Kaushal Dugar, the affable CEO of Teabox set out to create a global Indian tea brand online. He is now all set to take that brand offline, with stores in international airports across three cities — Mumbai, Bangalore and Delhi.
The former corporate finance executive comes from a family involved in the tea business — from growing to exporting it. So, when he headed back to India after quitting his corporate gig in Singapore, it was natural for him to consider the tea industry.
He set up his tea start-up four-and-a-half-years ago in Siliguri as an online business, exporting some of the finest Indian teas to countries such as Great Britain and the coffee-obsessed USA. Along the way, he established a corporate office in Bangalore and raised over Rs 15 million from investors and VCs such as American tech VC, Accel, and Japanese firm, Jafco, besides getting Ratan Tata to invest in his idea.
Teabox, which offers a mix of single origin teas and innovative blends, has established India’s first cold chain for tea, which helps preserve the beauty of the flavours and the freshness of the leaves. In the process, it shrank the time between a plantation sending out the tea to the time it takes to reach the consumer, to about seven days.
Teabox Strawberry Spritz Iced Tea.
Edited excerpts from the conversation:
What was the starting point for Teabox?
I wanted to strike out on my own and my family’s tea business seemed the best place to begin. But unlike my extended family, I wasn’t interested in the CTC business or garden supplies. My idea was to create a global tea brand that retailed the best of Indian tea.
We set up base in Siliguri and it remains at the nerve-centre of our business. While the tea culture itself is just 150 years old, the tea plantations, the entire process of processing and distributing tea, continue to be ancient, leading to a lot of inefficiencies.
How did you address these inefficiencies?
Traditionally, there are six to seven intermediaries between the producer or the plantation and the end-consumer. By the time the tea reaches the consumer, nine to 10 months have lapsed. The intermediaries offer absolutely no value, except increasing the cost by adding their margins. Our first step was to find ways to cut the time and the intermediaries.
Tea is an agricultural product. It needs to be stored well, much like wine, or it loses its flavour and character. We created a supply chain under which the tea reached the consumer directly from the producer within seven days, to preserve the authenticity and sanctity of the beverage.
I set up an online business five years ago, selling Darjeeling tea under the brand Darjeeling Tea Express. After our partnership with Accel, we shifted to packaging and retailing teas from regions such as Assam and the Nilgiris. After the second round of funding from Jafco, we are going offline with airport stores.
So, what does it take to create a global tea brand?
We broke it down to two things. One, incredible quality. Two, the right kind of packaging and attention to details.
Exposure to oxygen, light and temperature destroys the finest of teas. To address quality, we created India’s first cold chain process. Once we procure tea from a plantation, we bring it under controlled environment within 24 to 48 hours. Then, we remove the impurities and store the tea at a minus temperature. Even two years later, this tea feels as fresh as if it was produced yesterday.
We also hired Pentagram, an indie design firm from London, to help us rebrand and create a new identity. In the last few years, we have sold over 40 million cups of teas in 112 countries. Some of our consumers are even our investors, like an oil baron from Texas. Our biggest validation was Mr Ratan Tata investing in the company.
What spurred the decision to set up retail stores and how much of your business will come from offline sources?
Two years ago, India was not even a market for us. Today it is the fifth largest market. One of our biggest Indian customer, a gentleman from Jodhpur, buys Rs 45,000 worth of tea every alternate month. We have seen demand grow from cities such as Jodhpur, Dehradun and Ludhiana.
Most of our Indian customers, however, suggested that we should make the brand available offline, which is what prompted our decision to be present in airports, where we will attract dual customers — foreign visitors who are looking for a gift, and Indians themselves.
Exposure to oxygen, light and temperature destroys the finest of teas. To address quality, we created India’s first cold chain process. Once we procure tea from a plantation, we bring it under controlled environment within 24 to 48 hours. Then, we remove the impurities and store the tea at a minus temperature. Even two years later, this tea feels as fresh as if it was produced yesterday.
We also hired Pentagram, an indie design firm from London, to help us rebrand and create a new identity. In the last few years, we have sold over 40 million cups of teas in 112 countries. Some of our consumers are even our investors, like an oil baron from Texas. Our biggest validation was Mr Ratan Tata investing in the company.
What spurred the decision to set up retail stores and how much of your business will come from offline sources?
Two years ago, India was not even a market for us. Today it is the fifth largest market. One of our biggest Indian customer, a gentleman from Jodhpur, buys Rs 45,000 worth of tea every alternate month. We have seen demand grow from cities such as Jodhpur, Dehradun and Ludhiana.
Most of our Indian customers, however, suggested that we should make the brand available offline, which is what prompted our decision to be present in airports, where we will attract dual customers — foreign visitors who are looking for a gift, and Indians themselves.
The growth in our India business prompted us to launch another product innovation. Indians are new to fine teas; our culture is of chai. But not many have the patience to steep the loose-leaf teas which we vacuum pack and sell. So, we had to go the tea bag way, but the quality of the tea bags and the tea in them is pathetic. Most tea bags have fanning mixed with dust.
To ensure the quality of our teas, we drew inspiration from potato chip companies that use natural nitrogen gas to maintain the freshness of the product. Being an inert gas, it does not mix with the product. Our tea is also available in small nitrogen gas flushed tea bags. As long as you do not open the bag, the tea remains fresh.
Which are the regions that produce the finest teas in India?
Every region has its own speciality. Tea is like wine. You have to understand the nuances, the terroir it comes from. Our website describes the various teas with detailed tasting notes. We also offer information about the estates they come from and their legacy.
From Darjeeling, we get the first and second flush and a bit of autumn flush but that is available in very small quantity. In Nilgiris, our focus is on the winter flush. From Nepal, we predominantly get the first flush. We do a lot of R&D to create blends. A year ago, we launched a tea called Mountain Rose. In India, a lot of people like sweet floral teas. So, we took a black tea from a Nilgiris estate and infused it with roses imported from Bulgaria. We infuse our Jasmine green tea with jasmine flowers for 24 to 48 hours for that subtle flavour. Among our innovative teas is Blue Tea, used in Eastern alternative medicine as a herbal infusion to cleanse the body. We have infused blue pea flower with tea to create this one.
Darjeeling tea is very fruity and flowery. Assam tea is strong and mouldy. The tea from Nilgirs is a blend of the two. Nilgiris produce good baseline teas in which you can add any flavour.
Our most expensive tea, and my favourite is a Darjeeling white tea from a particular estate. It can be plucked only for the first 10 to 15 days of the season and from a particular patch in the plantation. A sip of it feels like a bouquet of flowers in your mouth. We sold it at Rs 1,80,000 a kilo and there are enough buyers, including some from India.
Teabox - Mulled Wine Tea.
