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The Changing World of


Although traditionally made from a mixture of Black teas, milk, sugar, honey and various spices, chai recipes have changed a great deal since the drink's conception and can drastically differ depending on region, culture and household. The original form of chai, as it was used by healing doctors on royal families in India and Siam, has come a long way in its 5000 year history. Reaching far beyond a simple concoction of herbs, flowers and spices, today's chai can be savored hot or cold, powdered or from concentrate, flavored, or even ready-to-drink.

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?????

Tea & Coffee - September/October 2002


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