Zhena Muzyka's product line started as something of a personal expression. Not only did Muzyka, founder of Zhena's Gypsy Tea, formulate the organic tea blends herself, but her likeness was on every tin. The packaging designs, decorated with stars and a full spectrum of wild colors, were created in-house based on the founder's tastes. "We did whatever we thought looked good," says Muzyka. "We used as many fonts as we wanted." But the product's "hippie" vibe, as Muzyka describes it, seemed to be limiting the tea's appeal. It was available nationwide, but about 80 percent of the Ojai, California, company's annual sales came from its home state.
In 2008, Muzyka hired Stuart Avery Gold, the former COO of Republic of Tea, one of her company's larger competitors, to give the brand a top-to-bottom makeover. "It was this small California company that didn't have all the DNA it would take to compete on a national basis," says Gold. "In order to achieve a hyperleap, we had to go in another direction." The direction Gold chose was going upscale. "Tea is a 5,000-year-old product," he says. "It's hard to get people excited. It's not an iPhone." His idea was to treat the company's products like fashion collections, each focused on a specific market. Muzyka and Gold also revamped the look of the tea bags themselves, turning them into showy pyramids made of corn silk. "They're not tea bags," says Gold. "They are couture sachets."
For the new "collections," Gold looked for budding markets in which Zhena's Gypsy Tea would have less competition and consumers would be willing to pay premium prices. "The problem in any kind of business venture is it's competitive," he says. "Everyone's saying 'Mine's better' or 'Mine's cheaper.' I thought it would be best to repackage the brand into a wide-open space." In 2009, the company launched three new retail lines, priced from $7.49 to $9.99 a tin, each aimed at a different demographic. "Our hope is to widen the net and gain new customers by creating new categories," says Muzyka.
The first was a line of tea targeted specifically at female customers. "Women are responsible for about 80 percent of tea purchases," says Gold. "We wanted something that speaks directly to them." Muzyka assembled a collection of tea blends with ingredients, such as açai berries and pomegranate, that are high in antioxidants and intended to promote women's health. The line, dubbed Pink, launched in early 2009, and 70 cents from every purchase goes to breast cancer research.
Next, the company launched a line for health-conscious foodies. The tea is grown using the techniques of biodynamic agriculture, a strict method of organic farming that treats the farm as a living organism and has recently gained popularity in the wine industry. "Biodynamics are the next big thing," says Muzyka, who together with Gold saw an opportunity to introduce one of the first biodynamic teas. Finally, in the summer, came a collection aimed mostly at Hispanic Americans, based on the idea of a tea cocktail, with flavors such as mojito mint and coconut rum. The tropical teas, which can be served over ice, are marketed mainly in the South and Southwest, and the labels are in English and Spanish. "The Hispanic consumer is the fastest-growing consumer," says Gold. "Probably one that's not as focused on as it should be."
A key aspect of the rebranding effort was Gold's packaging design. "We tried to come up with an upscale package," says Gold. "Good things come in good packaging." Most of the tins include a new cleaned-up and modernized version of the gypsy logo, and a muted color palette that reflects the type of tea inside.
At a time when many companies are paring down their product lines, pitching the new teas to retailers was surprisingly easy, says Muzyka. "Other companies are hiding in their shells," she says. "When no one else is doing anything new, it's the perfect time to shine." Adds Gold: "When you can go in and wow them, the question becomes not 'How much is it?' but 'How fast can I get it?' "
Still, Muzyka worried that changing her products would alienate her core customers. In fact, sales did slow following the introduction of the packaging; Muzyka believes customers had trouble recognizing the products. So she launched a PR campaign, engaging her customers through the company's mailing list and its Facebook page. "I can't stand at every shelf and say, 'The coconut chai label is black instead of white now,' " she says.
That early scare proved short-lived. Since Gypsy Tea launched the new products and revamped its packaging, same-store sales have increased 30 percent to 300 percent. Perhaps most impressive, East Coast sales recently surpassed West Coast sales for the first time. The new products are also performing well in the Midwest and the South. "We've seen really good growth in Texas," says Muzyka. "The tropical collection is doing extremely well down there." She is expecting 2009 sales to reach at least $6 million, up from $3.5 million in 2008.
For Muzyka, the creative process of remaking her brand was, in the end, well worth the effort. Still, she admits she wasn't at first crazy about the new packaging, some of which omitted her fanciful dancing-gypsy logo altogether. But Gold assured her that because the new products were "category creating," they required more text to explain their purpose, and he didn't want the design to get too cluttered. "Such a small package can get crowded," says Gold. "You just have a millisecond to speak to people on the shelf." So Muzyka swallowed her pride. "The hardest part was being humbled, really accepting what I didn't know," Muzyka says. "I've had people say to me, 'That's your baby! How could you allow someone else to come in and change everything?' But it's not whether you like it; it's whether the customer will like it."