India’s premier tea café chain is ready for post-pandemic life. Covid 19 has not only amplified the struggles of some of the largest and oldest consumer retail brands, it has also pushed many retailers teetering on the brink of bankruptcy into the throes of bankruptcy. Amuleek Singh Bijral was caught completely off guard by the second wave of the pandemic. ‘We didn’t anticipate the wave. People were cautious but the intensity of the wave and the kind of hysteria it created among consumers was sort of unexpected,’ the co-founder and chief executive of Chai Point said.
The grand plans to offer great tea around the clock were dashed once again. By 2020-end, Mountain Trail Foods, the company that operates the chain, was in the process of rebranding. The food and beverage industry was bleeding from the virus. Chai Point, which reported nearly 190 crore in revenues in FY20, had been severely impacted. Just before the pandemic hit, the company was working toward an EBITDA-positive quarter. Around the end of the year, green shoots began to appear: people were beginning to return to work, meeting up with families and friends, and ordering food and drinks more frequently. The economic engine of the country was back on track. There was a return of calm.
In China, a predominantly tea-drinking nation that boasts several well-known tea brands, Chai Point was making a strong comeback. ‘Our retail stores were close to 80% like-to-like. Many of the stores in the large corporate parks were closed. The retail business was back on track. Vendor sales increased by about 50%. We had seen a significant increase in deliveries. We were 120% higher than before Covid-19,’ says Singh. First, it pioneered concepts like IOT-enabled vending machines and facial recognition-based billing to reduce waiting times. Then came the second wave.
Top management gathered in a huddle. With Chai Point as a brand, it decided to develop a package-product portfolio. The central idea was to capitalize on the continuing work-from-home trend kickstarted by the pandemic.’We figured out that even though it is an omnichannel brand, with stores, delivery, and vending, there was one big bucket of omnichannel that was still open for us: that was to find a place in the kitchen cabinet of the customer,’ says Singh. In March 2021, Chai Point released what they claim are the best instant chai products in the world. Cardamom/ginger/masala chai was among the products. It plans to launch 15 more packaged products based on the concept of ‘chai made at home’.
‘We are launching 15 more products, of which seven will launch by the end of July and eight more in two months. We are expanding the instant chai range with healthy ayurvedic herbs, and multigrain organic cookies. Also, we would like to introduce some Indian snacks that are popular across the country that go well with chai.’ Singh says that our packaged products portfolio will feature around 30-odd chai and coffee products.
The packaged product portfolio is in fact a growth engine for Chai Point.Today, the package business, which was non-existent before Covid-19, is growing between 30% and 35% per month. ‘Some of the chai products were available as retail merchandise. Covid taught us that we need to take the view away from a merchandise angle to a hardcore utility essential’s angle and make sure it is present inside the kitchen cabinet of the customer,’ says Singh. Peppy Paranthas, Buddy Buns, and Enchante cold beverages are among the company’s food offerings. As the pandemic forced professionals to work from home, Chai Point saw a spike in tea orders, especially after dark. Chai-friendly snacks were also in high demand.
Fresh food and chai are available from the existing retail stores, while packaged products are sold on its website and through e-commerce sites such as Amazon, Flipkart, and Big Basket. From the beginning, the company realized that a chai business would be successful if it was an omnichannel brand with a customer-centric approach. ‘We ventured into vending, delivery and now, packaging because we firmly believe that as a brand, we have to provide the customer an arms-length opportunity to pick our products. So, if the customer is at home, how will he get his tea? If he is in the office, he can go to the pantry and get a quick cup of chai. And if he is in the boardroom, he can get his chai served. When walking around, one can step into a neighborhood store and get chai,’ says the co-promoter.
For Chai Point, 2020 has been a challenging year. Pandemics have badly damaged its revenue. FY21 revenues dropped from 190 crores to 70 crores. Chai Point had 169 stores before Covid. In the midst of the pandemic, some stores were closed, but store numbers stayed the same. Nearly 100 of these are open now. Around 65 of these are in airports or corporate parks that are inactive. Around 4,000 vending machines are installed in companies such as healthcare, media, critical tech, and pharma, among others. 1,000 customer sites were open in March. Due to the lockdown restrictions, only 350-400 sites are currently operational. About 1,200 people work for the company, including front-line employees.
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‘Before COVID-19, we delivered from 120 locations; now, we have 78. We have grown our delivery business by 120% in revenue terms. Per store, delivery volumes have increased. We have grown sales of packaged products tenfold over a year ago, albeit from a small base. We anticipate more than 30% growth for the next several quarters for The Tea Point.’ The company will continue to give tea its rightful place among the white-collar workforce.
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