A war for tea
Indian cafe market has a new rivalry. Earlier it was about coffee via Cafe Coffee Day vs the rest ( Barista, Costa, Starbucks etc. ). New players like Chaayos and Chaipoint have ditched coffee, and are romancing tea.
Coffee cafe market is saturating:
Indian cafe market is worth INR 7000 crore ( approximately). It’s growing at a compounded annual growth rate of 15 to 20 percent.
- CCD has nearly 2000 cafes, Barista more than 200 cafes, Starbucks has more than 100 cafes and Costa nearly 100 cafes.
- Only CCD has made profits.
- With the entry of Starbucks, there is no room for more premium coffee players.
Tea is the new coffee:
India is a tea drinking nation. people drink coffee than tea. Indian tea industry is double the size of coffee. It’s a two players contest for now. Chaayos and Chaipoint have respective strengths and weaknesses. Both are targeting millenials.
Chaayos
It started in 2013, serving to customers in Delhi-NCR.
- Currently it operates nearly 70 cafes.
- 80% of their revenue comes from cafes, the rest 20% from deliveries.
- Revenue in FY 17 was INR 28 crores.
- It made a loss of INR 14 crores.
- Though, it has lesser outlets, they are sit-in cafes. It attracts premium customers.
Dig deeper: Journey of Chaayos
Chai Point
it is from Bengaluru. It has more outlet and head-start of two years.
- It operates more than 100 outlets.
- Most of their revenue comes from delivery.
- Revenue in FY 17 was INR 58 crore.
- It made a loss of INR 36 crore.
- It has more outlets, but very few of them are sit in cafes. Their 100th cafe is a sit-in cafe.
Dig deeper: Journey of Chaipoint
NDBJ’s take; Who will win?
India’s formal economy is growing. So will brands. However, there is a disconnect between the products and pricing of these brands. The cheapest tea at Chai Point and Chaayos costs INR 50 ( approx). However, ordinary tea vendors sell it for INR 7.
Starbucks has been operating in India for five years, yet it made losses. Barista is in losses. So, without the market correcting itself, the overall size will be smaller, and saturate like that of coffee.
