After coffee, Tata Global Beverages looks to expand its tea retail venture

The Rs 68.15-billion Tata Global Beverages proposes to scale up its tea retail venture Tata Cha as initial feedback to its pilot stores in Bengaluru remains positive. 

The plan is to take Tata Cha to more cities as the company looks to expand into adjacencies.

Tata Cha was launched last year in the tech capital with one store, which was subsequently scaled up to a total of four outlets this year. The stores provide hot and cold tea-based beverages, traditional snacks and meals, all aimed at elevating the neighbourhood tea stall experience.

The concept, say company officials, has become a hit with office-goers and millennials in the city, who are constantly on the lookout for good places to eat and hang out. “Tea retail is a concept we are testing and is an interesting area to explore as consumers seek innovative beverage options and formats,” Ajoy Misra, managing director and chief executive officer, Tata Global Beverages, said.

Tata Global is the world’s second-largest tea maker after Unilever and is among the leading branded tea players in India, competing head on with Unilever’s Indian subsidiary Hindustan Unilever (HUL). While a desire for a meaningful presence in coffee retail pushed Tata Global to tie up with Seattle-based Starbucks Coffee Company in 2012, retail tea business is something it has largely experimented with in the past.

A decade ago, Tata Global had launched Chai Unchai, which did not go beyond the pilot phase. That, however, could change now as consumers take to eating out more frequently. A recent Technopak report says that the overall food services market in India would grow at a compound annual growth rate of 10 per cent over the next five years to touch Rs 5.52 trillion from Rs 3.4 trillion now.

Tea services is already a large constituent of the existing overall food services market, pegged at 44 per cent (or Rs 1.5 trillion) of the total size (Rs 3.4 trillion), said sector experts. This, however, is largely unorganised, led by neighbourhood “chai” or tea stalls. Players such as Chai Point, Chaayos and Chai Thela are now coming up as working professionals and millennials seek something better than cutting chai.

As the first organised tea retailer in the country, Chai Point, which started eight years ago, has now over 100 outlets in five cities, putting up nearly 2000 fresh-milk-based vending machines across the country and delivering tea on call in a span of 30 minutes.

Competitors such as Chaayos and Chai Thela also have a footprint; the former is located in cities such as Mumbai, Delhi, Noida and Gurguram and the latter largely in Delhi-NCR. 

HUL has also experimented with tea retail in the past (through Brooke Bond Taj Mahal Tea House in Mumbai), though it remains stuck at one store only in Mumbai.

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