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BW Businessworld

There Is A Wide Potential In The Specialty Tea Segment: Kausshal Dugarr, Founder & CEO of Teabox

In an interview with BW Businessworld, Kausshal Dugarr, Founder & CEO of Teabox, spoke about the brand and more.

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The traditional tea route is a long one, beginning in the garden and involving multiple middlemen. It takes between 6-8 months for teas, once produced, to reach the consumer. No one seemed to have stopped to ask why. Or attempt a more efficient system. Teabox chose to ask questions to provide or minimise the gap.

The tea organisation did away with the long supply chain, reducing it from five stages to two. This is how they have revolutionized how tea reaches its drinkers. The company claims that they source only the finest loose-leaf teas from over 120 estates across India & Nepal. In an interview with BW Businessworld, Kausshal Dugarr, Founder & CEO of Teabox, spoke about the brand and more.

How difficult/easy is to convince customers for a new tea brand or a new taste? As tea is a risky industry with already known brands in the market like Tata, Brooke Bond, Lipton etc.
While tea drinkers still love their chai, the choices have broadened and they prefer different teas as per their lifestyles. A cup of chai in the morning, a Morrocan Mint tea in the office to Chamomile before bed is what people are inclined towards. They are also opting for a glass of cold Hibiscus Lush iced tea over ready to mix iced tea powders available in the market during the summers. Here, health is the driving factor supported by good taste.

Consumers are picking something that is unique as well as healthy at the same time even when it comes to gifting. During the festive season, sweets are eventually goodbye and are being replaced by teas such as Paan rose, Caramel Spice Chai, etc.

We led the change in this 200-yr-old industry and have redefined a lot of things which were once considered impossible. People have also become more receptive about trying new things with constant reading, travelling and experiencing new things. This has led to an attitude change in the consumer as the focus shifted from consuming to experiencing. Today’s consumer wants to know the history behind the product as the storytelling aspect has become way more crucial. For example, our single estate teas are marketed more like single malts and have become more of a lifestyle statement.

We started our journey online and have been predominantly selling to global customers. But recently we started gaining traction in India as people started understanding the value of such high-end teas and wanted the same back home. That’s how we started focusing on Indian customers.

How Teabox is different from others?
The traditional tea route is a long one, beginning in the garden and involving multiple middlemen. Once produced, it takes between 6-8 months for teas to reach the consumer. By the time the consumer tastes the tea, it has already lost its flavour, aroma and most importantly, the freshness. Teabox is here to significantly change the way a consumer consumes tea. With the platform of technology, we can easily bypass the long supply chain, reducing it from five stages to two. We have become a single link between the producers and a global consumer base. The happy consequence is a better price for a much better tea and in the process, creating a more efficient supply chain. Further at Teabox, we are focused on selling premium quality whole leaf to our consumers which brings in a much better tea tasting experience as compared to brokens or fannings. Whole leaf rings come in a plethora of flavours and allow multiple infusions for the consumer.

Tell us about the rationale behind Teabox’s airports- first retail strategy.

We have managed to build a robust online presence and are in the process of changing the tea experience forever. However, we feel the need to build more awareness of speciality teas which India has to offer. There is a wide potential in the specialty tea segment and we have an edge in the online space. But setting up airport stores helps us to build that personal connect with the consumers which only being online, at times, does not help. The stores are all about personalization and connection. We have curated a special menu for travellers who can choose from single-estate teas, classic favourites, iced teas, matcha and signature blends to begin their journey with fresh exotica. These teas are beautifully inspired by different moods, seasons and occasions. Furthermore, there is a unique range of teas on offer each week for the tea lover to explore and relish. With subtlety and elegance, the store tells its brand story through messages designed on units and effective integration of lifestyle spaces. With interactive zones like ‘the cup zone’ and ‘the multi-sensory zone’ enhance every customer’s experience at the store. The multi-sensory section allows one to touch, feel, smell and tastes the finest teas which in every sense, is a tea connoisseur’s fantasy. We aim to redefine the tea drinking experience in India, both online and off-line.

What do you mean by nitrogen-flushed teabag and what is the need for the same?
Since the beginning, the core focus of Teabox has been on keeping the freshness intact and the highest quality deliverance which has been enabled through vacuum packing of our teas. But over the last few years, it became increasingly evident that many people would choose loose-leaf tea if it didn’t feel like a chore to make it. As it turns out, there are many tea drinkers who find the process of steeping tea exhausting and would happily reach for a tea bag instead. The challenge lies in ensuring that we combine the freshness of our loose-leaf tea with the convenience of the tea bag. The structure of a normal tea bag makes it vulnerable as the tea inside is continuously exposed to air and therefore affected by moisture and oxygen. It means that by the time a consumer receives their tea bags, it might not make a good cup at all, as the quality and freshness having been deteriorated. Nitrogen is a natural inert gas and doesn’t react with or impact the food product. But it preserves freshness by displacing all other gases. Our team worked day and night to crack the process. For the first time in the history of tea, we managed to pack in the freshest teas in a convenient tea bag form with absolutely no compromise on the quality. It is perhaps, the best thing that’s happened to the industry in the last 50 years.

You are planning to incorporate an IoT enabled device that consumers can use to make tea exactly to their taste every time. Will it be user friendly? Will it prove to be a better substitute to the experienced hands of Indian mothers and housewives or will it complicate the whole process of sipping a tea?
We have the world’s first ‘Personalized Tea Subscription Service’. This programme is powered by Teabox’s patent-pending machine-learning technology that personalizes and matches every individual’s tastes to a selection of teas. The Teabox subscription programme lets tea drinkers choose the kinds of tea they’re most likely to enjoy. This is done by categorizing the types of teas available by attributes such as aroma, astringency, strength and body, which are matched to user preferences, habits and taste characteristics. Taste preferences are not universal as they vary from one person to another. The descriptions of teas, like wine, can be subjective. Our prediction engine has been developed to break down subjective words like 'floral,' 'sweet' and 'astringent' in over 75 quantifiable attributes. This, coupled with the habits and preferences of our customers, enables us to pick out teas perfectly suited to their palate. The user takes a quick five-question quiz online and when the choices are submitted to the Teabox prediction engine, each user is assigned a 'signature profile' based on their response. The technology looks for a pattern to identify a selection of teas best suited to go with this signature profile. As the users repeat and share their experiences with our prediction engine, it improves its discerning capabilities, thereby improving its understanding of a user's choices and matches our teas to them better. This feedback loop enables a reinforced learning behaviour of the system allowing it to fine-tune itself to specific taste profiles. Further, customers receive their personalized box within five days of placing an order. Teabox has given customers an option in the beverage segment other than making a choice from what’s available on the shelves of grocery stores and supermarkets.

We use technology to solve the tea discovery problem as tea novices do not consume knowledge or have an experience like connoisseurs. By getting a few details about an individual consumer’s palate profile, we find the perfect tea for them over a period of time. We would not like to call it a substitute to the experienced hands of Indian mothers and housewives but as a guide, a friend which changes the way one has had tea before. The main idea is to build awareness about speciality teas in the country and in the process, improve our learning of consumer behaviour.

How do you generate 95 percent of your business from international markets?
We are perhaps the only global tea brand to have an extremely strong digital presence that has fuelled our growth so far. Outside India, we use and other online partners such as Amazon to sell tea to global audiences and so far, that strategy has worked well for us and we have been able to reach 11 countries. To our surprise, some of the countries’ names we had heard for the first time after getting an order like Kiribati, Micronesia.

Going digital worked for us and the US is the highest market in terms of value. In early 2015, Teabox generated roughly 95% of overall business from international markets where the US contributes 40% of our revenues followed by Russia, India, UK and Australia. The US continues to be our biggest market, but we’ve also seen demand from India pick up considerably over the past year or so.

You said, you will assure that the freshest teas are made accessible by creating a direct-to-consumer brand. How will you do the same?
The Indian tea industry is around two centuries old. Unfortunately, it is not a simple garden-to-cup equation but is a long supply chain. This chain features a network of intermediaries, including auction houses and exporter wholesalers, leading to an inevitable degradation in the freshness and quality of tea. The idea was to bridge this gap and ensure that tea consumers, no matter where they are, get access to the freshest teas. When I came back to India in 2011, I realized that no one had focused on that part of the market. So I decided to create a direct-to-consumer brand, and that’s how Teabox began.

Tea is a commodity that must be treated like fresh produce, and when it is unacceptable to consume fruits and vegetables that are as old as nine months, how is tea any different? 
I started looking for a solution to this and believed if solved, I could create a global brand. The formula was to compress the process of sourcing, quality control and cold storage in less than 48 hours which protects the freshness of the finest tea against factors like heat, moisture and oxidation. By getting rid of intermediaries, we managed to generate a more efficient system and made truly fresh teas available to a global audience.

Another valuable thing we as a company did was commissioning a New York-based branding agency to deliver a global design and feel to the brand. This was critical as we were selling to a global audience that were already used to certain standards. Being an Indian company did not mean we would only stick to Indian standards but instead work harder to push ourselves to the global level.

How will you ensure that the best quality of the tea reaches the sippers? What are your quality standards?
At Teabox, we adhere to a set of internal protocols once we procure a set of teas. The moment the tea come into our facility from the estates, it’s taken to a de-humidified chamber so that it does not come into contact with moisture, light, oxygen and heat- the 4 main enemies of tea. Moisture robs teas of freshness and renders them stale rapidly. Our quality norms insist on a maximum moisture level of 4 per cent in made teas. A temperature and humidity controlled-facility ensure that this level is maintained. The teas are then packed in opaque bags with an aluminium layer that protects them from excess moisture and light. A hot and humid storeroom or warehouse is the worst place for tea as it renders them tasteless. We set up India’s first tea cold storage, which stores tea in a temperature-controlled environment, and keeps it fresh. We vacuum pack our teas for all our customers through storing and shipping to preserve briskness or astringency. We have individual parameters for leaf appearance, infused leaf and liquor whereby 70 per cent of the points/weightage is given to liquor. We monitor the life cycle of individual teas once that is procured to determine the true quality of a particular SKU. This exercise gives an edge and makes the process of procurement data-intensive as well. This provides more insight and coupled with regular customer feedback, we try and improve on these processes consistently.

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Teabox retail Kausshal Dugarr