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DEALBOOK | TEABOX SEEKS TO BRING INDIA’S TEAS INTO MODERN ERA

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TEABOX SEEKS TO BRING INDIA’S TEAS INTO MODERN ERA

By Saritha Rai June 26, 2014 6:03 am June 26, 2014 6:03 am 18
Photo

A tea estate in the Darjeeling region of India. The online retailer Teabox is
seeking to bring the country’s centuries-old traditions into the modern
era.Credit Saritha Rai
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DARJEELING, India — The tea plantations here in the shadow of the cloud-shrouded
valleys of the Himalayan mountains may be the last place to find technological
innovation. Many of the colonial-era practices involved in tea-growing and
processing still follow the time-honored manual labor and handwritten
bookkeeping.

But as global consumers increasingly become connoisseurs of high-quality
products, one entrepreneur is seeking to give the industry a Silicon Valley
makeover.

India is the world’s second-largest tea grower after China. Yet, even as the
country produces quality specialty varietals that are as highly regarded as
wines from France and whisky from Scotland, its industry is antiquated.

With the backing of one of Silicon Valley’s biggest venture capital firms, Accel
Partners, Kaushal Dugar, a Singapore-trained financial analyst, is among those
slowly bringing the sector into the modern era via his online tea retailing
start-up, Teabox.

The bulk of India’s production — about one billion of the total 1.2 billion
kilograms (2.6 billion pounds) — is consumed by the domestic market, where
mass-market brands from the Indian conglomerate Tata and the multinational
Unilever hold sway. But the remaining 200 million kilograms is a market ripe for
shake-up.

“We grow some of the best teas in the world, but our processes are archaic and
marketing is nonexistent,” said Arun Kumar Gomden, a tea industry consultant who
managed tea estates for 35 years.

Photo

Teas lined up for tasting at the Goomtee tea estate, a supplier to Teabox.Credit
Saritha Rai

As is the case with other successful e-commerce sites, technology forms the core
of Teabox’s online operations. Algorithms predict demand based on such factors
as past sales, internal ranking of tea varieties and pricing. Information about
a tea’s picking date, season and origins is made available to online customers.

Taking a cue from the successful wine industry, Teabox is bringing in wine
tasters to provide engaging online descriptions for its products. Gone are the
flowery but opaque descriptions like “distinctly high-grown character” and
“surprising malty nuance.” They have been replaced by more consumer-friendly
taster phrases like “light-bodied tea with a slight woodiness in its flavor,”
along with detailed steeping instructions.

Teabox, which started in mid-2012, is introducing a subscription model offering
personalized tea selections, replicating similar successes of online sites
selling wine, razor blades, cosmetics and organic products.

All of these steps aim to hook a new generation of customers in countries such
as Russia and the United States. As consumers on a quest for the latest niche
food products veer toward drinking the brew in upscale salons and tea bars,
Indian tea could tap into the large addressable global tea market, estimated to
be $90 billion in size.

“Tea is a time-sensitive product, but the industry’s supply chain is quite
broken and has many intermediaries,” said Prashanth Prakash, a partner at Accel
India, which along with Singapore’s Horizen Ventures has provided some $1
million in early-stage funding to Teabox. “The business is ripe for disruption,
both in terms of price and quality,” he said.

The venture capital approach is helping Teabox change operations. It was Accel
Partners that suggested the wine industry method to “product discovery” —
industry jargon for helping shoppers discern and select products online.

“By employing tactics used by the wine industry, we want to demystify tea and
present it in a more accessible manner along with how-to brewing directions so
that buyers can explore varieties, regions and flavors,” said Mr. Dugar, 31,
founder and chief executive of Teabox, which is based in Siliguri, Darjeeling,
the heart of India’s tea-growing region.

His family’s trade connections go back four decades and give Mr. Dugar access to
high-quality teas from the estates of Assam and Darjeeling. From his childhood
summers spent on plantations, he recalls the tea pluckers picking two leaves and
a bud that was transformed into brewed tea within hours. “I imagined that the
workers in tea plantations were magicians.”

Photo

Kaushal Dugar, chief of Teabox.Credit Saritha Rai

Mr. Dugar had worked for a few years as a corporate finance analyst at
consultancy firm KPMG in Singapore, but he then returned to India to become an
entrepreneur. He and his backers quickly discovered that the industry first
organized by British colonizers about 200 years ago has not changed at all. Many
plantations are controlled by third- or fourth-generation owners, using machines
dating back a half-century or more.

“Traditional processes such as withering, rolling, drying are all manually
monitored just like it was when the tea industry was first established in this
region centuries ago,” said Amar Nath Jha, a senior manager of the 162-year old
Steinthal Tea Estate in Darjeeling, a supplier to Teabox.

Because of the lengthy auction and distribution process, it can take up to six
months for the tea to reach a consumer overseas.

“The lack of modern infrastructure leads to tea quality deteriorating and losing
aroma along the way,” said Mr. Gomden, the tea consultant.

To change that, Teabox set up sourcing centers in Darjeeling and Assam, within a
few hours from the gardens where the leaves are plucked and processed. (Other
buyers have also begun to bypass the auction system and buy premium teas
directly from producers).

Almost as soon as the teas are procured fresh from the production centers,
Teabox stores them in temperature- and humidity-controlled warehouses. Then,
within 48 hours, the teas are checked, vacuum-packed and dispatched to
fulfillment centers in major markets such as Russia, the United States and
Australia.

Data analytics also help. When they log into the website, buyers are served
personalized recommendations according to one of Teabox’s 53 tea profiles.

Customer feedback goes quickly back to the producers. For example, Teabox now
sells tea only in 100-gram vacuum packs after complaints that tea in larger
packs lost aroma.

The company tries to win over customer share its audience by offering high-end
teas at a discount to established brands like Twinings and upscale European,
Asian and American tea salons, all of which sell online (Teabox’s products can
sell for as much as $1,099 per kilogram).

For instance, a French tea salon called Palais des Thés sells the Mission Hill
tea at $340 per kilogram, but Teabox sells the same product about 60 percent
less at $126 per kilogram. TWG, a high-end tea bar in Singapore, sells the
Okayti at $390 per kilogram while Teabox sells it as $180, less than half the
price.

Teabox is still a small player in the industry: It has shipped 10 million cups’
worth of tea to customers in 65 countries so far. The challenges are many.
Traditional distributors have blocked access to plantations and Teabox has had
to counter rumors from rivals that it is an unreliable buyer.

Mohan Chirimar, 53, of Raghunath Exports, a bulk supplier to Starbucks as well
as retail chains and supermarkets in 30 countries, said Teabox was chasing a big
opportunity that had room for other entrepreneurs.

Raghunath Exports is itself gearing up to compete online as Mr. Chirimar’s
23-year old son, Aditya, a recent graduate from Cornell University, has returned
this month to join the business. “He is going to expand our business online; it
offers more opportunities and will speed up our growth,” Mr. Chirimar said.

Teabox does have an early-mover advantage but must now build its name. Regular
access to financing will help Teabox ramp up its brand in crucial markets like
the United States where tea drinking growth rates are overtaking coffee. The
start-up aims to grow 300 to 500 percent in the coming year and cross $1 million
in annual revenue.

“With cash in the bank and support from investors, we can dream about quickly
building a billion-dollar tea brand from India, something that has never been
attempted before,” Mr. Dugar said.

Correction: July 1, 2014
An article on Friday about Teabox, a start-up aiming to bring India’s tea
industry into the modern era with the backing of venture capital, misspelled
part of the name of one firm that has provided funding to the company. It is
Horizen Ventures, not Horizon Ventures.

A version of this article appears in print on 06/27/2014, on page B4 of the
NewYork edition with the headline: As India’s Tea Gains Fans, Finding an Easier
Way to Get It to Them.

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JEND

NJ June 28, 2014

This is great news, and amazingly timely for me. I order loose teas from Yunnan
Province in China. My husband and I are both tea-ophiles and we are grateful for
the high-quality Chinese teas we can get. But I said to my husband not even a
week ago that I would love to find a direct source for great Indian tea as well,
but that I had not been able to find one. I have had a hankering for a good
Nilgiri tea for quite a while. I am very happy to read that someone is trying to
bring Indian tea into the modern era. I watched a documentary about an Indian
tea estate recently, and could not believe how archaic the agricultural methods
were. Good luck to this entrepreneur and all others who can bring high-quality
Indian tea to us here in the US.

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KAUSHAL

Darjeeling, India June 30, 2014

Hey Jen - thanks for your good wishes. I look forward to you trying our teas :)

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GORDON ACKERMAN

Albany, NY June 27, 2014

I sincerely wish this fellow well. I, also, set up a company some years ago to
import high-grade teas to the U.S. but I abandoned it after a market survey I
commissioned revealed that the American market for gourmet teas was very small.
Times may have changed but I do not believe they have changed much - Americans
don't even know how to brew (steep) tea in a pot, and they still use
tea bags which, as an Indian friend once remarked, "is like washing your feet
with your socks on." India produces two of the world's finest teas, "Assam
Greenwood" and "Darjeeling Margaret's Hope", but my favorites (notably, the
exquisite and rare "Kenilworth") come from Sri Lanka. I would direct tea-fancier
to "The Book of Tea," a great classic. These days I drink only green tea. Last
year I was invited to a Sencha tea ceremony in Kyoto, Japan. Those last four
hours - four - and worth every moment.

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GORDON ACKERMAN

Albany, NY June 27, 2014

JONATHAN - nothing at all wrong with upton, but I believe you can order the same
teas from London (Harrods) or Helsinki (Stockmann) for a good deal less, even
with import duties and shipping. that's what I do, in any case. the finest teas
in the west are in London, Helsinki (Finland) and Paris (Fauchon), though
Fauchon is very expensive. the Finns are fanatic tea-fanciers.

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KAVITA

Kapoor June 27, 2014

Good Read.
I have been ordering some amazing Darjeeling teas from Golden Tips
www.goldentipstea.com for the last 4 years here in LA. Surprisingly they are not
mentioned here but I believe they are the one who started selling single estate
darjeelings.(Madhav Sarda I believe is the owner) I know a lot of people who
order from them and their prices are much lesser than even Teabox and the teas
are absolutely fantastic. . However, more companies coming in will definitely
keep the consumers smiling :) Best of Luck.

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DARKER

LI, NY June 27, 2014

A most refreshing read. The small vacuum packets of Darjeeling varieties are
splendid!

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BROOKLYNTEA

India June 27, 2014

There are so many factors and its finer points responsible for "good quality
teas", quality matures only over a period of time and silicon valley's biggest
venture capital firm should know this. Tea industry makeover by silicon valley
is a 'short-cut' method only to exploit marketing (in other words; it means "to
take out Cream from the Milk"). The Himalayan region is suffering from "ageing
tea-estates" and no one is bothered to plough back investments in R&D,
value-additions, young tea plantations, organic manuring, herbs&medicinal plants
as add-ons, with or without blending teas, selection of new sites, altitude etc.
... and many others have forced India's production at number four (from its
number one position).

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SCHOONMARLIN

kabir June 27, 2014

So the value of this endeavor is to cut out the auction houses and speed up
delivery. I do not see where venture capital will do much in the way of
producing the tea that will lower cost. So this is essentially a distribution
endeavor. You will need to control a significant volume of tea to change the
process much.

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LIZ

Utah June 26, 2014

I buy my tea at Wing Hp Fung in Monterrey Park, CA on my annual trips to LA.
They are a wholesaler and the prices in proportion to quality are unbelievable.
They have an online presence, but the website is pretty awful and they often
show things as out of stock which are in stock. Their lowest quality matcha is
better than the highest qualities I have had elsewhere and is $38/pound. It can
be tricky finding someone in the store who speaks English, but they usually can
scare someone up and if not two hands are enough to communicate. They also sell
whole herbs for traditional Chinese medicine, other herbal preparations, and
various housewares and preserved foods.

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PRINCESS LEAH SELMAN

Cazenovia June 26, 2014

please, bring Tea Shops that offer this liquid gold to the East Coast USA. Its a
funeral of dry cranky coffee addicts over here

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A CANADIAN IN TORONTO

Toronto June 26, 2014

I guess for educated tea drinkers are like educated coffee drinkers, one kind of
Darjeeling may be different from another kind of Darjeeling... And, tea is
really a time/season sensitive commodity. I dare not try any orders online...I
always go to a local shop due to that one can smell and taste a varity at the
spot prior to making a purchase.
I have a question: do Indians taste tea in bowls instead of a delicate cup? We
normally taste tea in an espresso cup-sized cup...

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DEEPUSEB

Baden, Switzerland June 27, 2014

Indians drink tea in cups. But our way of making tea is very different, we put
loads of milk and sugar and boil the hell out of the leaves.

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KAUSHAL

Darjeeling, India June 27, 2014

Try any of our teas - and experience the difference. Maybe that will convince
you to change your thoughts. While doing professional tea tasting, we use bowls
- but while drinking, we use normal cups .

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SHAH

Khan June 26, 2014

Now can they stop corruption in INDIA i have had it with corruption.

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KK

DC June 26, 2014

Nice! I will try some of the Darjeeling ones. Being from Bengal it's in my genes
to have a cuppa, esp. Darjeeling tea because of its wonderful fragrance. In case
readers want to read or share more about teabox:
http://yourstory.com/2014/03/teabox-funding-accel-partners/

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JONATHAN

NYC June 26, 2014

Er, how is this different from what uptontea.com has been doing for 10 years? I
am a long-time customer, and they really have any kind of high-end tea you want.

The very expensive teas are definitely an acquired taste. I once bought a
Darjeeling that was on sale at half price for $4.50 an ounce. It was really like
drinking of cup of flowers. The more robust Darjeelings and Assams can be had
for $2-3 an ounce.

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KAUSHAL DUGAR

Darjeeling, India June 27, 2014

Jonathan - Thanks for sharing your thoughts. Upton is an established brand and
has been in the business for a long time. But Upton and many other retailers are
not based in India (Darjeeling/Assam). By the time they get the teas in their
warehouses in Boston - 2 things have happened. It has taken about 3-6 months or
more for the teas to reach them. As a consequence, the teas (many of them) loose
their aroma/freshness which really needs to be preserved as much as possible. On
the other hand Teabox (www.teabox.com) is right next to plantations. We get the
teas within a day of production (sometimes within hours), bring them to our
climate controlled warehouses (where temperature, humidity) is mantained and we
take them through an intensive QC process and vacuum pack them . By doing this -
the aroma freshness is preserved and teas remain very fresh. Then the teas are
dispatched to customers around the world. So essentially a process which used to
take 3-6 months, takes 5-7 days, teas are the best in terms of freshness. That
is the Teabox difference.

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 * 1Recommend
 * Share this comment on FacebookShare this comment on Twitter




KAUSHAL

Darjeeling, India June 27, 2014

Jonathan - Thanks for sharing your thoughts. Upton is an established brand and
has been in the business for a long time. But Upton and many other retailers are
not based in India (Darjeeling/Assam). By the time they get the teas in their
warehouses in Boston - 2 things have happened. It has taken about 3-6 months or
more for the teas to reach them. As a consequence, the teas (many of them) loose
their aroma/freshness which really needs to be preserved as much as possible. On
the other hand Teabox (teabox.com) is right next to plantations. We get the teas
within a day of production (sometimes within hours), bring them to our climate
controlled warehouses (where temperature, humidity) is mantained and we take
them through an intensive QC process and vacuum pack them . By doing this - the
aroma freshness is preserved and teas remain very fresh. Then the teas are
dispatched to customers around the world. So essentially a process which used to
take 3-6 months, takes 5-7 days, teas are the best in terms of freshness. That
is the Teabox difference.

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 * Recommend
 * Share this comment on FacebookShare this comment on Twitter


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