
Tea Co-packing allows new tea brands and businesses to start selling their teas without having to invest in expensive factory equipment first. Photo credit: Empire Tea Services.
Selling dry tea comes with a relatively high barrier to entry for many retail operators in the United States. Not only are there concerns around sourcing—where to purchase the tea, choosing initial offerings, and validating them with customers when minimum order quantities (MOQ) can bring exorbitant risk, blending without specialist knowledge—but there are other challenges with choosing packaging, creating branding, marketing, and then of course, packing.
As in many other fields, the most obvious way to mitigate this startup risk is to utilize co-packing, or contract packaging. Co-packing is a contract agreement between two companies which can loop in a wide variety of services but essentially means that the retailer is outsourcing aspects of production.
Tea co-packers continue to evolve in response to the rapidly-evolving US tea market. How each came to the business is different, but all are united in solving a sticky issue for clients. And one of the first major problems to solve is the gap between expectation and reality for new tea brands.
Access ≠ Success
“We get a lot of food and beverage brands that believe that they’re ready to start selling tea,” says Matt Suggs, founder and CBO at PartnerSlate, a co-manufacturer marketplace serving brands including Unilever, Campbell’s, and Danone. “They have an idea and they think the very first step is to talk with a co-packer. But that’s not really the case. There are a lot of ducks that they should get in a row first, like thinking through the product itself and its process requirements. Do you actually have a commercial formula or recipe for the tea, not just a recipe on a napkin? Have you thought about scaling that recipe, your volume projections and what they are based upon, and the type of packaging you want for the tea?”
Tea is one of the most-accessible beverages, and is highly nostalgic. Friends, neighbors, or customers may encourage one to start a tea company, and from there actually making it happen can be dense. MOQs are a barrier to entry even within the co-packing world, which is why some co-packers specialize in enabling startups to enter the space.
“We call ourselves the ‘biggest little co-packer on the East Coast’,” says Steve and Jennifer Lorch, who together run Table Rock Tea, a South Carolina-based tea farm and co-packing facility. “Basically, we work with people literally from an idea in their kitchen. People come to us with a plastic bag of a homemade tea blend. We help them do R&D, figure out packaging, and make it scalable.” Table Rock Tea, which derives about 30% of its business from co-packing, sees itself as the necessary step for new tea brands until they can meet the MOQ for more standard co-packers. Table Rock Tea is one of the only co-packers that lists all prices on its website to facilitate ease of entry for new clients.

Table Rock Tea, founded by Jennifer (pictured above) and Steve Lorch derives 30% of its business from Co-packing. Photo credit: Table Rock Tea
Consultation and Collaboration
Lalith Guy Paranavitana, President and founder of Empire Tea Services LLC and Tea Temptations in Columbus, Indiana, hasn’t actively sought clients for many years—his firm runs entirely on a referral basis, and anyone who calls will get him on the phone directly. He initially got into co-packing after leaving his home country of Sri Lanka in 1989 due to political turmoil. In Sri Lanka he had been a director of one of the largest tea corporations, with twenty years of experience managing large tea estates and factories. “Tea co-packing and private labeling was something I could do with my sources,” he says. “I bought a machine for pyramid bags and have focused primarily on pyramid-style tea bags, putting them in tins or stand-up pouches, and labeling them for other businesses.”
He points out that tea is constantly evolving. “Things like chai are now mainstream, but 10-15 years ago it was a niche market, similar to yerba mate or rooibos. Now in the United States there is very little demand for traditional teas. Americans are more into variety.” It takes specialization to be able to track what is popular, manage the business itself, and direct clients in the right path. “In a way, it’s a collaboration,” he says. “It is in my interests to see my clients be successful and to that end I have to give them good advice.” He will often work with newer clients to determine what types of teas might sell best based on their area. For example, “When I came to the USA I thought I could sell Ceylon [Sri Lankan] tea, but there was no market for it as a standalone. I could call it English Breakfast, and it would sell better than strictly Ceylon.”
Equipment (and Inventory) Required
Tea co-packing addresses the barrier to entry, which is factory equipment. “It’s expensive to buy these machines,” says Andi Biron, co-founder of Biron Teas in the Macon, Georgia area, “and they are not easy to run. Ours is extremely sensitive! We are talking about getting Q-Tips and cleaning tiny sensors that have tea dust on them. There’s also a language barrier between us and our tech support in Japan.” For new tea brands, the specialized equipment (which includes teabag packaging and overwrapping machines, along with ribbon mixers and others such as milling/grinding, moisture analysis, and more) and the footprint combine to make co-packing the smartest way to get started.

Biron Tea invested in tea packaging equipment to meet their own needs and then eventually added Co-packing as another revenue stream. Photo credit: Biron Tea
There are limited options when it comes to equipment, and some co-packers get into the business simply because they want to optimize the ROI on their expensive factory. Biron says, “We started working with a co-packer and it reached the point where we needed our own equipment. We were closing a big deal with Kroger [a prominent grocery chain in the United States] and thought we really needed to do it ourselves in order to make money on it. Ironically, that business piece fell through a year or so later, but by then we had made the investment. We visited the World Tea Expo in Las Vegas and made our choice, and now this is what we do.”
Paranavitana points out that since there is room in the competitive landscape for tea co-packers and private labelers, it’s important for new brands to do their homework when choosing a partner. “It’s easy enough to make a website,” he says. “When interviewing co-packers, you should ask if they can provide inventory, and what their infrastructure is.” Certifications are important, depending on the GTM strategy, and each co-packer has a different approach to, for example, FDA Organic Certification. Biron adds, “Our clients have to be the right fit. At first we did everything for startups, but now we have recurring clients. Larger co-packers will send us pallets of product and we will package for them when they are over capacity.”
The Future of Tea
Co-packing businesses and other types of contract partnerships, including ready-to-drink (RTD) bottling and distribution, continue to evolve as the marketplace evolves. Suggs and his partners feel it’s important to offer education to potential new players in the field, which is why PartnerSlate has created a robust free platform called PartnerSlate Academy to introduce new entrepreneurs in the space to all necessary aspects of building a tea brand, including market research and product development and extending to building a “go to market” (GTM) strategy and navigating the choice of a co-packer.
Meanwhile, at least for Table Rock Tea, the future looks like more growing of tea in the United States (Steve Lorch wrote the first book on the topic, called “How to Grow and Make Tea in the United States), a focus echoed by Biron who plans to eventually start tea farming. This shift is interesting, and while unlikely to become a volume play at any point, demonstrates the enduring and exciting nature of the tea business in the United States.