Portland is fortunate to have some of the best coffee in the world.
It’s comforting to know that when the time calls, a rich sumatra roast is never difficult to locate. However, when Portland native anthropology student Heather Howitt was trekking through the Himalayas, a warm latte was all too scarce. To settle her cravings she purchased a cup of hot chai from a local peddler. She didn’t realize it at the time but this moment would become the basis of her future entrepreneurial career.
If you’ve ever attended business school at Portland State University then I’m sure your Professors have dropped the name Heather Howitt once or twice. Heather is the founder of Oregon Chai, a brand which introduced an entirely new product and successfully kicked off the Chai tea market in the U.S. Her business, which she started from the ground up, went on to reach a national sales of $30 million by 2000. Not bad for an anthropology major! When I heard that she would be speaking at Confessions of an Entrepreneur, I couldn’t wait to hear her story. Confessions of an Entrepreneur is a lecture series where entrepreneurs share their path to success and the obstacles they had to overcome.
Compared to past speakers Heather doesn’t give the impression of the entrepreneur type. She seems like the kind of free-spirited woman you see jogging in Forest Park, which actually happens to be her favorite pastime. But her passion and drive to succeed in the business world became evident as she shared her story.
“It all started by accident”
After returning to Portland, she was surprised to find that Chai tea was practically nonexistent, but through hours of research in the recipe section of Powell’s, she got the concept of how to brew her own chai tea. “My early batches of chai used to just be for friends and family but somewhere during this period I went from saying ‘Someone should start a business doing this’ to ‘We should start a business doing this’”. Heather’s first buyers were small cafes and coffee shops and as the Chai tea craze started to develop, her client base was quickly increased.
“Copycats are the greatest form of flattery”
As the Oregon Chai brand grew, competitors became interested. In a meeting full of Starbucks execs, Heather was asked how much she wanted for her company. “I replied ‘more than you can offer’ but at the time the number in my head was $20,000”. Her decision not to sell was fortunate but as chai tea established itself as a new market, Starbucks launched their own recipe of Chai tea which according to Heather, “tasted like the inside of a balloon”. She admits “copycats are the best form of flattery”, but she is still a little sore about how Starbucks spliced her tagline. Oregon Chai’s tag was ‘Nirvana, now available in a cup’ and Starbucks launched their tea with the tag ‘Nirvana in a cup’. This was a minor setback for Heather and as Oregon Chai’s client list grew she had to turn her attention toward retail packaging/co-packing.
“The nice thing about the food industry is that it’s very forgiving”
Heather described this era of her business as “having a few hiccups”. She purchased one of her chai’s at a Border’s bookstore and noticed that it had some funky flavors to it. It turns out her co-packer at the time also packed salsa. Not a good situation for a new brand but fortunately Heather was planning on switching packers anyway. The demand for Oregon Chai now required a tank large enough to keep up with the rapid growth. She ended up moving to Sunshine Dairy where they had a 500 gallon tank. At first this appeared to be a smooth transition until Heather received a call of someone complaining about mold in their chai. “When I got back to my office there were hundreds of calls”. Apparently the fault lay with Oregon Chai’s switch to paper cartons. A product recall is something an entrepreneur hopes they never have to encounter. Questions like ‘Will our brand reputation survive? Can we bounce back from this?’, ran through her head. “The nice thing about the food industry is that it’s very forgiving”.
Heather’s perseverance while overcoming obstacles, which starting a fast growing business definitely throws at you, has payed off. Oregon Chai is considered one of Portland’s classic brands and eventually was sold for $75 million in 2004. Since then Heather hasn’t lost her entrepreneurial mindset. Her favorite part of being an entrepreneur is that she’s her own boss. “When I need to, Forest Park is waiting for me. I can come back covered in mud and no one will fire me!”
It’s stories like these that get us excited about what we do. Because of the potential Heather saw in her brand she managed to turn an obscure Himalayan tea into a new cafe beverage market category. Working alongside brands as passionate, persevering, and open to new ideas as Oregon Chai, is a rewarding experience. As brands face obstacles it’s best to approach them from a human perspective. Brand personality, voice, and engagement are all qualities we bring to surface when working with our clients. What may at first seem like an obstacle may in fact be an opportunity, depending on how you look at it.