Chai

Chai has put a little zest into the retail cafe world,soaking up profits steadily for the past few years. Students flocking to the cafes after classes have been spotted sipping the beverage,which they like to order with milk or honey. Meanwhile,the younger generation of business executives has given this once obscure drink major attention,picking them up on route to the office

How a product like chai becomes a trend tends to be a result of targeted marketing conceptualization and research. In the West,people generally find products from the East to have an alluring quality to them. Based on this tendency,chai has recently caught the attention of trend analysts,making its way across the world and onto the tabletops of cafes.

Americans in particular have been lured to the flavor of chai for its exotic qualities. For the most part,chai has been enjoyed in the instant powder or in the syrup form. Ready-to-drink chai in the Western world has Starbucks,among others,to thank for its rise in popularity. Yet,while Starbucks should be afforded its usual merit for spawning customer interest in yet another gourmet product,it sent the lovely little product to the masses disguised in a ready-to-drink form. Companies like Oregon Chai,Pacific Chai,and Big Train have managed to secure their places on the shelves of coffeehouses. The downfall is that chai prepared traditionally has a unique flavor and people who are first introduced to pre-made chais may have an expectation that all chai should taste that way. It is time,now,for the reintroduction of chai. It is for this reason that chai has been,and continues to be,on the order forms of most loose tea manufacturers,but has only accounted for an average of 2-5% of sales.

For centuries this spicy hot beverage has been a symbol of tradition in the homes of millions of families in India. It's customary that during a visit to a household,the first thing offered to a guest is a cup of chai. While there aren't any formal ceremonial ways of preparing chai,it is a ritual in many Indian families to enjoy a cup in the morning and in the afternoon. There are as many variations to making chai as there are regions in India. For example,chai from Kashmir is primarily flavored with cardamom pods and almonds,while in south India tea is generally served British style,in porcelain cups with sugar and milk but with no spices.

Chai is such an important part of India's social customs that they have their own baristas attending to the brew of the drink called Chaiwallahs. These chai vendors are a staple of the community and their stands are most often the meeting point for news ,and yes,gossip. They are found all over India; from train stations in Bombay,to tiny villages around the country. This kind of tea,more specifically known as Masalla Chai,is made up of a unique blend of ground spices,including cinnamon,ginger,nutmeg,cloves,cardamom and pepper. Careful selection of high quality spices is critical to harvesting the basis for a quality chai product. Leaves have to be slowly dried in the sun,one of several processes in which chai demands meticulous attention in order to ensure that the most subtle flavors are captured. The right grinding procedure is equally as important and should be carried out in a calculated manner so as to create the appropriate balance of flavors.

One company fueling the loose chai-drinking trend in its natural form into the spotlight is the Dallas,Texas-based e-tailer Chai.com. The company has its roots in the tiny rural village of Veravil,in the Western state of Gujarat in India. Chai.com sells chai teas and related products,with an expertise built upon years of emmersion in the local spice market.

"My grandfather moved to South Africa from India when both were British colonies," comments Kamini Mamdani,"and there he became a businessman. As things began to shift politically in South Africa,my parents decided to move to America for a better future for their children. We still have our family house and farm in India,which is a priceless link to our past."

Chai.com has been a family effort; the concept for the company was developed by owner Kamini Mamdani,using a recipe from her mother,Mani Vallabh. With the help of her husband,Kamini developed a web site and structured the back-end of the business,including its on-line order processing. Her parents oversee the administration procedures and her cousin,a marketing consusltant,helps position chai.com as a new player in the world of tea.

Kamini Mamdani has developed her company to cater to the increasing demand for chai in the tea sector. "I think the market for chai is very promising....While there are more chai brands than ever before,customers will tend to be loyal to flavors they prefer from vendors who pay attention to packaging,service and quality....It is also quickly becoming general knowledge that tea,both black and green,offers many health benefits. Chai augments that with the therapeutic benefits of the spices included. For that reason and for its flavor,chai can be a formidable competitor to coffee.

Mamdani's business is strictly a Web venture for now. While there are other companies out there selling chai on line,they can be said to service all the regional flavor preferences of India. Chai.com's tea is specific to the state of Gujarat and use all the spices commonly found in that area.

"We started this business when I was in graduate school," comments Mamdani,"and having a store was not a feasible idea. So we decided to try an on-line store and so far we have been very satisfied with the response. We are in our second year of business and our revenue has increased 200%. This occurred in tandem with the acquisition of the URL,Chai.com,which instantly quadrupled the amount of traffic to our website."

"Our customers are all individual purchasers. We are working to develop partnerships with stores and coffee and tea shops. We expect growth to continue as we explore distribution channels domestically and internationally. Our orders have come from all over the world,including Brazil,Egypt,Italy,England and Japan."

"The key," she notes,"is to have a customer stay loyal to your chai....We are happy being e-tailers,but have had many inquiries from coffee and tea shops interested in serving our products,so our focus will be on developing those partnerships."

Instant chai has enjoyed its moment in the spotlight. Now it's time for retailers to get ready to welcome the pure product. "The benefit to instant chai is that it is much more accessible and it piques the interest of chai drinkers. We have had several customers who have to come us by way of drinking instant chai who say they are now ready to try "authentic" chai. Our challenge at Chai.com is to continue to offer chai as we know it but still make it convenient for our customers

With such a variety of options for consumers, it comes as no surprise that the demand for chai is growing strong. According to AC Nielsen data from May 2002, chai sales are up 82% in retail grocery sales from the previous year. For the most part, the myriad of chai drinks have allowed the tea to establish its own niche within the industry and as Scott Lowe, president of San Francisco-based David Rio, pointed out, both the domestic and international markets continue to thrive. "Whereas many international markets previously reacted more slowly to U.S. products, the trend now is to move quickly and establish your operation by offering those items found on U.S. cafe menus. Domestically, there is still strong potential in certain regional markets, but the chai trend will see its continuing growth with both mass merchants and restaurants. "

Continuing along this same train of thought, Donald Wilkes, president and c.e.o. of Blue Pacific Flavors, California, believes that the U.S. chai market will continue to thrive as more Americans become aware of the product. "Trends for the future will see major tea companies looking to innovate with old established instant tea brands into the chai category," according to Wilkes.

So what are some of these new trends that have given chai such momentum? Rick McGregor, California-based Caffe D'Amore's marketing director, believes that chai is piggybacking on the success of the blended-ice craze that has recently swept across America. The company has recently introduced the Chai Frappe, a new line of chai frozen drinks, as well as Iced Chai drinks with fruit flavors. As the founder of Rishi Tea in Wisconsin, Joshua Kaiser has also noticed the mutual affects that "designer" drinks and chai seem to have on each other. "The popularity of chai has gotten the creative juices flowing within many cafes as well as manufacturers of tea products. As we have seen a great deal of chai flavors and products succeed, so we shall see many new specialty tea-based drinks ranging from green tea soy lattes made with ceremonial green tea to passion fruit oolong tea nectar prepared in a martini shaker and poured over ice," Kaiser stated.

However, as successful as these different variations of flavors and preparation methods have been, one cannot help but wonder how far the product can be transformed before it can no longer be called chai. The answer to this question varies greatly depending upon how chai is defined. As Lowe puts it, "since 'chai' is yet another generic word for tea and how it is served, even as it evolves, it will still carry the name as long as tea is a component." Many industry members carry this same point-of-view as different flavors are continually introduced into the market in order to attract potential subgroups of chai drinkers. Caffe D'Amore, for example, attempts to adapt traditional chai into a creamier, sweeter and more luscious drink that better fits the American palate.

Oregon Chai, one of the first companies to create such a large buzz around the beverage, also believes in morphing the traditional into something more modern and has thus established itself by way of liquid concentrates, ready-to-drink products, iced tea with chai spices and chai smoothies and shakes. Even though the company strongly advocates innovation within the tea industry, the company is still a supporter of maintaining chai's traditional integrity. As Kathryn Huhn, Oregon Chai's marketing manager - Foodservice, put it, "While our new products and formats offer consumers additional flavor and convenience options, we are still committed to maintaining the true chai flavor profile of a deliciously sweet and spicy tea drink."

It is this precise commitment to the original form of chai that permeates the mentality of many chai companies. David Fields, co-founder of Oregon's Sattwa Chai, is a strong proponent of traditional masala chai. "The chai that is being sold to most Westerners has already been changed to the point of it being unrecognizable as real chai. There is chocolate chai. There is vanilla chai...There are chais that taste too sweet. I would love to turn the West on to really good masala chai," he stated. Although Sattwa continues to sell traditional chai in a dry form, it is only 10% of their business. The company now also produces pre-brewed concentrate in order to hold its own within the competitive market, but attempts to hold true to its original vision by continuing to brew in small, hand-crafted batches.

Like Fields, Steven Smith, founder of Tazo, which is also based in Oregon, is a firm believer in maintaining the original authenticity of chai. The company only uses CTC tea from northern India and strives to establish a balance of sweet and spicy that is not overwhelming. It is important for Smith to create a product that can be embraced by everyone, even a person who has chai embedded within his culture. Nevertheless, he understands that tea is a personal experience and an ever-changing industry. Although he sees that the chai category continues to expand in order to include many different variations of the original product, this trend does more than simply lean towards a sweeter, more flavored beverage. Smith has also witnessed a large cross-section of health-conscious consumers who prefer soy milk over whole milk in their drink and gravitate towards decaffeinated and organic chai blends.

Organic, natural foods and beverages have taken priority in the diets of many consumers and Third Street Chai, Boulder, CO, is among the businesses that cater to this specific demand. John Simmons, the company's sales director, has noticed that not only has chai established itself in coffee shops, but the drink has also become a staple in natural product stores. According to Simmons, "Real brewed chai is arguably the most consistently healthy beverage available - its core ingredients have been used for hundreds if not thousands of years to attain health in many countries around the world. Our mission as a company is to preserve the secrets of real-brewed chai. We brew in small batches with freshly milled, whole organic spices, and use our experience and creativity to balance flavor profiles with all-natural ingredients." In an attempt to uphold their dedication to natural chai, Third Street Chai was the first company to introduce an organic chai concentrate nationally.

What does the future have in store for the chai business? David E. Vautrin, director of sales & marketing / partner at Pacific Chai predicts a narrowing of the market. "We anticipate the market to continue to grow but the amount of brands to continue to diminish," he says. "Unlike Pacific Chai, many of the chai labels on the marketplace are packed by a third party packaging companies. I predict that many of the chai brands that do not package their own product are going to exit or compromise on quality with increasing pricing pressures. Based on our understanding of the demographics to the 'typical chai consumer,' we feel the typical chai consumer will reject down market products."

With the appearance of so many different varieties of chai into the market, it appears that more and more consumers are finding unique ways to incorporate the drink into their lives. Whether it be through traditional or more inventive uses, chai has a growing presence in specialty retail stores and cafes, gift stores and even mass merchandising. The secret of chai that was once protected by ancient Indian healing doctors is now being incorporated into current beverage trends. As Kaiser predicts, "Chai, not to mention tea overall, has evolved from its ancient roots in Asia. As we incorporate tea into our lifestyle it will inevitably be different. The evolution of chai and tea-based drinks will take this path and we will be sipping, if not gulping, many more of these 'new' tea beverages."

Dahlia Damaghi was forced to consume many cups of chai before undertaking this writing assignment. ALl she had to do was walk into any Dunkin Donuts or coffee shop, in downtown New York City and a whole variety of chai beverages were at her beck and call. Her bill amounted to $83.00. Did she take advantage of us?????