The Next Wave of Tea Chains in India

While chai might be one of the more trendy tea orders at American coffee shops, in India it is so commonplace that entrepreneurs are looking to refresh its image. And these business owners are looking to steal some of the newly emerging coffee fans and bring them back to tea.

Over the past fifteen years, coffee has become big business in India, with consumption growing 50% since 2000. The emergence had reached full throttle when Starbucks hit the scene in 2012. How could tea bring consumers back to its fold? The idea is to create trendy tea lounges that try to beat them at their own game.

151102_India_ChaayosLogoIncomes are rising in India and with that increased disposable income, businesses want to find ways to help consumers spend. Upscale tea lounges have recognized that people are becoming more aware of the wide variety of teas on the market and are curious to explore new flavors. Mumbai has seen a number of new tea lounges open in response.

The owner of the Indian tea chain Chaayos, Nitin Saluja, told the Chicago Tribune that tea has huge potential because consumption of tea to coffee runs 30:1. He firmly believes that the “Starbucks of India” will be a company focused on chai. He thinks focusing on India’s cultural connection to chai is key. Chaayos currently has 12 stores and aims to reach 50 by May 2016, partially funded by a $5 million investment by Tiger Global Management.

Saluja isn’t the only one with big plans for tea chains in the country. Uday Mathur, founder of Zone8 Tea World Pvt. Ltd. and its Tea Trails Cafe began in 2013 with eight stores and intends to reach 500 stores in four years. He credits increased travel and an interest in health as factors bringing younger audiences back to tea.

Now these business owners are eyeing a recent initial public offering (IPO) by Cafe Coffee Day that reached $175 million and dreaming of the possibilities.

Source: Chicago Tribune, Times of India