Chai cafes woo coffee fans in urban India

People drink tea from a roadside tea stall in New Delhi February 5, 2012.

NEW DELHI (Reuters) - A first-time visitor to New Delhi might think Indians are addicted to coffee. There are at least 10 coffee shops in Connaught Place, the city's financial and commercial hub, most within sight of each other and doing well.

But if somebody wanted to enjoy a cup of tea at a similar sort of cafe devoted to tea they'd be out of luck, even in the world's second-largest tea producer -- and a country where people drink nearly eight times more tea than coffee each year.

The lack of a single national franchise centred on tea, known in India as chai and served in a glass, has come into especially sharp focus now that coffee giant Starbucks is poised to make its entry into India.

"You can find nice coffee anywhere, but finding a perfect cup of chai outside is really tough," said Smiti Singh, a Bangalore-based software engineer, who drinks at least four cups of tea a day.

Vriti Malik, a marketing professional in New Delhi, spends 1,400 rupees on coffee a week and wouldn't mind spending the same on tea, but the flavour just doesn't measure up.

"If it is good chai, I would not mind spending money," she said. "I would like to see a lot of different flavours of tea, and healthy stuff like green tea."

No matter what people say, much of the problem is image.

There are numerous tea vendors who set up shop under a tree or on the streets in India, but the quality of chai they offer for five rupees (10 cents) is often suspect. India's growing urban middle-class would rather pay a few extra rupees for the clean, posh settings offered by coffee shops.

In addition, selling tea has been traditionally considered a down-market job. Coffee shops, on the other hand, have always been associated with a Western, fashionable lifestyle.

Young, urban Indians have embraced the coffee culture, where home-grown brand Café Coffee Day is the biggest player, followed by Italy's Lavazza.

In January, Starbucks announced plans to enter the competitive market with 50 outlets by year-end through a tie-up with Tata Group, the country's biggest business house.

While these cafes, including Starbucks, do offer chai on the menu, none of them caters exclusively to tea lovers.

Now, though, a new wave of educated entrepreneurs hopes to capitalise on this gap, keeping the essence of Indian chai but offering a modern setting.

TEA TIME?

When 36-year-old Harvard graduate Amuleek Singh Bijral decided to quit his job and open tea shops, people were perplexed.

"Selling chai is considered the last way of earning your livelihood," he said. "But the fact of the matter is that tea is a very large business in India."

Bijral opened a tea retail chain in Bangalore called Chai Point in 2010. While roadside tea stalls offer just masala chai, tea brewed with spices and herbs, the former engineer offers a variety including lemon tea and green tea.

He also is trying to promote tea as a healthy drink rich in antioxidants, which can boost the immune system.

"People were grateful that we were giving them a clean glass of chai in an affordable and very hygienic setting," said Bijral, who says he sold his millionth cup of tea in January and is set to open an outlet in New Delhi next month.

Ankit Bohra also ventured into the tea business last year, after submitting tea cafes as a business idea while an MBA student in Mumbai. He subsequently put the idea into practice by founding Tapri, a shop in Jaipur that sells 40 kinds of tea.

"Consumers are looking for a change," he said. "They have been having coffee at coffee shops for so long, that they were yearning for a new concept."

Bohra, who says his idea has already been copied by other start-ups in Jaipur, plans to open another Tapri outlet soon.

Both Chai Point and Tapri have tried to steer away from setting up as upscale cafés. A glass of tea costs less than one-fifth the cost of a cappuccino at coffee shops.

While there are a handful of upscale tea restaurants such as Infinitea in Bangalore, which says it tries to lure patrons with a "refined palate", they haven't sprung up across the country.

"In India, the perception is that you need not pay that high for chai," said Bijral, who said he was sure his no-frills cafe would be a hit.

Bohra agreed that chai should stay close to its roots.

"Chai is a common man's drink," he said. "The moment you start sophisticating it, it loses the essence of chai."

(Editing by Elaine Lies and Robert Birsel)