Doug Putman T-Kettle c.e.o.
By Dan Bolton
Canadian turnaround investor Doug Putman has acquired leases and reopened 45 tea retail locations abandoned this summer by Montreal-based DAVIDsTEA, formerly North America’s largest tea chain retailer.
The stores will be re-branded T. Kettle, an “ethically sourced” tea seller with a selection of 150 certified organic, Kosher, and vegan teas. The first locations opened November 1 across Canada with seven US locations, two in California and one each in regional malls located in Indiana, Massachusetts, New Jersey, New York, and Pennsylvania.
Putman told CBC News that he began exploring the expansion of T. Kettle this spring when he learned that DAVIDsTEA had closed its retail stores and filed for bankruptcy protection. Soon after, the chain of 231 stores announced that only 18 stores would remain open, mainly in Eastern Canada with two in Alberta, one in Manitoba, and one in British Columbia. DAVIDsTEA then pivoted to online and distribution of packaged tea at supermarkets, including market-leader Loblaws.
Putman told Joanna Pachner at the Toronto Star that “timing is everything. You get presented opportunities, but nothing is ever perfect. If we weren’t in the situation we’re in, another retailer wouldn’t be pulling out of 150 stores. People say, “Oh, they couldn’t make it, but you can?” But just because one restaurant fails doesn’t mean you shouldn’t open a restaurant. The opportunity is there because someone has left the market and landlords and suppliers are eager to partner.”
Putman convinced landlords at several malls in both the US and Canada that he could succeed where DAVIDsTEA foundered.
The 36-year-old entrepreneur has a convincing track record. His first acquisition, Sunrise Records, which he bought out of bankruptcy in 2014, generated enough profits that he could acquire UK’s HMV Canada locations. He purchased 100-store HMV UK in 2019. The 70 HMV Canada locations were re-branded Sunrise Records. The company’s flagship store in Birmingham, UK, called HMV Vault, stocks more than 25,000 vinyl albums and 80,000 CDs.
Putman’s most recent acquisition, for $10 million, is the financially troubled For Your Entertainment (FYE) entertainment venues in the US. FYE offers music, film, and pop culture collectibles and apparel at 200 locations.
Putman enjoys green tea but says that he is not a “purist.” He is often seen with a cup of coffee in hand.
Tea is doing quite well in Canada. During the first months of the pandemic, sales of the comforting drink soared, outpacing all other fast-moving consumer goods (FMCG), according to market researchers. Tea and Herbal Association of Canada President Shabnam Weber said that tea sales have since slowed but “not much.” Sales growth is 11% greater than last year through the first eight months of 2020. Tea continues to outpace FMCG’s 9% growth as a category during that same period, she said.
Little was required to re-open the T. Kettle stores. Existing plumbing, lighting, and fixtures greatly reduce launch expenses. T. Kettle employs 250 workers including Teaologists trained in tea tasting and presentation. Putman announced plans to open 100 locations.
The company website promotes “premium blends of black to green, oolong to white, herbal to matcha, and much more. There is something for everyone at T. Kettle, whether you’re a novice or connoisseur tea drinker.”
Sampling is critical in converting conventional tea drinkers to more premium lines. Landlords know that tea venues build foot traffic at a time when footfalls are in steep decline.
Retail consultants favorably cited the fact that consumers like to buy local.
In addition to the US locations, T. Kettle is operating eight locations in Alberta, two in British Colombia, four locations in Manitoba, two in Saskatoon, 17 in Toronto, two in Quebec, and three in the maritime provinces.
“Success is not assured,” said Putman. “There isn’t a secret sauce,” he told The Star. “Retail is very tough, but if customers are passionate about your products, you’re already ahead. And people who love records and pop culture are super passionate,” he said.
The same can be said of tea lovers.