Through the 90s and the early 2000's, Indians went in for café culture in a big way. Individual brands like Barista and Costa Coffee rose and declined, but cafes as a concept were here to stay as can be seen in the ubiquity of Café Coffee Day and the increasing presence of Starbucks.
While every café worth its espresso also served a smattering of tea, chai was something most Indians preferred to consume at home -made to exacting personal specifications. Or from a tapri by the road near office complexes and highways, with tea serving as a legitimate excuse to take a break, catch up with friends and gossip.
But over the last few years, an increasing number of entrepreneurs are attempting to break coffee's hegemony over the minds, time and wallets of affluent Indians.
Sandeep Kotecha, Director, Ahmedabad-based The Kettlery, said, "The vacuum between 'footpath' teas and those served in five star hotels across Indian cities is finally getting filled."
The Kettlery is hoping Indians will be wooed by the "tea experience": tasting sessions and a ringside view of the brewing process. "No one leaves without getting a pack or two of specialty teas and tea accessories," says the entrepreneur.
Playing to a different script are Chaayos and Chai Point, trying to woo a more middle class audience with a mix of recognisable chai and traditional Indian snacks. The latter boasts of a large retail footprint with stores across Bengaluru, NCR, Pune, Hyderabad and Mumbai.
Amuleek Singh Bijral, who runs Chaipoint said that his firm consumes over 6 tons of ginger and three tons of lemons a month for its signature ginger and lemon teas.
He further added, "Our weekend deliveries now equal our weekday deliveries, India runs on chai. "
Raghav Verma, co-founder Chaayos hopes to expand beyond Delhi NCR and Mumbai, to Hyderabad, Pune and Bengaluru.
Gaurav Marya, chairman, Franchise India: "Starbucks acquired Teavana and modified its logo, dropping 'coffee' altogether."
One big challenge is drawing an audience used to consuming CTC or dust tea to leaf teas with interesting flavours, paired with appropriate food. Marya says on an average, Indians spend USD1.7-USD2 per capita on tea compared to USD18 in the UK.
He added, "The major growth drivers will be green and herbal teas which will grow at 10 percent-15 percent annually over the next few years. The specialty market is growing at 20 percent-25 percent as consumers get more health conscious."
In latest funding round led by private equity firm Paragon Partners, organised tea firm Chai Point has raised $20 million. The firms existing investors including Eight Roads (Fidelity’s India PE arm), Saama Capital and DSG Consumer partners also participated in the series C round.
Paragon Partners recently raised $120 mn for its first fund and is led by Siddharth Parekh, son of veteran banker Deepak Parekh. As part of this round, Siddharth Parekh will join Chai Point's board.
DCS Advisory India (earlier Signal Hill Capital) had been the advisor of the company for this fundraise.
A large part of the capital raised will be towards enhancing the brand's multi-market go-to-market and grow significantly from its current sales of 3,00,000 cups per day.
"A substantial portion of our investment proceeds will go towards deepening our sales, marketing, and service operations for our automated hot beverage dispensing business - boxC.in - which is the next growth driver for the business. High-quality tea and coffee is fundamental to our growth and we are going to expand and refine our underlying sourcing program – “Garden to Glass”," said Amuleek Singh Bijral, CEO and Co-founder of Chai Point in a statement.
boxC.in is the company's fresh-milk based dispenser platform with over 2000 such units having been deployed in India.
Further, Chai Point is also set to enhance its food menu and widen its offering as it looks to take on competitors such as Chaayos in the multi-channel tea market that is pegged at over Rs 1.5 lakh crore in India.
"We are bullish on the consumption story in India and are excited to partner with Chai Point. This investment is in line with our overarching investment theme of partnering high-caliber entrepreneurs with compelling business models," said Siddharth Parekh, Co-founder at Paragon Partners.
The 8-year-old company is targeting a 5x growth over the next 3 years as it looks to double down on offline expansion significantly setting sights on its 100th store by May 2018.
Gulabs, the makers of tasty and delectable hand-crafted Indian snacks, has partnered with Chai Kings, the Chennai-based Tea outlet that provides freshly brewed Chai, to make the much sought after Tiny Khakhras available at the latter's outlets. Under this partnership, specially packed Tiny Khakhras from Gulabs which are of 2.5 inches diameter can be bought at all 7 outlets of Chai Kings, allowing customers to relish their hot tea with delicious and crunchy hand-crafted Khakhras. Each box priced at Rs.40 will contain 10 pieces of Tiny Khakhras which are available in three flavours - Plain, Ajwain and Methi. The package is vacuum packed to maintain freshness and shelf life.
Commenting on the partnership with Chai Kings, Ms. Ruchika Gupta, VP - Sales and Marketing of Gulabs said, "Our Idea is to offer to the tea lovers, the perfect snack to go with their chai. The fact that Khakhras and chai go hand in hand, made Chai Kings the partner for us."
Mr. Jahabar Sadique, Co-Founder of Chai Kings elaborates, "At Chai Kings, we always believe in giving our customers the best Chai experience. The Classic Khakhras fits best and compliments our Chai. The fact that Gulabs has not just flavours of khakhras, but also the tiny variants, that makes them a perfect partner for our variety of Chai."
Gulabs Tiny Khakhras are available at outlets of Chai Kings located at Annanagar, Kilpauk, Virugambakkam, T Nagar, Mount Road, Velachery and Perungudi.
With cafes in over 32 countries from Malaysia to Australia to Dubai, International coffee chain Papparoti has now opened doors in Mumbai and according to the spokesperson; the huge potential in Indian market makes it a perfect fit especially because of the culture of "bun and tea".
Nitin Jethwani, co-founder of the brand in cities like Mumbai, Hyderabad, Pune Chennai and Bengaluru said “We see huge potential for the brand to be successful in India primirily because it identifies with our culture of bun and chai. Also we would see a lot of Indians at Papparoti cafe in Dubai and thought why not give them the taste of Papparoti in their city. Indian is the second highest consumer market globally and if one connects with a brand there seems to be no limit. Indian F&B has evolved drastically in the past few years. We see so many international QSRs who have been well received in India. In the next quarter we plan to target cities like Chennai( scheduled to open in late January 2018 and Bengaluru. We are also in talks with airports of various cities for our brand”.
Launched first in Malaysia in 2003, the brand has a presence all over the world, with 407 outlets and kiosks across Malaysia, Dubai , Indonesia, UK, Australia,China, Vietnam, Abu Dhabi, Kuwait, Saudi Arabia, UAE, Oman, Bangladesh and now in India.
Ravi Jaipuria promoted RJ Corp is entering into an exclusive agreement with Singapore based TWG tea to setup tea lounges in India.
Regarded as world’s premium and one of the biggest luxury tea chains, TWG will enter Delhi, Mumbai.
"We will set up premium tea parlours starting around third quarter of this year. This deal complements our existing portfolio of brands across food and beverages and we will leverage our existing strengths to take this association forward,” shared Jaipuria in a press statement.
At present RJ Corp is heavily into food businesses and is one of the biggest bottling arms of PepsiCo.
It also run UK based cafe chain Costa Coffee in Indian market.
The group also has the franchisee right for KFC and Pizza Hut businesses in North and east market.
“The average cost of setting up an outlet would be Rs 10 crore. RJ Corp will begin with Delhi and Mumbai, and sell packaged TWG tea at hotels and upscale retail stores,” added Jaipuria.
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