Thé Store Manufacturing and Distribution Inc.

Exporting Specialty Tea to the U.K. or the U.S.

International Trade Research

FITT ID 317053

March 4th, 2016

Table of Contents1.0 Executive Summary.................................................................................................................1

2.0 About the Company.................................................................................................................1

3.0 Research Plan.........................................................................................................................2

3.1 Strategic Objectives.............................................................................................................2

3.2 Research Topics..................................................................................................................3

3.3 Research Objectives............................................................................................................3

4.0 Research Methodology............................................................................................................3

4.1 Objective I: Political, Legal, and Business Environment......................................................4

4.2 Objective II: Market Intelligence...........................................................................................5

4.3 Objective III: Competitive Intelligence..................................................................................5

5.0 Relevance, Reliability, and Currency of Data..........................................................................6

6.0 Logic & Analysis of Data..........................................................................................................6

6.1 Logic.....................................................................................................................................6

6.2 Analysis................................................................................................................................7

Demographic.......................................................................................................................................7

Government........................................................................................................................................7

Trade Agreements...............................................................................................................................7

Economy..............................................................................................................................................8

Currency and Exchange rate................................................................................................................9

Market Entry......................................................................................................................................10

Logistics.............................................................................................................................................11

7.0 Market and Competitive Intelligence.....................................................................................13

7.1 Market Intelligence.............................................................................................................13

Target Market....................................................................................................................................13

Government......................................................................................................................................13

Economy............................................................................................................................................13

7.2 Demographic Characteristics.............................................................................................14

Demographic.....................................................................................................................................14

Economy............................................................................................................................................14

7.3 Product-Specific Market Data............................................................................................14

7.4 Pricing Strategy..................................................................................................................18

8.0 Conclusion.............................................................................................................................19

8.1 Action plan.........................................................................................................................19

9.0 Bibliography...........................................................................................................................21

10.0 Appendices..........................................................................................................................22

10.1 Appendix A - Thé Store Research Process.....................................................................22

10.2 Appendix B - Thé Store Survey Sample..........................................................................23

10.3 Appendix C – Thé Store Information Management Cycle................................................24

10.4 Appendix D – Great Lake Ports Travel Time...................................................................25

List of Tables

Table 1 – Research Team........................................................................................................4

Table 2 – Research Budget......................................................................................................4

Table 3 – Websites...................................................................................................................6

Table 4 – Demographic.............................................................................................................7

Table 5 – Government..............................................................................................................7

Table 6 – Regulation & Trade Agreements...............................................................................8

Table 7 – GDP..........................................................................................................................8

Table 8 – GDP Growth Forecast...............................................................................................8

Table 9 – Currency Exchange Rate..........................................................................................9

Table 10 – Market Entry Costs...............................................................................................10

Table 11 – UK Sales Tax........................................................................................................10

Table 12 – US Sales Tax by State..........................................................................................10

Table 13 – Technology, Infrastructure, and Shipping.............................................................11

Table 14 – Target Market........................................................................................................13

Table 15 – Government..........................................................................................................13

Table 16 – Economy...............................................................................................................13

Table 17 – Demographic.........................................................................................................14

Table 18 – Economy...............................................................................................................14

Table 19 – Target Market Research Survey...........................................................................14

Table 19 – Survey Results US................................................................................................15

Table 20 – Survey Results UK................................................................................................16

Table 21 – Sample Pricing Strategy US.................................................................................18

Table 22 – Sample Pricing Strategy UK.................................................................................18

Table 23 – US Competition $/100g.........................................................................................19

Table 24 – UK Competition $/100g.........................................................................................19

List of Figures

Figure 1 – GDP Growth............................................................................................................9

Figure 2 – Toronto, ON to Buffalo, NY: 159 km, 1.75 hrs.......................................................13

Figure 3 – Toronto, ON to Southampton, UK: 5655 km, 10.2 hrs...........................................13

Figure 4 – US Survey Results Major Demographics Breakdown...........................................18

Figure 5 – UK Survey Results Major Demographics Breakdown...........................................18

1.0 Executive SummaryThé Store Manufacturing and Distributing Inc. is a specialty tea manufacturing company

based in Toronto, Ontario with 30 employees and several plantations in Southern China and

India. The company was incorporated in 2010 with only 5 employees and over time grew into a

major industry force that now controls over 75% of the Canadian market share, with 37M

revenues from Canadian markets. Because of the huge success in the domestic markets, the

company is now considering an international expansion.

The company is considering an expansion to one new market, U.K. or the U.S., due to

the financial considerations of sponsoring the expansion from within. The purpose of this

research plan is to determine which of these two potential markets, the U.S. or the U.K., would

be more suitable for exporting the company’s specialty teas.

Through a carefully planned research process, conducted by the team of internal

researchers, data has been collected from both primary and secondary sources. Researchers

conducted a survey over the course of three months, from November 7, 2015 to February 7,

2016, using the population sets of 300,000 people, in each country, by a method of random

sampling. Surveys uncovered that the U.S. customers are currently more inclined to purchase the

company’s specialty tea, at higher prices and with more frequency. Secondary research revealed

that the U.S. political, economic, social, technological, legal and regulatory environment also

yields higher profits and better long-term position for the company, internationally. Competitor

analysis in both potential countries revealed that both countries offer similar competitive

circumstances, where no country would be eliminated or favored for this factor alone. Due to an

exceptional demand for the company’s tea in the U.S. market, proximity of the market to Canada

and the favorable market conditions in that country, this research plan is making a

recommendation to export to the U.S. market at this time. It is further recommended that the

expansion project start within 6 months from issuing this research plan, as to retain the currency

and relevancy of the report.

Thé Store Inc. 1

2.0 About the CompanyThé Store Manufacturing and Distribution Inc. is a Canadian manufacturer and distributor

of premium specialty teas. The idea of Thé Store was born by Nevena Plumereau when she

became fascinated with the tea plants growing in her mother’s garden. It started as a hobby in her

backyard with experiments of great detail, and picked up funding by her business partner Orida

Keewatin in 2009. Curious how they could grow a tea business where coffee was around every

corner everywhere, they took to the streets and asked people. They found there was a

disappointing number of options when it came to tea that could be competitive with other drinks.

Nevena with her sense of humor in packaging Thé Store and products, and Orida’s ability to not

only keep up with current trends, but create them, they were confident they could win a

following among the young, trendy population that found the habit of having a cup of beverage

on the go. They opened their first humble storefront in Toronto, Ontario in 2010 under the name

“Northé” combining the start of Nevena and Orida’s names with Thé before changing to “Thé

Store” playing on the French word for tea and the popularity of English in their dialect.

Thé Store currently has 30 employees based in Toronto, Ontario, overlooking plantations

in Southern parts of China and India, where the climate can be wet and humid but also dry in

other seasons, as this is the best type of climate to create different types of flavors from the same

tea plant. Competition from similar tea businesses started around the same time only helped push

the Canadian public to really consider the option of tea. An annual revenue of $90 million selling

to the growing population of tea lovers in North America, Thé Store was first picked up by the

“hipster” crowd and over time became a hit with busy young professionals everywhere. Not only

earning a place on every desk in offices and break rooms of Eastern Canada, but was also picked

up in the West through word of mouth and as a premium gift to friends and family. It was not

long before Thé Store’s expansion to all parts of Canada became a reality.

Success in Canada has built up a small but growing empire that needs to conquer new

land. There is potential in expanding to the UK where tea consumption is a normality and

presents no need for as strong a push in the marketing of tea to the public. Expanding to the

much larger population of the US, not to mention being the geographical neighbor would also be

a very viable choice as the first step in international expansion.

Thé Store Inc. 2

3.0 Research PlanThé Store is looking to expand its growing business internationally. In order to have a

presence on a global scale they will have to expand to other countries that have larger markets

with consumers that are interested in mid to high-grade quality teas. Thé Store has looked at the

U.S. and U.K. for possible expansion due to larger populations and geographical benefits or

simply a steady demand for tea in the country.

3.1 Strategic Objectives

The company's strategic objectives are to:

Have a working distribution system planned for every step of the expansion, with the

preliminary and initial steps up and running by mid-2016

Expand beyond Canada and into foreign markets to increase sales revenue of all

merchandise by 20% by 2017

Research what foreign markets would like, in order to penetrate into them and create a

globally recognized branding to further arouse demand for a well-known product by 2018

3.2 Research Topics

Determining which country would be more profitable and realistic in business operations

is the most important concern when considering international expansion. The U.K. has more

buying power with their stronger currency but crossing the Atlantic Ocean would present some

difficulties when compared to the geographical ease in distribution of the U.S.

3.3 Research Objectives

The research objectives are to:

Produce an in-depth analysis of the political, legal, and business environment and

determine country-specific risks and opportunities

Explore the tea industry in the U.S. and U.K. and learn where the buying power lies and

what teas and form factor this demographic would enjoy

Study the competition and the market, and where Thé Store can capitalize on competitive

advantages

Thé Store Inc. 3

4.0 Research MethodologyThe research methodology relies on the specific research process (Appendix A -

Research Process). Primary research was completed using survey (Appendix B - Survey

Sample) and secondary research through online resources, conducted by in-house researchers

Benjamin Lee, Alfred Venkatesh, and Hannah Price, over a three-month period from November

7, 2015 to February 7, 2016 with a budget of $40,000. The research will be executed by

collecting qualitative and quantitative data from the primary and secondary resources and have

conclusions presented for further decision making.

Table 1 – Research Team

TEAM FUNCTION SKILLS

Benjamin Lee Research Lead Project management / Communication / Language

Alfred Venkatesh Analyst Research / Data Processing / Organization

Hannah Price Moderator Research / Moderator / Language

Table 2 – Research Budget

BUDGET EXPECTED ESTIMATE

Realistic Research Budget Expected Return Estimate of Reduced Changes

CEO Approved 20K 2

Budget = Expected * Estimate = 40K CAD

A survey will serve as the primary research tool in gauging the market in preference of

tea type and price range, as well as demographic demand and buying power. The researchers will

analyze the data and make suggestions from the company’s line of products, which product at

what pricing would make the most effective impact in penetrating the targeted market. Online

and other secondary resources such as compiled statistics and government websites will act as

supplementary information to the primary research in terms of market preference, but important

in understanding international regulation in relation to importing/exporting, as well as market

environment.

4.1 Objective I: Political, Legal, and Business Environment

Key information required:

Thé Store Inc. 4

Qualitative:

Political: Government Stability

Legal: International Import/Export Regulations

Business: Economic Factors Affecting Tea Industry

Quantitative:

Political: Government in Office Duration

Legal: Market Costs: Tariffs, Duties, Sales Taxes

Business: Currency Fluctuations

Sources:

Websites: CIA World Book, Britishchambers.org.uk, CBP.gov, Duty Tax Calculator

Books: The Regulation of International Trade1, Breaking into New Markets2

4.2 Objective II: Market Intelligence

Key information required:

Qualitative:

Demographic Profile

Demographic Preference

Attitude toward Foreign Goods/Services

Quantitative:

Size of Potential Customer Base

Demographic Annual Income

Optimal Tea Pricing

Sources:

Websites: CIA World Book, WTO, Gov.uk, Tea.ca, Tea.co.uk, Teausa.com

Survey: Conducted in the U.S. and the U.K. from November to December, both using data

sets of 300,000.

4.3 Objective III: Competitive Intelligence

Key information required:

Qualitative:

1 Trebilcock, M. J., and Robert Howse. The Regulation of International Trade. (London: Routledge, 1999) 2 Newfarmer, Richard S., William Shaw, and Peter Walkenhorst. Breaking into New Markets: Emerging Lessons for Export Diversification. (Washington, D.C.: World Bank, 2009)

Thé Store Inc. 5

Major Competitors Profile

Market Characteristics and Opportunities

Industry Trends

Quantitative:

Major Competitors

Competitor Market Share

Competitor Pricing Strategy

Sources:

Websites: Competitor Websites

UK: Taylors of Harrogate, Glengettie Tea, Ahmad Tea

US: Stash Tea, Teavana, Honest Tea

5.0 Relevance, Reliability, and Currency of DataThe use of government websites, as well as those from industry associations, research

databases, and even competitors’ websites show information gathered from databases,

interviews, focus groups as well as surveys and documents on incurred sales, all of reliable

source with only a select few websites that do not update regularly. Such information detail

statistics to show trends in demographics on subjects like population, birth rate, employment

rate, income levels, GDP, to gain insight and better target their demographic.

The key websites used in secondary research:

Table 3 – Websites

WEBSITES DATE ACCESSED LAST UPDATE

https://www.cia.gov/library/publications/resources/the-world-factbook/index.html 03/04/2016 02/26/2016

https://www.wto.org/ 03/04/2016 02/04/2016http://www.imd.org/wcc/ 03/04/2016 02/26/2016http://www.euromonitor.com/ 03/04/2016 02/26/2016http://www.europaworld.com/pub/ 03/04/2016 02/26/2016http://www.britishchambers.org.uk/ 03/04/2016 02/26/2016https://www.gov.uk/ 03/04/2016 02/26/2016https://www.commerce.gov/ 03/04/2016 02/26/2016http://www.cbp.gov/ 03/04/2016 02/26/2016http://www.dutycalculator.com/ 03/04/2016 02/26/2016http://taylorsofharrogate.com/ 03/04/2016 02/26/2016

Thé Store Inc. 6

http://www.glengettietea.co.uk/ 03/04/2016 02/22/2013http://www.ahmadtea.com/ 03/04/2016 02/26/2016https://www.stashtea.com/ 03/04/2016 02/26/2016http://www.teavana.com/ 03/04/2016 02/26/2016https://www.bigelowtea.com/ 03/04/2016 02/26/2016

6.0 Logic & Analysis of Data

6.1 Logic

In order to realize the potential for international expansion Thé Store will employ

information gathered from both test markets in the U.K. and U.S. as well as those from

government websites and databases. The data will be presented in tabular or graphic form to

show trends, forecasts, and assist Thé Store with long-term revenue estimates. All data in tabular

format will be referenced in comparison to the data of both countries for clarity of presentation.

6.2 Analysis

The research showed that in terms of per capita income levels the two countries were

similar. What was not similar though was the size of the population.

Demographic Table 4 – Demographic

Demographic US UK Year

Population 321,368,864 64,088,222 2015

Growth Rate 0.78% 0.54% 2015Source: CIA World Factbook

The U.S. has a population five times that of the U.K. as well as a growth rate that is higher. This

directly shows to what extent a proportion of a market the company can grow into.

Government Table 5 – Government

Government US UK Year

Type Constitution-based Federal Republic

Constitutional Monarchy Present

Political Stability Index3 0.62 0.44 2014

Thé Store Inc. 7

Corruption Perception Index4 76 81 2015Source: The World Bank, Transparency International

While the U.S. government looks to be more corrupt, it is interestingly more stable than that of

the U.K. government.

Trade Agreements Table 6 – Regulation & Trade Agreements

Trade Agreements US UKMajor Agreements NAFTA CETA

Signed Date 1994 2013Source: Government of Canada WebsiteNAFTA is an agreement that directly impacts trade between the three North American countries,

mainly in elimination of tariffs for industrial goods, and food and agriculture. CETA is an

agreement that gives Canadian Exporters preferential access to the EU.

Economy Table 7 – GDP

Economy US UK Year

GDP

$17.10 trillion $2.524 trillion 2013

$17.52 trillion $2.594 trillion 2014

$17.97 trillion $2.66 trillion 2015

GDP Growth Rate

1.5% 2.2% 2013

2.4% 2.9% 2014

2.5% 2.4% 2015Source: CIA World Factbook

Table 8 – GDP Growth Forecast

Forecast US UK Year

GDP Growth Forecast

2.7% 2.4% 2016(f)

2.4% 2.2% 2017(f)

2.2% 2.1% 2018(f)Source: CIA World Factbook

3 -2.5 weak; 2.5 strong4 100 = No corruption

Thé Store Inc. 8

Figure 1 – GDP Growth

Based on the current data, both countries’ GDPs are growing at a steady rate. The World Bank

has their own forecasts estimating that the growth in GDP will level off and even decline in the

future. There is no noticeable difference between the two’s GDP other than the sheer proportion,

as such it is hard to determine which economy looks to be more stable.

Currency and Exchange rate Table 9 – Currency Exchange Rate

Rate Canada US UK Year

Currency Exchange Rate CAD$1.00 CAD $0.90 USD £0.54 GBP 2013$1.00 CAD $0.80 USD £0.52 GBP 2014$1.00 CAD $0.74 USD £0.53 GBP 2015

InflationN/A 1.5% 2.6% 2013N/A 1.6% 1.5% 2014N/A 0.2% 0.1% 2015

Source: CIA World Factbook, Inflation.eu

As the US Dollar is the most often used currency for referencing exchange rate, USD in

the above Table 9 is not referenced, but instead with both USD and GBP compared to the CAD.

The GBP is the more stable currency with a decline in inflation from the data given above and is

favored for business partnership transactions to be dealt in. For cautionary sake, forward

contracting will be employed to ensure there are no confusion or miscommunication in regards to

discussed sales prices.

Thé Store Inc. 9

Source: World Bank, IMD World Competitive Yearbook

1.5

2.4 2.52.7

2.42.22.2

2.9

2.4 2.42.2 2.1

2013 2014 2015 2016(f) 2017(f) 2018(f)

GDP

Gro

wth

Rat

e Pe

rcen

tage

Year

Market Entry Table 10 – Market Entry Costs

Market Entry US UK Year

Average Duty Rate 0~10% 0~20% 2015Source: DutyCalculator

Table 11 – UK Sales Tax

State Sales Tax Year

England 20% 2015Source: DutyCalculator

Table 12 – US Sales Tax by State

State Sales Tax Year State Sales Tax Year

Alabama 8.91% 2015 Montana None 2015

Alaska 1.76% 2015 Nebraska 6.80% 2015

Arizona 8.17% 2015 Nevada 7.94% 2015

Arkansas 9.26% 2015 New Hampshire None 2015

California 8.44% 2015 New Jersey 6.97% 2015

Colorado 7.44% 2015 New Mexico 7.35% 2015

Connecticut 6.35% 2015 New York 8.48% 2015

Delaware None 2015 North Carolina 6.90% 2015

Florida 6.65% 2015 North Dakota 6.56% 2015

Georgia 6.96% 2015 Ohio 7.10% 2015

Hawaii 4.35% 2015 Oklahoma 8.77% 2015

Idaho 6.01% 2015 Oregon None 2015

Illinois 8.19% 2015 Pennsylvania 6.34% 2015

Indiana 7.00% 2015 Rhode Island 7.00% 2015

Iowa 6.78% 2015 South Carolina 7.13% 2015

Kansas 8.20% 2015 South Dakota 5.83% 2015

Kentucky 6.00% 2015 Tennessee 9.45% 2015

Louisiana 8.91% 2015 Texas 8.05% 2015

Thé Store Inc. 10

Maine 5.50% 2015 Utah 6.68% 2015

Maryland 6.00% 2015 Vermont 6.14% 2015

Massachusetts 6.25% 2015 Virginia 5.63% 2015

Michigan 6.00% 2015 Washington 8.89% 2015

Minnesota 7.20% 2015 West Virginia 6.07% 2015

Mississippi 7.07% 2015 Wisconsin 5.43% 2015

Missouri 7.81% 2015 Wyoming 5.47% 2015Source: TaxFoundation.org

Thé Store Inc. 11

LogisticsTable 13 – Technology, Infrastructure, and Shipping

Logistics US UK

Technology

317.4 million cell phone users

129.4 million land line users

276.6 million internet users

(86.8% of population)

78.5 million cell phone users

33.24 million land line users

57.3 million internet users

(89.8% of population)

Infrastructure

Queen Elizabeth Way

Welland Canal

Port of Buffalo

National Distribution Center

Southampton Port

Quay Warehouse

Railway System:

Cross Country, Great

Western Railway

Princess Royal

Distribution Centre

Shipping

I. Cargo truck importing goods

from Toronto, onto Queen

Elizabeth Way, into Buffalo,

settling goods in National

Distribution Center

II. Cargo Ship from Port of

Toronto, through the Welland

Canal, docking at Port of

Buffalo, settling goods in

National Distribution Center

I. Large Cargo Ship from

Port of Toronto across

Atlantic Ocean to Port of

Southampton, settling

goods in Quay Warehouse.

Railway system takes

goods to Princess Royal

Distribution Centre

InternetTime Warner Internet

Verizon

Sky Broadband

PlusNet

Source: World Bank, CIA World Factbook

Thé Store Inc. 12

Figure 2 – Toronto, ON to Buffalo, NY: 159 km, 1.75 hrs.

The geographical distance between Canada and the U.S. holds great benefits for quickly

addressing and adapting to market trends when emerging into the new market in order to take

foothold. Shipment would simply be cargo-truck driven 2 hours, crossing the border to reach

Buffalo, where an established packaging and distributing warehouse is located. The merchandise

is then land-transported to major cities like New York.

Figure 3 – Toronto, ON to Southampton, UK: 5655 km, 10.2 hrs.

Having a distribution centre in North America poses difficulties when shipping cross the

Atlantic Ocean. Shipment would first be from the Toronto seaport to the Southampton seaport,

arriving approximately 6 days after departure, then stored in a warehouse at Southampton until

freight transferred to the major cities for packaging and distributed to retail stores.

Thé Store Inc. 13

5,655 km

Toronto, ON to Southampton, UK

10.2 hrs by Travel Time

Distance

159 km

Toronto, ON to Buffalo, NY

1.75 hrs by Travel Time

Distance

7.0 Market and Competitive Intelligence

7.1 Market Intelligence

Target Market Table 14 – Target Market

Target Market US UK YearLanguage English English 2015Population 321,368,864 64,088,222 2015

Source: CIA World Fact book, IMD World Competitive Yearbook

Government Table 15 – Government

Government US UK YearPolitical Stability Index 76 81 2015

Corruption Perception Index 0.62 0.44 2014Source: World Bank, CIA World Factbook

Economy Table 16 – Economy

Economy US UK YearCapital Washington, DC London 2015

Population 321,368,864 64,088,222 2015

GDP$17.1 trillion $2.524 trillion 2013

$17.52 trillion $2.594 trillion 2014$17.97 trillion $2.66 trillion 2015

GDP Growth Rate1.5% 1.7% 20132.4% 2.8% 20142.6% 2.5% 2015

Export$1.633 trillion $480.8 billion 2014$1.598 trillion $442.0 billion 2015

Import$2.374 trillion $680.4 billion 2014$2.347 trillion $617.1 billion 2015

Exchange RateCAD

$0.90 USD £0.54 GBP 2013$0.80 USD £0.52 GBP 2014$0.74 USD £0.53 GBP 2015

World Ranking 1 5 2015Source: CIA Yearbook 2016

Thé Store Inc. 14

7.2 Demographic Characteristics

Demographic Table 17 – Demographic

Demographic US UK Year

Population 321,368,864 64,088,222 2015

Urban population 81.6% 82.6% 2015

Language English English 2015Source: World Bank, CIA World Factbook

Economy Table 18 – Economy

Economy US UK Year

Gross National Income 52,947 39,267 2015

Human Development Index 0.915 0.907 2015

Income Level(GDP Per Capita) 54,629.5 39,762.1 2011-2015

Education (Yrs of Schooling) 12.9 13.1 2015Source: World Bank, CIA World Factbook

7.3 Product-Specific Market DataTable 19 – Target Market Research Survey

Survey

Target Markets US & UK

Sample Size 300,000 each

Methodology Random Sampling

Research Time Period November 7, 2015 – February 7, 2016

Research Topics Age group, Annual income, Caffeine intake, Tea preference, Consumption frequency

Table 19 – Survey Results US

Thé Store Inc. 15

Survey US

Age Group

Out of the 300,000 randomly surveyed population:53% were ages 20-34,24%were ages 35-45,12% were ages 46+,And 11% were 15-19.

Annual Income

75% of age group 20-34 had annual income between $50,000 ~ $74,999;

80% of age group 35-45 had annual income between $75,000 ~ $99,999;

7% of age group 46+ had annual income between $100,000 ~ $149,999,

2% had $150,000+.

Consumption Frequency

70% of “20-34:25-50K” had tea often, 27% sometimes, and 3% everyday;

62% of “35-45:75-100K” had tea sometimes, 9% often, and 7% rarely;

88% of “46+:100-150K” had tea often, 12% sometimes.

Caffeine Intake

85% of “20-34:25-50K:Often” liked caffeinated, 72% of who drank sometimes liked organic, and 41% who drank everyday liked caffeinated.

70% of “35-45:75-100K:Sometimes” liked caffeinated.

60% of “46+:100-150K:Often” liked organic.

Preference in Type

50% of”20-34:25-50K:Often” chose Black Tea, 25% chose Herbal, 10% chose Green, and 5% chose Oolong.

67% of”35-45:75-100K:Sometimes” chose Black Tea, 23% chose Herbal, 5% chose Green, and 5% chose Oolong.

30% of”46+:100-150K:Often” chose Black Tea, 55% chose Herbal, 10% chose Green, and 5% chose Oolong

Willingness to Spend

70% of”20-34:25-50K:Often” were willing to spend $20-30

60% of”35-45:75-100K:Often” were willing to spend $30-40

80% of”46+:100-150K:Often” were willing to spend $50-60

Table 20 – Survey Results UK

Survey UK

Thé Store Inc. 16

Age Group

Out of the 300,000 randomly surveyed population:46% were ages 35-45,37% were ages 20-34,11% were ages 46+,And 6% were 15-19

Annual Income

87% of age group 20-34 had annual income between $50,000 ~ $74,999; the rest of age group 20-34 had annual income between $25,000 ~ $49,999;

60% of age group 35-45 had annual income between $75,000 ~ $99,999, 14% had $100,000 ~ $149,999, 1% had $150,000;

78% of age group 46+ had annual income between $50,000 ~ $74,999, 12% had $75,000 ~ $99,999, 2% had $150,000+.

Consumption Frequency

76% of “20-34:25-50K” had tea often, 17% sometimes, and 2% everyday;

82% of “20-34:50-75K” had tea often, 12% sometimes, 6% rarely.

73% of “46+:50-75K” had tea every day; 76% of “46+:75-100K” had tea every day, and interestingly 92% of “46+:150K+” had tea every day.

Caffeine Intake

87% of “20-34:25-50K:Often” liked caffeinated.

82% of “20-34:50-75K” who drank often liked caffeinated.

70% of “35-45:75-100K:Sometimes” liked caffeinated.

60% of “46+:100-150K:Often” liked organic

Preference in Type

75% of”20-34:25-50K:Often” chose Black Tea, 5% chose Herbal, 10% chose Green, and 10% chose Oolong.

67% of”35-45:75-100K:Sometimes” chose Black Tea, 23% chose Herbal, 5% chose Green, and 5% chose Oolong.

30% of”46+:100-150K:Often” chose Black Tea, 55% chose Herbal, 10% chose Green, and 5% chose Oolong

Willingness to Spend

85% of”20-34:25-50K:Often” were willing to spend $20-30

80% of”35-45:75-100K:Often” were willing to spend $20-30

90% of”46+:100-150K:Often” were willing to spend $30-40

Thé Store Inc. 17

Analysis Results: Figure 4 – US Survey Results Major Demographics Breakdown

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In the US Market, from the sample population, the majority who were willing to

participate in the survey were those ages 20-34, with ages 35-45 behind them. 20-34ers seem to

have tea more frequently than 35-45ers, yet interestingly of those surveyed, 46+ers were the

group that had tea the most frequently. 20-34ers liked black tea the most, with herbal teas

following closely behind; this trend interestingly looks to be the same for most age groups. The

sections of each age group seem to have the recurring theme that most of those that are employed

fulltime usually get a cup of beverage for work, with those who spend less time at work less so.

The portions of the age groups who drank tea the most often were all willing to pay a mid to high

level of pricing for adequately mid to high level quality teas.

Figure 5 – UK Survey Results Major Demographics Breakdown

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In the UK market, from the sample population, the majority who were willing to

participate in the survey were those ages 35-45, with ages 20-34 behind them. While there is a

larger population of tea drinkers in the age group 35-45 in comparison to 20-34, the portion of

those who drink “often” is interestingly larger in the age group of 20-34 and it must be noted that

the majority of the 46+ers had tea every day. A similar trend for favouring black and herbal teas

from the US market is seen here in the UK as well. The portions of the age groups who drank tea

the most often were willing to pay a low to mid level of pricing for their teas in proportion to

competitor tea pricings in the UK.

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7.4 Pricing StrategyTable 21 – Sample Pricing Strategy US

Product Black Herbal

Retailer Price Before Tax 4.55 4.55

Duty Tax Rate 8.48% 8.48%

Price After Tax 4.94 4.94

Markup 35% 35%

Total 6.67 6.67

Table 22 – Sample Pricing Strategy UK

Product Black Herbal

Retailer Price Before Tax 4.55 4.55

Duty Tax Rate 10% 10%

VAT Rate 20% 20%

Price After Tax 5.99 5.99

Markup 30% 30%

Total 7.79 7.79

Product

Thé Store will offer a simple selection of Black Tea and Herbal teas in loose leaf or tea sachet

form. The selection is simple for those who are interested in tea but intimidated by the vast

amounts of tea to be introduced to some major tea lines.

Place

Tea sachets would be seen at supermarkets and grocery stores, with loose-leaf packages

displayed in dedicated retail stores. Both options will be available through the online The Store

as well. Customers can also download the Thé Store App to order online for shipment or pickup.

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Price

The product is premium tea, and so will its pricing be reflected on that, playing on the buyer’s

tendency to associate higher price with higher value and higher quality. With that in mind, the

pricing will need to remain competitive to existing U.S. companies.

Promotion

Creating a relaxing atmosphere and lasting brand image. Implement mobile phone technology

into business. Social Media awareness through Facebook, Twitter, Instagram, etc. Free Wi-Fi at

locations.

Table 23 – US Competition $/100g

Product Domestic Price Export Price to US Stash Tea Teavana Bigelow

Black Tea 4.55 CAD 6.25 CAD=4.66 USD 9.97 USD 6.95 USD 5.79 USD

Herbal Tea 4.55 CAD 6.25 CAD=4.66 USD 9.97 USD 6.95 USD 5.79 USD

Table 24 – UK Competition $/100g

Product Domestic Price Export Price to UK Taylors of Harrogate

Glengettie Tea

Ahmad Tea

Black Tea 4.55 CAD 7.79 CAD=4.09 GBP 0.84 GBP 0.796 GBP 1.4 GBP

Herbal Tea 4.55 CAD 7.79 CAD=4.09 GBP 0.84 GBP 0.796 GBP 1.4GBP

8.0 ConclusionThe research has revealed that both countries, the U.S. and the U.K., have potential for

the consumption of teas. Nevertheless, the U.K. customers have also demonstrated some

indications that they would not be willing to pay the price that would justify shipping costs from

the North America to Europe. This market has lesser population, which means lesser

consumption and most importantly, the sales taxes are higher than in the U.S. It is clear that

expanding to the U.S. market is a natural choice for the company, out of these two markets

considered.

Primary research indicates that there is a great demand for tea in the U.S.markets.

Demand for teas from the U.S. is documented throughout all ages from young professionals to

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the older work force population. The majority of the age groups enjoy black caffeinated teas as

well as organic herbal teas. From what is shown in the research, it is advised that the company

market the black and herbal teas to the U.S. demographics in a fashion that is tailored to the busy

professionals, “on the go.” Pricing considerations including shipping and taxation costs still

show that with a similar quality in product, it is possible to undercut the general industry

standard pricing in the U.S. market.

Secondary research further helps conclude that this country is primed for the company’s

market entry. While the analysis of the political, economic, technological, social and regulatory

framework reveal that the U.S. is a suitable market for the company’s exports of the selected tea

brands at this time, it also points out at some difficulties such as exchange rates fluctuations. To

address the challenges with the exchange rates and eventual losses of the Canadian company

when it comes to collection of payments from the U.S. consumers, the company may employ

forward contracting. This option will provide some assurances that the business remain

profitable throughout the course of expansion.

The research has shown that the U.S. has a stable government, a strong currency,

declining trend of inflation, growing economy, as well as lesser taxes to pay when importing.

The majority of the U.S. is continually growing, has been urbanized, and has English-speaking

population with a high GDP per capita. There is a growing market for tea in the U.S. as a number

of tea shops continue to rise. The city of Buffalo, the major U.S. city that is also closest to the

company’s headquarters in Toronto, is similar to Toronto in that it borders a great lake, and can

be travelled to by either highway or ship within a day.

This research plan’s limitations are that all the primary research points to the general

consumer preferences. Future research should be conducted to gain additional consumer

preferences statistics related to state demographics. It is recommended that the company

implement the expansion to the U.S. within the next 4-6 months, in order to ensure data currency

and reliability.

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8.1 Action plan

Commission additional research in the U.S. market to be completed within the next 3-4 months

Once the company has expanded to most major cities in the state of New York, it needs to plan for the all-state penetration around the U.S.

Complete a full business plan for the international expansion to the U.S. to measure the costs of the project implementation and consider the needs of opening an office in the New York city

Carefully evaluate human resources and other resources the company needs for the expansion, to uncover hidden problems with the expansion.

Thé Store Inc. 22

9.0 Bibliography1) https://www.cia.gov/library/publications/the-world-book

2) https://www.wto.org

3) http://www.britishchambers.org.uk

4) https://www.gov.uk

5) https://www.commerce.gov

6) https://www.cbp.gov

7) https://www.dutycalculator.com

8) https://www.taylorsofharrogate.co.uk

9) https://www.glengettietea.co.uk

10) https://www.ahmadtea.com

11) https://www.stashtea.com

12) https://www.teavana.com

13) https://www.bigelowtea.com

14) https://www.worldbank.org

15) http://www.imd.org/wcc/

16) http://www.euromonitor.com

17) http://www.theglobaleconomy.com

18) http://www.international.gc.ca

19) http://www.europaworld.com

20) Trebilcock, M. J., and Robert Howse. The Regulation of International Trade. London:

Routledge, 1999.

21) Newfarmer, Richard S., William Shaw, and Peter Walkenhorst. Breaking into New

Markets: Emerging Lessons for Export Diversification. Washington, D.C.: World Bank,

2009.

22) United Nations: Department of Economic and Social Affaris, Statistical Yearbook 2012

Fifty-Seventh Issue, United Nations Publication 2015.

23) Whitaker’s, Whitaker’s 2015: Today’s World in One Volume, Bloomsbury Publishing Plc.

2014.

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10.0 Appendices

10.1 Appendix A - Thé Store Research Process

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10.2 Appendix B - Thé Store Survey Sample

THÉ STORE 439 University Ave, Toronto, ON M5G 2N8 (437) 836-3100

Thé Store is conducting a survey to offer the Northern teas in your area. We are only asking for a few minutes of your time. No personal information will be asked in this survey. Which age group do you belong? 10-14 15-19 20-34 35-45 46+

What is your income level? Less than $25,000 $25,000 ~ $49,999 $50,000 ~ $74,999 $75,000 ~ $99,999 $100,000 ~ $149,999 $150,000 or more

How often do you drink tea? Everyday Often Sometimes Rarely Never What kind of tea do you drink? Regular Caffeine-free Organic

What type of tea do you prefer? White Green Oolong Black Herbal How much would you spend on quality tea? $20 ~ $30 $30 ~ $40 $40 ~ $50 $50 ~ $60

THANK YOU FOR YOUR TIME!

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Pu-erh

10.3 Appendix C – Thé Store Information Management Cycle

Need for information Perform research Analyze and process information

Share and apply information

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10.4 Appendix D – Great Lake Ports Travel Time

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