E-retailers blend it right for tea connoisseurs

BANGALORE: For most Indians, the day cannot begin without a steaming cup of chai. Yet, very little has changed in the way tea has been sourced, delivered or branded in the country over the past hundred years.
A small group of online retailers are out to change this, giving discerning Indian consumers access to exotic varieties like China’s oolong and South Africa's rooibos.

"Our philosophy is to celebrate Indian teas and introduce different types of teas to consumers," said Snigdha Manchanda, founder of Goa-based Tea Trunk that started retailing tea blends online last year.

"In India, the legacy has been around tea trading and not around building a tea brand." So far, tea has been a legacy industry in India with the British starting cultivation in the 1820s. It is also among the oldest organised industries in the country with an established distribution network of producers, auctioneers, wholesalers, exporters and distributors. Yet, the industry has remained almost in a time warp.

Globally, companies like Teavana have been catering to an online clientele. Teavana, which was acquired by coffee chain Starbucks for $620 million (Rs 3,720 crore) in 2012, runs an online store apart from offline retail outlets.

In India, companies like Tea Trunk, World Tea Room, Goodwyn Tea, Beveragewala and Teaamo have all turned to the online channel to reach out to a niche but grow ing base of online tea buyers. What binds them together is a passion for speciality teas.

For instance Manchanda, 30, used to collect exotic teas as a child, begging her relatives to bring samples whenever they travelled abroad. She built up this collection in an old trunk, which years later inspired her company's brand name.

The geographic proximity to the source of tea gives Indian sites an advantage. Manchanda, who trained as a tea sommelier and blender in Sri Lanka and the United States, sources tea leaves directly from five tea estates mostly in Northeast India and creates blends like the Saffron Kahwa Green Tea green tea infused with saffron strands, cinnamon bark, cloves, ginger, cardamom pods, rose petals and almonds. Her site gets orders from across the world, but Manchanda is focused on the Indian market.

Manchanda declined to share revenue numbers. India's large tea market -the total branded tea market in India is estimated to be worth about Rs 10,000 crore and growing at over 15 per cent annually has also led scions of oldschool tea export houses to start online sites.

Bala Sarda's family runs 80-year-old tea exporter Golden Tips Tea, but in May the 22-year-old launched World Tea Room, an online site that retails teas sourced not just from India but also from estates in China, Japan and South Africa.

The company, which is run as a separate venture from Golden Tips with its own processing facilities, gets over 25 orders a day with an average order value of around Rs 800. However, challenges remain with customer awareness being the primary issue.

"The number of discerning customers who would value such (exotic teas and blends) teas are present in greater numbers globally than in India," said Prashanth Prakash, partner at investment fund Accel Partners that invested $1 million (Rs 6 crore) in Siliguri-based Teabox earlier this year along with early-stage venture Horizen Ventures.

Teabox, founded by 31-year-old Kushal Dugar, sells teas and blends sourced from India primarily to the global market. In fact, Accel's Prakash said the site receives more online traffic from India, but more orders come from buyers abroad. Teabox, which was founded in 2012, Rs 6 crore) is targeting $1 million in revenue this fiscal.

To bypass this issue, Goodwyn Tea has opted for a hybrid model. Launched in 2011 by thirdgeneration entrepreneur Rahul Sirohia, Goodwyn retails products through stores and sells to about 35 enterprise customers including hotels like Ritz Carlton and Novotel.

Sirohia, whose family owns tea gardens in Assam and Tripura, said the tea-drinking demographic made him go the hybrid way for now. "In India, a majority of tea drinkers are over 30 years old, and they are habituated to purchasing tea from a retail store, so we decided to maintain a balance between online and offline," said Sirohi, whose company earned revenue of Rs 3.5 crore last fiscal and is targeting Rs 8 crore in fiscal 2015.

However, entrepreneurs believe the future is online. World Tea Room's Sarda, who is launching a tea subscription programme, expects online tea retail to follow the trends in the larger e-tailing industry. "Like brick-and-mortar retail is losing its share to e-commerce, we don't see any reason for e-retailing of tea not gaining a foothold in India," said Sarda.