Argo Tea Focuses on Convenience Stores

CEO says retail channel is "making the right choices to serve consumers"

OAKBROOK TERRACE, Ill. -- Arsen Avakian considers himself a naturally curious person. It's his willingness to ask questions and his desire to learn that have made his Argo Tea what it is today: a well-respected beverage brand often referred to as the Starbucks of tea, a brand that has a firm target on the backs of the influential millennial generation. Argo Tea

When Avakian opened his first tea café in Chicago in 2003, he spent two years as a barista, serving customers and asking questions.

"A lot of people say I wasted two years as a barista when I could have been opening additional cafes," Avakian told CSP Daily News during a visit to CSP's office in Oakbrook Terrace, Ill. "But I spent that time asking customers, 'What makes this flavor taste sweeter than that one?' … Our objective was to build an unbelievable product with an unbelievable bottle and unbelievable merchandising."

A major part of that was using "real" ingredients while emphasizing the "healthy signature" of its beverages.

Eleven years on, Argo Tea is now targeting the packaged-beverage and convenience store industries, having first broken into the c-store channel through a test in Chicago in 7-Eleven stores. Today, the brand is sold by 7-Eleven, Sheetz, Wawa, Kum & Go and other leading chains in the industry as a high-end iced tea retailing for what Avakian calls the "sweet-spot" price range of $1.99 to $2.59 per 16-ounce bottle.

"Our inspiration is what Apple has done," he said. "We want to be creative. We want to be cutting edge. We want to use our stores to build an experience and built the brand, to build an emotional connection."

For Argo, Avakian sees his cafes as his billboards for the products now sold in other retail channels, significantly at colleges, universities and hospitals. Then, he sees the unique bottle as the company's iPhone. "It's about creating that unique impression where you think, this feels right, it feels better than a Blackberry [phone] or whatever."

By bringing many consumers' first impressions of the brand to college campuses, Avakian believes he is hitting consumers at an impressionable time, one that will make them seek out the products after leaving school. Finding Argo cafes in urban settings is the next step, and expanding into larger retail channels brings the experience full circle as those dedicated customers begin to expand beyond the city.

"There is an opportunity window [in iced tea] right now, and we're filling that window as fast as we can," Avakian said. And he's counting on the c-store industry to be a significant part of the brand's growth.

"Where we go from here is a matter of the evolution of the industry," he said. "And I believe the convenience sector is the one [channel] that is making the right choices to serve consumers well into the future."

Currently offering packaged tea in eight flavors, Argo will add four new SKUs--Limonelle, Blueberry White, Oolong coconut and Hazelnut Chai--soon. Other future rollouts will include unsweetened teas in mid- to late 2014 and a line of "teappuccinos" in late 2014 or early 2015.

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