Sulaimani, Pahadi, Desi, Aam Papad, Paani Kum… Quirky names brewed up by two IITians for the chai they serve at the Chaayos chain of tea bars they set up in the national capital region after quitting plush MNC jobs in the US.
In Bengaluru, customers drink up their tea and get to take home the kullad (earthen pot) it came in, at the four-year-old Chaipatty. Tapri Central in Jaipur serves the beverage in dhabha-style glasses to customers seated on cane moodhas and cushion-less wooden chairs reminiscent of roadside eateries.
As coffee-drinking steadily gains new converts in urban centres, a section of GenNext has taken upon itself the task of popularising tea-drinking outside home.
“There are many options for people to get good coffee outside home, but for tea, the native beverage, there are not that many. That’s why we decided to set up Chaayos,” says Raghav Verma. He and the chain’s CEO, Nitin Saluja, have expanded the venture from one to seven outlets within two years and are looking to add five more in as many months.
For Chirag Yadav, who set up Chaipatty Teafe (tea+cafe) in 2009, tea was the only constant in a life that was always on the move, thanks to his father’s defence postings across India. “The only thing consistent was seeing my parents having tea in the verandah and serving it to guests. Chai, for me, is the connecting drink,” says the 31-year-old Yadav, who happens to also be a salsa instructor.
An activity centre he started in Bengaluru’s Indiranagar area soon turned into a tea bar. “It was my friends who convinced me to start offering tea.” His provident fund earnings from a previous job, other savings and some funding from his father came to his aid. Chaipatty, or tea leaves, is named for the one commodity an average Indian household never ever runs out of.
In a city teeming with coffee chains, his tea bar’s kullad chai and pakoras were an instant hit and he broke even in four months. “My mother joined me and we opened another outlet in the city.” He now has five outlets, including one in Mumbai. More lounges are in the works in Delhi, Ahmedabad and Pune besides Singapore and Dubai.
In makeover mode
Coffee prices in cafes start at ₹50, whereas tea can be had for ₹30. At the top end, most teas are priced around ₹150. Chaipatty’s desi kullad chai starts at ₹50, the kadak chai at Chaayos comes for ₹40 and a pot of Chinese blooming tea costs ₹150 at Infinitea lounges.
Terming chai as the country’s “basic beverage”, Harish Bijoor, CEO at Harish Bijoor Consults, believes that is its strength and its weakness. “The strength is that everybody drinks tea, but when everybody drinks something, that beverage doesn’t have value. We have to re-invent value in tea.”
The tea lounges and bars are attempting just that. Cutting chai served in small glasses at Mumbai’s tapris (roadside stalls) cost not more than ₹6, but there are folks willing to spend ₹50 for the same brew — the difference is in the packaging.
“People are more than willing to pay a premium; they increasingly want to spend more time with tea,” says Parag Desai, executive director ofWagh Bakri. This chain of tea lounges in Delhi and Mumbai serves nearly 40 varieties of tea along with Indian snacks such as vada pav, samosa and bun maska.
When the company opened its first outlet six years ago in Mumbai’s Vile Parle, the idea was to familiarise customers with various tea varieties. But the response was so good that Desai quickly opened a second outlet in the metropolis. In several non-metros, Wagh Bakri has smaller tea lounges called Tea World. It also operates the kiosk model in cinemas and railways stations. “We are looking at more opportunities in this space,” says Desai.
Coffee, tea, or…
Per capita consumption of tea is 711 grams in India, while it’s a minuscule 56 grams for coffee, according to a 2010 Technopak Advisors report. In the estimated $6.6-billion non-alcoholic beverage market, tea commands the lion’s share at $2.3 billion. This is expected to exceed $3.4 billion by 2015.
Yet, there are only about 100 tea bars compared to the more than 3,200 coffee outlets in the country. “Coffee chains have the first-mover advantage, not as a competition but lifestyle offering. The tea industry focused on the core industry for too long and no one thought of connecting with the consumer on a longterm basis,” rues Desai.
It is this gap that the new-age chai bars are trying to bridge. Industry experts point out that the tea business offers high margins, nearly 50 per cent at times. Compared to coffee, tea costs less as it requires less milk and sugar. This also helped some of the tea chains break even within months.
“Within three months of opening every store, we are able to break even operationally. And we will continue to do that with new stores as well,” says a confident Verma.
Training to a T
Through entrenched processes and staff-training, the tea chains have been able to maintain consistency in taste and service, thereby attracting a regular clientele and revenues.
Wagh Bakri staff undergo six months of rigorous training to understand the nuances of tea making and tea tasting. Right from the tea gardens to its offices and tea lounges, the company familiarises its staff with every aspect of the business to ensure its customers are served a cup of perfectly aromatic tea.
At Chaayos, every employee attends an industrial training and certification programme, followed by two weeks of in-store training.
“After one month, they have to pass the certification exam,” says Verma. This is needed because, unlike coffee-making which is totally mechanised, tea making is still an art. Chaayos is doing its best to standardise processes.
“Procurement (for all seven outlets) is done centrally and from the best sources, like tulsi from Uttarakhand and cinnamon from Kerala. That helps maintain quality,” says Verma. The co-founders have also determined the duration and temperature of brewing for the right taste. Add-ons like ginger are ground and prepared fresh every morning and measured quantities are added to each cup.
“For the food items, we have a central kitchen in Gurgaon that supplies daily to the outlets.” Sandwich fillings or the vada for a vada pav, for instance, are prepared in Gurgaon, and the dish is assembled together at the outlets.
This makes the business highly scalable, says Verma. “We will be working on a hub-and-spoke model. From one kitchen, we are managing seven locations. We can take this to 15 in the NCR.”
Blend in the business
The scalability helped the business attract ₹2 crore funding from Powai Lake Ventures, a Mumbai-based angel investment group. Chaayos is now set for the next round of expansion and will raise more money only when needed.
Bengaluru-based chain Chai Point, too, raised ₹10 crore from Saama Capital in May this year. It has 22 outlets across Delhi and Bengaluru.
Others such as Infinitea and Chaipatty prefer to avoid outside funding. “I don’t want big boys to come and cut corners to increase sales. I am a chef and tea master; it is a labour of love,” says Gaurav Saria of Infinitea. Launched in 2003, the company right now has one outlet each in the NCR and Bengaluru.
Saria is in no hurry to expand and prefers to grow the business by offering a great customer experience. That strategy has served him well. From 100 customers a month in 2003, Infinitea now attracts 600 customers a day. “We have to make each unit profitable,” he declares.
Yadav concurs, saying outside funding is a big drain on the original promoters. “Those who fund take 10-20 per cent (of revenues) every month. There are bad months too. I don’t prefer this model for expansion.”
Brewing a USP
The companies not only differ in their approach to growth but also the clientele they serve, and target. The chai drinkers at Chaayos are in the 18-40 age bracket and are mostly working professionals, while the plush Infinitea lounges attract families, kitty party groups, college students as well as the elderly.
Wagh Bakri sees both business associates and families chatting over tea and snacks, while Chaipatty is the joint for youngsters.
In a country where tea-drinking is ubiquitous, there is enough room for new players. In the long run, however, differentiation will prove decisive. Each of the current players is attempting to brew that USP. Chaipatty is positioning itself as the friendly neighbourhood tea cafe — something of a cross between a college canteen and a roadside tea-stall. It sells Maggi alongside momos, and makes its kullads at the pottery classes held on its premises.
Chaayos offers 12 add-ons for its desi chai, including Adrak, Tulsi, Elaichi, Cinnamon, Mint, Kali Mirch; there’s a choice between Kadak (strong) and Paani Kum (light), and variations in the use of milk, tea and sugar. The crazy aam papad chai is Darjeeling tea that is milkfree and infused with dried mango.
There are innovations aplenty, but Bijoor is unsure if that alone is enough to re-invent the imagery around tea. “Tea has become too much of a commodity. People must bond with the beverage. Tea requires a unique discovery — it needs its own Cappuccino.” In the meantime, the new-age chaiwallahs will be closely watching the boiling teapot.