How To Start A Herbal Tea Business

If your love for herbal tea has inspired you to start your very own herbal tea business then you could be brewing something special (pun intended). However, you're going to need more than just really great tea to get your business off the ground.

Starting a herbal tea business means making sure you have the right business structure, your assets are protected and your business is legally compliant. That way, you can focus on what’s really important – selling your awesome teas without worrying about the technical details.

Before you get to that part though — you’ve got to set your business up the right way.

Is A Herbal Tea Business Profitable?

It’s not easy to determine whether a herbal tea business will be profitable right off the bat. A number of factors will decide your herbal tea business’s success. It’s better to create a business plan for your herbal tea venture so you can have an idea of your business’s potential strengths and weaknesses. This type of clarity will allow you to be prepared for the potential challenges that naturally come with starting a business, increasing your chances of driving your herbal tea business towards success.

How To Start A Herbal Tea Business In New Zealand

To start a herbal tea business in New Zealand, the first thing you need to do is register your business. The process for registering your business will be determined by the business structure you choose for your herbal tea business. There are various types of business structures however, the most commonly registered are a sole trader business, partnership and a company. Each has their own advantages and drawbacks – let's take a closer look at them below.

Sole Trader

Sole trader businesses are suitable for people who want to be the exclusive owner and operator of their business. However, this level of ownership also means you will be personally liable for the entire business. When you register your business as a sole trader, there is no legal separation between you and your business. So, if there’s ever any legal or financial issues with your business, your personal assets could be at risk. Despite this high risk, setting up as a sole trader might be attractive to some business owners due to its ease of setup. To register your business as a sole trader, you simply need to apply for a New Zealand Business Number (NZBN) online and register a business name — this step is only necessary if you plan on using a name different to your personal one. After that, you're officially registered as a sole trader.

Partnership

If your herbal tea business is a joint venture with one or more people, you might consider setting it up as a partnership. Setting up a partnership is similar to operating as a sole trader: you’ll need to obtain an NZBN for the business and register a business name, unless you plan to operate under the full names of all partners. However, partnerships have the same drawback as sole traders — there is no legal separation between the business and the partners. This means all partners typically share full liability for the business, which can be risky, especially as you may have limited control over the actions of other partners.

Company

A company structure offers the highest level of legal protection; however, the setup process is more complex compared to other business structures. A company must be registered with the New Zealand Companies Office and is subject to stricter regulations. Companies enjoy many legal rights similar to those of a person, such as the ability to earn profits and own property in their own name.

To establish your herbal tea venture as a company, you’ll need to address key elements such as your company structure, governance, shareholders, and directors. Following this, you’ll register with the Companies Office and comply with its ongoing requirements, which include annual fees and potential audits. Engaging a legal expert to assist with setting up your company is advisable — especially if your herbal tea business is a serious venture. They can help ensure your company is set up correctly and aligned with your future goals and plans.

Legal Considerations For Starting A Herbal Tea Business

Registering your herbal tea business with the right authority isn’t the only legal consideration you’ll need to factor in when starting your business – there’s a number of regulations you will need to look out for. It’s important to understand what your legal obligations are right from the start, that way you can streamline your business practices to be legally compliant right from the start and avoid unnecessary trouble. We’ve listed some key regulations for you to look out for below.

Food Standards And Safety

If you’re selling a food product, such as herbal tea, you need to comply with the Food Standards Australia New Zealand (FSANZ) Code. The Code governs food safety, labelling, and ingredient standards, ensuring that only safe ingredients are used. Additionally, it requires that your products are handled in a way that prevents contamination. Depending on your business setup, you may need a certified Food Safety Supervisor. Practising strict compliance with the FSANZ Code is essential to meet your obligations and protect consumer health.

Product Labelling Requirements

As a herbal tea business, accurate labelling is essential. Labels must clearly include details like:

• Ingredients used in the product 
• Expiry Date to indicate freshness 
• Country of Origin to comply with consumer rights 
• Nutritional Information if any nutrition-related claims are made 

This transparency allows consumers to make informed purchasing decisions and ensures compliance with FSANZ labelling standards.

Therapeutic Goods And Health Claims

Many consumers seek herbal tea for its potential therapeutic benefits. If you claim your herbal tea offers therapeutic effects (e.g., stress relief), you may need to register it as a Complementary Medicine with the Medsafe, New Zealand's regulatory body for therapeutic products. Meeting Medsafe standards requires specific evidence and compliance with therapeutic goods regulations.

Also, carefully differentiate between general benefits and explicit health claims. For example, while stating that herbal teas may support relaxation is often permissible, claiming they cure specific illnesses without evidence could breach regulations.

Import And Quarantine Regulations

If you’re importing herbal tea or ingredients, New Zealand biosecurity and quarantine laws apply. The Ministry for Primary Industries (MPI) regulates imported herbs and plant materials to prevent the introduction of pests and diseases. Imported products may require testing and specific certifications, so be prepared for this when sourcing ingredients internationally.

Environmental And Packaging Regulations

Consumers increasingly value sustainable packaging. However, if you use eco-friendly or recycled packaging, ensure that your claims are accurate to avoid allegations of greenwashing. Following New Zealand’s environmental packaging standards, you should be transparent about the type and recyclability of materials used, giving consumers an accurate understanding of your environmental commitments.

Fair Trading Act

The Fair Trading Act is crucial for business owners as it covers product standards, warranties, refunds, and consumer rights. Compliance ensures you meet standards for:

• Refunds and Warranties: Consumers have a right to refunds or replacements if a product is defective or doesn’t meet its description
• Product Safety Standards: You must ensure your products are safe for consumer use
• Truth in Advertising: Avoid misleading or deceptive conduct to maintain consumer trust

Understanding and upholding your obligations under the Fair Trading Act is vital to building a legally compliant business that respects consumer rights.

Advertising And Marketing Compliance

When advertising your herbal tea, ensure all marketing materials comply with the Advertising Standards Authority (ASA) Code. This includes:

• Truthful Claims: Avoid unsubstantiated or exaggerated claims about your product.
• Appropriate Content: Ensure all marketing content is suitable for your audience and adheres to standards.

Can I Start My Herbal Tea Business Online?

Starting your herbal tea business online is a great option, whether you plan to sell exclusively online or as a complement to in-person sales. An online store adds convenience for consumers and broadens your reach.

There are additional legal considerations when setting up an online business:

• Data and Privacy Compliance: Since you’ll be collecting personal information from consumers to fulfil orders, compliance with New Zealand’s Privacy Act is essential. Ensure you have a well-drafted Privacy Policy on your website that complies with the Privacy Act. This policy should outline how customer data is collected, stored, and used.
• Website Terms & Conditions and Cookie Policy: Protect your business by including Website Terms and Conditions and a Cookie Policy on your site. These documents clarify how users may interact with your website, manage your liabilities, and protect your business’s intellectual property. The Cookie Policy should also disclose any tracking or data collection methods in place, in line with transparency requirements.

These legal documents not only help manage liabilities and protect your business’s ownership but also improve the overall experience for both you and your website users by setting clear guidelines.

What Other Legal Documents Do I Need For My Herbal Tea Business?

Privacy documents aren't the only legal agreements you will require to protect your herbal tea business – there’s a few more you should consider to give your business the security it needs. Needless to say, the exact documents will depend on your business’s specific operations, so it’s a good idea to chat with a legal expert and have them tailor the documents to your specification. Here’s a few documents you may want to think about.

• Non-Disclosure Agreement (NDA): To protect your herbal business’s confidential information, consider securing it legally through an NDA. This can help safeguard proprietary processes, recipes, and any sensitive business details shared with others
• Supply Agreement: If you plan to have suppliers deliver essential products and ingredients, it's important to establish mutual terms on timelines, delivery schedules, liabilities, and warranties. A well-drafted supply agreement ensures both parties are aligned
• Employment Agreement: When hiring staff for your team, it’s essential to define the rights and responsibilities of both parties. This establishes a professional foundation for your working relationship
• Workplace Policy: To promote a harmonious work environment, all processes and expectations should be clearly outlined. A comprehensive workplace policy helps achieve this by setting standards for conduct, health, and safety
• IP Licence Agreement: If you plan to allow others to use your intellectual property (such as product formulas or branding), an IP licence agreement will define the terms, rights, and restrictions. This helps you retain control over how your intellectual property is used. You might also consider Registering a Trade Mark to protect your brand identity

Key Takeaways

Starting a herbal tea business can be a great new venture! However, it’s important to register your business the right way, ensure it’s following the necessary regulations and is legally protected. To summarise what we’ve discussed:

• Starting a herbal tea business requires choosing the right business structure (e.g., sole trader, partnership, company) to protect assets and limit liability 
• Creating a business plan is essential to assess profitability, identify strengths, and prepare for challenges 
• Key legal requirements include complying with food safety standards, product labelling, and obtaining necessary certifications for therapeutic claims 
• Importing herbs may involve quarantine and biosecurity checks, while sustainable packaging must adhere to New Zealand’s environmental packaging standards 
• The Fair Trading Act mandates standards for product safety, accurate advertising, and customer rights like refunds and warranties 
• Selling online requires data privacy compliance, including a Privacy Policy, Website Terms & Conditions, and Cookie Policy to protect user data and limit liability 
• Additional legal documents, such as Non-Disclosure Agreements, Supply Agreements, and Employment Agreements, can safeguard business operations and intellectual property 

If you would like a consultation on starting a herbal tea business, you can reach us at 0800 002 184 or team@sprintlaw.co.nz for a free, no-obligations chat.