Chai Point and Chaayos Manages 51% of tea café business in India- The India Watch study reveals

The Indian tea cafe business is sized at 873 crores in FY 24, growing at a CAGR of 25.1% since FY 21. In the last 12 months, the business has grown by 15.47%, showing the popularity of the concepts amongst Indians of all age groups. From millennials & Gen Z to grown-up adults, from family outings to business meetings, tea cafes are becoming widely popular. 

Tea has been introduced in India by the British in the 19^th century. Since then, it has become integral to Indian foods and cuisines. Barring a few states of Southern India, where coffee is largely consumed, tea is widely popular in most of India. Sipping tea and discussing about politics, movies, and cricket is synonymous with the Indian way of living. 

As the Indian economy has expanded and lifestyles have changed, preferences for tea, or chai as it is called in India have also greatly evolved. Once the country was known for milk-based tea. Today there are dozens of variants including green tea, white tea, Oolong, black tea, spiced tea, herbal variants, etc. Tea is seen not just as a drink for good social times but also with lifestyle, health, weight loss, gifting, and so on. 

Many now connect tea drinking with weight loss, stress management, anxiety relief, vitality, etc. The demand for gourmet tea is also rising and in many high-income households, one can easily find variants of  Moroccan mint tea, Kashmiri Kahwa, and premium Darjeeling tea. 

The Emergence of Tea/ Chai Café Culture in India 

India saw the emergence of coffee cafe culture in the early 2000s marked by the growth in indigenous brands such as café Coffee Day and the arrival of coveted international brands such as Starbucks, Costa Coffee, Gloria Jeans, etc. Soon drinking coffee in such cafes, mostly located in upmarket and posh neighborhoods, was seen as a status symbol. 

In contrast, in the 2010s, a new phenomenon emerged, the arrival of tea cafes in urban neighborhoods, malls, shopping centers, etc. Chai Point was one of the pioneers of the tea café movement in India. This was followed by Chaayos, a brand opened by a bunch of IIT grads. Chayos and Chai Point popularized the concept of drinking tea in sleek & edgy yet stylishly designed places. They introduced the concept of customization, wherein one can create almost 1000 varieties with 25-30 base variants. 

These new café chains also introduced a wide range of food items such as finger foods, burgers, desi snacks, buns, bakery items, etc. thereby taking the overall tea-drinking experience to a new height. This was a stark contrast in a country, where selling tea was mostly limited to small stalls and shops in markets, cinema halls, railway stations, etc. in the past. 

The overall market is sized at INR 873 crores and is still less than the coffee café business in the country which is pegged at 3084 crores, as per the study by The India Watch. 51% of the market is managed by the two leading brands Chai Point and Chaayos. Other popular tea café brands include Tea Post, MBA Chaiwala, Chai Sutta Bar, Chai King, Bagh Bakri Tea Lounge, etc.  

Mentioned below are some of the key research findings 

• The total size of the chai café market in India is INR 873 crores, growing by 15.47% in the past 12 months. (CAGR growth of 25.1% between FY 21 to 24). 
• 51% of the market revenue-wise is managed by two leading brands, Chaayos and Chai Point. 
• There are a total of 1238 branded tea café outlets in India.
• Outlet-wise, Chaayos and Chai Point manage 31% of the total outlets. As per the number of outlets wise, Chai Sutta Bar has the biggest footprint with around 36% of the market.  

A lucrative Segment to enter into 

As the average disposable income in India is rising and the aspirations of average households are changing, the popularity of the café concept will pick up, making this segment a lucrative industry to venture into. 

There will be many interesting things to watch out for. Venture capital-backed entities such as Chaayos (Which has been backed by numerous VCs such as Saif Partners and Tiger Global) will thrive, while individual entrepreneurs with their unique concept around teas will enter the space at breakneck speed. There will also be many localized outlets where the presence of the brand will be mostly limited to a city or region rather than pan India. Meanwhile, many mainstream tea brands will enter the F&B segment with their flagship outlets. Already brands like Wagh Bakri, Vardhaman Tea, and Taj Mahal Tea have their tea café brands.

How Does the India Watch Help? 

Any business house, investment house, entrepreneur, or retail venture who is planning to enter the chai café or related segment such as coffee café, F&B, QSR outlets, casual dining, or fine dining places can consult The India Watch for market research or feasibility study requirements. Our range of services includes the following 

• Feasibility study reports for new cafes, restaurants, and eatery ventures. 
• Custom research, information, and insights services. 
• Market surveys (quantitative, qualitative, mixed) to gain customer insights and market intelligence.
• Customer satisfaction surveys, brand perception & benchmarking surveys, competition research surveys, etc. 
• For any further information, feel free to drop us an email at info@theindiawatch.com