Portola Coffee owners to launch tea bar concept

The owners of the high-end Portola Coffee brand are planning to launch a new tea bar concept in early December that they hope to grow as a chain.

Named for the Chinese belief that tea is the seventh of seven necessities, Seventh Tea Bar is a new concept developed by Jeff and Christa Duggan, coffee roasters who opened the craft coffee bar Portola last year in Costa Mesa, Calif. A second Portola is in the works, but the Duggans are also adding the tea bar concept next door to their original coffeehouse.

Jeff Duggan described Portola a part of the “third-wave coffee culture,” with beans roasted in-house, thoughtful sourcing of small-batch and exotic coffees, and each cup brewed to order. Attached to Portola is a six-seat, reservation-only “slow bar” called Theorem, where guests can experience a high-concept “creative coffee” tasting menu that Jeff Duggan described as “like a craft cocktail bar without alcohol.”

At Seventh Tea Bar, the plan is to do for tea what Portola does for coffee: offer a cutting-edge experience, where those with a passion for tea can taste new products and unique brewing methods.

“Tea has such a rich history going back centuries, much longer than coffee,” said Jeff Duggan. While Seventh Tea Bar will make reference to the various traditions, and the spiritual and ceremonial aspects to tea, the goal is simply to “cater to those who want something amazing in a cup."

The menu at Seventh will focus on non-blended teas from around the world, both hot and cold, and a lineup of beverages made from those teas, served in a “Victorian punk” setting, said Duggan. Iced teas, for example, will be brewed into kegs and served on tap.

Beverages will be the primary focus at Seventh, with some sales of loose-leaf teas for home brewing. A tea-friendly menu of food will also be available, though the company is expecting only about 15 percent of sales to come from food.

Pricing has yet to be determined, but Duggan said, “We’re not going to be the cheapest, but we’re not going to be the most expensive either.”

At Portola, coffee beverages range from $3.50 for a siphon brew to $7 for a more exotic offering, but the average is about $4, he said. Pricing for tea, however, can vary more broadly, and Seventh will aim for a mix of more affordable entry points with premium products.

Growing tea culture in the U.S.

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The announcement of plans to open Seventh Tea Bar comes on the heels of Starbucks’ deal to acquire the Teavana tea retail store for $620 million. Like Starbucks’ chief executive Howard Schultz, Duggan sees an opportunity to tap into the estimated $40 billion tea market, which is seeing double-digit growth.

Tea is the second-most-consumed beverage in the world, after water, and Duggan contends that there is a growing culture of tea in the United States, especially among the young.

With the acquisition of Teavana, a 300-unit mall-based retail tea chain based in Atlanta, Starbucks plans to add tea bars to those units and grow the brand around the world, both in and outside malls. Teavana stores have an average unit volume of nearly $1 million with a $40 per person check average.

Last weekend, Starbucks also opened its first Tazo Tea concept in Seattle, another tea bar brand the Seattle-based coffeehouse giant may grow, depending on how it is received. After acquiring Tazo in 1999, Starbucks has grown it into a billion dollar brand.

Duggan said he’s not worried about Starbucks’ planned domination of the tea business and pointed out that its domination of the coffee category didn’t stop him from developing Portola. “The bottom line is that, if Starbucks opened right next door, I wouldn’t lose a night of sleep because we’re really different,” he said.

Portola, which opened in May last year, has struck a chord with those interested in an elevated coffee experience, Duggan said. The concept has made a profit over the past three months and sales are increasing monthly, though he declined to offer details.

Consumers, he predicted, will be even more eager to “geek out” over tea. “We’re interested in pushing this because, even more than coffee, it’ll be in demand anywhere and everywhere,” said Duggan.

Contact Lisa Jennings at [email protected].
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