Silk Road Innovation Changes the Way We Drink Tea

Silk Road customers will realize their longstanding wish on Monday, July 28, 2015 when Victoria’s most famous tea company launches Silk Road bagged teas. Some 200,000 locally manufactured tea bags in 10 varieties will ship on that date to markets in every Canadian province and U.S. state. 

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Photograph by Jeffrey Bosdet.

To celebrate the local and online launch, Silk Road will feature samples of the new product at its Government St. and Victoria Public Market stores, and at a number of pop-up events at select cafés.

On the eve of this launch, Douglas interviewed Silk Road owner Daniela Cubelic, Canada’s ‘Queen of Tea,’ about her new product and her success strategies.

Tea. The very sound of the word summons a peaceful, easy feeling. Speak that word aloud and it’s as though a tiny, perfect chime rings somewhere in the distance, heralding a coming moment of serenity amid the hustle and bustle.

Few tea houses summon the tea state better than Victoria’s Silk Road, a fragrant and calming Chinatown fixture for the last 22 years. But underneath its tranquil and soothing atmosphere beats the heart of a smart, strategic business, one that’s about to take the tea world by storm with its new made-in-Victoria tea manufacturing plant.

Daniela Cubelic was 22 herself and already a tea aficionado when she launched Silk Road in 1992. With ambition to become a diplomat, Cubelic was finishing up a University of Victoria history degree when the opportunity came to launch a teahouse on the edge of Chinatown.

“I plunged in,” she recalls. “And to m surprise, I discovered I loved the business side of things. I hadn’t known that about myself, but right after the doors opened I became fascinated with all the business aspects: The merchandising; how customers interacted with the space; the psychology of sales; store layout.”

So it began. Launching into the tea business first with a partner and then on her own, Cubelic has turned her tea house into a flourishing international business selling locally blended teas and personal-care products. She has 35 staff, two store fronts (one on Government Street and one in the Victoria public market), a spa and a strong internet presence. Now she’s adding a tea production plant that can, for the first time, put Silk Road’s high-quality loose teas into individual bags.

And all of this has come without Silk Road wavering on its original commitment to product quality, a small environmental footprint and attentive customer service, notes Cubelic.

What the Customer Wants
Silk Road’s decision to go into the bagged-tea market is a game changer in the artisan tea world, a shift that Cubelic says most of Silk Road’s customers presumed she’d never make. Yes, she has been telling them from her earliest days in the business that tea loses quality and taste when crushed into a tea bag, and that tea bags are often loaded with chemicals to stop them from disintegrating. But through it all, her customers in turn never stopped telling her that if only the Silk Road brand was available in bags, they’d happily drink more.

“The shifts in a successful business happen through consumer demand,” says Cubelic. “I’m a very customer-driven person and so is my business. I listen to what my customers want and where they’re headed. If you’re not serving their needs, they’re going to go elsewhere.”

While Silk Road’s initial exports of the bagged tea will be to North American markets, Cubelic is bracing for growth of as much as 50 per cent in the next year or two. “I don’t know where this could go, but the growth potential is really significant. Larger hotels, conferences — there are so many applications for bagged tea. We could potentially double in size.”

Somewhere in the distance a tiny, perfect chime rings. And off goes Silk Road teahouse on an uncharted adventure.

Thoughtful Practices
Silk Road has “grown ever since it started,” says Cubelic. From its earliest days it hasn’t just sold tea but the whole tea experience: Better health, tranquil mind, thoughtful practices. (Cubelic considers tea to be “the yoga of beverages.”)

Those are compelling messages for harried times, and Silk Road has a loyal, growing customer base as a result. Cubelic has grown along with her business, and says that at 44 she has now spent half her life running Silk Road.

“The skills I’m using today are not the skills of 10 years ago,” she says. “What makes you successful at year two is not necessarily what you need at year five. When I reflect back now, I think getting a business degree would have been helpful. But on the other hand, when you don’t know what’s possible or not possible, that’s a powerful thing, too.”

Reyna Goshinmon, manager of Silk Road’s two retail outlets and spa, says what sets her boss apart is her passion for her business.

“From there, everything else falls into place,” says Goshinmon, who has worked at Silk Road for 11 years. “But of course, she’s also highly intelligent, and nothing is done by accident. And she really listens to her customers.”
While Silk Road clicks with its customers on all kinds of fronts, Cubelic took note as the years passed that customer requests for her teas in bag form never ceased.

“Even though we spent many years educating clients on the benefits of high-quality loose tea, and how easy it was to prepare, and sold a wide variety of tea wares with convenient built-in strainers, we still had clients who kept asking for us to produce Silk Road tea in a bagged form,” says Cubelic. “They identified that tea bags were especially desirable when they were in a rush, travelling or on the go …”

“We also wholesale teas to restaurants, cafés and hotels, and many of them were looking for the convenience of a bagged tea. So if customers were asking for bagged tea, it meant I needed to start figuring out a way to see if I could make it happen. But it was a much taller order than they realized.”

In the end, Cubelic spent the last decade trying to figure it out, with work intensifying since 2011. There were plenty of tea packers, but nobody who wasn’t going to crush the tea and lessen its quality. There were plenty of tea bag varieties, but none that met Cubelic’s requirements to be compostable, free of the chemicals commonly used to keep tea-bag paper from disintegrating, and big enough to give the tea leaves room to move. Cubelic came to see that Silk Road would need its own packing plant to ensure quality, but a solution for a better bag still eluded her.

Finally, she decided to work with a Japanese manufacturer who had developed the equipment for their own market. The result is a new tea bag, which is pyramid-shaped but looks distinctly different than other pyramid bags because it’s made of plant fibre.

Template for Success
The tea bag project is a typically brilliant Silk Road move, says Jenny Marshall of Eclipse Creative, which has managed the teahouse’s marketing for the past eight years (and designed the new tea bag packaging). “Daniela is one of the most savvy, marketing-minded clients we have,” adds Marshall. “She has an uncanny ability to position her brand really well …”

Silk Road not only had to sort out quality issues before launching into bagged tea, but to prepare itself for the major market growth Cubelic anticipates will come.

As with every Silk Road project, she wanted to ensure each step on the way forward aligned with company and personal values around quality, service and customer satisfaction. She sought business coaching with former Custom House CEO Peter Ciceri (now CEO of Oak Bay Marine Group), and formed her own “think tank” to help her work through problems.

“A business can outgrow the skills of the person who starts it, or outgrow capacity,” Cubelic says. “Suddenly, it hits you on customer service, or on quality or organization. For steady, long-term growth, I think you need to carefully consider all your decisions. I also live my values. There are a lot of things I’ve said ‘no’ to that could have made me more financially successful.”