How Chai Point is leading the $10 Billion Indian Tea Market

A Little bit of History

The demand for Chai or Tea is crazily high in India. But when did this affinity towards Tea began for Indians? History and scriptures suggest that we Indians were brewing tea since 750 BCE. During then, Tea was a special beverage meant only for special occasions. After the British colonized in India, people started consuming tea on a regular basis. The British promoted large plantations of Tea for export. When the demand for tea declined, they sold it to the local people for lower prices. That’s how people started buying Tea.

Tea or Chai has become an integral part of Indian’s lives. There are Chai stalls at every people gathering areas. Tea stalls are hubs where people get together, discuss ideas, debate politics and have fun. Such Chai market in India is really huge, and estimated to be worth around $10 Billion. Tata Group, one of the big players in the country tried venturing into the Chai Industry a decade back but was unsuccesful, and that’s when the people started moving towards Coffee chains such as Cafe Coffee Day, Barista, etc. Interestingly, a survey on reddit during 2012 states that 89% percent of Indians prefer Tea over Coffee (Reference). And this is when new players started entering the Chai Market. The young minds had different approaches and unique strategies to capture this market.

ChaiPoint

ChaiPoint is one of the fore-runners ofthe Indian Chai Market with clever strategies and mind-blowing innovations. I was recently at Bangalore as a participant of a week-long program called OutOfBox organized at NASSCOM for StartUps (NASSCOM). and thats where I came to know about ChaiPoint. The Chai Outlet was clean and had a welcoming look, and I didn’t miss the chance to have a good cup of Chai. At NASSCOM, I got this amazing chance to interact with Mr.Vijetha Sastry and get mentored about startups and career, after giving me some valuable insights he advised me to do some case studies on Startups to understand their business and how things work. It will give me a competitive edge over others in the league. I thought it was a great idea, and at no time my intuition asked me to go with ChaiPoint! which I did.

From what I found, Chai Point is very similar to normal Tea Shops, they sell Tea. But they have built a brand around the Chai. Indians, especially the current generation are more attracted towards Brands. ChaiPoint is a company where they don’t make experiments on Chai, but they make lots of innovations in branding and packaging. They have very appealing and intuitive designs. The heat retaining flask is one of the most interesting innovations by ChaiPoint, they are made out of Cardboard like material. There are 2 variants of the Flask, it can hold 1 litre of Chai or Half a litre of Chai. The catch here is, the Flask can retain the heat of Chai up to an hour. I was curious, how could a cardbord carton store heat for an hour? So I researched a little bit, this idea is inspired from a Pharmaceutical industry application, where the Blood Plasma is stored in a similar material which can retain heat for a certain period of time.

Src: JustDial

Basically, Chai Point is a very organized Chai Seller. They have more than 100 outlets at 8 cities and employes more than 600 employees. They have an amazing technology experts to build solutions to make management and organizing easy and efficient. They built their own Cloud based Software Platform called Shark. The Shark integrates every stakeholders and activities of ChatPoint starting form Point of Sales, Supply Chain, Employee management, Delivery System to Auditing. They also provide eWallet service to their customers. They have a mobile application, through which the customers can order Chai!

Strategies of ChaiPoint

ChaiPoint have devised some clear set of strategies to stay ahead in the competition. I’m listing out some of them which I could observe

  1. Very Limited Varieties of Chai: They only have 4 core varieties of Chai.
  2. The location of the Outlet: The real estate is located at the anchor points such as School,College Joints or Corporate Parks.
  3. ChaiPoint at Work: Chai at work is the main business of Chai Point. They serve Chai to corporates and other medium sized companies. They serve by either having a small stores within the office, or heat-retaining disposable flasks or through large dispensers.
  4. Standing Table: They know most of their customers are from corporate background, and they do not have more time to spend. So, all the ChaiPoint outlets have Standing Tables and no chairs where they can have a quick chat, while they brew the Chai quickly.
  5. Understand demand: As all the transactions are cloud based, they do run data analysis and predict the future demand to provide better services to the customers. They also use analysis to monitor real time performance of each outlets.
  6. Consistancy of Chai: This is the major thing that differentiates ChaiPoint from other competitors. The SupplyChain team has full control over the raw materials supplied to each outlets, and they seriously consider the consistency of the Chai’s across every outlets.

Innovations:

Innovation should be at the heart of a company, and ChaiPoint is no exception to it. They are more towards clean and sustainable development.

  1. They modified their dispensers to consume less electricity, and be energy efficient. This can save a lot of money at for the companies where these are installed in.
  2. Heat Retaining Flask and Chai Cups.(previously explained)
  3. Shark — A Cloud based Software Platform(previously explained)
  4. Baggase Packaging: Baggase is the fibrous matter that remains after sugarcane stalks are crushed to extract their juice. This is completely bio-degradable.
  5. boxC.in — an IoT based Chai and Coffee Dispenser. They provide insights, and transparency.
  6. They have 80 Electric scooters, they deliver the Chai for the corporates or companies through these clean energy vehicle.

Competitions:

Whenever a Case Study is done on a company, we should also understand the competitors, and their performance.

Chaayos, Infinitea and Chaipatty are the direct competitors of ChaiPoint.

Chaayos, is created to be the Starbucks in India for Chai. They recently raised money from their investors, immediately after ChaiPoint raised $10 Million. Chaayos and ChaiPoint are now facing head to head in the Chai market competition. Chaayos provides lots of variety to customers. They have 12 basic ingredients, and the customers can customize their chai by using different combinations of these in thier chai. Their slogan itself says, Experimenting with Chai. One of their best performing outlets earned over INR 1 Crore as annual revenue. They are now experimenting with their business operations, by having an outlet open 24x7 at Gurgaun. The outlet is now recieving good response from the customers. One of the biggest challenge which they are facing is to maintain the consistency of chai. The taste of the Chai varies from outlet to outlet, as they are brewed by different Chai-Masters. They are figuring out a way to solve this problem.

Infinitea is a first of a kind tea room set up in 2003 under a unique retail-restaurant concept with the objective of introducing people to the best of teas and its culture. Infinitea has plush surroundings, and they target people who are willing to afford more money.

Chaipatty is also a direct competitor of ChaiPoint, where they have pricing strategy similar to Chaayos and ChaiPoint. Unlike Chaayos and ChaiPoint, their focus is not on selling Chai but on events such as salsa, photography and art sales in their stores. They are just 3 outlets of Chaipatty at Bangalore, and they are in no hurry to expand faster.

I have recently found an article stating that Tata is trying to reventure into the Chai Marketspace. Read more about it here


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