Niche tea sellers carve up online presence
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- Published 16.09.13
Calcutta, Sept. 15: The booming e-commerce market in India is beginning to make inroads into tea with the setting up of online stores by the enthusiasts and connoisseurs of the brew.
The online stores do not expect assured returns and profits just yet, but steady investments are being made in back-up infrastructure and logistics with the expectation that both consumers and producers will warm up to the idea.
“For us in e-commerce, the value of a customer is five years, which means, once we acquire customers, he is going to stay with us for five years. Hence, today we are suffering losses to attract customers and will only break even in the third year and make profits from thereon. It’s a very long-term game,” said Kaushal Dugar, founder of Teaxpress Pvt Ltd that has launched an online portal called Darjeelingteaxpress.
“We are currently growing at 15-20 per cent per annum but we don’t expect to be profitable for the next 2-3 years. We expect to hit an inflection point in the third year and from thereon the growth trajectory will be much steep.” he said.
Darjeelingteaxpress specialises in single estate offerings from Darjeeling and has recently expanded into Assam. By the end of June next year, it expects to sell the largest catalogue of Indian single estate tea, including the Nilgiris and Kangra.
An increase in volume, marketing skills and the willingness to serve customers better are expected to contribute to growth.
“A producer’s core competency is production. He is more concerned with selling his entire production than really think about each and every customer like we do. We are really fanatic about our customers and are working very hard to create a brand and a platform to provide market visibility to the producers worldwide,” he said.
Snigdha Manchanda, tea sommelier at Tea Trunk, launched in June, sells signature gourmet blends crafted by her.
According to her, the reason people are turning to e-commerce for tea is because offline sales are dominated by CTC (crushed, tear, curl).
Whole leaf options in stores are less as they are 10 times more expensive. Her tin of 15 lemon green tea bags costs Rs 650. Moon white tea, made from buds that glisten under the Darjeeling moonlight, is priced at Rs 1,350 a tin.
Producer Amit Daga, managing director of Amarawati Tea Co Ltd, which owns the Halmari tea estate in upper Assam, took his brew online in July.
At present, he sells only the second flush.
“We are testing the water right now. For producers, it is easier to sell tea in bulk and put money where the mouth is. There are enough estates making great tea but only a few convert it into a brand. We are doing much better and there are repeat buyers,” Daga said.
BK Birla Group company Jay Shree Tea & Industries took the online plunge last year. It sells both CTC and orthodox tea and even caters to overseas customers.
The value of the domestic e-commerce industry is expected to touch Rs 27,000 crore, or $5 billion, by 2015, according to eBay India.
Deepa Thomas, e-commerce evangelist at eBay, said the market was pegged at $1.2 billion in India last year and would grow 55 per cent in 2013.
Sanjay Bansal, chairman of the Ambootia Group, said online sales did not work for Darjeeling because buyers liked the personalised experience of touch and smell. It is steeped in tradition. Moreover, delivery logistics make it an expensive affair.
Experiments with flavour, like a coffee- or a tiramisu-flavoured tea, may not find favour with the regulars, he said.