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Tata brews tea retailing format through Chai Unchai

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Tata Tea, the country’s largest tea company by volume, made a first-of-its-kind foray into the out-of-home beverage segment by unveiling a new retail format christened Chai Unchai in Bengaluru. Targeting the youth, the company opened its first Chai Unchai outlet at the Indian Institute of Management (IIM) campus in Bengaluru.

“Chai Unchai is the transformation trigger that the tea company is using to get into the out-of-home food and beverages space. The outlet idea came about when the company decided to fill the gap between the low-end functional teashops on the road and the high-end tea lounges. The outlet serves tea and other beverages, apart from light snacks and cakes, and is targeted mainly at the youth,” Sangeeta Talwar, executive director, Tata Tea, told Indiaretailing.

Tata Tea claims that it will retail F&B products at prices that are 10-15 per cent lower than at organised coffee retail outlets like Café Coffee Day (CCD) and Barista. Tata Tea plans to open more outlets mainly in the large cities at various locations such as malls, colleges, university campuses, corporate campuses, and public places. The company is looking to attain market leadership position in this segment in the next five to seven years.

“By the end of this fiscal (ending March 31, 2008), around 10-12 pilot Chai Unchai outlets will be up and running in Bengaluru. Meanwhile, the company plans to expand the new retail format across the country in the next five to seven years,” Pankaj Dant, GM (marketing and sales), Tata Tea, envisaged. Initially, Tata Tea plans to set up its own outlets and then take the franchisee route at a later date.

In the brand name for the new chain, Chai Unchai, ‘chai’ (tea) signifies the menu that comprises items that are classified as teas, and ‘unchai’ denotes all the other F&B items, including coffee, mineral water, food snack items – all eatables that one finds in the millions of small and large, branded and unbranded outlets.

“Chai Unchai outlet is not a café or a kiosk, but is designed in the form of an informal ‘hangout’ where the youth can congregate and relax in a warm, friendly and unpretentious atmosphere. Each outlet comprises a vending kiosk, a staircase leading to an upper floor, and a lower seating place behind the vending kiosk. The entire outlet can be dismantled and taken to another place, in case the location is not suitable,” Dant explained.

Initially, Tata Tea plans to limit its promotion activities, which will only use outdoor media and billboards as well as localised advertisements. The company also plans strategic tie-ups with movie halls to allow people to book tickets at the outlets, while the movie halls would promote Chai Unchai. Once a sufficient number of outlets have been set up, the company will go in for mass media communication, which will include TVCs as well.

According to Tata officials, the current F&B market, with a year-on-year growth rate of 15-20 per cent, is a Rs 480 billion business annually. Meanwhile, the branded or the organised market is less than ten per cent, or between Rs 3 billion and Rs 5 billion. The rest of the demand is met by the millions of tea-vending outlets that also dot some of the smallest hamlets in the country. According to the company’s estimates, Indians consume about 400 billion teacups, or about 190,000 tons of tea, annually.

Tata Tea was set up in 1964 as a joint venture between the UK-based James Finlay and the Tata Group to develop valued-added tea. Among India’s first multinational companies, the operations of Tata Tea and its subsidiaries focus on branded product offerings in tea with significant presence in plantation activity in India and Sri Lanka.

– Vishnu Rageev R, Bengaluru Bureau

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