Moneycontrol
May 18, 2017 03:31 PM IST | Source: Moneycontrol.com

Chai Point to expand dispenser service, plans to sell 7 crore cups of tea

Chai Point has entered the snacks segment with jaggery chana and is now competing with Cafe Coffee Day with its BoxC dispensers for coffee and tea inside corporate offices

Chai Point to expand dispenser service, plans to sell 7 crore cups of tea

Priyanka Sahay

Moneycontrol News

Tea cafe chain Chai Point that launched BoxC, its cloud-based beverage dispenser offering last year, now claims to be getting almost 40 percent of its revenue from this segment and aims to grow it to 50 percent with the rest coming from its pan-India retail outlets in the next three years, owing to rise in demand from corporate clients.

BoxC is an offering, under which Chai Point places its tea and coffee dispensers across corporate offices. It has so far tied up with 150 corporates in seven cities spread across Chennai, Bangalore, Pune, Delhi and Mumbai. It claims to have made over 1000 installs so far. The company is directly competing with Cafe Coffee Day's vending business in the corporate segment.

The company charges Rs 1,000-1,500 as the dispenser maintenance charge from the companies besides charging them on a per cup consumption basis.

The charge that is based on consumption varies from Rs 5 to 9 per cup.

In its results for the quarter ending December, released in February, rival Coffee Day Enterprises Ltd reported 18.5 percent growth in the vending machine count taking them to 40,013 from 33,742 units installed in the previous financial year.

Interestingly, with the launch of BoxC, Chai Point has entered into the coffee market as it claims have set up an equal number of tea and coffee outlets across the corporate offices.

"Our biggest market is in South India and being there we appreciate that a for a large number of people, the ritual beverage is filter coffee. In the corporates, we have dispensers for both tea and filter coffee," Amuleek Singh Bijral, founder of Chai Point told Moneycontrol in an exclusive interaction.

While the tea cafe, does not keep coffee at its retail outlets as of now, it is not ruling out a possibility in the near future.

"We haven't done that (launched coffee) in our retail stores because we are very young. The brand is still forming. But the response for filter coffee is roaring. We can in the future look at embracing filter coffee but we want to make sure that the core platform of Chai Point gets stronger before we do that. We are sometimes away from it but not too long," Bijral said.

Sold 3.5 crore cups of chai, entered snacks segment

Besides the dispensers, the rest of the business for Chai Point comes from over 100 retail outlets in eight cities. It is targeting to set up around 30-40 more outlets by the end of the financial year 2018 with an investment of around Rs 10 crore.

"Last year, we sold about 3.5 crore cups of chai. This year, we think, we can double the number," said Bijral adding that the growth is expected to come majorly from the rise in the install rate of the BoxC dispensers and delivery done by the company.

Chai Point uses its own staff besides third-party startups such as Swiggy, Runnr, Google Aero and Uber Eats, among others to get the delivery done.

The company has also entered into ready to eat packaged snacks category with a tag line of "Made for Chai". It has so far launched six products such as multi-grain biscuits and munchies.

To begin with, these products are only sold at the company's retail outlets however it may consider distributing it to other outlets in future. It had applied to the Department of Industrial Policy and Promotion for a food-only retailing venture to get into food products business through stores as well as online channels.

The size of the tea industry is around USD 10 billion in India and is growing at a compound annual growth rate of around 16 percent.

Chai Point is backed by Eight Roads Ventures, DSG Partners and Saama Capital and has raised over USD 11 million so far.

So can we see a Chai Point snacks and beverage brand in domestic airlines going forward? "Yes, why not," says Bijral, with confidence.
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