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Sitting amid a slew of colorful tea canisters, Ron Rubin, executive chairman of the Republic of Tea, hits the delete button on his computer. Then Rubin hits it again and again, going through his regular ritual of dismissing the many e-mails he receives from private equity firms and investment banks, most expressing interest in acquiring his specialty tea company. “My answer is no answer,” he says.
It’s easy to see why many find the company alluring. American tea consumption is taking off, with domestic sales jumping from $2 billion in 1990 to nearly $11 billion in 2014, according to the Tea Association of the USA. In 2012 Starbucks SBUX -0.06% acquired Teavana, which had revenue of $168.1 million and 300-plus salons, for $620 million. “We believe the tea category is ripe for reinvention and rapid growth,” said Starbucks CEO Howard Schultz at the time. And last summer Montreal-based DavidsTea went public with revenue of $142 million. On its first day of trading the stock rose 42% above its offering price, giving the company a valuation of $634 million.
Rubin has been told other specialty tea companies are selling for more than five times revenue, so the Republic of Tea, which topped $25 million in revenue in 2015, could be worth as much as $125 million. But he says he’s not interested in selling. An effusive 66-year-old, he recently doubled down on keeping his company independent, executing a plan to turn over the reins to his son Todd, 35. “I wanted this not only to remain a family business but also a generational business,” says Ron, who has started a new venture, a Sonoma winery, and says he considers himself a “zentrepreneur,” explaining, “An entrepreneur creates a business; a zentrepreneur creates a business and a life.”
Rubin purchased the Republic of Tea in 1994, when it was just two years old, from a group of owners including Mel and Patricia Ziegler, who had also founded (and sold) Banana Republic. Under Rubin, Republic promoted the complex and artisanal characteristics of tea as if it were wine. Combing the tea-growing regions of the world for high-quality leaves, the company helped create a designer niche, introducing more than 300 then-exotic brews like Ginger Peach, Milk Oolong and Double Green Matcha. He also imbued the company with his idiosyncratic corporate sensibility. Both the corporate headquarters in Novato, Calif. and its warehouse, packing and distribution facility in a nondescript industrial stretch of Nashville, Ill. were designed by a feng shui master and filled with soothing colors, curved walls, fountains and meditative spaces. Within those curved walls employees are known as ministers, retail partners as embassies and consumers as citizens.