Premium Tea Startup Teabox Raises $7M to Expand Tea Commerce Business

December 15, 2017

India and Singapore-based e-commerce tea startup Teabox announced it has raised $7 million through a Series B led by Singapore-based RB Investments, and including existing investors and venture debt provided by DBS Bank Ltd. However, the company is reportedly in talks with additional investors for a $3 million extension to the round.

Previous investors in the company include Accel, Keystone Group, Dragoneer Investment Group, and JAFCO Asia, which have collectively backed a $1 million seed round that was followed by a $6 million Series A 18 months ago.

Founded by Kaushal Dugarr five years ago, Teabox is a vertically integrated premium tea company that sources teas directly from plantations across India and Nepal. The teas are picked, vacuum packed and packaged for delivery to warehouses within hours, and then shipped directly to customers all over the world. The elimination of distributors and retailers streamlines the supply chain, and enables Teabox to get tea from the plantation to the customer within one week.

“The end-to-end supply, from the growers to the cup, has helped Teabox drastically reduce the time-to-market from 4-6 months to under a week, ensuring only the freshest of teas reach the consumer,” Dugarr told The Hindu Businessline.

Tea-licious

Tea is the second most consumed drink in the world after water. Between 2009 and 2016 the global tea market has seen a compounded annual growth rate (CAGR) of 5.6 percent, according to the report Tea Market: Global Industry Trends, Share, Size, Growth, Opportunity, and Forecast 2017-2022, issued by IMARC Group. This growth has pushed output to reach 5.6 million tons last year, and has generated expectations that production will top 7.2 million tons by 2022.

One of the key drivers of this growth are the health benefits associated with tea consumption and the increasing health awareness of consumers. While in emerging markets, modernization of infrastructure channels will add to the segment’s growth.

And this is exactly what Teabox is aiming to accomplish with this funding, of which a portion has been earmarked to support the build-out of a cold-chain processing center with an initial capacity of between 15,000 and 20,000 kilograms, and a future capacity of 50,000 kilograms. Plans also include expansion into new markets and automation of the production process.

“We have established a strong digital presence. We are now mulling to go multi-channel through offline formats by setting up our exclusive outlets at airports and partner with online marketers such as Amazon. We have a network of 150-plus suppliers across the country,” Digarr told the Hindu Businessline.

Through its business model, the company has sold more than 40 million cups of tea to 100,000 customers in 110 countries to date through its own website and other online retailers such as Amazon.

“We are excited about backing the challenger in a large category with a demanding customer,” said Harshavardhan Bothra with RB Investments. “We feel that Teabox’s dynamic team and its innovative supply chain of tea from plantations to cup will enable them to provide the freshest tea to consumers worldwide and redefine the category.”

Dugarr states that the company deals only in premium teas, and has been targeting tea enthusiasts and connoisseurs. Over the past 12 months the company has seen growth in sales of 2.5 percent, and has targeted sales of 50 million cups of tea in the near future.

“Things are going great,” Dugarr told Tech Crunch. “We’ve really built the core infrastructure so we can scale 5X, 10X, 50X. Many say they want to disrupt, infrastructure should be at the source and now we are able to scale as fast as we want using the front end.”

However, understanding that six in 10 consumers will buy a tea after tasting it, Teabox has also opened an “experience store” in Bangalore for in-person tasting, and is also exploring new retail channels such as high-end supermarkets in India. Ultimately, the Chinese market is in sight.

“We think there are other more compelling opportunities before we try to figure our way into China [but] we have it at the back of our mind,” Dugarr told Tech Crunch.

“There such an incredible opportunity to grow. We feel we have a window of three to four years to grow the business and make it a big business in the premium tea space. There’s no other company in that space with a dominant presence from a global perspective.”

-Lynda Kiernan 

Lynda Kiernan is Editor with GAI Media and daily contributor to GAI News. If you would like to submit a contribution for consideration, please contact Ms. Kiernan at lkiernan@globalaginvesting.com.

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