Tracking top teahouse trends in the Middle East

Tea, in all of its forms and variations, is refreshingly flavourful and a perfect pick-me-up so much so that it is the most consumed beverage worldwide after coffee. In fact, it is no longer an early morning beverage to kick-start the day but more of a medium for conversations. Be it the perfect spot for lunch or breakfast with your family, a catch-up with friends or an inspiring spot to work from, tea cafe chains are growing in the UAE.

According to Business Wire’s “Coffee and Tea Global Market Report, 2020-30,” the total coffee and tea market is predicted to grow from $142.1 billion in 2019 to $148.5 billion in 2020, an annual growth rate of 4.6 percent. “Gone are the days when sipping tea used to be a street-side activity or part of a household discussion. It has now evolved into a multi-billion-dollar industry. The Middle East and Africa Tea market was worth about $6.73 billion in 2021 and estimated to be growing at a CAGR of 5.3% to reach $ 7.88 billion by 2026,” said Rafih Filli, Founder of UAE’s popular Tea chain cafe Filli.  This young Indian entrepreneur started with just a small tea shop near the Mamzar Corniche in Dubai. It currently serves at 24 locations in the UAE and 11 franchise stores in Oman, Qatar, Saudi, Bahrain & India.  His concept was simple and ingredient niche – steaming up a delectably simple, flavoursome and aromatic concoction of Zafran Chai in a vibrant and relaxed cafe atmosphere.

From a small tea shop to a chain of cafes across the region and beyond, Rafih’s brand has come a long way from where it started. “I want to be known as the Starbucks of tea,” exclaimed Rafih.

Owing to cultural habits imbibed from the West, coffee chains have long been seen to be more mainstream in the foodservice scene. What made Rafih go off-stream? “Tea has always been my focal point since I entered the café business. I did a lot of research on tea business before entering into this segment. Opening a cafe is not an easy job. It takes a big investment in both time and money and I defined my vision. I saw a gap in the market, there were many coffee shops in the UAE but very few tea chains,” said Rafih. The journey has been very exciting and every day has been enjoyable and very satisfying,” he responded. The business of tea, both as retailing and food service, has over the years seen a huge growth in Asian markets including China, India, and Pakistan. The huge Asian expatriate population in the Middle East of tea drinkers were in need of more tea rooms when Rafih was first starting off.

“Tea is in the blood of every Indian and many expats in the UAE are from the Indian Sub-Continent. They always crave for a good cup of tea. In fact, there were many small cafeterias serving the basic tea when I entered the Tea Café business but nobody made tea the traditional way as we do it now. I took a challenge on myself to serve every customer a cup of tea which they would get at their home”, added Rafih.

Despite the boom in demand for premium beverages, convenience is still king in the UAE. A study by Allegra shows nearly three-quarters of industry leaders cite good location is the biggest factor behind a tea shop’s success. With its fast-paced lifestyle and vibrant multi-cultural society, making tea available whenever and wherever in Dubai is crucial. Indicative of this trend, Rafih made sure his cafes are within every 5 km of Dubai.

In the UAE we follow the COCO Business model, which means that all the stores would be Company Owned and Company Operated. Any other country besides the UAE would work on a franchise model with constant operational guidance from us. Rafih’s vision is to make Filli the best Tea brand globally and take the brand to all continents of the world through a franchise model, which is very conducive and adaptable to every region, country and people living in those countries. “We have recently signed Franchise deals in Texas, USA to open 15 outlets in the next 5 years in that state. Besides Texas we are in discussion with like-minded companies in New York, New Jersey, Georgia, California, Chicago and many more states and we are confident of opening more Filli Cafés in the next two years. USA and Canada are very big markets for us and we aim to cover as many states as possible in the coming years,” he said.

“The first store in Texas is opening in the City of Houston end of next month and it will be our first flagship store with an area of about 3000 SQ FT. We have also signed Franchise agreements for the UK and Canada. And we plan to open about 100 stores in these 2 countries in the next few years. We are also in very forward discussions for opening more Franchise stores in Saudi Arabia, Kuwait, Bahrain, South Africa and India and hoping to close these deals this year,” added Rafih.

Supply chain has been the biggest problem for retailers in the past year especially due to the pandemic, which has resulted in the collapse of various tea cafes and retailers worldwide. “It was very challenging and is still not easy. Lot of our products were stuck during Covid but somehow our vendors managed to deliver it on time. We had a good stock and we made sure to have more stock. All vendors from outer markets supported us with stocks for longer days. Managing the supply chain was a nightmare, the costs were high but still we managed to provide the same taste to our loyal customers,” reflected Rafih. Even with the pandemic his loyal customers stuck by and ordered the tea at home in their special Filli tea cardboard boxes.

Kava & Chai, another home-grown brand celebrates and revives Arabic tea tradition. “Tea culture has always been important within the Arab world, both for locals and for expats who have settled in the region. India has played a significant role in developing the tea culture here due to its strong links with the UAE and the Gulf. Our brand is proud to celebrate the role the Arab region plays in cafe culture and we hope to be able to preserve this for future generations of tea and coffee enthusiasts,” said Mike Butler, CEO of Kava & Chai. “Our journey began pre-Covid when we recruited and trained a friendly and dedicated team to deliver the Kava & Chai experience.  Our knowledgeable and dedicated outlet colleagues help our customers discover drinks best suited to their tastes.  We have successfully expanded our reach across the UAE, by launching seven outlets that include three consumer locations at Mall of the Emirates, Medicare in Sharjah and American University in Sharjah. Plus, a further four in Dubai Police Club,  DHL Head Office, Crescent Enterpries Head Office and a cloud kitchen in Dubai Media City”.

Tea is a bit of an afterthought within a café environment. Many cafes tend to opt for the convenience of mass-produced tea bags, which means tea does not always get the credit it deserves. “At Kava & Chai, we do things differently by serving premium drinks to our customers, including our range of Karak and loose leaf teas. We don’t use tea bags as we believe in giving customers access to premium tea, brewed to their taste. Our Traditional Karak is made with evaporated milk, but we use fresh milk and ingredients such as masala, ginger, saffron and cardamom. Our menu is constantly evolving as we introduce new loose teas and flavours to satisfy our customer base. By using loose leaf tea, we can acquire the maximum aroma and taste in the cup, meaning our customers can pause, savour the aroma and thoroughly enjoy the taste of their drink”, added Mike. The pandemic also impacted consumers behaviours and affinity towards teahouses and cafes. It made owners adapt to the changing demands. Lot of loyal customers switched to online ordering. Remote working mandates have also encouraged a lot of people to go to cafes and work from there.  “As we grow our retail outlets, positioning ourselves closer to consumers and becoming more accessible, will become a priority. With this, comes the increased demand for food and drink that is convenient, accessible and reasonably priced.  We want to make sure that we are providin service to customers, which allows them to pop into a Kava & Chai café or order their favourite tea, coffee and light bites to be delivered to a location convenient for them,” concluded Mike.

The UAE’s tea and coffee industry is growing and new outlets with divergent tastes are coming up. It is also gaining popularity among the youth who aren’t only looking for delicious, beverages, but are also looking to experience them in a cozy environment. This has made room for more entrepreneurs to open tea cafe chains with beautiful decors. “The UAE has attained a unique status as the ‘Melbourne’ of the Middle East by boasting a unique coffee and tea consumption culture with a blend of Arabian aura”, said Tania Lodi – Founder of Dubai-based cafe Tania’s Teahouse which is listed as the 7th most instagrammable cafe in the world. Located on Jumeirah Beach Road near the Burj Al Arab, the quaint cafe, with interiors styled in a pastel pink palette interspersed with quirky, chic elements has become a hot spot for both locals and tourists. “In terms of our cafe decor, we didn’t hire a designer, I did everything myself- every floor board, art piece, speck of paint, and it was a blast! The space features elegant, rose gold accents, minimalist marble touches, and whimsical foliage, making it perfect for those who crave the subtlety of a french cafe with a feminine touch. “I strive to provide a unique customer experience that converts our community to tea-consumers. A lot of people have pre-conceived notions about tea and don’t understand the untapped world of different flavours and tastes, so at Tania’s Teahouse branches we offer sniffing jars to sniff out the aromatic flavours before selecting them, and I’ve carefully trained our whole team on ‘matching’each customer with a tea, depending on their flavour profile and mood” elaborated Tania.

Besides the traditional prevalence of tea culture, tea has been very popular in the emerging market due to it’s various health benefits. Moreover, rise in disposable income, growth in health awareness, people moving away from carbonated drinks are fueling the market growth for tea. This led Tania to come up with the concept of her second branch, under the Tania’s Teahouse brand, Sereni-tea, whichh is located in the heart of Umm Suqeim in Dubai. Nestled among the lush and zen grounds of Keyani – a wellness centre offering holistic treatments and yoga – Sereni-tea offers visitors a uniquely calm and serene environment. The interiors – unlike the pink flagship – offer a Hygge vibe with neutral, earthy and pastel shades — inspired by Scandinavian designs, terrazzo, earthy tones, and homey ceramic pieces. While the concept remains ‘instagrammable’, it is more importantly impactful. “As someone who suffers from autoimmune conditions, Sereni-tea was a personal passion project on inclusivity, mindful eating & anti-inflammatory teas and dishes,” she added.“You have to adopt to newer business models as an entrepreneur, especially in an industry that never sleeps.”

As established, it is purely about the consumption of the product, it is also about creating unique experiences that distinguish between the winners and losers in this overcompetitive F&B retail environment. Founded by two Emirati tea aficionados, SÖ Tea offers a stylish Tea Lounge & Restaurant, where Japanese and Emirati flavours come together to create exquisite dishes, served alongside a perfectly blended pot of tea . An explorative experience for all, as the first Emirati-Japanese tea brand, the adaptable café restaurant offers a space for a leisurely breakfast, a relaxing family lunch or a late evening dessert spot. With trendy interiors and a playlist to match, SÖ Tea embraces its playful side with dishes that tell a story.“When we first created SÖ Tea, we developed storytelling dishes to enhance the Emirati-Japanese signature of the brand. Our Sakura Cherry Blossom Cloud Cake pays homage to the springtime cherry blossom festival in Japan, whilst our Green Tea infused Baklava Cheesecake presents culinary-intertwined cultures. We have recently added a range of funky bubble ‘boba’ teas, selfie-printing and 3D Japanese latte art.” – Ahmed Al Yammahi. Co-Founder. Marking three years since its opening at Mirdif City Centre, SÖ Tea is set to open their second location in the neighborhood of Al Wasl in early 2022.

F&B retailers in the business of tea café chains will need to constantly evaluate macro and micro factors like choosing the best locations, suppliers, technology, design, and menu, all while