Despite its nationwide appeal and consumption, legacy tea manufacturers have been facing challenges in the form of smaller regional players, margin pressures and a growing Gen Z consumer base that is experimenting with artisanal coffees and a range of functional drinks, which is why the 133-year-old Wagh Bakri is trying to make tea drinking cool again!
Aside from launching its Royale blend this year, its first major product launch in the black tea category in nearly three decades, the brand also recently revamped its menu at its tea lounges, offering traditional staples with ‘Instagrammable’ bubble teas and fusion dishes combining Indian flavours with global influences.
9% market share
Wagh Bakri has an annual turnover of over `2,000 crore with an estimated 9% market share. It is the third-largest tea manufacturer in the country, well behind big conglomerates such as Hindustan Unilever and Tata in that order. Although the brand enjoys significant market share in regions like Gujarat, Maharashtra and Rajasthan, Paras Desai, executive director, Wagh Bakri Tea Group says it is working towards strengthening its presence in the Northern markets to become a stronger national player.
“With evolving consumer preferences, we see rising demand for high quality and differentiated tea drinking experiences. The premium segment is growing at least five times faster than the mass tea category,” explains Desai, emphasising that this is where the headroom for growth lies. “Our launch of Royale across core markets and e-commerce channels has been a significant step in strengthening our premium play.”
Consumers in metros and urban markets are showing a willingness to trade up for enhanced flavour profiles, and Desai says that rising disposable incomes are driving consumption trends such as appreciation for specialty teas, café culture and dining out.
The company currently operates 49 tea lounges across 11 cities such as Mumbai, Delhi NCR, Bengaluru and others. Beyond premiumisation, its new menu christened ‘Rock & Roll’ is also aimed at giving Wagh Bakri a youthful facelift.
Catching them young
Tea lounges could potentially become gateways to youth relevance for Wagh Bakri, remarks Yasin Hamidani, director, Media Care Brand Solutions. “By turning these spaces into experience hubs, the brand can reposition tea as aspirational and not routine. Lounges can serve as content-first, culture-led environments that mirror the modern café experience,” he notes.
Desai concurs. “We’re finding ourselves a new route to market the Wagh Bakri tea experience in a format that connects not just with Gen Z consumers but also other younger consumers across urban markets,” he says, adding the company plans to scale up the number of lounges to 500 over the next five years, with a footprint across tier-II and smaller markets too. The newly revamped menu now offers over 50 varieties of tea, including classic teas and gourmet brews. The brand is also investing in better distribution and brand building, with an emphasis on digital channels.
According to industry reports, India’s tea market was 1 trillion in 2024 and is expected to reach close to1.5 trillion by 2029. Rishav Jain, managing director and co-lead, consumer, consumer tech and retail practice at Alvarez & Marsal India notes that while the tea market in India has been growing at 4 to 6% annually in the last couple of years, premium tea has been growing at over 25% CAGR, driven by the popularisation of variants such as herbal teas, functional teas for weight loss and better sleep quality.
Nikhil Sethi, partner and national leader, consumer goods at KPMG in India points out that the tea category faces multiple challenges. Mass segments face down-trading and intense regional competition that limit pricing flexibility. “In this environment, success will hinge on cost agility, steady premiumisation, and wide reach across channels. Brands that balance innovation with affordability and maintain wide distribution while managing volatility will define leadership in India’s evolving tea landscape,” sums up Sethi.