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Herb Industry Pioneers Sell to World’s Second Largest Tea Company
by Mark Blumenthal
Tetley Tea Group/Tata Tea, the second largest tea company in the world, has purchased Good Earth® Teas and its parent company, Fmali Herb Co. of Santa Cruz, California. The terms of the sale were not disclosed but reliable sources indicate it was less than $50 million dollars.
According to Reuters, Tata the parent company to Tetley Tea Group of the UK (TTTE.BO), purchased the Good Earth and Fmali through Tata’s U.S. subsidiary, Tetley Teas.1 Good Earth Teas are sold in grocery, gourmet and natural food stores across the United States, with a strong presence in the Western U.S. Good Earth markets herbal, fruit-flavored, medicinal and specialty green and black teas with reportedly a 3.7 percent national market share. The company's annual sales are estimated to be more than $16 million.1
Good Earth will continue to blend and pack the Good Earth teas in Santa Cruz and expand the brand in selected world markets emphasizing its California roots, according to a statement from Tata cited by Reuters.
Tata Tea acquired Tetley of the UK for $432 million in 2000, according to the Reuters article. Reuters also states that Tata and other major tea companies in India have been divesting their tea plantations to focus on promoting their brands.
“We were only a marginal player in the U.S. tea market (with Tetley) with a presence in black tea and a small presence in specialty,” Tata Tea Managing Director Percy Siganporia is quoted by Reuters. “What this acquisition does is give us critical mass in specialty, which is very fast-growing. It gives us not just the brand, but also knowledge of the U.S. market,” he said.
The original Good Earth tea is a Sweet and Spicy tea that was the “house tea” of the Good Earth restaurant chain, a concept restaurant that featured all natural ingredients with menu items that were prepared fresh daily. Good Earth was started in California in the early 1970s by its founder Bill Gault. The chain was purchased in 1979 by General Mills and expanded to over 55 units until sold in 1986 to one of the franchisees. According to Ben Zaricor, CEO of Good Earth/Fmali, his family purchased the trademark and trade secrets in 1992 after founding the Good Earth tea products under license from the restaurant chain with the Fmali name beginning in the early 1980s. (Zaricor B., personal communication (e-mail) to M. Blumenthal, Oct. 27, 2005). At that time Fmali was one of the major bulk and specialty herb supplier to the then emerging herbal tea trade in the U.S. Fmali began shifting its market focus toward production and marketing of the branded tea line when it became Good Earth Tea’s contract packer.
Zaricor and his wife Louise Veninga started the Fmali Co. in 1971, selling Chinese herb specialties like Asian ginseng roots (Panax ginseng) and Tiger Balm®, the well-known Chinese analgesic rub. Fmali was in the vanguard of the developing natural food and specialty product companies which first started proliferating in the San Francisco Bay area in the 1970s. From those entrepreneurial beginnings, Fmali was the first American herb company to establish the trade of importing Chinese herbs directly from the People’s Republic of China after President Richard M. Nixon began to normalize trade relationships with China in 1971.
The Fmali Co. has operated continuously since 1972 in Santa Cruz, beginning in the founders’ home and then expanding to the old “Fog Kist” artichoke warehouse where Fmali first began the milling, processing and blending of herbs, teas and spices for resale to companies such as Celestial Seasonings, Lipton and Bigelow among many others in the emerging specialty tea trade in America. The company was especially noted in the early days of the herb trade for its development of Chinese specialties, especially Chinese ginseng and “Siberian ginseng” (Eleutherococcus senticosus), plus wild native American herbs, and other botanical materials.
Zaricor and Veninga were significant players in the emerging herb market in the U.S. They helped to popularize ginseng in the 1970’s with the publication of Veninga’s beautiful coffee table-style book, The Ginseng Book, (1973) the first book on ginseng published in the U.S. in 80 years. In 1976 they also wrote and published Goldenseal Etc., a handbook on the wildcrafting of important medicinal plants native to the U.S. They were co-founders of the Herb Trade Association, the predecessor to the American Herbal Products Association. They were also co-founders of Botanical International of Long Beach, California in 1977, at that time a major state-of- the-art supplier of botanical ingredients.
One of the lasting and most significant contributions of Veninga and Zaricor to the modern herb industry occurred on the legal-regulatory level. In 1983 Fmali sued the U.S. Food and Drug Administration on a point of law in what is now considered a landmark case, Fmali vs. Heckler2 (Margaret Heckler was FDA Commissioner at that time). Prior to the passage of the Dietary Supplement Health and Education Act of 1994 (DSHEA), which states that herbs and other dietary supplement ingredients are not food additives, FDA often took the position that an herbal or other natural ingredient were food additives, requiring pre-market proof of safety. FDA also contended that such proof should include a history of safe use within the U.S.
Fmali’s attorney, William R. Pendergast, an attorney specializing in FDA law, persuaded the 9th Circuit Court of Appeals to find that in 1958 when the food additives provision was passed by Congress, its term “common use in food” never intended to limit the evidence of use as a food solely to history of use in the U.S., i.e., that foreign marketing experience was allowable to help establish the safety of a food ingredient. The result of the Fmali case was to allow the relatively free importation of herbal ingredients as foods thereby not requiring pre-market safety approval. If the FDA had prevailed, the result would have stunted the growth and development of the modern herb trade at a pivotal time in its history, and would have adversely affected the importation of many common foreign botanical ingredients that constitute much of today’s multi-billion dollar herb industry.
Reached for comment for this article Louise Veninga and Ben Zaricor emphasized that this acquisition will ensure that the Good Earth line under the new leadership of the Tetley Tea Group/Tata Teas will now have the resources to become an international brand leader in the specialty tea trade. Veninga and Zaricor will continue in their role in the foreseeable future to lead the company in Santa Cruz. They also have retained the rights to the Good Earth Restaurants and intend to develop a plan to “re-launch the unique concept of the restaurants to its former leadership in healthy dining.”
References
1. Anon. Tata Tea buys U.S. brand Good Earth. Reuters. Thursday, October 13, 2005.
2. Fmali Herb Inc. v. Heckler, 715 F.2d 1385 (9th Cir., 1983).
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