A makeover: This is how the country’s most widely consumed beverage can stay relevant to the rising number of young in the country, believes the tea industry.

Its image is that of a beverage for the older generation and there has been hardly any concerted move by the industry to boost its consumption out of home.

But with the spread of café culture in recent years driven by coffee café chains such as Café Coffee Day, Barista, Costa Coffee, Gloria Jeans and now Starbucks, the tea industry seems to be keen to emulate the model to boost consumption.

For the younger crowd, especially, the coffee cafés – nearly 2,000 across the country – have turned out to be popular hangouts. Not only the ambience, the imagery around coffee and its stronger aroma is appealing to the younger lot.

Changing lifestyles and demographics coupled with a rise in disposable incomes and growing urbanisation are fuelling the café culture. Now, meeting or spending time at a coffee shop or seeing coffee shops as an option for a quick bite is becoming very much a part of the consumer's lifestyle in the top 15-20 cities.

Sensing this trend, tea companies are now planning to roll out tea lounges and boutiques and those who are charting such plans in the year ahead include the Wagh Bakri Group, Mohani Tea and Manjushree Plantations.

“Tea needs a strong image makeover,” says Parag Desai, Executive Director at Gujarat Tea Processors and Packers Ltd, which owns the Wagh Bakri brand.

The Rs 750-crore Wagh Bakri Tea Group is the third largest packaged tea vendor after Tata Global Beverages Ltd and Hindustan Unilever Ltd. Wagh Bakri, which operates large tea lounges in Delhi and Mumbai, is planning to add 10 more in these two cities in about a year’s time, says Desai.

Desai, who represents the fourth generation at Wagh Bakri, stresses the need to make tea more fashionable and position it as an aspirational drink for the youth for its consumption to rise.

Manjushree Plantations, a B. K. Birla Group company, is also planning to test the waters. Manjushree, which has started retailing its exotic, speciality and flavoured teas through its outlets at domestic and international terminals at the Kolkata Airport, expects to start its first tea lounge at the DLF Mall in Saket, New Delhi, next month, says Ravi Thapa, the company’s vice-president.

The Noida-based Mohani Tea Leaves Pvt Ltd is also gearing up to set up tea lounges and boutiques. “We plan to start about 50 outlets in five years, of which half will come up in Uttar Pradesh and the rest across the country,” says Ramesh Chand Agarwal, Managing Director, Mohani Tea.

Mohani plans to invest about Rs 20 crore in its tea lounge initiative and would also be targeting colleges and universities in cities such as Noida, Delhi, Lucknow, Kanpur and Agra, Agarwal adds.

These companies believe that popularising tea among today’s younger generation, which is exposed to a host of other beverages, juices and milk-based drinks, could trigger out-of-home consumption and create a bigger market for tea.

In fact, the Tea Board has also mooted a proposal to offer subsidies during the 12th Five Year Plan to companies planning to set up tea cafes or boutiques to increase per capita consumption. The proposal is yet to receive the Government’s nod.

While the spread of the café culture has given domestic coffee consumption a fillip, a section of the tea industry believes that it has begun to affect tea’s offtake.

“The rising trend in coffee consumption is keeping the growth in tea consumption under a check, mainly in urban areas. Growth in tea consumption is not keeping pace with the growth in population,” says Piyush Desai, CMD of Gujarat Tea Processors.

The annual growth in domestic tea consumption is now pegged between three and five per cent as against 6-8 per cent some years ago, he adds. Though exact consumption figures were not available, Tea Board pegs the domestic offtake at 800-900 million kg and growth at 2-3 per cent per annum. Amidst rising tea production and stable exports, the surplus is being absorbed, indicating the growth in consumption, says G. Boriah, Advisor, Tea Board. He admits that there is a need to enhance the image of tea as it is getting equated with the older generation. Tea Board is focusing on rural areas, where it sees potential.

On the other hand, coffee has transitioned from being a traditional South Indian beverage to a national presence and the domestic offtake has been growing at 5 per cent annually to an estimated 1.2 lakh-plus tonnes on higher demand from non-traditional markets such as North India.

Technopak estimated the Indian café market at $230 million in October 2012 and estimates it will grow to $410 million by 2017. It was estimated that the number of cafes stood at 1,950 in October 2012 and another 1,000 were likely to be added over the next five years.

Though Mohani’s Agarwal supports Desai’s view on the rising coffee culture influencing tea offtake, the other large players disagree on this issue.

“I have not seen any impact on tea sales. My belief is that the cafes are doing well prompting out-of-home consumption. Most of the cafes have been serving both coffee and tea,” says Harish Bhat, CEO of Tata Global Beverage Ltd. “Tea is the favourite beverage in India and continues to be. Tea has got loyal consumption and continues to be an integral part of our culture,” he adds.

Ullas Menon, Secretary General of the United Planters Association of South India, said both tea and coffee were complementary to each other and were unlikely to replace each other. In fact, the coffee chains have also been selling tea, Menon said, quoting the example of Café Coffee Day.

At 82 gm per capita, coffee is hardly any competition to tea whose per capita consumption hovers around 750 gm, says K. Ramakrishnan, President - Marketing, Café Coffee Day, the largest coffee chain in the country with 1,497 outlets.

“Though our middle name is coffee, we are beverage-agnostic,” Ramakrishnan says, adding that “there is a significant throughput of tea sales through our outlets”.

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