Chai, the Indian beverage, is the second most consumed drink in the world, surpassed by water. Although it is one of the most enjoyed beverages worldwide, its culture can be very “local”. The kind of tea, or chai, that you get in one region is totally different from another region.
However, there are very few brands that have entered the business to establish a managed network of delivering a brewed cup of tea. One of them is Chai Point, started by Amuleek Singh Bijral in 2011.
Amuleek was bitten by entrepreneurial bug while pursuing his MBA at Harvard. However, he wasn’t sure of the business idea except that he wanted to be in consumer-facing business. Like any other MBA graduate, he too joined the corporate workforce and it was during his stint at an IT company, he saw his colleagues taking chai breaks like a ritual. But they didn’t have any other option except the chai tapri on the roadside.
Describing this, Amuleek Singh Bijral, Founder, and CEO of Chai Point said,
“I was always keen on starting something in the consumer brand segment but during my stint in an IT company in India, I noticed how my colleagues were particular about their Chai break and would go down to a tapri. This was like a ‘Eureka’ moment for me because it’s a known fact that tea is the 2nd largest consumed beverage globally after water. That’s when I quit my job and started working on the business idea of serving a fresh and enjoyable cup of tea to millions of Indians in a better environment.”
Today, Chai Point is India’s largest tea serving brand with more than 100 stores in 8 cities – NCR, Delhi, Mumbai, Bangalore, and Hyderabad. The Company claims to bring a perfectly brewed cup of Chai made with fresh, natural ingredients to offices and working professionals around the country.
Naturally, there were some surprising reactions when he broke the news to his family. His mother asked him that if he wanted to sell tea, why did he waste money studying MBA at Harvard. However, his friends and family members were certain that he wasn’t just jumping into it. They were sure that he would have given it some serious thought.
On the business side, the tea market in India is astounding. In the year 2015-16, 951 kilograms of tea was consumed in India. For the year 2013-14, the numbers were at 911 kilogram, valued at ₹33,000 crore. Also, one of the most important factor to enter into the tea space was that there was not a single organized player in the market offering chai to people until Chai Point came along.
Chai Point’s Current Business Scenario
The Company is in a growth phase. Chai Point has opened two more stores last month, one in Delhi and another is in Mumbai. These high impact stores are in line with company’s strategic vision to deepen its presence in the top cities in the country.
Chai Point, an omnichannel fast-casual brand, believes technology is a big enabler for expanding their business without the hassle of retail presence even in large metros. The Company has launched India’s first IoT-enabled boxC.in, a 100% automatic tea/coffee dispenser machine.
This platform, says Amuleek, is playing a significant role in helping them reach more customers in large cities where they may or may not have a store presence.
Chai Point takes pride while claiming that they serve completely authentic and responsibly sourced ingredients and freshly brewed every cup that is sold. The company says that it doesn’t use any artificial or natural flavors, colors, and pre-mixes while preparing Chai.
In order to meet the consumer’s ease and satisfaction, Chai Point has also developed a mobile application. Using the app, customers can place their orders in the nearby outlets, and can also receive an advantage of discounts and freebies.
It has expanded its offerings beyond chai. The company also sells its own brand of curated packaged snacks along with Chai.
Fundraising And Revenues
The company started operations by raising an undisclosed funding from angel investors. Financial details regarding that round and the name of the investors are not disclosed. It later raised $2 million funding round, led by Saama Capital.
In 2015, Chai Point secured $10 million in Series B round of funding from Eight Road Ventures, DSG Partners, and Saama Capital, mainly for expansion, hiring, and sprucing up its technology platform.
Chai Point says that about 60 percent of its revenue comes from retail stores, 30 percent from corporate service and 10 percent from the delivery business. The company has its own delivery fleet with 75 electric scooters and is also available through food-delivery apps Swiggy and Zomato.
Amuleek claims that delivery business is growing at 10% month-on-month with a spurt in weekend deliveries. The home delivery model accounts for 20% of retail store revenues.
Company’s Efforts To Become Environment-Friendly
Chai Point says the tea cups used by the company are also environmental friendly. Chai Point has installed a ‘Clean Earth Tracker’ in its supply chain, with a goal to move towards 100% plastic free and recyclable usage of consumables.
The company stopped using plastic coated plates for snacks and food items since last year. It now uses bagasse-based plates, which are made from sugarcane, a 100% biodegradable material.
It measures the percentage of glasses served in re-usable and ceramic material, and are also sensitizing the customers to use reusable cups instead of paper cups. At its stores, the company has started to introduce bagasse-based glasses instead of paper cups – the move which Chai Point thinks is going to have a big positive impact on carbon footprint.
It further says that it also use sulphur-free sugar in beverages – not only for taste reasons but also to ensure a purer product. The bottled beverages sold by Chai Point are glass bottles. The company took a conscious call of not using PET bottles, in spite of the cost and non-breakable advantage.
Beyond Beverages – The Use Of Technology
Chai Point has also built a Cloud-based platform Shark, which connects POS, supply chain, employee management, delivery system, and auditing etc. in one place. Essentially, it means that the inbuilt intelligence in the platform keeps track of stock usage at the store level and automatically initiates order query for the stock, which may run out fast.
boxC.in, which was launched almost a year ago, is also seeing serious traction. Amuleek says, that the market response has been fantastic and they have installed more than 1,000 boxC.in till date.
In January last year, the company launched a unique heat retaining use & throw flask. The team at Chai Point says that they saw the necessity to invent this flask based on customer demand for tea delivery, and the scalability and hygiene that was missing in traditional thermos based chai deliveries.
At the time of launch of this flask, Yaduvir Singh, Head of Supply Chain at Chai Point, had said,
“It took us about nine months to get the pouch specifications and the design right. We have always been particular about quality – it’s our foremost operating pillar. We made sure that all the five layers of the pouch were approved for food industry usage and that the inner most layer was certified to be BPA free.”
At present, he heads new product and vendor development portfolio for the company.
After the launch of flask, chai deliveries to offices outgrew the take-away format. The initial flask capacity was 1.0 liter and within six months of its launch, the company also launched a 500 ml capacity flask called the ‘Mini’. Chai Point also announced to launch a 350 ml heat-retaining flask unit called ‘Uni’, aiming to give individual customers the incentive to order Chai in this flask format.
The Road Ahead
Chai Point has recently applied to DIPP for a food-only retail venture. This will result in the venture in becoming the latest foreign-funded company after online grocery sellers Grofers, BigBasket, and US-based e-commerce giant Amazon. However, Amuleek says that the application to DIPP is more from a clarification point of view as they have plans to enter new segment related to Chai.
The Company plans to open more than 30 stores in the current fiscal year. The new stores will be set up in Mumbai, Delhi, and Chennai.
Besides new stores, the company also plans to launch new product variants across all the platforms – stores, home delivery and boxC.in. The company expects its boxC.in dispenser range to grow at 100% by the end of this fiscal.
While it has already raised a significant amount of funding, the company is planning to raise another funding round later this year. When raised, the funds will be used for fueling the company’s growth and its expansion plans within and outside India.
Competition And Market Analysis
When Chai Point started its business, there was no one in the organized space. But, that is no longer the case. Currently, Chai Point faces competition with Chaayos, Teabox, Tpot, Chai Gram, among others.
Commenting about the competition and its market opportunity, Amuleek says,
We are aware of the competition in the segment. The Chai market in India is pegged at Rs 1.5 lakh crore thus the opportunity is massive and there is room for healthy competition. We have barely scratched the surface. But we believe our competition is not limited to players operating in the same segment as we have set our eyes on ritualistic beverage market in India. We aim to serve Chai and filter coffee to our consumers. Thus, our competition is in the hot beverage segment.
Tea retail market in India is largely unorganized and more than 90 percent consumption happens through small vendors. However, over the past years, startups have jumped to bring tea to the young and busy working class.
Chai Point differentiates itself from its competitors with the use of tech innovation in serving a cup of tea. Amuleek says that IoT-enabled boxC.in uses fresh ingredients to prepare a cup of tea or filter coffee, and also adds that the company’s omnichannel strategy has been featured as a case study for Amazon.com.
The Indian tea industry is pegged at ₹410,000 crore. India is the largest consumer and 2nd largest producer of tea in the World, and Chai Point claims to be the largest organized tea service brand in the country.