A decade ago, anyone who relishes tea had no option than looking for a cup of tea either at a small roadside shop or restaurants that offer not many varieties of teas, but a regular one to keep you going! But now in 2018, there are at least a handful of startups that have forayed into the massive tea industry, as India accounts for the highest tea consumption globally.
One of the early companies to tap the burgeoning tea consumption market is Chai Point. In 2010, Amuleek Singh Bijral (in picture) had an idea to build a consumer brand, and he zeroed in on chai to cater to white-collared working professionals and founded Chai Point.
In 2014, the company raised $2 million through a Series A round of funding. From then on, Chai Point started evolving and thereby increasing its reach and offers to consumers to make their cup of tea memorable.
“The need for good quality tea is very strong and we want to offer consumers a better product and reach out to them in multiple ways- be it delivery or dispenser,” says Bijral, co-founder and CEO of Chai Point.
Of late, the tea retail chain has started making an effort to elevate the customer experience right from the design of the store, technology to snacks that go well with chai.
“For the past six months, we have started paying attention to our design. You can see how green this outlet is. As far as possible we use glass cups, and even straws are paper-based and we have wooden stirrers. Our packaging is 100% biodegradable,” says Bijral, sitting at the 101st outlet on Church Street, Bengaluru.
Not far away is Tata Cha, the out of home beverage initiative of Tata Global Beverages, on Church Street. Amuleek feels there is space for everyone. “We welcome all competitors and there is a huge demand for chai out there,” he says.
According to Tea Board, the total tea production in India in 2017 was 1,321.76 million kgs, of which South India alone contributed 234.65 million kgs. India is the second largest producer of tea in the world after China. According to Statista, a statistics portal, India exports the most tea globally behind China and Sri Lanka.
“Tea is one of the most popular drinks in the world, second to water. Consumption of chai is huge in India, it should be around 750-800 billion cups of tea annually,” says the co-founder, adding Chai Point sells over three lakh cups of chai a day across all its channels.
The organised tea market in India is Rs 1.5 lakh crore and the average per capita consumption of the beverage is increasing at 20-30% annually.
Face recognition technology
Chai Point is an omni-channel company with stores, delivery and dispenser ‘boxC.in’. Behind all these is its cloud-based platform SHARK, which allows integration for billing and tracking across all outlets and also delivery. Around 35 people are part of this SHARK team.
“Our business started as a single cup of chai and it is still about a cup of chai. But in the pursuit of reaching out to consumers and recognising their needs, the business became a multi-channel and SHARK holds it together,” explains Bijral.
At its 100th outlet in Indiranagar, which was opened in June this year, the company announced face recognition billing for loyalty customers. So, if a customer steps in, it is exactly known what he/she prefers - either normal or ginger tea.
About 35-40% of the company’s revenue comes from boxC.in. At present, it has 106 outlets, and plans to add 30-40 more by the end of this fiscal, and will witness around 75% growth. “As far as opening outlets, our sweet spot is somewhere between 700- 900 sq feet. We are not a large format player, but at the same time, not small either,” he says, adding that they are also looking at Tier-II cities like Coimbatore, Indore and Mysuru.
“Be it infrastructure or customer behaviour, everything in Tier-II cities is on par with top cities. The market is ready and it’s all about how fast we can execute it. By the end of this fiscal, we would have made a few beginnings in Tier-II cities,” says Bijral.
Expansion plans
Apart from expanding across the country, Chai Point is also looking at the overseas market, particularly the countries where the Indian diaspora is huge. The company was also part of Mayor of London’s IE20 business programme. “The opportunity in India is huge, but at the same time we are also deliberating on our global plans,” says the co-founder. The retail chain’s menu is also evolving - from pakoda to vegan products and Rajdhani cutlets, it offers more options to customers.
S Soundararajan, Director of Tea Development, Tea Board of India, says there is a huge scope for such business in Tier-II, Tier-III cities and tourist places as well. “These cities are also in need of such outlets so that people can have quality tea at a nice atmosphere,” he adds.
Sourcing strengths
The company sources the highest quality tea from tea estates across the country and it runs Garden to Glass programme. “India has a huge liking for Assam tea. What we are selling to customers are the ones that we are making too. All teas are single origin and we are enrolling tea estates on our platform. We have five estates right now, and we are on-boarding one tea estate a month,” he informs.
In April this year, it raised $20 million Series C funding, led by Paragon Partners. All existing investors - Eight Roads (Fidelity’s India PE arm), Saama Capital and DSG – participated in the round, with some of them investing super pro rata.
With a clear target on white-collared professionals, Chai Point wants to provide and maintain its quality and consistency, at the same time enhance customers’ chai experience at its outlets.
“We will never let our customers down,” concludes Bijral, sipping a cup of chai.
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