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By Tanisha Saxena 

In bustling urban centers and quaint neighborhoods, the coffee shop reigns supreme—a staple of morning routines, study sessions, and afternoon pick-me-ups. Customers file into these outlets, often shelling out Rs 100 to Rs 500 for a cup of coffee without batting an eye. Yet, when it comes to tea, even the most premium varieties seem locked into a lower price bracket, struggling to break past the psychological Rs 20 to Rs 100 ceiling.

Why does tea, with its rich history and endless varieties, remain the underdog in the retail business? And what does this pricing dynamic mean for tea outlets trying to carve out a niche in a coffee-dominated market? The answers lie in a mix of cultural perceptions, consumer psychology, and market dynamics that have long favored coffee over tea.

*The Prestige of Coffee vs. The Familiarity of Tea*

One of the core reasons for the price disparity is the deep-rooted perception of coffee as an indulgence. Coffee, especially in Western markets, has transcended its functional purpose of providing a caffeine hit and has entered the realm of luxury. From meticulously sourced beans to complex brewing methods, coffee is often marketed as an artisanal product that invites consumers to experience its craftsmanship. A pour-over, an espresso shot, or a frothy cappuccino often feels like a crafted experience—a ritual, rather than a simple beverage. This perception allows retailers to justify higher price points.

Tea, on the other hand, despite its millennia-old legacy, is often viewed as the drink of the masses—comforting but ubiquitous. The association of tea with simplicity and routine, rather than indulgence, makes it harder for tea retailers to push prices upward. As Divam Wadhwa, founder of Chai Nagri, a popular tea chain with 30+ outlets PAN India., explains:

“Tea has always been seen as the everyday drink, something you brew at home with minimal fuss. Coffee, on the other hand, has this aura of sophistication. We offer 15+ varities of tea sourced from estates in Darjeeling and Assam, but even our most premium blends struggle to justify prices beyond Rs 60. There’s this mental block with consumers—they’re willing to pay more for coffee because they perceive it as more than just a drink.”

The complexity of coffee-making also plays a crucial role in its higher price points. From roasting methods to latte art, coffee has become a playground for innovation. This has given rise to a market where consumers are willing to pay for not just the drink but the experience that comes with it. Each step in the coffee production process—from selecting beans with specific flavor notes to pulling a perfect shot of espresso—justifies a higher price tag.

Wadhwa highlights, “In contrast, tea preparation is often seen as a more straightforward process, even though premium teas undergo a meticulous cultivation process, with high-end blends requiring hand-picking of specific leaves during certain seasons. Yet, this intricate labor behind tea often goes unnoticed.”

He adds, “With tea, the process from leaf to cup is every bit as complex as coffee, but it’s harder to communicate that to customers. When they see tea steeping in hot water, they don’t think about the craftsmanship behind it. With coffee, it’s all out in the open—the machinery, the barista’s expertise, the aroma filling the café. This visibility gives coffee an edge.”

*The Cost of Competitive Pricing*

For tea retailers, this price gap poses significant challenges. While coffee chains can charge premium prices and still see a high volume of sales, tea chains often have to keep prices comparatively low to attract foot traffic, which erodes their margins. The global tea market, though large, remains highly competitive, with many consumers opting for cheaper tea bags and at-home brewing rather than visiting specialized tea outlets.

“We’ve found that consumers are extremely price-sensitive when it comes to tea,” notes Jahabar Sadique, the Chief Executive Officer and Co-founder at Chai Kings. “If we price a cup of masala chai at Rs 300, customers will complain. But they wouldn’t blink at paying the same for a latte. To remain competitive, we have to offer value in other ways, whether through ambiance, service, or unique tea blends. But keeping prices low while maintaining quality is a constant balancing act.”

For tea retailers to truly compete with coffee, a shift in the narrative is essential. Just as the craft coffee movement elevated the perception of coffee from a mere commodity to a luxury product, tea must undergo a similar transformation. As per Sadique, “Retailers like TeaVine of Australia are starting to introduce tea-tasting sessions, akin to wine tastings, where customers are educated on the intricate differences between white, green, oolong, and black teas, alongside the regions from which they’re sourced.”

Sadique emphasizes the need for a cultural shift: “We’ve to integrate tea sommeliers into our outlets to guide customers through the tea experience, educating them on what goes into crafting each cup. It’s about showing that tea is just as nuanced as coffee, if not more so. Our hope is that consumers will start seeing tea as a beverage worth paying a premium for, not just something you throw a bag into hot water to make.”

*The Value Proposition*

At the heart of this debate is the value proposition that coffee and tea offer to consumers. Coffee, bolstered by years of marketing as a premium product, can command higher prices. Tea, despite its rich heritage and potential for innovation, has yet to make the same leap in consumer perception.

But as more tea outlets invest in creating immersive, educational, and artisanal experiences for their customers, there’s hope that tea will finally get the recognition—and price—it deserves. As Sadique puts it: “It’s all about awareness and education. Once people understand what goes into that cup of tea, they’ll be willing to pay for it. Just like they do for coffee.”

Until then, tea retailers will continue to walk a fine line between offering quality and maintaining competitive prices, hoping that the day when tea earns its place alongside coffee in the premium beverage market isn’t too far off. Adding to the discourse, Vidur Maheswari, Founder of Chai Waale, explain, “Tea retail chains are steadily carving out a niche in the market, offering consumers not just a variety of tea but also an inviting ambience, snacks, and a social environment—all under one roof. These establishments are beginning to reshape how people experience tea, with outlets opening across cities nationwide. However, when comparing tea to coffee in terms of pricing, it’s important to recognize the historical and cultural factors at play.”

Coffee has long been associated with sophisticated preparation methods, often involving high-end machines and intricate brewing techniques. This has given coffee a certain premium status in consumers’ minds, justifying higher prices. Maheswari further adds, “Coffee culture, especially in urban areas, thrives on the ritual of craftsmanship, which adds value beyond the beverage itself. In contrast, tea, particularly in countries like India and China, has traditionally been viewed as simple to prepare—boiled leaves, water, and sugar, with no need for specialized equipment. This perception has kept tea prices lower, despite its rich cultural significance.”

Another factor driving coffee’s higher price point is its association with global café culture. According to the founder, Major international brands like Starbucks have successfully marketed coffee as a lifestyle choice, where the experience of drinking coffee is as valuable as the beverage itself. Tea, on the other hand, is still finding its place in this competitive space, though chains such as Ours, Chaayos and Chai Point in India are beginning to elevate tea drinking into a comparable social experience.

In essence, while tea retail chains are gaining popularity, the challenge lies in shifting the perception of tea from a casual, everyday drink to one that commands the same prestige and price as coffee. This will require not only innovation in how tea is prepared and presented but also a broader cultural shift in how people perceive its value. As this transformation unfolds, we may see tea rise to a similar status, but for now, coffee’s complex preparation, global branding, and cultural cachet allow it to command higher prices.

Saurabh Sharma, Co-Founder of Super Chai, accentuate, “One of the key factors driving coffee’s premium pricing is the extensive machinery involved in its preparation. From high-end espresso machines to grinders and brewing equipment, the investment in coffee-making technology is significant, both for individual consumers and cafés. These machines, often costing thousands of dollars, contribute to the perception of coffee as a complex, crafted beverage deserving of a higher price. Tea, on the other hand, doesn’t require this level of machinery. Its preparation is generally minimalist, needing only hot water, a kettle, and perhaps a teapot or infuser. This simplicity reduces the overhead costs for tea chains, making it harder to justify the same kind of premium pricing that coffee commands.”

Bhrigu Dutt, founder of Chai Garam, elaborates, “Tea and coffee are both technical beverages, each with its own distinct preparation methods. Take espresso coffee, for instance. When you visit well-established coffee chains, the espresso they serve is typically made using semi-automatic coffee machines. These machines are operated by baristas—highly trained professionals who specialize in the art of roasting, grinding, and brewing coffee. This expertise, coupled with the expensive coffee machines and the premium quality of the beans themselves, contributes to the higher prices of espresso coffee. In contrast, the most commonly consumed tea in India is the CTC variety, which stands for Crush, Tear, and Curl. CTC tea is often brewed by boiling it multiple times and adding milk, sugar, and spices, making it a staple in Indian households. However, at Chai Garam—a tea chain with over 350 outlets across 80 cities in India, and one of the oldest in the country—we offer a wide range of premium teas beyond the regular varieties.”

The chain’s selection includes fine teas like organic white tea, chamomile, jasmine tea, Earl Grey, and Darjeeling first flush, which are all leaf teas. These premium varieties are brewed at specific temperatures and are typically enjoyed without milk or sugar. Instead, they are often served black, with a touch of honey or a splash of lemon, offering a refined and distinct beverage experience that’s different from what is commonly consumed at home or roadside stalls.

When comparing the prices of tea and coffee, particularly on a per-kilogram basis, there is a notable difference. The CTC (crush, tear, curl) variety of tea, which is processed by crushing, tearing, and curling the tea leaves, is generally much cheaper than coffee. This price difference can be attributed to several factors.

Dutt adds, “First, India is one of the largest producers and exporters of tea, which naturally keeps domestic tea prices lower compared to coffee. While India does produce coffee, including varieties like Arabica in regions such as the Nilgiris, the highest-quality Arabica beans are often imported by premium coffee chains, driving up their costs. Second, the type of tea most commonly consumed in India, the CTC, is not the highest-grade tea. Since it is a lower form of tea, it is more affordable compared to premium tea varieties. Third, there is a skill component to coffee preparation, especially with high-quality black coffee, which often requires a trained barista. Lastly, the machinery involved in making coffee, such as espresso machines, is costly, and this too contributes to the higher price of coffee drinks.”

At Chai Garam, the founder recognizes that tea, especially in India, is more than just a beverage—it’s a lifestyle choice. Unlike coffee, tea contains significantly less caffeine—about six times less—making it a healthier alternative that can be enjoyed multiple times a day. Varieties like white tea and green tea are rich in antioxidants and provide numerous health benefits, such as regulating blood pressure, cholesterol, and sugar levels, while also aiding in detoxification.

“At Chai Garam, we’ve thoughtfully designed our outlets to enhance the customer experience. The tea preparation process takes place in full view of the customer, so you can see every step, smell the aroma of the tea, and even examine the tea leaves up close. We invite you to interact with our brewers, inspect the leaves, savor the fragrance, and then enjoy your freshly brewed cup of tea. This transparency and engagement is at the heart of the experience we aim to provide for our customers,” concludes Dutt.