W27301

BITACO TEA: A TASTE OF A BETTER WORLD

Juanita Cajiao Sáenz wrote this case solely to provide material for class discussion. The author does not intend to illustrate either
effective or ineffective handling of a managerial situation. The author may have disguised certain names and other identifying
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Copyright © 2022, Ivey Business School Foundation Version: 2022-06-09

In March 2021, Andrés Velasco the chief executive officer of Agrícola Himalaya S.A. (AH), along with
Carlota Llano, board member and shareholder, and Santiago Gonzalez, Bitaco specialty tea brand manager,
were reviewing the 2020 balance sheet of the Bitaco endeavour—a line of specialty tea the company
launched in 2013. AH was a family business in Cali, Colombia, dedicated to cultivating, producing, and
selling tea, and the business wanted Bitaco to break even in 2020. With restrictions due to the COVID-19
pandemic causing global logistics and market complications, Velasco was finding it difficult to achieve this
target. Gonzalez said, “Fortunately, we see that the trend is positive; since December 2020 sales began to
stabilize, we are optimistic about ending year 2021 well.” Velasco was less enthusiastic than Gonzalez
about the future of Bitaco, saying, “While growth by all means is not our primary objective, we should keep
this company profitable.” Llano pointed out, “The only way for Bitaco’s project to be viable is for AH to
continue generating long-term value.”

With AH’s growth strategy supporting the expansion of the Bitaco portfolio, black tea was generating a
smaller percentage of the company’s sales (see Exhibit 1). Considering labour costs, it was cheaper to
import tea than to produce it in Colombia. Velasco explained, “A harvester from AH had a daily salary of
approximately US$20, while a harvester in India, his daily wage did not exceed $5.1 In short, with these
costs, we were subsidizing the plantation and the processing plant.” Importing tea in bulk and packing it in
Colombia only required money, something that any competitor could have, but closing the plant and
plantation would have an environmental impact and affect the tea garden, the processing plant, the
employees, and the Bitaco community. AH had sustained double-digit revenue growth over ten years until
2019, and Velasco faced the dilemma of whether to keep the line of specialty tea—with a more realistic
forecast—or discontinue it. To make this tough decision, Velasco had to consider the company’s three
pillars of sustainability: value interaction, social responsibility, and environmental leadership.

AGRÍCOLA HIMALAYA

AH was a family business based in Cali, Colombia, dedicated to planting, producing, and commercializing
various types of tea. Joaquín Llano founded the business in the mid-1940s in the village of Bitaco, an area
in the mountains of the Western Colombian Cordillera, an hour’s drive from Cali. He planted the first tea

1
All dollar amounts are in US dollars unless otherwise stated.
Page 2 W27301

bushes from seeds from Sri Lanka (known then as Ceylon) on fields he owned. Joaquín Llano and his son
Alberto started the artisan production of loose-leaf black tea. Alberto Llano continued the business and
planted three varieties of tea (China, Assam, and a variety that shared qualities of each) on 45 hectares at
“Himalaya Hacienda,” his farm.2 He later imported tea processing equipment from England and began
construction of the production plant. He began by making loose-leaf tea packed in bags, and in 1960 he
launched the Hindú brand, which, as of 2020, remained one of the company’s greatest assets.

Himalaya Hacienda was located in a “mist forest” area, an ecosystem with ideal conditions for growing tea,
due to the altitude (between 1,700 metres and 2,050 metres), humidity, and light conditions throughout the
year. Alberto took care of the forest and was committed to conserving the various sources of water located
there that supplied the aqueducts of several neighbouring towns. AH was the only mid-sized company
established in the Bitaco region and therefore one of the few sources of formal employment for its inhabitants.

The Llano Family

Alberto and his wife Marichú had seven children. The family was always closely linked to the Bitaco area;
they spent all school holidays there, which allowed the second generation to learn about the social and
environmental conditions surrounding their property. The Himalaya Hacienda plantation bordered several
small landholders—peasants who had come from other regions of Colombia and had settled illegally in the
region. They had cut down the forest to increase the arable area and sown coffee and corn, but the low
production rates perpetuated their poverty conditions. The family was sensitive to the needs of the
community and offered permanent financial support in various forms.

Carlota Llano recalled, “My mother was Catholic, and she practised Christian charity with great conviction;
it was her principle of life.” Marichú financed the construction of a small church on the grounds of the
hacienda so that people had a closer location to attend religious services. Many of the plantation employees
or their wives came to her seeking help with their financial needs. Seeing that the children did not have
many opportunities for fun when they were not in school, Marichú sponsored music, soccer, and taekwondo.
She helped maintain the local school, and she organized training for women in fields such as baking,
dressmaking, hairdressing, and weaving.

Unfortunately, the violence that took place across Colombia was also experienced in Bitaco; in 1993,
Alberto Jr., who was managing the company at that time, was assassinated by guerrillas while working on
the hacienda. The years that followed were difficult since no member of the family could go to the plantation
for fear of also being killed or kidnapped. During this time, Marichú and Carlota, who had become the
general manager, took over the business and managed it from the headquarters in Cali, with support from
trusted workers still at the hacienda. Carlota recalled, “I remember once, after my brother’s death, my
mother told us: ‘I know that among the people that we help here, in Bitaco, there may be collaborators or
those who killed Alberto,’ and despite this, she dared to continue with the company. Her capacity for
forgiveness was shocking for the whole family. It was because of her example that we were able to go
through those tough and difficult times, and move on; otherwise, this would no longer exist.”

Security conditions improved in Colombia and the company hired agronomists to run the plantation and tea
factory. Carlota remained involved in the management of the business, and she and her mother participated
as members of the board of directors. In 2005, they hired Andrés Velasco, a manager with extensive
experience in marketing mass consumer products; at that time, the family stopped participating directly in
company management and only supported it from the board. To ensure that the company remained faithful

2
The term hacienda indicated a large estate or plantation with a dwelling house.
Page 3 W27301

to the family’s values and philosophy, AH created strategic guidelines that represented the company’s
sustainability policy and had to factor into all company decisions: creating value (development and
progress), social responsibility (better quality of life for workers and the village neighbours), and
environmental leadership for the hacienda and its surroundings (united for the planet).

Making the Family Philosophy Sustainable

Marichú had sometimes approached employees about buying Christmas gifts for their children or about
going to Bitaco to teach the schoolchildren how to operate the computers AH had donated. However, as
María Isabel Rodríguez, administrative director of AH, explained, “This distracted us from the day-to-day
tasks in the company; we had to decide whether to attend to these requests or to dispatch the pending order,
understanding that both were important.” Carlota and her siblings wanted to continue the work Marichú
had started, although with a different approach, which the sustainability plan reflected.

Velasco and the company’s administration were in charge of the value creation aspect of the sustainability
plan, and they had the task of generating the resources to keep the company financially stable in the long
term, innovating and diversifying the portfolio of products to offer the market. Carlota was in charge of
environmental protection through the AH Foundation. Finally, social responsibility was under the shared
remit of Fonagrícolathe company’s employee fund, which addressed the welfare of the employees and
their familiesand the AH Foundation, which worked for sustainable rural development of the region.
Fonagrícola, the employee fund, had been created in 1999, and workers had full autonomy over its
management, under a scheme of solidarity. The fund promoted savings and facilitated access to credit under
favourable conditions for its members, and AH contributed to it monthly.

The Agrícola Himalaya Foundation

The AH Foundation was a non-profit entity that operated through the funds that AH and shareholders
provided.3 The Foundation, which Carlota managed, performed all environmental management, including
solid waste management, recycling, carbon footprint monitoring, solar energy program management, water
preservation, prevention of forest burning, protection of native species, and reforestation.

The Llano family owned 213 hectares of land, ninety-nine of which were cloud forests that had been
declared a national park. “Being a national park, we guarantee that this generation and the next do not touch
the forest, they have to preserve it,” said Carlota. This forest was a favoured place for bird watching; it had
about 200 identified species, and local and international bird watchers regularly visited it. The forest was a
hotspot in the tropical Andes, the Paraguas–Munchique Corridor, one of the most biodiverse in the world.
“This is a strategic biological corridor, it is a jewel, and we are here to preserve it,” Carlota emphasized.
The company had a native tree nursery, and its goal was to plant 15,000 trees each year in the Bitaco area
and neighbouring townships.

Protecting water sources was a priority for the Foundation since they supplied aqueducts to over 10,000
inhabitants. They received co-financing from the German non-governmental organization MISEREOR
($320,000, in equal parts between MISEREOR and AH) for a comprehensive sustainability program in the

3
Té Hindú Channel, “Fundación Agrícola Himalaya, unidos por el planeta,” January 21, 2015, YouTube video, 2:43,
https://www.youtube.com/watch?v=aZ_VOGl9FXU.
Page 4 W27301

Bitaco river basin that sought to include community leaders.4 There had been an issue with sewage being
discharged into the Bitaco River or the streams that fed it, and the Foundation collaborated with the CVC
(Corporación Autónoma Regional del Valle del Cauca) on constructing 120 septic tanks and eradicating
nearly 200 sewage discharges.

The Foundation also created a solid waste recycling program that focused on educating and training the
inhabitants of the area. “For these projects to be sustainable, we have to involve and empower the
community, convince them of the pressing need to care for and protect ecosystems; otherwise, it doesn’t
work,” said Carlota. In 2020, this solid waste recycling project earned the Foundation seventh place in the
Latin America Green Awards’ “water” category, out of 2,540 projects submitted.5

The Foundation also supported rural education. Carlota explained, “When a person enters education, a door
opens for them to get out of poverty.” The Foundation managed the Marichú de Llano Scholarship Fund,
which gave young people from Bitaco the opportunity to attend university, giving preference to the children
of employees. Additionally, the fund paid teachers for teaching courses in information technology, music,
sports, and environmental education, alongside contributions to improving and maintaining school
infrastructure.6 The music school was one of the most successful projects, receiving positive feedback from
the children and their parents.7

PRODUCING TEA IN COLOMBIA

AH had the only tea estate in Colombia. People generally associated tea, as a crop, with adverse
environmental and social impacts, particularly in developing countries that grew it intensively, such as
India, China, Turkey, Argentina, Ecuador, and Kenya. Growers who cultivated tea in the mountains often
cut down forests to create planting space. The intensive use of pesticides and fertilizers also contributed to
environmental deterioration, impoverishing soils, extinguishing fauna, and polluting waters.

Since workers harvested mountain tea by hand, it was a labour-intensive crop—one that offered precarious
working conditions and low wages. As a crop belonging to tropical climates, labourers could harvest tea
every day throughout the year. In India, the second-largest global producer and consumer of tea (after
China8), many of the crops belonged to smallholders whose main concern was obtaining the highest possible
daily production rate (cash crop), leaving little space for environmentally friendly practices and decent
working conditions.

In addition to the bud, all tea growers harvested between six and three leaves of the plant. The quality of
the tea depended on this; the more tender the leaf, the higher the quality. The leaves’ oxidation process
meant they had to be processed a few hours after being harvested, which was why the processing plants
4
“Environmental Project in Cooperation with the Misereor Foundation from Germany,” Agrícola Himalaya, July 18, 2018,
https://www.agricolahimalaya.com/en/enviromental-project-in-cooperation-with-the-misereor-foundation-from-germany/.
5
“Así se cultiva y produce té protegiendo los ecosistemas en el Valle” [in Spanish], Semana, August 9, 2020,
https://sostenibilidad.semana.com/medio-ambiente/articulo/asi-se-cultiva-y-produce-te-protegiendo-los-ecosistemas-en-el-
vall-colombia-hoy/53844.
6
Fundación Agrícola Himalaya, “Apoyo a la Educación Rural—Fundación Agrícola Himalaya 2019,” March 1, 2019, YouTube
video, 2:01, https://www.youtube.com/watch?v=_9klyDBogx0; Fundación Agrícola Himalaya, “Fomento a la Recreación,
Cultura y Deporte 2019,” March 1, 2019, YouTube video, 3:39, https://www.youtube.com/watch?v=5AfVbSenbqU; Fundación
Agrícola Himalaya, “Apoyo Educación Rural Fundación Agrícola Himalaya,” June 27, 2017, YouTube video, 3:07,
https://www.youtube.com/watch?v=5IdaZYiwg1A.
7
Fundación Música de Chicoral, “Un Día En Chicoral (Bitaco, La Cumbre, Valle del Cauca),” December 10, 2017, YouTube
video, 1:17, https://www.youtube.com/watch?v=i9ZQAriMXl0.
8
Food and Agriculture Organization of the United Nations, Emerging Trends in Tea Consumption: Informing a Generic
Promotion Process, FAO, April 2018, https://www.fao.org/3/MW522EN/mw522en.pdf.
Page 5 W27301

were generally on the tea plantations or close to them. Wholesale intermediaries bought much of the tea
production; they processed and sold it, unbranded and in bulk, to companies oriented to mass consumption
products (e.g., Unilever plc with its Lipton brand).

Labour was responsible for 70 per cent of the production cost of tea, given its manual collection. AH upheld
its pillar of social responsibility by improving the quality of life of its workers. It paid wages above the
local average, assigned bonuses for productivity, and contributed to the employee fund; however, given the
poor working conditions and lower wages in countries like India, it was cheaper to import tea than to
produce it in Colombia.

The Hindú Brand9

At the beginning, in 1960, Alberto Llano Sr. hired the services of a national distributor, John Restrepo &
Cia., who was in charge of marketing the product throughout Colombia. For thirty years, AH sold black tea
in bags, positioning itself as the country’s leading brand in that category. In 1994, AH began producing
herbal teas and flavoured teas; management focused on the plantation, and agronomists and family members
ran the business.
With the arrival of Velasco, the company began to expand. Velasco said, “I could quickly see that the
company’s value was the brand; Hindú was a strong brand, deeply rooted in the Colombian consumer.”
Velasco expanded AH’s product portfolio (see Exhibit 1), strengthened the marketing team, and continued
with the brand management (the annual marketing budget was 20 per cent of the sales income). AH
consolidated Hindú, with commodity products, as the leading brand in the tea and herbal tea market in
Colombia (45.8 per cent and 40.3 per cent market share, respectively, in 2019, according to Nielsen data10),
with sustained growth of about 10 per cent over ten years (see Exhibit 2). “I think that today, AH is a mass
consumption company, which maintains the agricultural business,” said Rodríguez.

LOOKING FOR A WAY OUT: ENTERING THE SPECIALTY TEA MARKET

The plantation would not remain viable if AH continued to produce black tea in “cut, tear, curl” (CTC)
form; however, it recognized that the high-altitude tea had qualities that were attractive to the most
knowledgeable and demanding international consumers. Additionally, the region where AH grew the tea
gave its flavour special characteristics. AH had the advantage of having three varieties of Camellia sinensis
(the species name for the tea plant) on its plantation, which allowed it to obtain a unique blend of flavours.
Nigel Melican, an adviser to Teacraft Ltd. who had periodically visited the plantations of Himalaya
Hacienda since the late 1990s, confirmed that the plants AH had could produce tea with the quality
standards of specialty tea.
Another factor affecting AH’s decision about its specialty tea was the mass market for tea in Europe. It
accounted for 18 per cent of global tea imports and showed signs of stagnation, while the market for
specialty tea—premium and super-premium—was growing in developed countries’ markets. A subset of
consumers was upgrading their purchases, migrating from traditional black tea to specialty tea varieties; in
Germany, this segment had annual growth rates of 5 per cent.11 Although the specialty tea market tended
to be traditional—it included traders and tea houses that were over 100 years old—some consumers were
willing to explore higher-quality, organic tea with new origins, blends, and flavours.12
9
Unless otherwise specified, the information in this section is from: Juanita Cajiao and Diana Leal, “Hindú: Revitalizing a
Colombian Tea Brand,” Harvard Business Review, January 29, 2021. Available from Ivey Publishing, product no. 9B21A001.
10
Data based on the company's market intelligence.
11
Food and Agriculture Organization of the United Nations, Emerging Trends.
12
Food and Agriculture Organization of the United Nations, Emerging Trends.
Page 6 W27301

In 2013, the AH management team started to consider producing specialty teas (see Exhibit 3), and Velasco
began attending international tea fairs. The specialty teas (see Exhibit 4) did not use the CTC method; they
were single-origin teas—preferably organic, loose-leaf, and rolled.13 For experts to consider them special,
the tea needed to have particular leaf characteristics (e.g., uniformity); observe harvesting standards (e.g.,
number of leaves, manual harvest); and possess specific colours, aromas, and complexity (e.g., different
flavour notes).14 AH recovered an old machine that Alberto Llano Sr. had used to produce rolled tea, and
began preparing its first blends and taking them to tea fairs. Velasco recalled, “Getting started was very
difficult. They did not believe us, nobody associated Colombia as a tea producer. A person once told us:
‘This looks like banana leaves!’”

To compete in this niche market, AH converted the plantation to organic cultivation, complying with all
certification requirements. Rodríguez said, “When the consulting company presented us with the verdict to
switch to organic farming, they told us: ‘You are so clean in your practices that organic work will be very
easy for you.’ Why? Because that has always been in our DNA, of the company, of the family.”

AH could no longer use pesticides or fertilizers, so production fell by almost 50 per cent. For pest control, it
planted citronella around the tea lots; for weed control, it used sheep that grazed freely among the alleys of
the plantation; and for white tea and green tea, it could only harvest the bud and one or two leaves, compared
to the standard for CTC black tea, which was four to six leaves. Paulo Bedoya, the plantation manager,
explained, “Before, we produced 500 tons of leaves for black tea; now that we harvest the bud and two leaves,
for specialty green tea that quantity has been reduced to 70 tons a year.” In 2017, AH obtained UTZ
certification;15 at the beginning of 2018, it obtained the United States Department of Agriculture (USDA)
Organic and Ecocert Organic Standard (EOS) certifications. Carlota recalled, “For me, going to organic
farming was the most difficult thing in this whole process, the thing that gave me the most fear.”

The work of the harvesters became more critical because the quality of the tea depended on them. They no
longer cut the leaves with scissors but selected them by hand, depending on the type of tea AH was going
to produce—black, green, or white. Additionally, while harvesting, they discarded unsuitable leaves so that
the plant had a better yield (one bud and two leaves) in the next harvest. The mist humidified the tea
plantation so well that AH had no irrigation system; however, considering the impact of climate change, it
began drafting a comprehensive plan for water resources in case water for the plantation became scarce.

Alongside fieldwork updates, AH began the construction of its new orthodox-tea16 processing plant,
equipped with technology imported from India and Japan, with an investment close to $1.5 million. It began
operating in 2016 with ISO 22000 food safety certification (see Exhibit 5). Staff training was also a priority;
over forty-five days, an expert in the cultivation and processing of specialty teas from Sri Lanka taught the
staff manual techniques for harvesting the leaves and processing the tea in the plant. Moreover, the head of
the plant, the head of research and development (R&D), the Bitaco brand manager, and Carlota also made
two trips to India to learn the best production practices for orthodox specialty teas.

The visits helped the company create a comprehensive strategy for developing a portfolio of specialty teas
of Bitaco origin. Gonzalez recalled, “We actually improved our processes of sowing, harvest, processing
and retail.” One of the innovations was to mix some of the offered teas with local ingredients, such as cocoa
and coffee, as well as exotic fruits such as lulo, mango, star fruit, and guava, which consumers liked.

13
Single-origin teas were the opposite of blends; that is, their loose leaves belonged to one single location.
14
“The Pathway to a Definition for Specialty Tea,” International Specialty Tea Association, accessed October 1, 2020,
https://specialtyteaassociation.org/the-definition-of-specialty-tea/.
15
UTZ was a sustainable agriculture certification that guaranteed consumers that the products had been obtained sustainably,
covering the entire supply chain—from the plantation to the point of sale.
16
“Orthodox tea” referred to specialty black tea.
Page 7 W27301

Opening Markets

In mid-2015, AH hired Santiago Gonzalez, an economics student at Icesi University of Cali, as an intern.
Velasco and other reps had just returned from the World Tea Export in Las Vegas, where they had taken
samples of the tea AH was producing, and they were optimistic about the prospect market for the company’s
specialty tea. The first task Velasco gave Gonzalez was to build a potential global client base. Gonzalez
recalled, “During the first six months, I believe that I contacted some 1,200 companies. The guideline that
I had was: ‘We are going to let the world know that Colombian tea exists.’” He contacted all the brokers
and tea houses he found, regardless of their size, and told them about Colombian tea. He sent samples to
all those who responded, but the response rate was less than 3 per cent, with potential customers skeptical
of tea produced in Colombia.

In 2015, AH began supplying Harney & Sons, a New York-based luxury tea brand (see Exhibit 6). As of
2019, AH’s top special tea customer was Ronnefeldt, a Frankfurt-based company that sold specialty teas
under its brand and that served the HoReCa17 industry in Europe. Gonzalez remained with the company as
brand manager for Bitaco, which was the name it gave the tea line as a tribute to the region where the tea
was grown and to mark its origin.

Bitaco’s first two years were difficult in terms of sales (see Exhibit 1), despite intense promotional work.
AH continued to attend international fairs and advertise in specialty tea magazines. It supplied Mariage
Frères, a French company specializing in the sale of fine tea that had tea houses in various world capitals.
For this company, AH designed a portfolio of eight orthodox black tea and green tea products: Lulada,
Cocada, Guava, Champús, Salpicón de Frutas, Oro Verde, and Los Andes. When Mariage Frères launched
the portfolio, it displayed it prominently on its website and in its tea houses, and it sold 100 grams of the
Colombian tea for €18–€20.18

In 2018, AH was the origins pavilion sponsor of the Las Vegas tea fair. In its stand, AH showed the
plantation, the cloud forest, the harvesters, and all the processes that distinguished it as a sustainable
product, and it gave samples to approximately 5,000 attendees. The company’s Cacao Kisses tea won the
award for the best black tea orthodox blend that year. In September 2018, AH was featured on the cover of
the Tea & Coffee Trade Journal; the magazine interviewed AH and highlighted the management of the
company and the quality of its products.19 This greater visibility for AH resulted in new clients, both in
Europe and the United States.

AH also invited potential and existing clients to Colombia to see its facilities firsthand. It built a guesthouse
on the grounds of Himalaya Hacienda and gave tours of the plantation and production plant, the forest, and
the conservation and community aid programs. Most visitors left with a more favourable impression of
Colombia and the quality of AH’s product than they expected (see Exhibit 7). After their visit to the Bitaco
plantations in 2019, International Tea Importers, a California-based specialty tea broker, became a client
and distributed Bitaco tea in the United States, Canada, and Mexico.

Although the brand AH defined was Bitaco Unique Colombian Tea, not all customers sold it as such. All of
AH’s European clients sold it as an origin tea, but most marketed it under their own brands or gave the tea
range a special name such as Colombia, Andes, Bitaco, or Chocó. AH sought out reputable tea companies that
would reach premium consumers since Bitaco tea could cost five times more than teas from other origins. As

17
“HoReCa” referred to the sector of the food service industry that included hotels, restaurants, and cafés.
18
€ = EUR = euro; US$1 = €0.83 on March 1, 2021.
19
Anne-Marie Hardie, “Awakening the World to Orthodox Colombian Rea,” Tea & Coffee Trade Journal, September 12, 2018,
https://www.teaandcoffee.net/feature/20662/awakening-the-world-to-colombian-orthodox-tea/.
Page 8 W27301

Gonzalez explained, “A specialty Assam or Nilgiri tea can cost $6 or $7 per kilo [kilogram]; our teas range
between $16 and $30 per kilo” (see Exhibits 8 and 9). AH’s goal was to be included in each company’s regular
product portfolio to ensure both prestige and continuity of sales. In Colombia, the tea was sold under the
Bitaco brand in pyramid sachets; the sales potential was much lower there than in other countries considering
the premium price conditions and the reduced purchasing power of consumers.

At the beginning of 2019, the first high-value specialty tea, Bitaco White Tea, came onto the market. A reputable
tea house could sell white teas of various origins for €25–€100 per 100 grams. Bitaco White Tea was the
culmination of joint work from AH’s R&D and production teams. Victoria Tobar, certified tea sommelier and
head of R&D and the tea blends, stated, “2018 was a year of learning and adjustments, both in cultivation and
production, until the best possible product was obtained, the blend that met the buyers’ demands.”

Challenges Ahead

In 2019, Bitaco tea sales already covered the brand’s operating, logistics, and freight costs, though the tea
sales only covered 20 per cent of Bitaco’s brand marketing investments. Restrictive measures—particularly
in Europe—associated with the COVID-19 pandemic made it difficult for AH to meet its 2020 sales budget,
considering that many of its buyers operated within the HoReCa industry.

The initial company plans were to increase the cultivated area to 80 hectares and produce 150 kilos of tea
per day, continuing to target the premium segment among specialty tea customers. “Our credentials will
continue to be the origin, 100 per cent sustainable, and a superior sensory profile,” said Gonzalez. AH had
also planned to bring roasted green tea and blue tea (also known as oolong) to the market. These varieties
could sell for up to $60 per kilo; in a tea house in Europe, a connoisseur of specialty teas could pay up to
€150 for 100 grams of blue tea. AH had to put all these plans on hold due to pandemic issues.

While growing the Bitaco brand, AH simultaneously proceeded with its aggressive plans to grow the
product portfolio of Hindú, its flagship brand in Colombia; this meant continuing to buy cheap tea from
developing countries. Bitaco tea also faced another challenge: to grow its sales in Colombia. Even though
AH exported Bitaco tea to thirty-one countries, its domestic sales were marginal compared to those of AH’s
other product lines (see Exhibit 2). The Bitaco brand was barely known in Colombia.

Carlota also worried about the future of the AH Foundation. “I am in my mid-sixties, and I won’t be around
forever,” she said. Despite her dedication to the Foundation, she did not receive a salary, making finding
her replacement difficult. Several board members also wondered whether AH’s sustainability activities
were making a lasting positive impact in the environment and the community. Gonzalez, however, was
confident, stating, “Specialty teas are a long-term bet. I am confident that in ten years of being on the
market, Bitaco’s operation will already be profitable.”

Velasco felt that “the story of AH is one of resilience and love for a region, of honouring the teachings of
its founders, who marked the path of the next generations.” He knew that any decision he made would have
its trade-offs. Abandoning the Bitaco initiative would involve ending the crops and closing the processing
plant; this would negatively impact the employees, the community, and possibly the environment.
Continuing to invest in Bitaco also had risks, and it raised the question for AH of how long to persist with
it. With these considerations in mind, Velasco analyzed the Bitaco financials once more. He would have to
make a decision and present it to the AH board members.
Page 9 W27301

EXHIBIT 1: HINDÚ PRODUCT PORTFOLIO, 2016–2020

2016 2017 2018 2019 2020

Category Segment Product Line
(%) (%) (%) (%) (%)
Herbal Tea 17 16 17 16 15
Herbal Tea with
Herbal 3 3 5 6 7
Envelope
Healthy Herbal Tea 7 7 7 7 7
Total Herbal Teas 26 26 28 28 28
Fruit Herbal Tea 2 2 2 1 1
Fruit Cold Tea 0 0 1 1 1
Fruit Tea 27 27 27 27 27
Teas
Total Fruit Teas 29 29 29 30 30
Esveltta Tea 3 3 2 2 1
Black Tea 15 14 14 13 12
Other Teas Red Tea 1 1 0 0 1
Flavoured Tea 2 2 2 3 3
Green Tea 13 13 12 14 15
Total Other Teas 34 32 31 32 32
Total Teas 88 88 89 90 90
Red Fruits Iced Tea 4 6 6 5 6
Lemon Iced Tea 2 1 1 1 1
Apple Iced Tea 3 3 2 2 1
Passion Fruit Iced Tea 0 0 0 0 0
Ready-to-Drink RTD
(RTD) Iced Tea Zero 0 0 0 0 0
Beverages
Iced Tea Plus 1 0 0 0 0
Wild Fruits Iced Tea 1 2 2 1 1
Mangosteen Iced Tea 0 0 0 1 2
Total RTD 12 12 11 10 11
Total RTD Beverages 12 12 11 10 11

Source: Agrícola Himalaya internal documents.

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EXHIBIT 2: AGRÍCOLA HIMALAYA SALES PER BRAND, HISTORIC AND FORECAST (COP 000)

Brand 2015 2016 2017 2018 2019 2020 2021 2022 2023 2024
Hindú
25,491,050 28,659,726 31,051,290 33,615,507 36,729,665 38,933,445 46,994,488 52,025,730 56,850,085 61,065,919
Colombia
Hindú
2,183,000 2,861,000 3,500,100 4,114,000 5,571,700 5,906,002 10,148,394 10,960,266 11,837,087 12,784,054
Exports
Bitaco
- 36,000 158,700 203,000 231,000 244,860 430,614 527,164 621,821 704,665
Colombia
Bitaco
43,000 20,000 471,060 799,000 1,158,800 1,170,388 1,639,005 1,937,921 2,245,162 2,524,122
Exports
Total Sales 27,717,050 31,576,726 35,181,150 38,731,507 43,691,165 44,128,077 59,212,502 65,451,081 71,554,154 77,078,760

Note: COP = Colombian peso; US$1 = COP 3,613.08 on March 1, 2021; “Hindú Colombia” and “Hindú Exports” represent all products under the Hindú Portfolio (see Exhibit
1); “Bitaco Colombia” and “Bitaco Exports” represent Bitaco line products.
Source: Agrícola Himalaya internal documents.
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EXHIBIT 3: EVOLUTION OF BITACO UNIQUE COLOMBIAN TEA

Source: Agrícola Himalaya internal documents.

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EXHIBIT 4: AGRÍCOLA HIMALAYA SPECIALTY TEA CONDITIONS

Source: Agrícola Himalaya internal documents.

EXHIBIT 5: AGRÍCOLA HIMALAYA PRODUCTION PROCESS FOR SPECIALTY TEAS

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EXHIBIT 5 (CONTINUED)
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EXHIBIT 5 (CONTINUED)

Source: Agrícola Himalaya internal documents.

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EXHIBIT 6: CLIENT PORTFOLIO EVOLUTION 2015–2020

Year Client Product Channel Country Countries for Distribution

Black Tea, Green Tea, Germany, Switzerland, Austria, Netherlands,
Private Brand –
2015 J. T. Ronnefeldt White Tea, Cacao HoReCa – B2C Germany Czech Republic, Luxembourg, Slovenia, Iceland,
Tea Shops
Kisses Tea Hong Kong, United Arab Emirates
2015 Harney & Sons Black Tea, Green Tea Private Brand HoReCa – B2C United States United States, Canada
2016 Capital Teas Black Tea Private Brand B2C United States United States
Exclusive portfolio with Private Brand –
2017 Mariage Frères HoReCa – B2C France France, United Kingdom, Taiwan, Japan
13 varieties Tea Shops
Black Tea, Green Tea, Private Brand –
2017 Palais des Thés HoReCa – B2C France France, Belgium, Switzerland, Luxembourg
White Tea Tea Shops
Black Tea, Green Tea,
2017 Hälssen & Lyon White Tea, Roasted Broker – Trader Wholesaler Germany Global
Green Tea
Private Brand –
2017 Camellia Sinensis Black Tea HoReCa – B2C Canada Canada, United States, Brazil, United Kingdom
Tea Shops
Schroeder & Black Tea, Green Tea,
2018 Broker – Trader Wholesaler Germany Germany
Hamann White Tea

2018 Harrods Black Tea Private Brand B2C United Kingdom United Kingdom
Private Brand – Germany, Saudi Arabia, Kuwait, United States,
2018 TeeGschwendner Black Tea HoReCa – B2C Germany
Tea Shops Austria, Luxembourg
Black Tea, Green Tea, Private Brand – Czech Republic, Poland, Slovakia, Austria,
2018 Oxalis HoReCa – B2C Czech Republic
White Tea Tea Shops Russia
Black Tea, Green Tea, Private Brand –
2019 Dammann Frères HoReCa – B2C France Global
White Tea Tea Shops
International Tea
2019 Black Tea, Green Tea Broker – Trader Wholesaler United States United States, Canada, Mexico
Importers
Private Brand –
2019 Secretea Black Tea HoReCa – B2C Taiwan Taiwan, Singapore, South Korea
Tea Shops
Black Tea, Green Tea,
2020 Sinas Broker – Trader Wholesaler Germany Germany, Switzerland, Spain
White Tea
2020 Central Market Bitaco Pyramids Retailer Retail United States United States (Texas)

Note: HoReCa = hotels, restaurants, and cafés sector of the food service industry; B2C = business to consumer.
Source: Agrícola Himalaya internal documents.
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EXHIBIT 7: TESTIMONIES FROM TEA EXPERTS WHO VISITED THE AGRÍCOLA HIMALAYA
TEA ESTATE

“I came looking for specialty tea in a country very few even knew grow it. I found a place that
produces tea of exceptional quality, in an environment more beautiful than I could have imagined.”
– Jordan Hardin, American Specialty Teas Connoisseur

“I was surprised and delighted to learn that nestled within the heart of one of the planet’s most
biodiverse regions resides a thriving tea estate!”
– Brian K. from Upton Tea Quarterly

“The energy . . . in this place, very different from that of China, is so invigorating. The soil, the
climate, the people . . . everything seems to be in place to produce excellent teas.”
– Camellia Sinensis, Tea Broker

Source: Jordan G. Hardin, “Into the Cloud Forest: Finding a New Specialty Tea Origin in Colombia,” Kill Green (blog), March
26, 2018, https://www.killgreen.io/main/colombian-specialty-tea; Brian K., “The Magic of Colombian Tea,” Upton Tea Quarterly
27, no. 2 (Spring 2018): 40–45, accessed October 1, 2020
https://www.uptontea.com/images/art/UTQ_V27N2_SPRING_2018.pdf; Camellia Sinensis, “Onsite Report: Colombia,”
February 24, 2020, https://camellia-sinensis.com/en/blog/onsite-report-colombia.

EXHIBIT 8: BITACO TEA PRICES FOR RETAILERS AND WHOLESALERS

Price
Tea Type
(US$/kg)
Black Orthodox 22
Green Vaporized 20
Green Roasted 28
White Regular 28
White Premium 40
Oolong 38

Note: kg = kilogram.
Source: Agrícola Himalaya internal documents.
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EXHIBIT 9: TEA PRICE COMPARISON BY ORIGIN

Origin Product Price per Unit (US$) Unit Weight (kg)

Assam Black Tea Orthodox 6 14
Nilgiri Black Tea Orthodox 7 14
Darjeeling Black Tea Orthodox 20 80
Bitaco Black Tea Orthodox 16 30
China Green Tea 3 20
Taiwan Green Tea 6 20
New Zealand Green Tea 15 40
Japan Green Tea 12 40
Darjeeling Green Tea 8 100
Bitaco Green Tea 15 30

Note: kg = kilogram.
Source: Agrícola Himalaya internal documents