Investors Put $7 Million More into Teabox Subscription Service

Teabox Founder-CEO Kaushal Dugar.

SILIGURI, India

Five-year-old Teabox is now selling 250 varieties of tea sourced directly from 100 growers. The monthly subscription service has provided 100,000 customers in 110 countries with 40 million cups of tea, making it a formidable player in the specialty category.

Last week the company received $7 million in Series B funding led by RB Investments with participation from Accel Partners, Ratan Tata and Texas billionaire Robert M. Bass. An initial round of $6 million included investments by JAFCO Asia, Keystone Group and Cameron Jones. The funds bring financing to $14 million including debt funding from DBS, a Singapore bank. The firm currently employs 95 workers focused on sourcing and logistics with a strong IT group.

Teabox (100 grams).

The latter is perfecting algorithms that CEO Kaushal Dugar says identify precisely which tea will please customers.

He told Wired (UK), “We’ve engineered an algorithm-powered subscription program that helps consumers select with 90 percent accuracy the teas they will end up liking.”

The traditional supply chain delivers tea to consumers several months after plucking. In contrast, Teabox air freights subscription boxes to major cities for delivery within a few days of harvest. The process begins with delivery of a selection of teas from India and Nepal vacuum packed at source and shipped within hours of plucking and processing. Bagged tea is sealed in nitrogen-flushed packets called TeaPacs. The gas delays staling by keeping oxygen from reaching the tea. Dugar avoids the cost and delay of purchasing tea at auction, adding value at origin.

Dugar will use the new round of funds to expand the capacity of the company’s cold-chain processing facility to 50,000 kilos in the coming year. Half the money will be to market the brand, he told The Hindu Business Line.

White tea from India.

Dugar intends to upend the tea industry’s complex system of processors, distributors, importers, exporters, auction houses, warehouses, buyers and sellers that all play a part in distancing tea’s true essence from tea drinkers, putting months between harvest and cup, he explains.

“It’s time for a new approach. It’s time to enjoy tea, in an entirely new way,” Dugar said. Central to his approach is freshness and traceability. Teabox connects tea to people, not distributors. Not resellers, he said. “We believe every tea drinker deserves to know how, where and when their tea was born,” Dugar said. The company seeks to “unite the richest flavors of the finest teas with the curious, the cultivated, and the adventurous, all over the world,” according to the website.

Dugar said the greatness of a tea lies in its very precise origins. “We’re redefining the way the world thinks about and enjoys tea by ensuring the leaves are superbly sourced—and hand-picked and packed—every time. We can do this because we know the best teas in India, and we work right at the sources, in the same gardens where the teas we sell are grown,” he writes.

Holiday gift packs start as low as $10 online (four teas) and increase to $49 for 12 Christmas blends with offerings of 75 grams in three tins for $18 and 24 teas for $24. More premium selections sell for $29 for six teas with three packs at this price point. The company also offers drinkware, tea utensils, storage containers and brewers. Single mugs begin at $10.99 and handmade ceramic sets are advertised under $30. Kettles are priced under $50 and tea brewers are priced under $30.

A Jungpana Summer Muscatel grown in Darjeeling is priced at $44.99 for 3.5 ounces while a private reserve Temi Muscatel from Sikkim is priced at $95 for 17.6 ounces (200 cups). Most Indian oolongs are priced under $20 for 1.8 ounces with a Thurbo Estate Autumn oolong selling for $29.99 (3.5 ounces) and a Glenburn Spring oolong priced at $26.99 (1.8 ounces). Few items sell for more than $100; and many are priced $15 to $25.

The company grew 2.5 percent in the past year and the online store is profitable, Dugar said.

He has ambitions to establish a global brand with both online and offline presence. Tea from India is present in all the major global brands from Lipton to Twinings, Tetley’s and Teavana but even Tata Global Beverages, which is based in India, is not known globally for its heritage. “We’re trying to be India’s first premium tea brand to go global,” he told Wired.

Dugar told TechCrunch that “We’ve really built the core infrastructure, so we can scale 5X, 10X, 50X. Many say they want to disrupt, infrastructure should be at the source and now we are able to scale as fast as we want using the front end.”

Sources: TechCrunch, The Hindu Business Line, Wired (UK)