Exchange that sells ‘golden tea’ at Rs 13 crore a kilo to open shop in India

The London Tea Exchange interiors

The London Tea Exchange (LTE), which once triggered breaking headlines by offering tea laced with molten gold, will open its India chapter this fall.

A top LTE official told Moneycontrol that the stores will be spread across India, starting with either New Delhi and Bengaluru as the first choice, followed by Mumbai, Kolkata, and Hyderabad.

The official said the state-of-the-art tea stores will be a unique experience for people in India, the world’s largest tea market.

The LTE is counted among the world’s luxurious tea stores. “In the first three years, we are looking to expand to over 200 stores across India, with a target of 50 in the first year of operation. There will be tea and there will be coffee,” Shahid Rahman, a director of LTE India, said in an interview.

The LTE was started by Charles II when he got married to Portuguese Princess Katherine Braganza in 1552. It is currently run by ex-banker SK Aliur Rahman, who is the CEO; Mike Farnan, former Manchester United MD; and, Howard Dawber, head of the Canary Wharf group.

Rahman said he has taken a master franchise for pan-India. He was born in Calcutta (not Kolkata then) and knows India like the palm of his hand. His father, late SK Abdur Rahman, was the only official cricket scorer and statistician to cover 113 Test matches and 109 ODIs.

Rs 1.5 crore per licensed store

“LTE India will be operated with a balanced network of company-owned and licensed stores to provide our products and services. We have set SOPs for operating stores in India,” Rahman said.

For nearly a decade, the LTE has evolved into an enviable niche in the world’s growing luxury tea market, he said. “We are inspired by the wide range of tea leaves and coffee beans that are sourced from some of the best cultivators around the world,” says Rahman.

The cost to start a franchise will depend on the locality of the store but LTE India is looking at an average of Rs 1.5 crore per licensed store.

Inking the deal for Indian venture

Coffee not a threat

Rahman says he is not worried that coffee has more appeal in India. He calls it a myth, Indians drink lots of tea throughout the year.

“The rise of coffee shop culture in America in the past century has resulted in coffee becoming the preferred social beverage across major parts of the world. But we Indians still love our chai, don't we? Contrary to the world's belief, Indians still prefer tea as their first choice of beverage with over 90 percent market penetration in the average Indian household. With the right market strategy and product design, we believe we can bring back the social charm and class that tea houses once greatly enjoyed,” he said.

Rahman says he wants to make LTE India the Starbucks of Tea in India. “While we take pride with our extensive tea collection, we also offer premium and rare coffee sourced from different countries. This also gives us an edge as premium coffee chains only offer one or two types of coffee beans.”

‘Indian spending behaviour more about quality’

Rahman says he is aware of the pricing issue in the Indian market. “India is one of the most price-sensitive markets in the world but the Indian spending behaviour is not about the cheapest product but about one that gives the best value for money. Our teas and coffees are value for money.”

Rahman says if one compares his interim prices to the current market players, LTE India rates will be well-placed in between. “Our beverages start from as low as Rs 120, which, we believe, is below the industry standard.”

What about golden tea?

Rahman laughs, the golden tea costs approximately Rs 13cr/kg and it is not feasible to sell this as a beverage in the tea houses. “We are looking to offer the tea to a niche market through our retail channels. But if there is a rise in demand from our customers, we are definitely open to serving the tea in our teahouses.”

But that’s a big call, only the super rich can buy the golden tea, whose leaves come from Sylhet in Bangladesh. It is called  Sonar Bangla that translates into Golden Bengal. You can get it for free if you are a Nobel laureate. Else, you will have to swipe your card.