John Seelmeyer

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November 12, 2012
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Branded products, private-label work boost Davidson's

Davidson's Organics came through the recession just fine, thank you, as its health-conscious and relatively affluent clientele had both the money and the health-consciousness to buy its organic tea.

"Our customers are educated people who enjoy quality tea and understand the differences between organic tea and conventional tea," says Kunall Patel, who directs the company's operation.

Now as the Sparks-based company looks for accelerating growth in a recovering economy, it expects private-label and custom development of tea blends will provide a further boost to the production of the products it sells under its own name.

Founded in 1976, Davidson's was purchased five years ago by an Indian family, three generations in the tea-growing business, who were looking for vertical integration.

That transaction provided Davidson's with a strong marketing hook its owners knew darned well that the company's tea is organic, because they grow much of themselves that served it well through the economic downturn, says Patel.

But even with solid sales, the company had unused capacity to put to work.

Enter the private-label and custom-manufacturing business, which today accounts for somewhere between 30 percent and 40 percent of its business.

Customers range from companies who are willing to pay top dollar for their own special blend of tea in specialized packaging for use as corporate gifts to companies that buy an existing blend in white-label packaging that allows them to co-brand their product with the tea company.

Davidson's combines its knowledge of the tea business, its deep catalog of recipes that combine tea, herbs and flavorings, the skills of its staff of 15 and the available capacity on its specialized equipment as key selling points for custom orders, says Patel.

It even flies some big customers to its tea-growing operations in India, giving them a close first-hand look at its business.

While the company has competitors, especially among manufacturers who work as co-packers for big retailers, Patel says his company's expertise in tea makes a big difference.

"They're not tea companies," he says of the co-packers. "They're machine companies."

Davidson's, meanwhile, continues to build its own branded consumer business, selling through channels that range from grocers to restaurants to gift shops across the country.

It sells direct to consumers, too, through a recently upgraded Web site, a traditional phone and catalog operation and a retail store at its East Glendale Avenue facility. (The store, once open only during the holiday season, now is open year round.)

The combination of business-to-business sales, custom manufacturing and consumer-direct business, Patel says, provides Davidson's with an enviable diversity that allows it to spread risk across numerous markets.

It's looking to further diversify by increasing its focus on medicinal and herbal teas. While only a small part of the tea business worldwide, medicinal and herbal products are by far the fast-growing segment of the business, Patel says.

This summer, for instance, it rolled out a line of six herbal teas based on tulsi , a type of basil plant that grows in India. Tulsi isn't commercially grown anywhere in the world, but Davidson's provides seeds to small farmers who grow the crop organically at the company's tea gardens.

And they are segment where Davidson's can make good use of its source of organic tea.

That's a particularly big deal in tea, Patel says. Unlike other farm products lettuce, for instance pesticides can't be washed from tea leaves. Washing, after all, isn't much different from steeping tea leaves.

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Northern Nevada Business Weekly Updated Nov 12, 2012 12:00AM Published Nov 12, 2012 12:00AM Copyright 2012 Northern Nevada Business Weekly. All rights reserved. This material may not be published, broadcast, rewritten or redistributed.