Tea time: Davidson’s owners draw on Indian heritage to build Reno business
November 27, 2017
Kunall Patel, owner of Davidson's Organics in Sparks, is always on the hunt for ways to increase his company's revenue stream.
Davidson's Organics already offers more than 300 tea bag and loose leaf varieties of teas that are sold throughout the U.S. and beyond. Patel's latest venture is a line of medicinal "functional" blended teas targeted for improved sleep, digestion, energy and other areas. And last week, the intrepid 37-year-old stepped even farther out of the box.
Patel attended MJBizCon in Las Vegas, the largest cannabis industry conference in the world. He was there to consult marijuana companies looking to diversify their lineup of edible and drinkable cannabis products.
"I'm here to help create a new path for cannabis tea and edibles," Patel said. "The industry has picked up so much steam and growth and acceptance. I'm here as a tea expert for people who want to create products using tea for both for medicinal and recreational use.
"Due to the medicinal side of the research found in helping patients deal with their health problems, drinking a CBD-infused tea would allow them to ingest a healthy beverage without the negative connotations found with cannabis," he added.
It's just one of many efforts Patel has undertaken that have helped him quadruple his company's revenue since purchasing Davidson's Tea in 2007.
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With a decade of ownership now behind him, Patel, who was born in Kenya and spent part of his youth in India, can reflect on the factors that drove Davidson's growth over the last decade. A former commercial banker for JP Morgan Chase, Patel knew he could leverage Davidson's Organics into a much bigger player in the tea industry – but it wouldn't be easy.
"We were a small company when we bought it with just six employees," he said. "We had a steep learning curve as far as the infrastructure … and we had to learn packaging trends, tea flavor trends, as well as the market, which was just about five to seven years into the growing role of organics."
The first order of business was upgrading antiquated production equipment at the Glendale Avenue facility. The equipment for bagging tea could only produce paper-wrapped tea bags (think Lipton's), limiting Davidson's ability to create trendy and eye-catching packaging. Paper-wrapped tea bags also have limited shelf life versus modern packaging methods since the tea loses its essence over time as it is exposed to oxygen. New production equipment totaled roughly $500,000.
"In order to cater to the U.S. demographic, we had to invest in new tea-bagging machinery," Patel said. "We had to invest in the growth of the business for the next 10 or 15 years. Looking back, it was the best investment we ever made.
"It helped us quadruple our business and increase employee hiring from 6 to 35. It helped us improve the quality of the product to make it more shelf stable and enhance the oxygen barrier. Changing the packaging material to a more shelf-stable format allowed us to market products with longer shelf life, and it allowed us to export outside of the U.S. Making this simple change elevated us in the marketplace and put us on par with other tea companies."
Another overarching factor that has helped Davidson's Organics grow was the unparalleled depth of industry knowledge that comes from Patel's wife, Promilla, whose family has been growing tea in India for nearly a century. A third-generation tea grower, Promilla Patel's experience, coupled with Kunall Patel's business acumen gained from working for four years on Wall Street as a commercial banker and a degree in operations management from Rutgers University, made the duo formidable business partners.
"We already knew the tea industry well from sourcing and global tea and packaging trends," he said. "And working at JP Morgan in New York gave me the high critical analysis needed to analyze (prospective) markets."
Still, leaving a high-paying job on Wall Street didn't come without some trepidation. Patel said he made the leap and moved to Reno only on the condition that he take a two-year, hands-on crash course in all aspects of the tea industry. He visited a plethora of tea farms to learn the technical aspects of growing tea, and he immersed himself in all aspects of operations at Davidson's Organics to fully understand the company's infrastructure and manufacturing operations, customer base and supply chain.
"At the end of program, I knew our teas from farm to the finished product in the cup," he said.
And that's what separates Davidson's Organics from its competitors in a highly saturated market, Patel said. It's also become the pillar of the company's marketing and sales efforts.
"It's farm to cup," Patel said. "We are the only tea company that grows, imports, blends, manufactures, packages and distributes its own tea, and that sets us apart from all other tea companies. It's all vertically integrated, and that allows us to control everything we do."
Patel has become a world traveler in the past decade. The company sources tea ingredients from India, China, Sri Lanka, Egypt, South Africa, Brazil and Ecuador, to name just a handful of countries he's visited as he set up sourcing contracts. In the past decade, Patel estimates he's logged between 11 million and 15 million frequent flyer miles.
If he could change anything about the past 10 years, Patel said he would have bought out some well-positioned competitors and unique distribution companies that would have fast-tracked Davidson's Organics growth. But he's never wished for a different career.
"I truly enjoy what I am doing today," he said. "Every day I delight people's palates with the different blends of teas we manufacture. At end of the day, I am a salesman selling tea bags – and you have to sell a billion of them to make a living – but I really am bringing pleasure to people, and that is what I enjoy doing."