Chai Point to tap local brands in China

Tea cafe chain Chai Point is exploring the possibility of entering into alliances with local partners in countries like China.

“Chinese consumers are now discovering the power of local brands and we will look at strategic alliances and may also seek franchises in the region. We have to look at ways to sell our teas in China,’’ said Amuleek Singh Birjal, Founder & CEO, Chai Point.

Birjal returned from Beijing after having studied local stores like Heitea, which has its tea cafes spread in the country. While Starbucks already has more than 2,000 cafes in China, it is local tea cafes which are now giving it competition and the six- year-old start-up is seeking an opportunity to enter the region.

“China is ahead of India in terms of infrastructure and purchasing power when it comes to tea cafes.

“Non-milk and iced tea are healthier options which have high volumes in China and is a big area of growth. We may seek transfer of knowledge in these categories as well,’’ he added.

In India, Chai Point considers itself the largest player among tea start-ups with revenues at ₹100 crore.

This year it expects to turn profitable and is also ready to raise another fund of $20 million as it gets ambitious and expects to compete with stalwarts like Starbucks.

Being an omni-channel player, Chai Point claims it has an advantage over other tea and coffee companies.

“Established western brands like Starbucks have not managed to crack the delivery model and have resorted to aggregators, while we already have a delivery model,’’ he said.

Apart from its tea cafes, almost 15 per cent of its revenues comes from its delivery model.

In India, like Starbucks, Chai Point is also on the verge of completing 100 outlets and with this scale it expects to turn profitable. It will be setting up more of its cafes measuring between 700 and 900 sq ft at malls to take on Starbucks.

However, unlike Starbucks’ Teavana tea brand, the average Chai Point tea would be less than half its price.

With investors like Saama Capital, DSG Capital and Eight Road Ventures, Chai Point has also been getting investor interest from corporates selling tea.

“There have been some feelers from big corporates but at this stage, we would rather have institutional investors. Some of them are now trying to re-enter the cafe space after seeing the spurt of start-ups in the tea cafe space, ‘’ he said.

Lately, the largest Indian tea company, Tata Global Beverages re-entered the tea cafe segment under Tata Chai and in the past even HUL has tried to set up its Taj Mahal Cafes.

COMMENT NOW