Snarky Tea
DEAL
EPISODE SUMMARY
🕓 Air Date: November 5, 2017
Asking For:
$150,000 for 25%
Investor:
Kevin O'Leary, Bethenny Frankel (50/50)
Deal:
$150,000 for 50%
PRODUCT SUMMARY
Snarky Tea offers high-quality whole-leaf tea sachets with blends designed to match various moods and situations, challenging the conventional image of tea as a gentle beverage.
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Background Story
Jenni-Lyn Williams, the owner and creator of Snarky Tea, entered the Shark Tank seeking $150,000 for a 25% stake in her unique tea business. Recognizing the struggle many women face with societal expectations, she decided to break the traditional image of tea as a gentle and dainty beverage.
Instead, she rebranded it as a “badass beverage” with blends tailored to match different personalities and situations. Williams’ passion for the idea stemmed from her belief that women are not alone in facing these challenges. She took a product associated with numerous expectations and transformed it into a representation of strength and attitude.
The Product
Snarky Tea offers a range of blends, such as “Get Your Ass in Bed” for relaxation and “Fierce Bitch” for tackling a long to-do list. Each blend is carefully crafted using whole-leaf tea sachets with intentional flavors and benefits.
For example, the “Calm the F**k down” blend features Caribbean rooibos fruit with coconut, known for its anti-inflammatory and hypertension-reducing properties. The company primarily sells through its website, with 85% of sales made online and 15% through wholesale to boutiques and gift shops.
The pricing structure involves $12.99 for a tin containing 15 sachets. However, concerns were raised about the cost, as each tin’s production cost was $4.34. The company had achieved $190,000 in sales over eight months, with a customer acquisition cost of $11.
Despite the success, some Sharks expressed reservations about the sustainability of the edgy branding and potential competition with major retailers, especially Amazon.
How It Went
The company’s position before Shark Tank
Snarky Tea had shown promising performance, generating $190,000 in sales within eight months. The majority of sales (85%) occurred through the company’s website, with an additional 15% through wholesale partnerships with women-owned boutiques and gift shops. The product had gained traction, particularly among online customers, but concerns were raised about the sustainability of the marketing approach and potential challenges posed by competitors like Amazon.
The cost of acquiring a customer was $11, and each tin, priced at $12.99, had a production cost of $4.34. The company’s founder, Jenni-Lyn Williams, expressed a strategic focus on women as the primary purchasers, targeting a niche market. However, some Sharks questioned the viability of the business model, citing potential limitations in reaching a broader audience and concerns about competing with major retailers.
The Negotiations:
During the negotiations, Lori Greiner and Robert Herjavec both opted out, expressing concerns about the sustainability of the cute labeling and gimmicky branding. Kevin O’Leary and Mark Cuban also withdrew from the deal, with O’Leary emphasizing the potential threat from Amazon.
Kevin O’Leary expressed interest in the product’s potential fit within his wedding platform. He made an offer of $150,000 for a 50% stake, proposing a partnership. Bethenny Frankel attempted to make a similar offer, but the founder countered, suggesting a combined deal with 25% for each Shark. After some negotiation, the founder, Jenni-Lyn Williams, accepted Bethenny’s offer, forming a partnership with the entrepreneur and TV personality.
Despite concerns raised by other Sharks about giving away 50% of the business, Williams saw the partnership as an opportunity to leverage Bethenny’s experience and customer base. The deal concluded with Bethenny Frankel and Jenni-Lyn Williams becoming 50/50 partners in Snarky Tea.
