Will Americans Wake Up And Smell The Chai? -- Tea Companies, Starbucks Market A Coffee Alternative

PORTLAND - "Chai" is the word for tea in much of the world. Some small Oregon and Colorado tea companies and coffee giant Starbucks hope it also will translate into profit in this country.

Chai - it rhymes with "high" - is a blend of black tea and spices, including ginger, cinnamon, cloves and pepper, often sweetened and combined with milk or cream, depending on the recipe.

Starbucks is testing its sweet and spicy blend in Portland and Dallas, until the end of the year, before deciding how to market what amounts to a tea version of the frothy coffee and steamed milk latte the Seattle company already brews throughout the country.

"I doubt it will ever replace coffee," said Greg Jackson, a Starbucks spokesman. "It's just another beverage alternative for folks looking for something tasty."

Despite its enormous popularity in much of Asia and India, chai brewers say the tea only recently found a widening market in the U.S. after gaining a toehold in the 1970s in the San Francisco and Boulder, Colo., areas.

"It was a very, very tough sell in the early years because nobody had ever heard about it," said Raphael Reuben, the founder of Masala Chai in Santa Cruz, Calif., widely considered in the tea industry to be one of the main contributors to the popularity of chai.

"Whenever I tried to sell it in other areas it was just impossible because nobody knew about it. The concept of a spiced tea had never appealed to anybody outside northern India. It was so tough in the early years you can't imagine."

Reuben has found a reliable market for his chai in the San Francisco Bay Area. But it has been Oregon and Colorado companies that recently began a strong campaign to market chai nationally.

Heather Howitt, a self-described coffee fanatic who founded Oregon Chai, considered a market leader, first tasted the tea as a student at the University of California at Santa Cruz. Later, on a trip through the Himalayas, she was forced to drink chai when there was no coffee to be found.

When she returned, she and her mother, Tedde McMillen, started mixing their own blend before starting their company.

In just three years, Howitt has parlayed the Oregon Chai flavor into a brand name that is marketed from Portland to Boston.

"The kind of strange thing is I'm not a tea drinker," Howitt said.

Market analysis, however, has shown companies such as Oregon Chai and Starbucks that coffee drinkers are looking for an alternative with less caffeine. Recent scientific studies indicate tea also may have benefits such as reducing the risk of cancer.

"Chai is much closer to a latte in that it's a frothy, milky drink. I think it's riding the tea wave as well as the latte wave," Howitt said.

Artine Yapoujian, the founder of Mountain Chai in Boulder brewed coffee for years before he tried his grandmother's chai recipe for customers at his Boulder coffee houses.

It was not an instant success, but after some experimenting with the recipe, word-of-mouth quickly spread, encouraging Yapoujian to try sending samples to grocery stores.

Now Mountain Chai and Oregon Chai have helped create a growing national market that has attracted attention from giants such as Starbucks.

Despite the popularity of coffee in the United States, nearly half of all Americans drink tea every day, according to the Tea Council of the U.S.A.

But the different recipes of chai may have to be tailored to find the right taste for an American palate accustomed to more traditional brews, such as Earl Grey or orange pekoe, said Larry Frank of the Tea & Coffee Trade Journal, a monthly based in Windham, Maine.

"I think it's a product that's growing substantially in the North American market," Frank said. "But I think it has changed from the original product."

The real key to selling chai, however, simply may be raising consumer awareness above a critical threshold, said Juanita Crampton, co-founder of Sattwa Chai in Newberg, a Portland-area competitor of Oregon Chai.

"We're finding incredible response nationwide," Crampton said. "A year ago we didn't find nearly that kind of response. It's truly a phenomenon."

Sattwa, which is a communal enterprise as well as a tea company, ultimately will benefit if a large company such as Starbucks enters the market.

"Starbucks will make it a household word," Crampton said. "And they'll pay the big bucks for the ad campaigns."