Novel tea: Beyond the humble chai

Published: July 22, 2019 1:29:25 AM

Therefore, creating touchpoints where consumers can taste the teas before making a purchase is high on their agenda.

Premium tea brands lack the distribution muscle that mass market brands have and are, hence, employing different tactics to reach consumers.

By Venkata Susmita Biswas

As the world samples Indian tea — be it chai tea, chai tea latte or any of its foreign variants — Indian palates are warming up to premium teas and infusion, predominantly a Western habit. India accounts for 14% of global tea exports and nearly 20% of the tea produced in the country is exported, according to Tea Board India. Although premium teas such as white tea and oolong form a big chunk of the exports, their domestic consumption has been insignificant thus far.

Start-ups like Teabox, Tea Trunk and The Good Life Company are trying to influence consumer behaviour with premium tea offerings. But changing the traditional tea drinking habit in India may not be easy for these brands.

Steeped in wellness

Indian tea consumption is dominated by chai (milk tea), which is made from CTC (crush-tear-curl) tea. The black tea market that comprises CTC tea accounts for 84% of the `14,200 crore tea market, according to Euromonitor International, while green tea accounts for the rest. The green tea market, worth `2,200 crore, is growing at a CAGR of 27.2%. In contrast, the strong flavoured black tea market is growing at 6.2%.

The green tea market is recording high growth as consumers opt for healthy lifestyles and food alternatives, and premium tea start-ups are riding this health and wellness wave. Teabox, which earns most of its revenue from exports, hopes to increase domestic sales to 20-25% by the end of the year.

“Health is the number one driver of speciality teas,” says Snigdha Manchanda, tea sommelier and founder of Tea Trunk. Every brand has an exclusive line of health and wellness tea blends that claim to aid weight loss, help with sleep disorders, and such.
Bhuman Dani, co-founder, The Good Life Company, which sells both premium tea and coffee, says that start-ups like his are focussed on “uplifting the tea category” even though the premiumisation of a commodity like tea may not pay off in the short term. “The challenge is in achieving scale. That is why we are targeting the aspirational consumer earning an annual income of `5-10 lakh, which is the fastest growing consumer segment,” he adds.

A 50 gm pack of speciality tea could cost between `350 and `900. Consumers, who get introduced to premium teas through green teas, are experimenting with curated blends and also purchasing loose leaf tea for household use.

Kausshal Dugarr, CEO, Teabox, compares premium tea to wine and whisky. “Tea drinking is now about the experience, taste and flavours.” In fact, premium tea start-ups are not just selling tea, but also special accessories and utensils to brew the best pot of tea.
Mass market brands like Girnar, Organic India and HUL’s Lipton, too, are going beyond green teas and offering novelty teas. Lipton recently introduced Japanese Matcha Tea, which is the latest addition being offered by speciality tea brands.
Taste test

Premium tea brands lack the distribution muscle that mass market brands have and are, hence, employing different tactics to reach consumers. Tea Trunk follows a digital-only strategy and earns 70% of its sales from Instagram; whereas The Good Life Company and Teabox have a modern trade presence in stores like Nature’s Basket and Food Hall.

Associations with hotels, restaurants, cafes, co-working spaces, airlines and other B2B sectors bring in additional revenue for these companies. For instance, Tea Trunk curates blends for restaurants like The Table and Burma Burma, and specialty blends from The Good Life Company are available at Smoke House Deli, Yauatcha and on GoAir, among other places.

These companies have identified sampling as a key piece of the scaling-up puzzle. Therefore, creating touchpoints where consumers can taste the teas before making a purchase is high on their agenda.

Teabox has experience centres at the Mumbai and Bengaluru international airports, with plans to launch more. Tea Trunk is planning to launch a tea tasting room in Goa this year, while The Good Life Company has an experience centre at the Mumbai international airport. However, none of these companies are keen on launching their own tea bars; the focus is more on upping the number of experiential touchpoints. In the long term though, a larger offline footprint may enable these companies to expand their reach.

Get live Stock Prices from BSE and NSE and latest NAV, portfolio of Mutual Funds, calculate your tax by Income Tax Calculator, know market’s Top Gainers, Top Losers & Best Equity Funds. Like us on Facebook and follow us on Twitter.