Bengaluru-based online premium tea brand Teabox has raised an undisclosed amount of funding. Teabox founder Kausshal Dugarr told Inc42 that Dubai-based NB Ventures, the family office of Neelesh Bhatnagar has invested in the round. The company’s existing investors such as Accel partners also participated in the round.
Prior to this round, the company has raised nearly $13 Mn. Teabox was founded in 2012 by Kausshal Dugar. Shipping to over 117 countries from its warehouse in Siliguri, the online tea brand focuses on the vertical integration of sourcing, branding and distributing teas. The company works with around 150+ plantations in Darjeeling, Assam, Nilgiri and Nepal.
Dugarr told us that the company has gained immense worldwide popularity, especially in the United States, India and Russia, selling over 1 Bn cups of premium Indian teas to consumers.
The company claims to have been growing 100% Y-o-Y and has been focusing on offline expansion. For this, the company has opened experiences store at Bengaluru and Mumbai international airport. They are now looking to open five-six more such offline stores in the next few months.
Along the same lines, it aims to launch international experience store by 2020. The company claims to deliver 40K-50K kilos of tea every month. The company rakes in 5% of its revenue from offline stores as of now and aims to make this 35-40% of its revenue in the next year.
The company is also looking to continue its product expansion plans and create more exotic blends for its customers through research and development.
Dugarr emphasised that the company is well-capitalised and the idea with Neelesh’s investments is about his mentorship to the company. “We believe in their vision of creating an omnichannel experience given the existing international appeal of their high-quality products and look forward to assisting them in their expansion plan leveraging our strong experience/connects,” said Neelesh Bhatnagar, CEO at NB Ventures Limited.
India is the seventh largest coffee and the second largest tea producer in the world. Interestingly, 83% of Indians prefer tea to coffee. However, the tea in India i.e. chai is a concoction of tea blend with water, sugar and milk. The premium tea market that Tea Box caters to is an unadulterated version of India’s chai.
Talking about the market, Dugarr said that India is not the biggest market for them but the US is. He explained that Indians love chai, and chai is not tea. Tea is supposed to be unadulterated without any ingredients. “Historically speaking the market for high end and orthodox teas has always been overseas and lesser in India. A lot has changed in India over the last three to five years. This change is coming about because more awareness about various kinds of tea has steeped into our lives because of the easy access to media. The modern consumer is more receptive about trying new things, they constantly look forward to new experiences and pick up new habits by reading and travelling,” he added.
Indians get such experiences outside India and then demand for such products in India. The competitors catering to premium tea demand in India include Udyan, Vahdam Teas, Kettlery, and Infinitea among others.
Despite their high prices when compared to the more ubiquitous CTC (crush, tear, curl) tea market in India, the opportunity for premium teas is huge and is growing at 40-50% annually. There is a rapidly emerging shift towards healthier options in all beverage categories, and millennial and Gen-Z audiences are increasingly opting for green teas, healthy teas, single estate blends and other niche tea options.