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Chai Point - an iconic next generation tea-based start-up

Updated: Sep 16, 2020


Journey:


India is one of the largest tea consumers in the world, accounting for 88 per cent of total households and consuming 911 million kilograms yearly. But as of 2010, we do not have a premium tea café in India. This is the time when Chai Point came into the picture by founding its first beverage store in Bangalore.

Chai Point is an Indian tea company and café chain which focuses on tea-based beverages. It was founded in 2010 by Harvard graduate Amuleek singh Bijral and has its headquarters in Bangalore, Karnataka.

The range of product and services offerings by Chai point:

Business model:


Chai Point has obtained omni-channel presence with offline retail stores focusing on beverages & snacks and online tea sales by partnering with Amazon.in. They currently have offline presence in eight cities – Bangalore, Delhi, Gurgaon, Noida, Mumbai , Pune, Hyderabad, and Chennai.


As a part of the strategic expansion, Chai Point has recently started an online app-based delivery service "Chai-On-Call" where Chai Point serves tea-based beverages with a heat-retaining bottle at your door steps with a strict 3-10-20 rule (acronym for "3 minutes on order, 10 minutes on delivery and 20 minutes on delivery").


In 2018, a hybrid on-demand payment model was launched, which will be integrated with BoxC 's Tea Dispenser service to expand its ongoing bond with B2B customers. BoxC.In is an IOT-enabled platorm. It is India's first cloud platform oriented towards B2B and distributes different varieties of tea in offices with the aim of "bringing back culture around the chai". Recently, a loyalty program "Chai Point Rewards" was launched to attract their customer base, where the customer can redeem a free cup of tea for 30 tea leaves (reward points).


Rounds of Funding:

Competitors and Competitive advantage:


At present, Chai Point has three major competitors in India: Nitin Saluja's "Chaayos," Chirag Yadav's "Chai patti" and Gaurav Saria's "Infinitea."


However, they retain their competitive advantage over the following strategies:

  • Limited portfolio: In contrast to several premium coffee chains, Chain Point does not have large variations in its product range, which helps them reduce their operating costs and retain their customer experience.

  • Expansion to B2B: Despite relying on B2C customers, Chai Point was expanding their services and product offerings to B2B with schemes like Sub Chai and BoxC.

  • Retail outlets: Their retail outlets are mostly located near schools , colleges and public parks, and they retain traditional "stand table" furnishings inside stores that help busy consumers have a quick chat while brewing their tea.

  • Innovation: Chai point often differentiate their products through innovations in their business model, starting with sharks, a cloud-based software platform for their BOXC dispensers to serve as data managers and supply planners, and then a paper-based heat retention flask and chai cups to improve sustainability.

These approaches help Chain Point to differentiate itself and cost-focused among competitors.


Valuation and revenue source:


During Series C investment in 2018, the firm was valued at USD 30 million, with a large portion of revenue generated from BoxC with a sales of 4 lakh cups a day and a contribution of 38-40 per cent of Chai Point's overall revenue. Rest was contributed by the remaining verticals.


Conclusion:


Chai point, with its dynamic business strategy, is always striving to extend its offerings to new markets. They recently launched a digital payment system to BoxC services by partnering with Paytm, and Brijal expects both market penetration and revenue to increase by 20% in the coming years.

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