Harney, Paul

Paul Wm. Harney Interview:

This is file #68, cycle 2. Today’s date is Sept. 13, 2017. This is Jean McMillen. I am interviewing Paul Harney of Harney & Son Tea Company. He is going to talk about life and times in the tea company and other things that he wants to mention. First we will start with the genealogical information.

JM:What is your name?

PH:Paul Harney

JM:What is your birthdate?

PH:Aug.20, 1968.

JM:Where were you born?

PH:Sharon, Ct.

JM:Your parents’ names?

PH:Elyse and John Harney Sr.

JM:Do you have siblings?

PH:Yes I have three brothers; John Michael, Keith and one sister Elyse.

JM:I am going to ask you first about the tea chests that you used to carry as a high schooler on Yonder Way?

PH:Yes it was Yonder Way which was Robin Hill Lane and the other dirt road as you get up on Robin Hill Lane was named Yonder Way.

JM:Were they chest or were they just boxes of tea?

PH:No they were actual tea chests which pretty much don’t exist anymore. A tea chest is made out of mango wood, lined with foil. Each corner is wrapped in tin. It is a very sharp and unwieldy, easily cut operation. My father and I had many techniques for opening the chests. It took us a long time to come up with a good technique. So we had a pry bar, a hammer and that was my main tool. You had to get the tin which was hammered in by hand so it was edged in tin. You had to get that off first, and then you could pull the lid off. The tea was below some foil.

JM:Was it packaged in packages or loose?

PH:No it was a full chest of loose tea.

JM:How much would it weigh?

 

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PH: Generally they weighed 120 pounds 50 kilograms. They varied in size but that was the standard weight. It was heavy. It was not to be trifled with. Sharp I cut my hands many a time on this operation before sadly enough it took me quite some time to come up with a good technique. It was not until I probably came back that I was able to finally come to using a circular skill saw and to go down far enough. Then we just left the tin on there. Soon after the chests went away. Now they are foil lined bags.

JM:Oh that is no fun!

PH:They are no fun. Not enough mango trees to go around.

JM:Do you know why it was mango wood?

PH:I think it had a lot to do with what was available and plentiful.

PH: It was very thin about ¼ inch piece of sheet deep that made up the box. I don’t know why they did it that way. If they did not have the tin it would peel off. It stabilized it, but if you had a pallet of these chests to get off, this was no small operation. They stick together with tin. The tin would rip and then you would have this big hairy piece of tin to cut you.

JM:Where did these chests come from?

PH:India and China were the two main spots. At that time we were not doing any Japanese tea. Most of it was coming from India as china had not really opened up much, although they had plenty of tea, most of it that came to us was from India.

JM:Did your dad teach you how to blend tea? We are still talking about high school.

PH:Yes absolutely! He spent some time with me. We would blend the teas. Before it was Harney & Sons, it was Sarum Tea in the basement of the White Hart. As an even younger man in grade school At Salisbury Central School, I would work in the basement of the White Hart filling loose tea tins and blending teas. Blending teas is simply a matter of putting the tea into a tray, a bus tray like you would find at the restaurant, and then you just weigh out the different mixes and put it together, blend it together.

JM:Is it dome by proportion?

PH:Yes it is much like a baking recipe; it is just dry tea. At that time we were not using very many liquids. I can’t think of any other but Earl Grey which was a flavored tea which we did.

JM:With bergamot?

PH:Yes, that was not sprayed on. We used cotton batting which we would soak the bergamot in. Nest we would layer that in the chest with the loose tea. We would let that age into it which was the old way of blending flavored teas. Unfortunately it takes quite some time.

JM:It would. It is like aging whiskey in bourbon barrels.3.

PH:Yes so at some point I would like to get back to that and try some of that out again. But I haven’t gotten there yet.

JM:Where did you go to school after high school?

PH:I went to the University of Wisconsin in Madison, Wisconsin in 1986.

JM:What was your degree?

PH:History

JM:It was a special type of history?

PH:Yes, East Asian History was my focus which at the time I didn’t know that I would be heading into the tea business, but it has proved to be a wonderful background for me. I think it was sort of related; Madison was sort of like Berkley so there was still left over feelings about the Vietnam War which had been only a decade before. There was still plenty of interest and a lot of teachers from the Vietnam War so I think that was why I drifted in that direction. Obviously it gave history much more of a spectrum than the Vietnam War. I think in my mind that was why I drifted in that direction. It has been fantastic. I was the first one to go to Vietnam from the company; I went right after it opened up. We started importing Vietnamese tea and have continued on. My wife is Vietnamese.

JM:What is your wife’s name?

PH:Thu

JM:You have two children.

PH:Two children, one with my first wife who is a boy Finnegan. Then I have a new one year old daughter with Thu and her name is Teagan.

JM:You went into the military?

PH:Yes, after Wisconsin I went into the Marines as my father and my oldest brother had been Marines so I did not want to be outdone by those guys. I was trying to keep pace. I was a tank officer.

JM:Did you serve 4 years?

PH:I served 4 year. I got out as a Captain.

JM:Where were you stationed?

PH:I was stationed in Jacksonville, North Carolina. I ended up spending the bulk of my time in Cuba and Puerto Rico.

JM:What did you do after the service?

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PH:After the service I went to work for Schneider National which is the largest trucking company in the free world. I was based in West Memphis, Arkansas. I ran a team of 100 drivers, cross country drivers. I did that for about 1 ½ years.

JM:Then you were asked to join the company? (See file #58, cycle 2, Michael Harney)

PH:My father was getting a little sick. He had a little case of bladder cancer. The company was very small. I don’t know if it was a formal ask or somewhat of an ask. It seemed the right time. In 1997 there were 6 people in the company. My first office was on Brook Street and I shared it with my father in the attic. We had one little window at the end of the room.

JM:You said that the Brook Street facility was how large?

PH:The Brook Street place was 7,000 square feet. I showed up in January of 1997. That first winter it snowed the whole winter. I think pretty much what I did was shovel, because I could not figure what I should do. I spend a great deal of time shoveling. Luckily there was snow so I am thankful that it was a snowy winter because I don’t know what I would have done if I could not shovel. Then I found a fork lift that was left over; I got that running. I then reorganized the garage. There were two separate building on Brook Street. They were both 3 boy garages. One was in use; that is where we worked. The other one still stored cars. So there was a bunch of old cars there. We had a little bit of junk in there. My first move was to get rid of the old cars and to organize that space. That was my start.

JM:From Brook Street you went to New York.

PH:Yes, What happened was at that time we did not have any machinery. That spring I started to sell ice tea. There was a guy that is still here today, Patricio. He is the soccer coach at Salisbury School for boys and he also worked here just about as long as me. He was my right hand man. He would fill the zip lock bags for ice tea by hand. The first summer I started selling ice tea. By the fall it became clear that we were not able to keep up by hand. We needed to get ourselves a piece of equipment. That was our first purchase of a piece of equipment at Brook Street. Pat and I went down to this guy that made these coffee making machines that would weigh something out and put it into a bag, called a form, fill and seal machine. That would go into the bag. We bought this piece of equipment. We had a bucket elevator to bring the tea up to it. This was a large purchase for us because we had no equipment. We bought this. It came. Pat and I had to put it in. It became clear that we had miscalculated that the ceiling was too low to tip it up. We cut a hole in the ceiling to get our ice tea machine up. But the ice tea machine is still in production today. So it is still working today. We moved it. That was the part of the business that started to grow very quickly was the freshly brewed ice tea for hotels and restaurants, big bags of ice tea.

JM:I am confused. Ice tea is usually a liquid, so was it freeze dried?

PH: No this was similar to coffee. It was just loose tea in a bigger pouch and it goes into an automatic ice tea brewers. They made three gallons of fresh brewed ice tea. This is what we were

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selling. This was a relatively new piece of equipment from Bonomatic which made ice tea. Ice tea is a very profitable item. Ice tea is general 10 times the volume for a restaurant as hot tea. It was good for us. We weren’t really selling ice tea when I got there. That was the part of the business that I got into and started working on. That was where it started. That was growing and we needed more space. I remember looking for some space and telling my father that we might move to New York State. “I don’t think we can do business there.” The only option is Winsted or Torrington. “We clearly can’t do business there.”

JM:You made a right move.

PH:Yes, somehow I ran into Melinda Chase who redid the old K&E building on Route 22. The location is 5979 North Elm Avenue, right across from Agway. We were her first tenants. The manager of K&E in Millerton was Bill Manko who lived right next door to us on Yonder Way. (See file #39, cycle 2 Joseph Soper re K&E) After it closed, his office was still there. I am pretty sure the Salisbury Bank had loaned her the money and that is how we connected.

JM:It was when I knew it Arnoff Storage. You move into that location when?

PH:Yes we moved in in 1999. Originally we were just going to take a little bit of space for the ice tea business. Then it became clear that maybe we should all move rather than just this little space. We still had a co packer who had been doing the bulk of our tea business in Brooklyn called Modern Tea. He was doing most of the blending. We did some blending, but he would package it in tea bags and stuff like that. I believe he was closing at the same time and going out of business. There was an impetus for us to mechanize more. I had come up with a way to blend tea other than using a bus tray. We out drums onto a little upside down wagon and the drums would spin. It was a very early blender for us. I did notice that my friend at Modern Tea had something that would be a better blender: I offered him $500 and we moved into tea blending with a real blender. We still have that blender today and it is still blending away.

JM:With the K&E/Arnnoff building how large was it?

PH:That was 16,000 square feet. We were there not very long. We took a 5 year lease, but we were there less than 2 years. We bought a traditional tea bag machine during that time that made tea bags and put then it 20 count boxes. The only reason I remember that machine was there is because that building had lots of turns. It was an old brick building. The tea bag machine came. It was all cast iron. It was a brand new machine from Italy. I broke everything I had dragging that machine to its final spot. The last piece of equipment I had was trouble. There was a guy down the street who had a diesel tractor. I persuaded him to bringing his tractor over. We had a block and tackle to try to lift it up because you had this machine with a smooth surface on the bottom. It was recommended that you place onto something else so you could move it later on down the road. We were out the window with a tractor and a block and tackle trying to lift the machine up and get it onto this piece of iron that I had welded for it. Somehow it worked, but it was a challenge. That was all on North Elm Avenue. The other

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thing that was significant on North Elm Avenue was that we also got our first pyramid machine, sachet machine.

JM:We need to talk about the teabags. Do you want to do that now?

PH:Sure. There was a guy named Bill Stoddard out in Taconic who forever after will be known as “Sweats” because he was a large man who always wore sweat pants. He had made a machine for Gertrude Ford Tea Company who was in Poughkeepsie, NY. They had a tea ball that was their claim to fame. It was just the same tea; it was broken leaf tea in a tea ball. At that time I was thinking that we needed some way of designing the bag itself. My father’s sales pitch had been fannings and dust. The tea bags before he got into the business were all fannings and dust, the lowest of the low. His claim fame was that he put better tea into the tea bag. Our competitors were starting to catch on to that gig. That line was not working quite as well. The goal was to try to go to the level which was to put loose leaf tea into some sort of a bag. I was playing around with ideas and at the same time I was trying to get into Barnes & Noble Bookstores because Barnes & Noble had 750 cafes. That was farther than my imagination could take me of what this would do for us or what it would take to get there. “Sweats” called at the same time and said,” I have a machine that is 90% complete that would make a tea ball. Would you like to commission me to finish it?” My father and I went out and met him at the Taghanac Diner. He lived up in Livingston, NY. He rolled out his plan for this machine. For a measly 10 or 20 grandwhich at the time we did not have, but we cut some sort of deal to finish this machine. This was in the fall of 1999.

Somehow by January of that year we had come up with a tag along tin with 5 sachets in each made of cloth with tea in them. I wanted the guy from Barnes and Noble to see this. I kept calling him and calling him. He never called back. Eventually we went to the fancy food show in San Francisco and I had this in my pocket the whole time. On day 2 of the show all of a sudden here is the guy standing in front of me and I showed him my newest creation. At the time they had Republican tea which had a traditional tea bag, like a circular bag. I said, “This is really what you need to be having in the stores.” He liked it. He sort of woke up and started the whole conversation. At the same time I stumbled upon or this Japanese guy stumbled upon me with a pyramid bag which is what we ended up with.

The “Sweats” machine sort of trickled along during all that time, but the pyramid machine appeared shortly thereafter. So within a very short period of time, perhaps a year, the process began for us to get tested at Barnes & Noble. During that year “Sweats” kept working feverishly on his machine which might have on its best day would run at 6 or 7 sachets a minute. That would not get the job done for 750 cafes, but the Japanese guy’s machine would do it. We bought one machine that produced 50 a minute. I had an old retired guy that we started using on the machine and then realized that it was pretty easy to figure out.

January of 2000 this building at # 5723 Route 22 where we are now speaking became available. My cousin Gary Harney who was working for us was a great seller of ice tea. Another guy

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was constantly pushing us to buy machinery. We would both torture my brother Mike and my father as well that was what we should be doing. I had driven by this building several times, but it just looked so big. At the time I could not quite visualize it. It was pretty big and I could not visualize having the money. I might have been able to get through one of them, but not both. We bought this traditional tea bag machine and we also managed to buy a 50 count pyramid machine, plus we had our man “Sweats”. The business was clearly growing, but there was rarely a time at that point that the outgo was not eclipsing the income. We looked at this building twice. Mike and I walked through it. It was on the market for I think for 2 million dollars. Clearly we did not have that. We looked at it and walked away. We looked at it again, would call the realtor. It was easily on the market for a year if not longer. We would talk to the realtor periodically. Where we were located then, they had rented out the rest of the space so there was no more space to be had in that building. We had 16,000 square feet and we needed more space. If Barnes & Noble came, we would not make a good impression. We could not quite figure out how we were going to grow.

JM:Is this where “Uncle Bob” comes in?

PH:Yes. “Uncle Bob” walked in from M&T Bank to 5979 North Elm Avenue and said, “Do you want any money?” Yes! We do. He really did allow us to grow the business when Salisbury Bank had gotten us as far as they could get us. We needed to go in a different direction so that is when we started our relationship with M&T Bank.

JM:Where are they from?

PH:They are from Buffalo, NY but they had a branch in the building next to Saperstein’s. That was one of the only branches that did not have either an ATM or a drive-up. That is why ii is no longer a bank. , (It is now the Gilded Moon Frame Shop, 17 John St. Millerton, NY Ed.)” Uncle Bob” was based in Dover, NY but they had a group of banks up here. He was their guy who would go out to find people. He did not loan us the money for this building, but he loaned us all the money for all the machinery that we needed to put in the building. So that caused up to grow out of our space pretty quickly. We made an offer finally on this building. The realtor said that it needed to have a one in front of it. We offered one million. They came back at 1.5 and we split the difference. I believe we settled at 1.2 million or something like that. We were very lucky because we came in here and at the same time bought two sachet machines that spring, hoping we were going to get the Barnes & Noble business.

JM:You moved in here when?

PH:We moved in here in 2001 and this building is 89,000 square feet.

JM:That is quite a jump from 16,000 to 89,000 square feet.

PH: Yes! We had no expectation that we were going to fill any of it. We couldn’t imagine filling any of it. We were going to rent out space in the back to a variety of people. Union Savings was our lender for this. Part of the problem was you had to build a huge wall and we did not have the money to pay for

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a wall. As it turned out it was very lucky that we didn’t do that. There were issues that the loading dock was in the middle of the building. People wanted loading docks. In the end we rented out a portion of it to Becton & Dickinson. They stored syringes and stacked those for one season, but that was all we ended renting out. We ended getting Barnes & Noble that same year. We closed on this building in April of that year. The machines arrived in May. We closed the deal with Barnes & Noble. The test had started in that January, but we did not know if we were going to get it until May or June. In June I hired 40 people, set up 2 shifts on these two machines. We were off and running. I remember very clearly sitting with the President of Barnes & Noble and the guy that had made the decision. The President asked him if he had been to see their place. This was in May. Up until May we didn’t even have a place that one could conceptualize as being able to handle this sort of business. To which the guy said, “No, not yet.” “Well you had better get up there! How do you know that they are able to handle this amount of business?” Luckily in May he came. He walked in the front and was very impressed. Then we walked into the back and it was virtually empty. It was very empty and there were two machines. I did manage to rouse some bodies. I had yet to work out many of the kinks. We did manage to work them out.

JM:What is your responsibility now? You manage this facility.

PH:Yes I am in charge of operations for the most part and sales.

JM:Your position is what?

PH:Vice President.

JM:Cam you break down your sales by % from the different types of markets?

PH:I pretty much can. Mail order represents 15%, shops represent 5%, hotels and Restaurants which used to be the biggest portion of sales is more like 20% of the business, export now is 10%. That gets us to 50%. Grocery stores now are 30%. Groceries are a grey area because Barnes & Noble is one of these things that are not really groceries. That would be the last phase which is cafes, restaurants. It includes Amazon, Target, and Walmart and that sort of stuff. Barnes & Noble would be on the other side as it is more what they call fast casual. That is more like” grab and go” type business which is growing.

JM:Things have changed greatly in the restaurant business. Fine dining is not the thing any more.

PH:That is not where it is.

JM:You have a facility in Hudson, NY. What does that do?

PH:Yes. We have a facility in Hudson, NY that is a bottling plant. That bottles our ready to drink tea.

JM:Do you brew the tea there and bottle it?

 

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PH:We brew and bottle the tea there. Up until 2 years ago one week a month I used to go for the last 10 years to Pittsburgh, PA to brew the tea at a co-packing facility. We started the bottled tea about 10 years ago. It represents 5% of the business. It is not a huge portion of the business, but it opens us up into sort of a different market. It is fast casual part of the business that is growing.

JM:How many staff do you have there?

PH:6 staff there. That helps to feed the trucks that go to New York City every day and to surrounding areas. We just bought a new facility which I don’t have the address of but which is the old Duchess Diesel building on Route 22, north of our old #5979 place. That handles delivery into the city and surrounding areas here.

JM:What about the facility in SoHo which Michael’s son Emeric runs?

PH:Emeric runs the shop in SoHo. There is a retail shop in Millerton and a retail shop in New York City in SoHo on Broome Street. Then there is a facility in Los Vegas which is a distribution center with 4 employees out there. They handle the West Coast for us. A truck goes out every week to Los Vegas from here. It is dispersed either to mail order consumers so they get their products faster or to hotels and restaurants, the Bellagio in Los Vegas.

JM:Is there anything I haven’t covered that you would like to tell me about?

PH:We covered it pretty well. Mike and I were very lucky in that dad took it from 0 to 1. We have grown greatly since then. I came when the company had not quite crossed the one million mark, maybe half a million or something at that point. The company would have been 14 years old then. That had been a long and arduous slog already. It does take a long time for these things to get rolling. I do greatly appreciate not having to go from 0 to 1.

JM:You came in when it was getting a little easier.

PH:At least there was somewhere to go. Starbucks and all these guys with specialty coffee clearly helped the cause. There was more interest and more interest from the consumer end shortly thereafter. Now we are into a whole new renaissance with the fast causal. People are becoming very interested in craft; where and how things are made.

JM:Tea fits into that niche.

PH:Yeah so we are very lucky as it has continued to grow in that direction. I often consider the drift so we are drifting and we have a little current with us. Luckily we have had the current with us so that sometimes when we are tired of paddling, we can just float. That is a nice way to look at it.

JM:Thank you so very much.

PH:You are welcome.