Parent firm of Yogi Tea plans expansion
EUGENE — Fueled by growing demand for its lineup of hot teas, the maker of Yogi Tea plans to roughly double its space by building a $12 million facility in west Eugene.
East West Tea Co., Yogi's parent company, plans to buy 13 acres of vacant land in the Westec Business Park off Highway 126, where it will build a plant and offices totaling 150,000 to 200,000 square feet, CEO Conrad Myers said.
"We have property in escrow," he said. "We're deciding whether to start with 150,000 square feet and later enlarge (it), or build out the whole thing at once."
The company, which has 103 U.S. employees — about 85 of them in the Eugene-Springfield area — plans to expand its workforce as it expands production, Myers said.
The company plans to add five employees in the U.S. by the end of the year, and forecasts adding 30 to 40 positions from 2016 to 2018, said Sat Bir Singh Khalsa, director of global community relations and HR development.
East West Tea Co. is owned by the Sikh Dharma religious community, which is based in Espanola, New Mexico, and was founded by the late Yogi Bhajan.
The tea company is what remains of Golden Temple of Oregon, a food and beverage company that was started by the local Sikh community in the early 1970s and became a pillar of Lane County's natural food industry.
The investment in the new plant continues that longtime local presence, Myers said, adding, "we're here for the long haul."
East West Tea is the unnamed food company that The Register-Guard reported in late April was trying to decide whether to expand at the site in Westec or one farther west in Greenhill Technology Park.
The company ultimately chose Westec, Myers said, because "we think it's an easier site to build on."
"We think the soil conditions are better," he said. "There are some wetland remediation issues not yet complete on the other site, which lends some uncertainty."
East West Tea hopes to break ground next summer and to move into the new building in mid-2017, Khalsa said.
However, the timeline will be determined by what the company discovers in its due diligence, Myers said. He said the company's lease for its International Way facility in Springfield expires in September 2018.
"We've given ourselves plenty of time to make good decisions and work with our landlord partners," Myers said.
The 13.3-acre Westec parcel is between Oregon Lox Co. and Lane Memorial Gardens & Funeral Home and is owned by developers John Hammer and Richard Hunsaker, according to Lane County property records.
It is in the west Eugene Enterprise Zone, which offers expanding companies three to five years of property tax waivers.
Myers said they had not calculated the tax savings associated with a waiver.
But "that's not our prime motivation," Myers said. "Our prime motivation is our business is growing. We're situated in several locations. That's not the most efficient way to run our business, and it doesn't make it cohesive for our employees."
When the company opens the new plant, it will close three facilities it leases: a 38,000-square-foot headquarters and factory at 950 International Way in Springfield's Gateway area, a 32,000-square-foot warehouse in west Eugene, and a 14,000 square-foot warehouse in Coburg, Myers said.
He declined to provide detailed financial figures for the privately held company. But he said, "we've had excellent growth both here and in Europe over the last two years."
In addition to the Springfield site, East West Tea has an office in Portland; European headquarters in Hamburg, Germany, where Myers has been based since the managing director there resigned in November 2013, and a tea packaging plant in Imola, Italy, near Bologna.
East West Tea makes about 60 products for the U.S. market and introduces two to three new products each year, Myers said.
It is pushing to make its products in the U.S. with 100 percent organic ingredients — something the company has already achieved in Europe, Myers said.
In June 2014, it introduced a recyclable K-Cup product for Keurig brewing machines, he said.
The Yogi brand's niche in the tea market has always been in "functional, wellness teas," a niche that is growing more quickly than the overall tea market, Myers said.
U.S. retail sales of tea and ready-to-drink tea in bottles or cans were $7.3 billion in 2014, up nearly 20 percent from 2009, according to Mintel International, a market research firm. Sales are projected to continue to grow at least through 2019.
"The great majority (of Yogi teas) have a functional purpose, with roots in Ayurvedic wellness and medicine," Myers said. "That's our sweet spot: They're functional and delicious."
Over the past decade, Yogi Tea has made the leap from natural food stores into mass retailers, such as Walmart and Target.
"There are many, many more opportunities to find our products," Myers said.
For now, East West Tea makes bagged teas and K-Cups, but other products are "always a possibility," Myers said. "We have a strong brand. Our main focus is on tea. Despite this being a 30-year-old company, it continues to grow like a much younger one."
Yogi tea had sales of $27 million in 2009, according to court documents filed as part of lengthy legal dispute with a group of then-Golden Temple managers, including former Golden Temple CEO and Eugene resident Kartar Singh Khalsa.
In December 2011, a Multnomah County judge found the group of Golden Temple managers was unjustly enriched by a 2007 corporate restructuring that shifted 90 percent of ownership in Golden Temple to the executives and away from the Sikh Dharma community. The judge ordered the managers to return $36 million to the Sikh community.
The former management group left the company in fall 2012, Myers said. In a settlement reached in late 2012, Kartar Singh Khalsa agreed, among other terms, to relinquish ownership interest in Golden Temple valued at $23.5 million.
That dispute "is tremendously behind us," Myers said.
However, a different lawsuit is ongoing. It involves allegations of trademark infringement by Yogi Bhajan's widow, Bibiji Inderjit Kaur Puri, a Los Angeles resident.
"There is unresolved litigation with the widow," Myers said. "We hope it will be resolved. We'd like to have a settlement. That hasn't happened yet."
Arbitrators found several years ago that the Yogi brand name belongs to Yogi Bhajan's heirs. The yogi died in 2004, leaving half of his estate to his wife and half to a group of 15 female former assistants.
Myers said East West Tea has received authorization to use the trademark from the group of Yogi Bhajan's former assistants.
The cereal brands Golden Temple built, including Peace Cereal and others, are now owned by Post Holdings, the parent company of Post Foods.