Argo Tea

History

Argo set out to be the Starbucks of tea. Argo Tea was launched in 2003 by three partners: Arsen Avakian, Simon Simonian, and Daniel Lindwasser. Avakian and Simonian are boyhood friends from Armenia. They grew up in Yerevan and emigrated in the 1990s to the United States, where Simonian, a computer scientist, and Avakian, a startup company specialist, teamed up following the dot-com bubble. Avakian first came to the United States as a Fulbright scholar. Lindwasser is a Frenchman who moved to the U.S. in 1997. He is a former management consultant. Avakian's father, Yuri, holds multiple wind and solar technology patents.

The original 900-square-foot (84 m2) cafe for Argo Tea, which had 24 indoor seats and 20 patio seats in its 2003 configuration, is located at 958 West Armitage Avenue on the corner of Sheffield Avenue in Chicago. The venture, which opened in June 2003, was the first tea cafe in Lincoln Park. It was across the street from a Starbucks. Argo borrowed its name from the story of Jason and the Argonauts in Greek mythology. The original store was financed by its founders, who were all experienced management consultants, without outside investors. They used their own credit cards as lines of credit. Chicago architect Mark A. Cuellar was hired to design Argo's early cafe interiors.

At first, the company experimented with expansion by distributing boxed dry tea at Whole Foods, but quickly restrategized. Barely six months after opening, Argo was planning expansion in Chicago and beyond. Late in 2004, Argo signed a lease to make its first expansion beyond its original location (at Loyola University in the Near North Side community area on Rush Street). By the beginning of 2006, there was a third location (in the Loop community area on Randolph Street near State) with a fourth on the way. In March 2006, Argo expanded to the South Side of Chicago at the University of Chicago Medical Center, which is located in the Hyde Park community area, with a location that is described as a teaosk, a themed kiosk. By 2007, the company decided to pursue consistency across its locations and began a centralized concentrate brewing process. After five years, the franchise had 10 locations ranging from 1,000 to 2,000 square feet (93 to 186 m2), all in Chicago. In Chicago, several of the early cafes, including the 11th inside Merchandise Mart and the 13th at O'Hare International Airport, have been located in close proximity to a Starbucks storefronts with the thought that Starbucks is expanding demand for tea. By February 2009, the company was still a Chicago metropolitan area business with all 13 of its locations. In July 2011, Argo became the first outside retail tenant of the Tribune Tower in six years when it leased space.

Argo opened its flagship New York City location in January 2010 by signing a 10-year lease in the Flatiron Building. It promptly followed with a Chelsea neighborhood storefront and then a Columbus Circle store in the spring. It opened a total of four cafes in New York City in 2010, taking advantage of the late-2000s recession, which allowed the company to procure prime retail locations such as Union Square, Columbus Circle and the Flatiron District at reasonable rates. The business replaced a Dean & Deluca in the Union Square neighborhood. Among the investors in the New York City expansion were Sam Zell, Glen Tullman and Oxford Capital. In May 2011, the company added its fifth tea room in New York City.

By 2010, the company eschewed its aspiration to be the Starbucks of tea, "Starbucks is more like Windows PC—it's old, less healthy and designed for everyone—and we want to be more like Mac: young, healthy, cool and a more unique, innovative brand." Avakian said the company hopes to build the Apple of tea. At the time, it was opening its 18th store (14 in Chicago and 4 in New York) and had $10 million in annual sales, making it the largest chain focused on tea, according to Technomic Inc.

In 2011, the San Francisco Chronicle credited Argo as being the company that caused the 21st century tea shop revolution, while Time ran a story claiming that Argo has gotten America to drink tea. As of 2011, the United States market had grown to over 3,000 tearooms, according to the Tea Association of the USA. According to Beverage Digest, between 2006 and 2009, coffee consumption declined 2.3 percent in the United States, while tea consumption rose 4.5 percent. The growth of teas has caused Starbucks to drop the word coffee from its name and build the Tazo brand. Starbucks had a total 2010 revenue of $9 billion, while the entire tea industry was $7.7 billion, including $443 million by the top 6 U.S. tea chains. By early October 2011, Argo claimed 26 locations in four cities (Chicago, New York, Boston and St. Louis) and distribution in 3,000 grocery stores around the country including Whole Foods, Safeway and Dominick's.

When the lease came up for renewal at the original location on April 30, 2013, the company did not extend the deal, but the company would open a “greenhouse” location, with mainly glass walls, near Rush Street the following month. By March 2013, bottle drinks, which they had begun in 2010 were 20% of the company's business. By that time Argo Tea had opened a business location in Beirut and had planned to follow that with one in Doha in April 2013. It also intended to open 2013 Middle East locations in Abu Dhabi, Dubai, Kuwait and Riyadh. By September 2013, Doha was opened and that month a second Beirut location opened.

Argo Tea signed a licensing agreement in October 2016 with Caribou Coffee to open co-branded stores.

Tea is the second most consumed beverage in the world, after water. Argo was founded in response to a realization that Americans had so few tea offerings that they generally were unfamiliar with anything but bagged teas. At the time, most tea retailers either supplied bulk tea for home brewing or traditional sit-down service, but Argo focused on premium specialty drinks in paper cups. Meanwhile, a minority of Asian immigrants from countries such as India, Vietnam and China where tea is the national beverage were spreading some of their traditions. Argo endeavored to emphasize the healthy aspects of tea as an alternative to coffee. When it was founded, Argo was part of a field of blossoming tea cafe franchises meeting a burgeoning demand. By 2002, there were 1,100 tearooms with sit-down service. In 2003, retail sales of tea totaled $5.1 billion, and in 2005, as the specialty tea market was growing 20 percent per year, the total retail tea market was expected to surpass $10 billion by 2010.

Argo began with 35 teas from around the world, including black tea, green tea and chamomile tisane as well as exotic teas. From the outset, it included a mix of traditional Asian teas as well as teas from exotic locations. One of the companies staple drinks came from a vacation to Ipanema beach in Rio de Janeiro in which Avakian paid a juice bar operator to close shop to allow him to experiment with flavor combinations during business hours. Several of Argo's teas are seasonal. One of its signature drinks is the teappuccino, a black tea mixed with steamed milk and froth, which the company has trademarked. The menu leverages the new wave of specialty teas that may be served sweetened or spiced and that are blended with milk, sparkling water or fruit juices. In the early years, its favorite offerings were Bubble tea, Pomegranate tea, Matte Latte or Chai tea and milk and Tea sangria.

In its first years, the company sold illy brand coffee. While the company imports its teas from sources around the world, it now brews its teas at a centralized location in downtown Chicago. Argo started out selling loose tea in 1- and 4-ounce bags or in bulk. Among Argo's Americanized drink varieties is a version of the national drink of both Argentina and Uruguay, the mate, which Argo serves as a Mate late. By 2010, the company ventured into the grocery store market (Whole Foods and Treasure Island) with bottled specialty teas in Chicago and had plans for its own bottling facility. By the time the company opened its New York locations, it offered fair trade certified coffee. In 2011, the company expanded its distribution to grocery stores around the country.

According to the company's press release for the opening of its 20th location in 2011, the menu included "all natural tea-based signature drinks, over 30 varieties of loose leaf teas, fair-trade organic coffee, fresh-baked pastries, specialty foods, and a selection of teaware and accessories. The signature drink menu features healthy and unique options such Maté Laté with earthy maté, almond and milk, Green Tea Ginger Twist with Japanese green tea and ginger root, MojiTea with cool mint tea and lime juice as well as many others. The food menu features a wide assortment of freshly baked gourmet pastries, French quiches, and a SpecialTea Foods made with tea-infused ingredients such Teanie Panini, Tea Bites and wholesome Teapot Grains. Argo Tea’s ready-to-drink bottled beverages can also be found outside the cafés, in the finest grocery retailers across the country." Bloomberg Businessweek summarized Argo Tea's business as follows: "Chicago-based Argo Tea strives to redefine the message of tea as a healthy beverage and lifestyle choice, to create unique, all-natural tea-based beverages and to provide customer experiences that reflect modern designs and a sustainable environment." The tea ware and accessories include tea pots, high-tech tea infusers, and wide variety of tea cups.