How ice tea has started brewing at modern retail shelves?

The size of the ice tea market is minuscule compared to the traditional hot tea market, which presents a huge opportunity
How ice tea has started brewing at modern retail shelves?
Siddharth Jain

Established in the year 2017, BrewHouse Tea Brewing Co. has launched organic ready-to-drink Ice Tea, which is available across all metros & Tier-I cities. The ice tea category in India holds great potential. The size of the ice tea market is minuscule compared to the traditional hot tea market, which presents a huge opportunity for entrepreneurs like Siddharth Jain who is the Founder and CEO, BrewHouse Tea Brewing Co speak further on same.

What inspired you to launch BrewHouse? What were your initial challenges and how did you overcome those?

First and foremost, I was inspired by the glaring need for healthier beverages. Initial challenges included developing the right product which was all-natural, shelf-stable, tasted great and used real, good quality tea.

Post development, the challenge was to manufacture this in a way where quality remained uncompromised, since we didn’t have our own plant, and third-party plants do not want to make any changes for new, small brands. Once the manufacturing challenges were addressed, the challenge was to set up a distribution network that is cost-effective and reaches the right audience; we've seen that the audience with purchasing power in India is highly scattered and fragmented.

What is your assessment about the health beverage market in India? According to you, what are the factors propelling growth in this segment?

I believe the beverage industry suffers from a trust deficit among consumers. Consumer expectations are changing, especially among the millennial audience and Gen Z. This audience expects responsibly-made products that stand behind their quality and sourcing, and talk about ethics and transparency. Very few beverage brands have effectively addressed those expectations, especially in the affordable category.

I strongly believe the process of how the beverage is made (for example: real-brewed versus powdered) is becoming as important as the ingredients (what the beverage actually contains). Consumers are looking to not just minimise harmful ingredients (preservatives, colours, excess sugar etc.) but also include healthy ingredients (probiotics, natural active ingredients).

How do you see consumer behavior evolving towards health drinks?

Consumers are looking for functional beverages, i.e. they are choosing functionality over just taste. Globally, energy drinks and ice teas are the leading functional beverage categories, followed by coffee, enhanced waters and sports drinks. In India, energy drinks have gained some traction among the millennial audience but is now declining among Gen Z due to the emerging health concerns associated with energy drinks.

We are seeing hat ice teas and other functional beverage categories are doing very well with Gen Z and younger audiences who instinctively choose natural, healthier beverages as long as they are within their more limited budgets. This audience is moving away from unhealthy, unmindful consumption at a much larger scale than the earlier generations.  

What is the current distribution of BrewHouse? Going forward, what are the plans to scale? Are you working with any modern retailer as part of your distribution strategy?

We are available at over 5,000 points of sale across over 25 cities in India. These include Modern Trade outlets, institutions, HORECA outlets as well as General Trade (kirana) stores. Going forward, we will be focussing on alternate channels like schools, colleges, cinema chains, co-working and co-living spaces, office canteens and more. We want to reach these points of consumption to help us go from 5,000 to 10,000 points of sale. We are working with all the modern trade chains in the country, and are currently selling at premium chains like Nature’s Basket and Spencer’s while we are in talks with large format retailers for launching our PET bottles as they reach the market from January 2020 onwards.

Tell us about the pricing?

Pricing wise, our glass bottles retail at INR 60, while the 300ml PET bottles retail at INR 40. 

Have you raised any funds so far, or do you plan to?

We have raised US$ 3.1mn so far from Food Empire Holdings, a Singapore listed FMCG co.

kindly highlight your growth plans.

We’ve launched our ice teas in PET bottles in January 2020, which will allow us to enter many more points of sale where we couldn’t earlier due to risks associated with glass bottles. For example: vending machines, schools, colleges etc.

We’ve also developed a whole range of new products and have a launch pipeline of 12 months ready. We’re going to start with lemonades that also have real-brewed tea and tisanes added to impart more flavours. 

 These will be followed by some zero-calorie ice teas. We’ve taken a lot of time to develop these zero calorie products which are again, all natural and organic. Also, these will not have any of the sharp, lingering sweet notes typically associated with zero-calorie products that have made them difficult to consumers to adapt to them so far, from a taste perspective. We’re working on a kids range of beverages as well, which will be launched by mid 2020.

We’re also very excited to be bringing out an all-natural, organic cola brand which builds on our expertise of making beverages with real-brewed teas.

 

Siddharth Jain
 
 
 
 
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