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The true story of how EcoTeas came to be [Interview]

May 26, 2012

Stefan, Juan, Milton of Eco Teas and Kraus Yerba Mate

(From left to right) Stefan, Juan, Milton

A few weeks after my interview with Steven Karr, from Guayaki, I came in contact with Stefan Schachter, founder of EcoTeas. After speaking with him for only a minute, I realized that Stefan is one of the people who, like Guayaki and other companies, has paved the road for Yerba Mate in the States. And by the end of the interview, I realized that the road is nowhere near being finished. Each brick has to be placed one-by-one, and it is in this interview that we see how one man–with an idea, friends, and a little luck–was able to build a company that has become the #1 loose-leaf Yerba Mate seller in the United States.

Matéo:

So a few people already know about the history of EcoTeas from the interview COD did with your Vice-President of Operations, but maybe you could tell everyone the story in your own words.

Stefan:

I went to Paraguay when I was seventeen, and I spent eight weeks there volunteering with an organization named Amigos De Las Americas. I lived in Southern rural Paraguay with a host family. That was the first time I discovered Mate, because literally everyone drinks Mate there. It’s pretty much done exclusively in a communal setting—where there’s one Mate in a circle…you know how it goes.

I thought that it was really cool, and when I got back from Paraguay, I had the idea of importing Mate into the States, and I fantasized a little bit about how I could do it. But, at that point, I was only seventeen and I didn’t know what I wanted to do. I ended up finishing up high school in Arizona, went to college in California for four years, and by the end of college I was most interested in agriculture. And I was interested in how to garden. It was my passion. So after I graduated in 1996, I moved to Santa Cruz, California, which was only forty minutes from where I went to college. I started to learn how to farm. I ended up doing an ecological horticulture apprenticeship at UC Santa Cruz, and also spent a summer at UC Davis doing an internship in sustainable agriculture. I also spent a long season as a market gardener with a weekly roadside stand in Aromas, CA, a town of about 2500 people.

For about three years, I did different farming and gardening practices, and then I was in a place where I said, “Okay, this is great, I learned a lot about organic farming,” but I didn’t feel like I had a concrete direction at that point. I knew that growing food, as a living, would be a hard thing to do, especially in the greater Silicon Valley without any capital. Anyway, I went on a road trip and, on my trip, around 1999, I discovered that everywhere I went, I was running into people drinking Mate the traditional way—with the gourd and bombilla. I said, “Wow! This is crazy!” and then I went to Ashland, Oregon, and there was a café serving Mate traditional style.

Read a review on Ecoteas yerba mate >>

Matéo:

Woah. This is amazing; who were the companies that were selling Mate at that time?

Stefan:

The company at that time was actually just some local Argentinean guy who had his dad send him Mate, from Argentina, and he was literally distributing it to friends. It was very grassroots. I think he may have been repacking it under his own brand, but it was very rudimentary stuff, which is how we started, too.

I went to New Mexico, and my cousin was drinking Mate. He said, “Yeah I learned about this in our permaculture class.” I was sort of blown away by all of that, and I started drinking it again, and I just began to love the energy and experience of it all. And when I was drinking Mate with my cousin in New Mexico, I said, “Why is Mate not available every where you go?” He said that he didn’t know, but that it should be. It was at that point that I said, “I’m gonna make this happen.” From that moment on, I knew that it was my calling—bringing mate to North America.

At that point, in 1999, it was still very foreign. Even today, you could make the claim that it’s still foreign, but a lot more mainstream compared to how it was. So I finished my trip, went to Tuscon, Arizona, where my mom lived, and I spent a couple of months there working on a business plan. Then I moved back to Ashland, Oregon, and I met up with my best childhood friend, Brendan, and we moved into a house together. I pretty much started the business, and he was my right-hand man from the beginning. At first, he was working outside of the business, and then he quit his job and started to work with me full time.

We started by finding an importer, based in Colorado, which was bringing in organic Mate, in bulk bags. We would buy 30 kilo bags, repack them into different sizes, custom blend them with other herbs, and print labels out on our home printer. Then we would go to farmers’ markets and sell them, and also bring Mate to festivals. We were just getting it all going, and getting a feel about how to run a business, because it was all really brand new to both of us. After about a year or so, our good friend Joe moved out and became the third partner of the company.

At that point I felt like the business could really take off, so I went back to South America on a sourcing mission. I was looking for a good organic Mate grower, and that was when I found Kraus, in the Misiones region of Argentina. I met Milton Kraus, his family, and they were super cool people. They had a great product, they were super friendly, and we just hit it off with them. We started to buy directly from them, but we still didn’t have any capital at that point. I had taken a little loan from my mom to get started, but it wasn’t enough to keep going. The loan lasted for a couple of years, but we didn’t have an income from the business yet. So it was hard to figure out what to do next.

Milton visited us in Oregon. Basically Brendan, Joe, Milton, and myself were all hanging out together and talking. We had just gotten a warehouse space, our first one, but we had no inventory. So Milton said that he wanted to invest in us, and that he would become a partner in our company because we had a lot of potential. He saw that we needed capital and inventory, but he didn’t have cash to put into the business. But what he did have was yerba. So he ended up investing by giving us two container loads of Mate.

(From left to right) Joe, Stefan, Brendan

Matéo:

How much is two containers loads?

Stefan:

Let me think for a second. It’s probably about 20,000 kilos.

Matéo:

Wow, I’m curious…how did he get that to you? On a ship?

Stefan:

Yeah, he shipped it on an ocean vessel.

So he sent the first one, and we finally had some inventory. We packed it up by hand, and we started to build our wholesale accounts. Then we had the opportunity to buy the domain name yerbamate.com.

Matéo:

Yeah, I was actually thinking about that before. It’s really amazing how you were able to get that domain.

Stefan:

Yeah, we bought that back in 2002. Anyway, we started to get a lot of traffic right away, once we got that website, so we had both inventory and a market. That really got the business off the ground. Once we went through the first container, Milton sent the second container, and for a couple of years we didn’t have to buy any Mate. With all of this, we were able to build our capital, build our accounts, and build our business. By the third container, we had enough cash to be able to pay for it. So the Kraus family really got us on our feet, and we’re now Kraus’ best customer.

Milton (left) and Juan (Father) Kraus

Matéo:

That’s interesting, are you Kraus’ only customer?

Stefan:

We’re not Milton’s only customer, but we are his only customer in North America. We have an exclusive agreement with him for the North American marketplace, but he sells it in Argentina, and exports to some other countries, as well.

Matéo:

That’s awesome. Were you ever selling any other types of Mate, or just Kraus?

Stefan:

Yeah, before we met Kraus, we were buying from another seller, the Jaguar Yerba Company. We didn’t even know it at the time, but we were actually selling the organic Las Marias yerba. That was the very beginning. Once we found Kraus, we exclusively switched to Milton, for the most part, but we do have backup suppliers that we can draw from if we need to. Our partnership with Kraus is strong, so we work with them as much as we can.

Matéo:

When Kraus was shipping you the containers, was there an agreement that you all were partners, and that you would eventually split profits?

Stefan:

Yeah, Milton actually received 20% of EcoTeas in exchange for giving us the Mate. And we also continue to buy from him; we’re up to our 46th container now.

Matéo:

I see that you guys have the 1 lb Green Energy Mate, which I tried. Is that the only 1 lb product that you have? I also know that you have the Tulsi and Peppermint blend, but were you considering branching out?

Stefan:

Well, for now, we ended up going with a real simple product line in order to get established. We started with the 1 lb bag, and straight yerba tea bags, and those were our only two products for a long time. We eventually expanded in other directions. As far as loose yerba goes, we also have a 5 lb bag, but it’s still just pure yerba, not a blend. At the moment, we just focus on the 1 lb bag, and we’ve become a leader in the marketplace with that. And I think that part of it is that it’s a great product, and also that we don’t have any other competing loose yerba products. Since all of our energy and sales are focused on that one product, we are able to really dominate. We have the #1 yerba mate nationwide, and it’s also the #1 selling fair trade tea, and the #1 selling loose-leaf tea, and it’s the #1 selling caffeinated tea.

Matéo:

Really…what about Guayaki?

Stefan:

Yeah, so, on the liquid side they have all of their beverages and other products, but as far as the dry side, we outsell them. And that’s on the loose-leaf side, they outsell us on the tea bag side. They’re the #1 yerba mate tea bag, and we’re #2. We’re #1 in loose, and they’re #2 in loose.

Matéo:

I remember talking to your VP of Operations, and she said that there’s a sort of “co-opetition” between you and Guayaki, would you be able to tell me more about that?

Stefan:

Yeah. Over the years, in the spirit of the herb itself, we’ve had a friendly relationship with them. In certain ways, they’ve sort of been a big brother to us. We all help each other to grow the Mate category, even though we’re competing with each other. When we have a chance, we connect, have a conversation about how things are going, and also hash out issues that may be coming up in the industry.

Matéo:

In that same vein, do you all speak with companies like Aviva or The Maté Factor?

Stefan:

Are we cooperative with them as well? Yeah. The truth of it is that I don’t know The Maté Factor people very well. I’ve met them, but we don’t really talk. I actually known Dan from Aviva very well, and we’ve worked together in certain ways. We’ve supplied them with gourds and bulk yerba at times, as well. I would say that we definitely have a good relationship with them. Nativa is also in the mix as one of the top American companies.

Matéo:

What’s your vision for EcoTeas in America?

Stefan:

My vision at this point is to expand beyond yerba mate. Of course, we still love it, and it’s our #1 product, but we don’t see it as being the only magical herb out there. We want to build a key product line that is focused on yerba mate, but also other herbs.

Matéo:

Oh, like what?

Stefan:

Like rooibos. That’s one. And the other core herb right now is called Tulsi, it’s an herb from India. Those are our two other core herbs, but we’re also doing a gunpowder green tea right now, and we also have our caffeine-free chai that has a rooibos base. And so, the idea is that we want to establish ourselves as a solid tea brand for the natural products industry. We don’t want to pigeonhole ourselves as just a yerba mate brand. We’re trying to expand our brand identification, and we’re really trying to get to the point where we have enough shelf presence and sales, that a store wouldn’t even imagine not having us on their shelves. It’s really easy to get shoved to the corner of a shelf and disappear. We want to get to the point where if we do disappear from a shelf, people notice. We would like to have at least between a half to full shelf of presence, with great and diverse selling products that are ethically sourced, organic, fair trade, kosher, non-GMO, and also packaged responsibly. We want all of the different certifications and indicators of quality and ethics.

The way the market is going, the natural foods industry is becoming more mainstream. And more supermarket chains are getting involved. As that happens, we’re planning on going along for the ride, and to some extent, I would say, we’re doing that. An example of this is Target. We’re selling in 200 Targets, and I didn’t even know about it until it happened.

Matéo:

What’s your take on Mate, and the growth of it, in the States? I’m sure it’s a lot different from the way it was in 1999 when you were on your road trip.

Stefan:

Overall, yerba mate as a category is now a core part of the tea category. There’s no question about it. Any natural foods store you walk into will either have Guayaki, EcoTeas, or both. Most have both. And maybe some other brands as well. It’s pretty ubiquitous at this point. It’s not quite ubiquitous in the mainstream, but you’ll find yerba mate all over the place. It’s definitely caught on in a major way, and I think that Guayaki was smart to put Mate in a bottle and a can. They’re appealing to American consumers, opposed to the traditional Mate drinker. I think because of that, it’s becoming more widely known, and the market has grown substantially from where it was in the past. Your website is playing a key part of creating the buzz about Mate, which expands it, draws interest, and grows the Mate category overall.

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