Nexage Innovation LLP

In their own words

Executive Brief Why a Tea on wheels? In India, consumption of tea is not a seasonal phenomenon; rather an obsession, where people drink "chai" (tea) at any time of the day, irrespective of the temperature. Indians can be found sipping tea from road side stalls, established eateries and at their homes across the country. Tea consumption occupies more than 79% share in the non-alcoholic beverage market, which is estimated to value more than $16 Billion (Rs 104,000 crores). As per the latest statistic (Source: Statista, Aug 2019) report 24% of the tea consumption happens Out of Home, valued Rs 24,960 crores. And around 80% of this market cap is generating from unorganized Street Tea vendor valued around Rs 20,000 crores. We, as Kolkata Chaiwala, are targeting this segment of unorganized sector (unhygienic, unhealthy, low grade tea and food presentation) with our disruptive business model to provide a healthy, hygienic chai and snacks in an affordable pricing model as our target customer segment is the middle-income group. Our business structure is equipped with technology interface for better customer satisfaction and traditional test of high-quality tea and snacks at nearly no extra cost which will not only provide business sustainability but also easy and faster scale-up. All our Chai (tea) kiosk are built on E-Vehicle, and all the E-vehicles are equipped with live kitchen to give the feel of freshness as well as our operation- running on electric to reduce the carbon footprint. Our hot beverages and foods will be served on biodegradable ecofriendly plates, and we are minimizing use of plastic in our E-karts. Hence, to make the business not only economically sustainable but also environment friendly. Target Market, Revenue, margin and brief business model As a start-up we are starting our operation from east (Kolkata) market, and reason behind this to develop partnership relation with Tea estates in east specially in Assam and Darjeeling as Kolkata is the entry-point for east and north east’s tea traders to create a sustainable supply chain model for CTC tea and tea leaves. So, our first 5 yrs’s mission to penetrate thoroughly in this market and create an easy tea retail brand for mass market segment. The competition as of day- none, as no brand has a penetration in this segment but competing with unorganized sector in this product domain is going to be challenging for which we are setting up GTM and RTM mix to reach the heart (emotion) of the consumers. The target market size is approx. 200 million population in eastern region, and we are targeting to a brand reach to approx. 10% of the same in the next 4-5 yrs. As per as the per capita Tea consumption stats. we are targeting to generate a revenue after 4-5 yrs.: 1. Every E-kart will sale 156,000 cups of Tea/ year with an avg. value of Rs 15/ cup, hence from 100 E-kart we will generate a Tea Revenue of: Rs 23.5 Crore/ year. 2. Along with Tea, every E-kart will serve snacks with an avg. per plate value of Rs.18, hence annual revenue generation from snacks line will be: Rs 2.8 crore from 100 E-karts. 3. Total revenue generation from the business/ annum: Rs. 26.3 crore with a gross operating profit of 39.9%. All the tea will be selling at an avg. gross margin of 40%, whereas snacks will be selling at 35% gross margin. As mentioned earlier, all our E-karts are equipped with live kitchen, and to run the operation 2 staffs will be involved in every E-kart. These Karts can move any location based on the market demand and need, will be replenished additional stock from the base if required any time in the day. This concept will empower to reach any mass gathering on any day, which is a constraint for street vendors or Organized Tea-cafes. Even any organization/individual can do bulk booking for any event and the E-kart will be there to serve their need. Our E-kart, live kitchen and branding/ signage are affordable to built up (approx. Rs 5 lacs/kart), hence easy scale-up of the operation is possible any time. Break-even for every cart is around 1~2 yrs, hence payback period is faster than other Café set-ups.

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