, if you had one piece of advice to give me about getting into the tea industry, what would that be?

Ryan · 10:09

And deadpan. He was just like, the world doesn't need more tea geeks, needs people who understand the business of tea. And it stayed with me. It's stuck because I see it so often now where, I'm sorry, but knowing, knowing the history of how matcha evolved in China and then spread to Japan is not going to save your business.

Ryan · 10:35

Knowing the differences in the growing regions between Uji and Kagoshima, as cool as that is, it's not going to save your business. You have to know how to actually sell sell the product. Where do you see people like, what do they get right and wrong when it comes to team marketing?

Zongjun · 10:55

Because we've all seen like a lot of cringe and then like the really effective stuff that actually moves the needle. I don't know. I'm like a little suspicious that it's stuff that's like less mind blowing than you would think. Like what?

Zongjun · 11:11

How have you seen that? Because you've talked to and advised and been a part of so many different companies who are doing this, Like what do people get right and wrong? Yeah, I mean, it looks very different for for everyone.

Billy · 11:22

I think one of the some of the first things is Matt was speaking about matcha specifically. So many of these small time brands just fade into the sea of green, right And you become just another matcha brand unless you were an early mover, right. Someone like Cha Cha Matcha, someone like Matcha Bar, these companies that really helped to kind of push and start the matcha boom on the coasts.

Billy · 11:49

They had the advantage of being early, of being early movers. What I think in talking with a lot of different tea entrepreneurs, I think most people just don't know their audience or know who their niche really is. So when we're going through, you know, discussing go to markets with, with clients, we, we try and drill into them that like know your customer, like is your customer named Alex?

Billy · 12:14

Are they, what, what age are they between? Do they have kids? What's their job? What are their hobbies like? Build yourself the person that you are trying to sell to, not that it has to be ultimately your North Star thing. Things pivot right as things happen. You might be surprised by the market that you start to get, but go in understanding who your customer actually is. If you're selling, I guess it's like it's always go in with the mindset of what's on the customer's mind. Focus on your customer and put all of your effort into satisfying their need, their wants, and try and make your business successful on that.

Billy · 12:49

If you're just running a tea business for your own pleasure, that's a hobby. Yes, it can be enjoyable, but ultimately it's a hobby, right? Indeed. Or matcha specifically, What have you seen being more effective in talking to your customer?

Billy · 13:07

I think both can be effective right? Look at one of my favorite examples. Not matcha specific but talking like content specific. Looking at a company like like Jesse's Tea House, right? Really who's Yeah, who's really I?

Billy · 13:20

And I know Jesse, he's a phenomenal person. He's he's wonderful. We've sat down for tea together several times. What I think he does very differently than a lot of tea companies is he's built a brand persona, but he also knows exactly, again, going back to the customer, he knows exactly who his customer is and he's trying to foster that community of people.

Billy · 13:40

His customer is first timers that want to explore gongfu tea. That's his customer. He's not aiming for the collectors who are who are, you know, ordering their stuff from, you know, their their own tea guy in China or, or their specialty tea place in Tokyo or whatever it might be, right? Like he knows exactly who his customer is and he's put all of his effort into building his content, his brand persona, his product assortments, everything based around that identity. And so it's kind of a mix of everything as, as you were saying, Sam, like you, you need to have all the pieces together, whether it's the content,

Billy · 14:19

whether it's that, the education. But I think a lot of people don't understand how to balance that. I think first and foremost, at least what I've seen is communicating benefits effectively outcomes. What does your product do?

Billy · 14:34

That is the easiest thing for customers to connect. Frankly speaking, most customers probably are not going to care about, like, I'm talking Amazon customers, are probably not going to care about cultivar differences between matcha.

Billy · 14:48

Some niche brands can go that route and I think there's a space for that. But if you're looking on Amazon, like most people aren't going to care about that. What are your outcomes? What are your unique selling propositions? You're tailoring your messaging around that versus around trying to bombard people with with education. I'm a huge fan.

Billy · 15:07

You'll see a thread throughout this. I'm a huge proponent of let's make tea accessible. Don't gatekeep for no reason. There's absolutely no reason to gatekeep whatsoever. I think it's what a lot of the specialty coffee places are doing wrong right now is, you know, when you go into a coffee shop, if someone looks at you and expects you to know what carbonic maceration is, all of a all of a sudden you're like, well, I got to get out of here.

Billy · 15:31

I was, I just wanted, you know, a cortado or I just wanted like a nice drip coffee. Like it becomes very overwhelming because then you feel like you have to know these things to be a part of the club, right? No. It's true, Forms is like very insular inclusive, non inclusive cultures.

Billy · 15:50

Yeah, like 1, I guess 1 extreme example for that is White2Tea, like they are almost like anti education, like the other side of education, which is very interesting and they are very successful too. Yes, Paul is, he's, he's built himself a very, very good business and a really loyal customer base. And I think part of his whole, like, I don't want to call it a gimmick.

Billy · 16:17

That's not the right word for this. Part of his whole, part of his whole strategy is in a way, accessibility. It's accessibility through mystery because you're buying a tea, but you don't know where the heck it's from. He never tells you really where it's from. You know, he's just like, listen, this is, this is a really good, you know, matcha that I, that I found in the back of a farmer's shed.

Billy · 16:37

And I just want to sell it because it was really good value for money. Like those are the stories that he's telling. It's it's wild, but in a way I think that's also something very accessible. Yeah, right. Build up the trust somehow.

Ryan · 16:52

Like how does the next White2Tea build up? Because I remember the first time I saw their marketing, I think it was in 2016, it was like a year or two after they formed and some people were asking me about it with Sam and I were both into pu-erh. We've been into pu-erh for a long time. And you know, you learn pattern matching and everything about it.

Ryan · 17:12

I don't trust it. Like I don't trust it. These rappers are weird. What is this gigantic whale doing on this brick of tea? Like you don't tell me anything. I don't know who this Paul is like and then like it just slowly eroded away. It's like enough people said no, man, it's like actually good taste it like and but now that like it's a really sticky type of trust, though.

Billy · 17:40

It's a very like, how do you, how, how do people bridge that gap of I don't know who you are? And if you're buying this random matcha powder crap or even you don't know where it's from and you hire someone to repackage it for you and stick on a label versus, you know, turning into someone like a Kettl, like a Rocky's Matcha where there's some level of trust associated with that brand, you start. With one person who shares your values and you stack and it takes a long time.

Billy · 18:10

Truly though, you have you have to start with one. If one person, if one person is going to believe in your product and idea and you've built a connection with one person, it will be possible to build connections with multiple people keeping that thread. That I think is where some brands go wrong, where all of a sudden they try and like overextend themselves into a bunch of different categories and try and expand in ways that don't satisfy their core customers or core group of people.

Billy · 18:41

Because then you start diluting. You do one thing really, really well and service this one type of customer really, really well. That's a pretty solid strategy. And it's been a it's been a main theme even of of different business strategy books that I've read from, you know, these famous authors and business people, whatever. If you distill it down, that is a pretty core theme. Kettl, the Kettl is super interesting. I really quite like what Kettl do in in Brooklyn. I'm I'm so excited.

Ryan · 19:12

We so we have a client in Manhattan on the Lower East Side that is a customer of so we go and visit them occasionally, but I am so excited to see Kettl's new like lab kind of situation that they're building. Man, next time I'm there, that's one of the first places I'm going to go.

Ryan · 19:26

I have to see what's going on with them, but they remind me of early days Intelligentsia, early days La Colombe, if we're if we're keeping with coffee parallels. Yeah, but they've also still done a good job of keeping it accessible. It's it's expensive, but they don't barad you with, buzz you with information unless you want the information. Other than that, it's just darn good Japanese tea. How do you view the relevance of the traditional matcha blend houses and companies?

Ryan · 19:52

I cannot think of a less consumer centric group of companies than the traditional blend houses. All of the products have very difficult names to remember and pronounce. They don't tell you anything about the product. Like where do they fit into the future, especially as the practitioner base?

Ryan · 20:13

Like declines, but yet they're super popular, like getting a can of Marukyu Koyamaen is like super hard. Even if you like live in Tokyo, it's super hard. They're selling out so much. How do you see that like fitting in where you have this wave of newbies who are positioning things very differently and then you have these very traditional companies. How do you see that dynamic evolving? And especially because the traditional companies are really not customer centric.

Billy · 20:40

They don't seem to care about the customer at all, actually, beyond the tea ceremony practitioners. Yeah, man, there's a lot to unpack in your question. Wow, I don't even know where to start. I'll be quite honest with you, there's so much.

Billy · 20:52

There too much. No, that's that's fine. That's fine. It's it is a lot. It's it's forcing, it's forcing me to think. And I'll be honest, Ryan, I don't I don't know if I have an answer for you. We don't much for As for as traditional and old and rooted of a product as it is, it's going through a change that I think no one really foresaw.

Ryan · 21:16

And so we can speculate, we can try and make parallels, but ultimately we don't know what's going to happen with matcha. And anyone help who tells you otherwise? It's it's it's it's a best guess, right? Yeah. Wow. So I guess Sam, what when you were talking to all these new matcha founders of deep in the business owners, what are their perspective towards these like legacy matcha brands from Japan?

Zongjun · 21:44

Do they actually, do they see them as a competitor? Do they see them as a threat? Do they see them as, do they just like ignore them because they don't sometimes often have a huge presence overseas? What are their perception to these brands? I think some people might view them as competitors, some people might view them as the founders that pave the way. In my view, the healthiest way to view them is looking at who their customers are, who are they catering to, and try and tackle a different niche.

Zongjun · 22:17

There's a lot of space for tea. It's not it's not a very competitive market until you get to the grocery aisle. That's where things become very competitive. So these legacy, you know, the legacy brands like if we're talking, you know, the Twinings and the Celestial Seasonings and these like those grocery brands bringing it back to matcha, we're not at the point yet where it's like a, it's not a dog eat dog industry. So viewing your competitors as where they're they've targeted and what piece of the pie they've cut out and trying to pivot and go somewhere different. I think it's a very healthy way

Zongjun · 22:54

to view how to how to build your brand or get your brand to to stand out. And the legacy companies have played a really important role. They built a foundation, they've built an association with quality and taste of place.

Billy · 23:09

But even that is changing dramatically. You have some really high end, high quality matcha coming out of not just Japan anymore, but you have high quality matcha coming out of China. You have high quality matcha coming out of Korea. Excuse me, you have high quality matcha coming out of Vietnam. Like all these countries are starting to produce a because the demand is there.

Billy · 23:29

People cannot get enough matcha. And so they're stepping to fill the fill the gap. But even they're trying to figure out where they fit. And if we, if we, you know, even go it, go into it, we can start talking about some of the issues involved in grading as well. That's another thing, right?

Billy · 23:47

What is what the heck does ceremonial matcha mean? Nothing, absolutely nothing. And not going down too much, not going down that rabbit hole too much. I do think there's value in looking at how we can re categorize matcha and understand the grading from a different perspective, because I do think grading is important, but not in the way that I think most people think is important.

Billy · 24:09

A more useful framework and lens would be looking at grading matcha through end use or use case, right. This is this is more for A to be added with milk. This is more for the food industry. This is more for drinking on its own, like end use case.

Billy · 24:26

And very bluntly speaking, end use case, I think is one really valuable way to view grading and terroir, that's going to be the other lens that I think will really impact grading in, in the future, right? Because you're going to start having more terroir associations, yes, within Japan itself.

Billy · 24:46

But then also look at Korea. Is it mainland? Is it Jeju Island? What area of China is, is this coming from? That's going to start to be pretty important. But I mean, the, the demand is crazy. I spoke, I was speaking with one of the largest matcha producers in, in China.

Billy · 25:06

You know, they supply to like Starbucks and like all these global brands. And I was, I was reaching out to them on behalf of a, of a client, a North American based client. The e-mail back was, hey, we're sold out until the beginning of 2027.

Billy · 25:25

And and even then, people are starting to buy, going to going to be buying and putting in their orders for that year. That's the soonest that I could get something to, you know, to this client of yours would be like maybe the middle of 2027.

Billy · 25:40

And this was last year. Wow, that's. Crazy. Well now I mean the majority of the matcha volume is coming out of China. If you just purely look at the numbers since it's all these people who are like so anti China matcha must be made in Japan blah blah blah. They should be grateful that how much matcha the Chinese are producing because they're Japanese matcha would like quadruple in price, maybe even more. Yes.

Billy · 26:09

It's just from a business lens like the and Japan is much better off long run in the long run, but just producing higher and higher quality because I actually think they're in a bit of trouble because I think the Chinese are getting pretty close to below the quality out of the water for the mid tier.

Billy · 26:31

And like all of this very high volume stuff coming out of Kagoshima or Wazuka or you know, places that are less well known as compared to like a Yame or an Uji matcha. The Chinese are probably going to be able to produce the same quality at half the price. And if you're a Cafe and that's where most of that volumes going, they just probably don't care, especially if there's no sensory difference.

Billy · 26:55

It's I don't know. Well, yeah. Well, for from a tea buying perspective, like if we're looking at, you know, I don't know, let's use Luckin Coffee as an example, right. If they're looking for a matcha supplier, they're not going to be going to the tiny farm in Kagoshima. They're going to say I need consistent quality, consistent volume and consistent price.

Billy · 27:17

They're going to go elsewhere. I do also think that what people may also not realize is some of the larger matcha producers in Japan do have some level of presence in China as well. So I was speaking, I'm very close with one of the largest matcha producing companies in Nishio and they have a very strong presence in China as well.

Billy · 27:43

And they started very early on, I think because they saw ahead a little bit and started investing in infrastructure in China as well. And I think that's going to be so advantageous moving forward, right? Well, they're already supplying to places like Costco in North America. So bulk, but pretty darn high quality stuff, all things considered, because they are they know how to how to produce it, facing it.

Billy · 28:08

China's got more room for expansion and and and output. They just do. Yeah, well, the Japanese company, I wish everyone would just be more transparent too, because we know a lot of tencha goes back. The flow of tencha is not the direction most people think.

Billy · 28:25

It goes back to Japan and comes out as Japanese matcha. And like, this is a very, to use a horrible matcha pun shady industry in a lot of ways, both both labeling and like, you know, accurate provenance. And the disappointing thing is it's not just the big players. It's not like the gigantic Nishio companies or the big ones.

Billy · 28:47

It's it's also like in in Uji, Like this concept of Uji matcha is not from Uji at all. Like 1% of the Uji matcha comes from Uji. Like it's even at the highest end, you can't trust provenance at which makes me worry about like a thriving specialty market where terroir and like the taste of place or the different production styles and fertilizer recipes, they're leading to these different flavor profile outcomes and just kind of get like washed out because they just get blended out and labeled this generic term.

Billy · 29:22

It's not specialty at all. Actually, it's almost the definition of a commodity product. It's and then you can't buy direct from farmers. Large parts of this value chain are impossible to access. Yes, the transparent, you're right, the transparency is is non existent. I'm hoping that certain blockchain technologies and smart contract technologies can help with traceability. That's something I want to see more of in in the tea industry. And I don't, I am not by any means a blockchain expert, right?

Billy · 29:54

But I know that there's certain traceability that can come through smart contract tech inserted into the supply chain of agri products. People are already looking to do this with cocoa and with other agri bananas. Another good example where they're really trying to better track the supply chain for both the customer, but also for themselves as a, as larger buyers, right?

Billy · 30:20

So I, I do hope some of this technology can help to curb that. But you're absolutely right, Ryan, where understanding how to stand on your own laurels instead of try and copy, as you say, a taste of place, that is where I think this redefinition of terroir has to make a difference because then Chinese matcha can really stand on its own laurels. I think that would actually be a great thing for the Japanese matcha industry and the matcha industry overall if people stop saying, oh, matcha, good matcha only comes from Japan. And instead the mindset is, have you tried this matcha from Japan and this matcha from China and

Billy · 30:59

this matcha from Jeju? That's it's going to open up the market, I think a lot. And yeah, just make it more accessible. Again, that threat of accessibility. But but we see issues in the tea industry all the time with this, right?

Billy · 31:13

Darjeeling in Nepal is another huge example. So my is something like 70% or 80%. It's a wicked number of all of the Darjeeling tea branded labeled as Darjeeling sold in the world is not from Darjeeling at all. Typically is green leaf, green leaves from Nepal that are imported into Darjeeling, processed in Darjeeling and exported as Darjeeling.

Billy · 31:40

Interesting. And so, so we see this in multiple industries and especially with, in places that have like a legacy name. Darjeeling is one of is, is one of the most, you know, storied places in the in the tea industry. And so, yeah, we're seeing, we're seeing this in in Japan as well.

Zongjun · 32:00

Yeah, in China too, like Long Jing and you know, Dahong Pao, it's all tea leaves from like other parts in Fujian or like even Sichuan. It's a tea laundering kind of business. It's not new. No, it's not. I did a whole article about counterfeit tea on my sub stack, which is aptly named Steep Insights. And so I I did this deep dive into counterfeit and yeah, Taiwan, Taiwanese oolong the same problem. So much of it is imported from Vietnam and repackaged and resold as Taiwanese high mountain tea. But I also think what a lot of people don't realize is Taiwanese tea growers actually help to start the quality like oolong production in Vietnam.

Billy · 32:46

And so in a way, it was self feeding. But I also do see now steps that are being taken to ensure that Vietnam as a tea industry can stand on its own and not have to be rebranded. I think that is really the key here, where if you're just trying to copy and emulate something that you're not, yeah, that's not a good recipe.

Zongjun · 33:11

Like, understand your terroir, understand what the best you can bring out of it is, and focus on that. Yeah. I went to a wine conference once I think about 8 years ago. Association of East Coast US wine producers can imagine how good this their products were.

Zongjun · 33:28

And I think there was some winery in Virginia that came to France. Brought back tons of like classics and said, you know, had their whole staff taste them and said this is the goal. This is like the North Star for us. Like this is the top of the top.

Zongjun · 33:41

We need to produce stuff that tastes like this. And this was this whole speech was about this. And I remember thinking, no, like, why don't you just try making the best that you can with what you have? You're never going to make that Bordeaux Blend.

Zongjun · 33:55

Like it's never going to be anywhere close to that. Like you're a Virginia winemaker. Yeah, it's it's weird how people call this emulation culture. Yeah, well, it's if you're copying someone, you're trying to, trying to snag a piece of the pie that like is not even a pie that you like the flavor of. I don't know, like it just doesn't make sense. It makes absolutely no sense.

Zongjun · 34:19

Yeah. Well I guess the the biggest reason behind This is Money right? Like you can obviously sell for higher price if you tag it with a different name, but I feel like the ultimate solution is that, you know, people can end up making like similar amount of profit using their own GI or BE themselves and I think that will be the hardest problem to solve. It's a demand problem.

Billy · 34:47

There is no demand for, let's say like Kagoshima Matcha or for Shizuoka. Yeah, a little bit. Now with all of these new vendors highlighting or Nishio matcha or Toyota Aichi matcha, these names are super new. Maybe you hear not all consumers know it's even from Japan.

Billy · 35:06

If they do learn a place, it's probably Uji. And then like it just everything else gets washed in the, you know, gets lost. And actually that's this word specialty I think can really kick in. It's it's cool. Like if you go to a place like Bangkok with a really advanced matcha scene, you'll find places that have like 3 different products from Toyota IG like that's super cool. Or from Nagasaki or from like all of these places you don't commonly hear about.

Billy · 35:35

And it's exciting to see that kind of evolve. But the Japanese don't make it easy to buy. I guess newcomers coming in, getting access to this material in those places is so hard. What advice do you have to like, you know, new matcha companies in sourcing, especially in Japan and trying to get their foot in the door and some of these more off the beaten path places. Gosh, yeah, direct sourcing is as a hard game. It truly it's it's it's a hard game both from the, you know, available quantities, import, export, things like that. My my advice to new entrepreneurs typically is start with a trusted wholesaler or

Billy · 36:20

distributor in your locality, right. So I won't name names, but there's some wonderful wholesalers of really good like transparent high end Matcha in North America. It saves you time. You start to understand your own consumer better first.

Billy · 36:37

And you can test products from multiple companies, dial it in, and then get to a point in volume where it makes sense for you to start going and talking with these people. Because if you go to Japan to a farmer and you know, I'm a start up, I don't have any revenue. Like they're probably not going to sell to you, not because they don't believe in you, but just because they don't know you. Like it's a it.

Billy · 37:02

Takes a while to develop this relationship of trust because that's really important when when buying and approaching people is is developing that trust. And yeah, part of that trust is going to come with money in consistent orders. It just is.

Zongjun · 37:18

Yeah, that makes sense. Just build up that transaction history and, you know, keep showing up. Yeah, and see all these. And don't get me wrong, you can. Don't get me wrong, you can do it. You can start your company by direct sourcing.

Billy · 37:33

I'm not saying you can't, but there is a lot of a lot more friction than I think people might realize because then you become the source, the sourcing person, the logistics person, the customs and duties and testing person.

Zongjun · 37:50

On top of that, you're trying to market your product, you're trying to build your website. You're trying like one person can really only do so much. Truly. Really. Yeah. Indeed, totally agree. You know, we, we've seen, we've been seeing like a lot of these, you know, new founders going into Japan trying to like even talk to anyone.

Billy · 38:11

It's really not happening these days unless you are extremely lucky or you end up knowing someone that gives you an introduction. That's it. Knowing and having a network is vital that that can that can move mountains in not just the matcha industry, but in the tea industry in general. Truly, I know even for my own business, there are some vendors where just because they know me and trust me. And if I believe in, let's say I, you know, I believe in my clients, I'm like, they're going to go places. Let's bend your typical rules a little bit and get them in the door because I know that they're going to grow and have a trajectory.

Ryan · 38:51

And that is all word of mouth. It's all word of mouth like and trust in through, you know, down the chain. So yes, this that example I think is a is a really valid 1 cent. It your time in David's Tea and product development and working with all of these tea companies, how do you think about like consumer preference acquisition and building ladders? Like how does someone go from drinking a marshmallow flavored blend to wanting to have a gyokuro or an Uji matcha? And like, what are like really successful ways in building these ladders to move people from, you know, maybe a matcha latte to a sencha to a single

Billy · 39:32

cultivar, single origin kind of thing. I love that question, Ryan. The term that I love to describe this consumer behavior is graduation. You're you're, you're, you're graduating, let's say to the next level. And I'm not trying to say it's a hierarchy, it's not that at all. But there is an upward trajectory both in quality and typically that's directly related to price as well, right? So we can also think of it as a price graduation. The higher up the ladder you go, typically the more money you're going to pay for your product.

Billy · 40:05

I think first coming in with a perspective and understanding that not everyone is going to graduate and be realistic about that. I think that's that's first and foremost. The second thing is do you want to be everything to everyone? That's another big question, right? Dilution of customer was and I think still is a big issue for a lot of tea brands.

Billy · 40:30

So in the case of David's Tea, just because I know that customer, I know the type of market that they that they service. And if we're Speaking of from matcha directly, David's Tea is one of the largest retailers of matcha in North America. That is huge volume and it all comes from Japan, from Nishio specifically.

Billy · 40:47

They first started by selling straight matcha and the quality was pretty darn good. Even the lowest grade of matcha that they started with was the stone ground entirely and but they positioned it both in price and to consumers as latte able.

Billy · 41:04

What I think changed the game was when they started introducing flavored matchas on the market. So matcha either mixed with sugar and flavoring or just with flavoring itself or with other powders. Because then you start to build that more entry level category, right? Getting someone into matcha by offering a strawberry flavored matcha is a pretty easy gateway for many people that are brand new to matcha.

Billy · 41:30

And there was definitely a, a certain amount of customers that did graduate as, as we'll say up to their highest tier matcha. They may not buy it all the time just because of, of of price, right? It was like a special occasion kind of a thing actually that there's some funny story about that, that matcha was one of the highest redemption products on people's loyalty points. So people would reach like a certain amount of loyalty and be able to have like credit or whatever. And there was a huge number of people, even non matcha drinker, surprisingly, but that were like, I want to spend my loyalty points on this because it's one

Billy · 42:10

of the most expensive things that this company sells, right? So we found that super interesting where there was this like prestige element, but then there are some that's it. But then there are some customers that just buy, you know, bags and bags and bags of flavored matcha and just stay there. I think Matcha was or I guess is a category still within David's Tea that is very surprising in that they seem to be able to deliver to a wide spread of customer without diluting this perception of quality.

Billy · 42:44

I don't know if I would say the same about their about their leaf tea assortment. Just not, not because the quality is, is bad, but I think it's just over diluted. It's there's like 170 different SKUs like it's, it's how does someone navigate that? How, how do you how do you go through that? Matcha as a separate category does not have that many SKUs. It's a lot easier for customers to navigate. So I think graduation is about a few things. One, it's about actually providing those options, but understanding your customer journey and if you and positioning if you even want to capture that whole journey. Some brands do not care about

Billy · 43:23

capturing upward momentum, this idea of graduating to next levels. And I also think that's totally fine and totally valid. Why? Because you're focusing on a niche that you know, you serve really, really well. The type of customer typical of David's tea in terms of revenue was what we classified at one point as the hedonist customer, right?

Billy · 43:43

It was these customers that wanted Big Bang Big impact. They wanted to drink the S'mores tea, they wanted to drink the strawberry lemonade tea. They wanted all of these flavors, but stuck there. And it was a massive, massive revenue driver for that. And I think as tea people, the team was always trying to like, maybe get them to evolve when they didn't want to. Yeah, yeah, right.

Ryan · 44:11

It's more of a push than a pull. The customers pulling it was like, like, you want the better thing, climb up the ladder. Exactly, exactly. So I, I think it comes down to a few things. One it's yeah, do you even want to be the company that supports that graduation?

Billy · 44:28

And that is a very valid question. And then and then what was the other one? Oh yeah. So do you want to be the company that supports that graduation? But how do you do it without over inundating with too many SKUs and ending up in decision paralysis? Yeah, it's a confusing piece.

Ryan · 44:44

And also I feel like from a consumer perspective, you know, it's the same product, can be a graduation point at different time. I feel some people just go back to simpler product that they started with and stayed there after you move through the whole app.

Billy · 45:01

Yeah, so let's say I'll take myself as an example. I drink some really high end tea, right. So funny enough, I'm not actually a regular matcha drinker. I love tasting matcha. Surprisingly, I don't drink a lot of matcha, but I do a lot, you know, a lot of Kung Fu or teapot or, you know, grandpa style, whatever. But I am that I am absolutely that customer where I can go and buy the, you know, really expensive yancha. But then I'm also like, yeah, but I have this like immunity tea bag with like zinc in Echinacea. And so I'm going to go throw one of those in my cup because that is serving me at that moment,

Billy · 45:36

right. With matcha drinkers, I think we're going to see this as well. They're going to be people that want to go to this kettle bar and order the single cultivar matcha, you know, whisked as koicha, but then can go back and be like, yeah, but that lot, that matcha latte from this one place, that Maple matcha latte that this one place did was super good. I want to go back and and have that. And we're going to see that a lot more, in particular with Gen.

Billy · 45:59

Z. I just finished an article for STiR Coffee and Tea Magazine about Gen. Z preferences. And it's super experiential. And both of those are two different experiences that satisfy two different needs at two different times. And you can still be the same customer and do that, right? Yeah, they just doing two different jobs, Yeah. Precisely.

Ryan · 46:20

Makes so much sense. Just as a last question to wrap up, what gets you excited? You are like super plugged into the tea world and the tea industry and new companies, new positioning like what what's what's cool that's happening or that's going to happen, but just in general in the next couple of years. Yeah, that's a fun question.

Billy · 46:40

Well, what what excites me #1 the people excite me. I am so network driven. I love the people in this industry. It's an industry that my colleagues and people that I work with and have, you know, the hard discussions with are also some of my best friends.

Billy · 46:57

So first and foremost, I think that is always going to be my anchor. Yes, I love the product without question. I love the product. But at heart, like I just, I love the community that tea has developed. People are the best.

Ryan · 47:10

Tea people are. They really are, yeah. And so, you know, you asked what energizes me, That's what energizes me about this, What energizes me about what we're going to see down the road. I there, Oh my gosh, there's so, so many things that I think are really exciting right now.

Billy · 47:25

There's some amazing stuff happening with ready to drink tea at the moment, and in particular with the sober curious movement where tea, I think, has an opportunity to capture a huge market space of people that want to enjoy experiential products without the alcohol.

Billy · 47:46

Because historically alcohol was always the like the sophisticated product. Oh, you want to taste the, you know, you want to taste Palmas al region of France. Oh, you're going to have to taste that in a wine, right. Like that was always the, the idea was always attached alcohol, whereas tea offers something completely different.

Billy · 48:04

And there are some amazing companies that are doing sparkling teas and botanical infusions, different fermented products using tea, not just kombucha, but all over the spectrum that cater to a customer that is looking for something super high end. I was in New York a few years ago and had the privilege to go to a restaurant called Atomix, which I think was actually rated #1 restaurant in North America not long ago. Phenomenal dining experience and we got their mixed pairing. So it was an alcohol and alcohol free pairing. I was with my business partner and the alcohol stuff, great. It's truly what left a bigger

Billy · 48:42

impression on me was some of the non alcoholic pairing options that they had, and a couple of them were very it was like it was tea based to some degree or it had botanicals included. And so if you're asking really what is what I think is a a big frontier, the the non alcoholic space is something to watch.

Billy · 49:02

Even if relating this back to matcha, I see a definitely see a place for some kind of sparkling single single origin matcha poured out of a champagne bottle. You know, like they're, they're, that is going to be something that consumers will be keen on, not just tea consumers, but people that are looking for experience based beverages that don't want to drink but want and want that occasion, right.

Ryan · 49:27

If someone can nail doing that but for matcha and and other Japanese teas, that would be pretty killer. Yeah, it would be cool. Actually, someone earlier today just forwarded me a link about some guy in Kuala Lumpur who's throwing matcha raves that are all sober raves.

Ryan · 49:46

Yeah, pretty cool. It is Max, Max Falkowitz. Yeah, Max Falkowitz, who's a pretty prolific tea writer based in the New York area. He just did an article on on like sober bars or non alcoholic spaces, whether it's events or a restaurant or bar or whatever. And tea is such a common thread in these places and I'm so excited to see where that goes and who else it will bring into the fold of tea because that is is lateral movement, I think, and market acquisition.

Billy · 50:21

So there's so much potential, so much potential. The alcohol how how much bigger is the alcohol industry than the tea industry? Massive If you can pull even an eighth of that industry into your fold. The tea industry explodes with new customers and new revenue opportunities. Totally.

Billy · 50:38

And it you know, the alcohol free options need things that aren't sweet. Like what adult wants to have a soda when everyone else is like it's it's like you don't turn to a CSD or a juice. They're alcohol free options are like for children, like mostly. So it's I think that's a perfect vacuum for tea to fill. Yeah.

Billy · 50:57

And and it's it's coming. It's it's definitely coming. Europe is really the hotspot I think right now for these tea based beverages. There are a lot of brands out of Europe that are doing some really cool non alcoholic tea stuff. Yeah, I had one from at the Berlin Tea Festival from a company called EST.

Billy · 51:13

It's in champagne bottles. It's all caffeine free. Wow. They mastered the acidity. It had just enough sweetness to give it body, but it wasn't sweet and it had just a beautiful aromatic profile like it. Honestly I think if I wasn't paying attention I wouldn't have realized it wasn't alcohol.

Billy · 51:31

Like it was just a well crafted beverage that you could sip slowly like just like you would in those use cases. So absolutely super exciting to see. Well, someone's got to do that with with some matcha, and that's the next product I want to see on the shelf.

Billy · 51:47

Same. Well, thank you so much for your time. I know we are a bit over but really appreciate it. All good. Next thing on my agenda is a haircut. So all good. Seriously, Sam Ryan, huge pleasure speaking with both of you. I'm going to keep thinking about that question that you asked Ryan. The one that's that kind of stumped me. I think it was it was definitely a definitely a good one. And we'll have some some further conversation about that. Sounds great.

Ryan · 52:13

Thank you so much for coming on and thank you, dear listener, if you enjoyed this, please consider sharing the friend and we'll see you in the next one. Thanks. See you in the future.