Credit rich tea startups

Formal tea cafes with VC funding are making losses

Formal tea cafes with VC funding are making losses

Indian startups selling tea are not making profits, as they are expanding to capture the INR 4540cr market. A road side tea stall makes profit at INR 10 per cup, while startups make losses at INR 150 per cup.

Chai Point started in 2010. It has more than 150 stores and 3000 dispensing units. Its losses was INR38.5cr in 2016–17. It has raised more than INR 240cr in VC funding. Chaayos started in 2012. It operates more than 80 outlets. Its losses was INR16 cr in 2016–17. It has also raised more than INR 250cr.

Howard Schultz built Starbucks into a 28,000 outlets company. He said, “Starbucks is not profit driven. Starbucks is values driven, and as a result of those values, we have become very profitable. Not every business decision should be an economic one.”

India’s tea industry is struggling. Tea chains, if profitable, can help the sector grow by paying growers more for their teas, and workers more for their labour.