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DavidsTea CEO brews an ambitious expansion plan

The Lunch

Rachel Idzerda for The Globe and Mail

Steeping himself in disparate corporate cultures

Sylvain Toutant, president and CEO of Davids Tea, on adapting to new work environments and charting a major U.S. expansion

Sylvain Toutant dates the start of his conversion to Jumpy Monkey and Alpine Punch to about five years ago when his two older sons introduced the former coffee-chain executive to the perkily named brews of a trendy new store on the scene: DavidsTea.

"Something is going on here," the veteran Quebec retailer and erstwhile coffee stalwart recalls thinking to himself. "You talk tea with your mother, not your boys." Over the years, as a senior executive at coffee chain Van Houtte Inc. and K-Cup maker Keurig Green Mountain Inc., Canada and British divisions, but also a keen observer of developments in the beverage industry, Mr. Toutant followed Montreal-based

DavidsTea's progress – occasionally sampling its loose-leaf blends – as it carved out a space for itself among millennials taking to tea in droves.

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When DavidsTea Inc. co-founders – and cousins – David Segal and Herschel Segal (of fashion chain Le Château) decided last year it was time to bring in an outsider to help take the company to the next stage, they tapped Mr. Toutant, whose CV includes stints as head of Quebec's provincial wine and liquor monopoly – the SAQ – and CEO of home-improvement giant Réno-Dépôt.

Besides crossing over from joltin' java to softer-edged tea, Mr. Toutant, 52, was in for some culture shock at DavidsTea's head office in a northern Montreal suburb. "My first impression was that [employees] thought grandpa had just entered the building," he says, laughing, recalling his first day at the youth-focused company where employees put a premium on all things hip and environmentally friendly.

"There is quite a culture of humanism at DavidsTea, among the employees, and it's important for me to clearly grasp that culture. It's really different from what I've known, for example, at the SAQ or at Réno-Dépôt," Mr. Toutant says over a lunch of braised bison shoulder at the Institut de tourisme et d'hôtellerie du Québec, the province's training academy for professionals in the hospitality and restaurant sectors. (His choice of venue reflects his role as a benefactor of the institute.)

Indeed, on this day, the casually dressed – sports jacket, no tie – Mr. Toutant is wearing a glass-bead bracelet instead of his usual Tag Heuer Monaco watch. It's in support of DavidsTea's new partner ME to WE, a social enterprise that backs charity partner Free the Children and its program to provide clean water to children in Kenya.

For the loquacious, affable Mr. Toutant, the ability to smoothly slip into disparate corporate cultures and environments is a quality he prides himself on. Call him the Protean Manager. Key to being a good boss is listening and learning, or W4C – "walk the four corners of your company" – he says. "The first thing I do when I come into a new organization is make sure the right people are in place, establish my trust in them, put the management process in place."

What I want is for 26-year-olds, who are far better than I was at 26, to really get the chance to thrive.

A middle child with two sisters, Mr. Toutant grew up in a working-class neighbourhood in the industrial town of Trois-Rivières. He knew very little about home renovations when he joined the predecessor to Réno-Dépôt in 1987. Over the years, he climbed the

executive ladder and was eventually tasked by French owner Castorama in the late 1990s to help boost sales at its home-improvement outlet in Sao Paulo, Brazil. He noticed that the streets regularly emptied whenever important soccer games were broadcast and that many retailers set up televisions in their stores to ensure staff showed up for work and to attract TV-less customers. So, he adopted the tactic, installing sets at the store. The move conferred "superstar" status upon him as a foreign but likeable boss, he said.

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Yves Archambault, former president and CEO of Réno-Dépôt and a mentor, says Mr. Toutant was a whiz at applying his marketing know-how to fine-tune the relatively new art of big-box retailing. "He was a team player. He knew how to get people working together on how best to bring about the changes needed." At one point, he was bold enough to suggest to the boss, Pierre Michaud, that his – the boss's – daughter, working for the company at the time, was perhaps not well-suited for the role at that point in her career, Mr. Archambault recalls. "That took tact, finesse."

Mr. Toutant ended up marrying Josée, Pierre Michaud's niece. Mr. Michaud is currently chairman of DavidsTea. Founder Herschel Segal, 85, is a major shareholder and director while David Segal, 34, and also a big shareholder, is the company's brand ambassador.

Of his days in Trois-Rivières, some of Mr. Toutant's fondest memories include stumbling in his laced-up skates to the outdoor rink at the end of the street for games of shinny on frigid winter days. He has nothing but good things to say about the public postsecondary education network set up by the provincial government in the late sixties. Had it not been for the affordable University of Quebec at Trois-Rivières, he probably would not have attended university, he says.

He started up an advertising firm with a friend in his university days and, after a brief stint in customer service at General Motors of Canada, went to ad agency Publicité Martin, where he further developed his flair for understanding and acting on consumer behaviour. "For me, marketing was a form of sociology but in disguise," he says.

CURRICULUM VITAE

Age: 52

Birthplace: Trois-Rivières, Que.

Education: Business degree from the University of Quebec at Trois-Rivières

Family: Married for 25 years to Josée Michaud; three sons (Simon-Claude, Francis, Jérémy)

Current book: Par amour du stress by Sonia Lupien

Car: 2016 Chevrolet Volt

Lunch-guest wish list: Barack Obama, Bill Clinton, Angela Merkel

Music: Montreal indie band Half Moon Run (“It reminds me of Supertramp”)

Sports: Downhill skiing, water skiing

Principal residence: Sainte-Marcelline-de-Kildare, Que.

Quotes Growing up, “I was in between two sisters. I was a bit of a pest with my big sister but protective of my little sister.”

“There are two things in life you can’t have: You can’t have regrets and you can’t feel guilty.”

At DavidsTea – founded in 2008 and publicly traded since June – the priority these days is making good on an ambitious plan for significant growth in the tough, challenging U.S. market. The company currently has 193 stores in North America, 37 of them south of the border. The goal over the next five to 10 years is to attain a mix of about 230 stores in Canada and 320 in the United States, for a total of roughly 550, says Mr. Toutant, who developed a passion for marketing while working toward his undergraduate degree.

"The first thing you have to do to succeed in another country is understand that you don't understand that country," says Mr. Toutant, who hired seasoned American retail experts to spearhead the U.S. expansion, where DavidsTea is up against a formidable rival: Starbucks Corp. and its Tazo tea brand and Teavana subsidiary of standalone stores. "Growth [in the U.S.] is exponential. I think there's room for several players," Mr. Toutant says.

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Meanwhile, rivals in Canada – notably Tim Hortons – are ramping up their tea offerings as more players eye opportunities in the rapidly growing, $40-billion (U.S.) a year global tea business.

DavidsTea's stock price on the Nasdaq market has dropped to more than half its IPO price of $19, currently hovering around $9; top of mind among analysts' concerns is the high-risk U.S. expansion given how puny

DavidsTea is when measured against a behemoth such as Starbucks. Mr. Toutant does not as a rule comment on the fluctuations of the share price but says the company is committed to the creation of shareholder value over the long term.

One thing the CEO never forgot from his early, untested career days is the generosity of older managers who helped him develop his skills and find his footing, and he's acutely aware of the need to give back by helping along today's young keeners. "I'm surrounded by people in their 20s.You really have to take the time to understand them. We often don't give them a chance. What I want is for 26-year-olds, who are far better than I was at 26, to really get the chance to thrive," says the father of three sons, who are of ages 24, 21 and 16.

He hasn't lost his habit of kicking off the morning with a "very sturdy espresso" but now indulges in several tea breaks throughout the day, including current top pick Alpine Punch, an almond-scented rooibos with apples, cinnamon, ginger and nuts.

The "lab" at DavidsTea, where different ingredients are blended as part of new-product research, is one of Mr. Toutant's favourite places. "It's not that different from wine. You develop a little bit of an epicurean side tasting teas," he says. Meanwhile, the store itself must present a multisensory experience for customers, he adds. The visitor has to get something worthwhile in exchange for his or her precious time, and a big part of that payback is inhaling the perfumes, sipping showcased sample brews, taking in the "Tea Wall" behind the counter, and getting suggestions from staff.

"That's the power of tea. It's a pause. It's a fantastic moment."

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