Kausshal Dugarr, Founder and CEO of Ratan Tata-backed Teabox, which sold tea for `2 lakh a kg this year, takes LuxeBook through his entrepreneurial journey and shares insights on the luxury startup landscape in the country.
India is a chai nation. Whether rain or shine, we like our cup of tea or rather cups of tea. Today, we have a lot more to choose from. We prefer a cup of green tea in the morning, white after lunch and oolong at night. But even until the last decade we mainly consumed kadak mitthi chai (strong, sweetened, milk tea).
Earlier this year eight-year-old Teabox, which sells Indian tea to 117 countries, including Russia and the US, claimed to have sold India’s most expensive tea for a whopping Rs2 lakh a kg. Last month, they raised an undisclosed amount from Dubai-based NB Ventures and in 2017, got $7 million in a round of funding. In 2016, Teabox scored an undisclosed fund from Tata Sons’ chairman emeritus Ratan Tata.
Eight years after developing and growing its business online, Teabox’s Founder and CEO Kausshal Dugarr, 36, has now started its offline journey, He invested Rs14 crore in opening an experience store at the Mumbai International Airport, in August 2018, followed by an outlet in Bengaluru, in June this year. And will soon open an outlet in Delhi.
LuxeBook discusses the business of premium teas and the decision to go offline from online with Dugarr, the man who trimmed the supply chain of the 200-year-old tea business to two stages from five, established the country’s first tea cold storage in Siliguri and introduced TeaPacs, the world’s first nitro teabags that are sealed at the source using a natural nitrogen flush that keeps the tea as fresh as the day it was picked.
Why did you feel the need to go offline after being so successful online? And why airport stores?
Our business plan is very straightforward. It is to follow the customers. After having served customers from across the globe, we started getting traction from India over the last few years. We realised that more and more Indians were beginning to understand the value of high-end teas and wanted the same back home. That’s how we started focusing on Indian customers. Through our interactions with the customers, we learnt that a lot of them wanted an opportunity to touch, taste and smell the tea; all in all, experience the product. That is why we opened the experiential stores. Also, as we cater to the premium luxury segment, we thought that an airport would be the right place to reach out to the well-travelled, discerning client.
How has India’s tea consumption changed over the years?
Earlier, tea in India was synonymous with chai, a concoction of milk, sugar and water. Indians are now also warming up to different kinds of tea. Health and great tastes are the driving factors.
Consumers are also gifting tea. Sweets are slowly being replaced by teas such as Paan rose and Caramel Spice Chai.
What are your digital marketing strategies?
Digital marketing is the gospel of success in today’s internet-based business model. A successful digital campaign entails understanding the customers’ needs, offering quality products, getting valuable feedback and developing a marketing strategy based on the overall customer sentiment. When Teabox started, there was a vast void in the premium tea market in India. Most people didn’t know that India also produces speciality teas. The traditional industry usually exported most of the high-quality produce to Germany, France, Japan and Iran.
The producers never explored alternative means of marketing teas apart from selling through intermediaries. Through the online medium, Teabox told people that speciality teas were also grown in Darjeeling, Assam and the Nilgiris. We showcased the hard work of the tea planters, engaged the customers with the overall tea experience. All of these would not have been possible without a vibrant internet-based eco-system such as Facebook, Twitter, Instagram, Google Adwords, etc.
What is the offline marketing strategy?
Offline experiential stores provide an opportunity to people to touch, feel and taste the product, and that is critical for us.
What is coming up next?
We are gearing up for our first sit-down tea room experience in Mumbai. We have also just launched our new gifts catalogue for 2019, which features 25 plus tea gifts.
What advice would you give a luxury startup?
A convincing story is very important for any new business. It will set you apart from the others in the same category. Never take customers for granted, especially, in the commodity space where there is a constant need to create a personal connection with the product. In our case, we monitor the customers’ feedback on a regular basis and even reach out to the connoisseurs for their opinion on every new launch. Their feedback matters, whether positive or negative. If it is negative, we try to understand what went wrong and reach out to that consumer wherever in the world he or she maybe.
Moreover, before launching any product, we conduct extensive research and closely study the market trends. We are in constant touch with all the stakeholders in the industry, starting from the tea producer to the consumer. We try and learn with every new launch and improve our products.
How can a startup impress investors? Could you give some tips on how to prepare for that big pitch?
I am also trying to figure that out. But on a serious note, I think the passion for your mission really shines through, giving enough confidence to the investors to invest in your company. They need to know that even when the going gets tough, you would be unfazed.
What are the three most important lessons that you have learnt in your entrepreneurial journey?
The first and the most important is to have conviction in your idea. If you do, things will work out sooner or later. It is important to be persistent in the face of adversity. When I started selling tea online, I faced a considerable amount of resistance from people who simply did not believe that teas could be marketed online. And today, those same people are our biggest supporters.
Second, one must be ready to change directions as per one’s understanding of the market. When we started out, we purely thought of ourselves as an e-commerce company. Many years later, we considered ourselves an FMCG company and e-commerce was one channel.
The third is to consider this journey more as a marathon and not a sprint. That helps you pace yourself and others so that you don’t burnout.
What support would you like from the Indian government?
At a macro level, the expectation from the government is to continue its pro-business reformist policies and Make in India initiatives along with the simplification of the tax system. As a homegrown global brand that sells to consumers in 117 countries, we would want the government to support our journey of creating megabrands from India and help us cut the red tape we face in the export of food products primarily in B2C formats. It would help if the import process is made easier and packaging materials more affordable. Also, we would want the government to reduce transaction costs while dealing with government agencies.
What kind of a boss are you?
My team is 200 people strong and I am a democratic autocrat. It’s a consensus-based decision in most cases. But once a decision is made, it should be implemented, and people who disagree are expected to commit.