India has always been largely a tea-drinking nation but the recent years have seen coffee becoming an increasingly popular drink with a number of coffee shops and cafes gaining popularity in the likes of Cafe Coffee Day, Barista Cafe and Restaurant, Costa Coffee, Starbucks Coffee Company, The Coffee Bean & Tea Leaf Restaurant, and Cafe, etc.
While until recently, coffee lovers were crazy about these names, there has been sort of a revolution in this segment with the emergence of a number of start-ups in the category, offering coffees created and developed to suit every palate, right from house blends to different degrees of roasting to a gamut of innovations and textures. And these start-ups are successfully winning the hearts of consumers and presenting good competition for even the established players in the segment. To top this up, many of these start-ups have taken the D2C route in order to stay as close and connected with their customer base, as possible.
India is the third-largest producer and exporter of coffee in Asia and the sixth-largest producer and fifth-largest exporter globally. According to IBEF, the coffee production stood at 299,300 million tonnes (MT) during 2019-20P and around 342,000 million tonnes (MT) in 2020-21. Further, the total coffee export accounted for US$ 622.09 million from April 2020 to February 2021 and for February 2021 it was US$ 72.37 million. All this makes up for an impressive market, however, the country exports 70 percent of its produce, and only 30 percent is consumed domestically.
Now the question arises, what’s really facilitating the rise of so many coffee start-ups in India? Millennials in India are at the forefront of the newly established coffee culture and are very enthusiastic to try alternative coffee brewing methods at home.
With the pandemic-induced fear among consumers, brands are embarking upon various experiments to shift to the ‘new reality’ and connect directly to the consumers through online channels, which is working out amazingly for them. These young brands have also started giving online sessions to train millennials on how to brew coffees at home with relative ease. In line with the growing love for various kind of coffees, here are a few of the popular D2C coffee start-ups to look out for.
Launched by Matt Chitharanjan and Namrata Asthana in 2013, Blue Tokai was founded with a mission to introduce people to great-tasting coffee grown in India and set a coffee culture in India. The start-up was joined by Shivam Shahi as a founding member, later in 2015.
“We wanted to bring the best brews to our customers. So our mission has always been very simple - make high-quality coffee more accessible to everyone through our cafes and our website. We were a two-person army; one would do the roasting and the other was focusing on the packaging so we had to make sure we were choosing a platform that wouldn’t burden our journey and Shopify was it for us. In early 2016, Blue Tokai received seed funding from Snow Leopard Ventures and Bold Ventures and raised subsequent rounds of funds after the initial seed funding,” maintained Matt Chitharanjan.
Blue Tokai’s entire in-cafe coffee range is available on its online portal wherein the brand has gone above and beyond to ensure they can help each visitor find their perfect brew. It has raised a total of US$ 5.6 million in funding over 3 rounds. Another striking feature of this brand is its packaging, with artwork by folk and tribal artists at the back, and information about the estate, type of processing and date of roast in the front.
Sleepy Owl was launched by Ajai Thandi, Ashwajeet Singh and Arman Sood in June 2016 as a D2C cold brew coffee brand. The brand scaled handsomely till March 2020 when the lockdown due to Covid-19 shut all businesses for months altogether.
Sleepy Owl’s sales jumped by almost 300 percent from Rs 1.8 crore in FY19 to Rs 5.2 crore in March 2020. The coffee start-up has raised an undisclosed amount as growth capital in its second round of funding in 2020 after Rs 3.26 crore in a seed round in 2018. The total funding that Sleepy Owl has received to date is Rs 16 crore.
The pandemic came as a wake-up call for Sleepy Owl, during which the brand pivoted its strategies and adopted various survival hacks like the introduction of hot brew bags priced at Rs 300 for 10 bags, breakproof packaging to ship glass bottles across India, maintaining strict fiscal discipline, engaging with customers on social media and more focus on e-commerce and its own website. This helped the brand revive and the revenue crossed Rs 6 crore mark by January 2021 mostly on the back of its online business.
“As a brand, we take feedback very seriously, so when we had numerous requests from our customers telling us to sell our signature coffee in a loose format, we knew we had to act on it. This led us to our latest launch - Whole Beans and Ground Coffee. In an age when most information is absorbed through social media, we’re making sure we use this platform to the fullest. We are also customer-obsessed and focused on giving a great customer experience. We make sure we have our customers hooked to our social media pages through timely support and engagement. Through the content that we produce, we try to spread awareness and educate customers about what it means to have a ‘real’ cup of coffee,” said Ajai Thandi.
Launched by Bharat Sethi in 2018, New Delhi-based FMCG coffee company, Rage Coffee is a plant-based-vitamins-enriched D2C coffee brand that has so far expanded its offline network from 5 to 20 distributors, 4 CFAs, covering 600+ offline touchpoints across India.
It registers 75 percent of its sales from its website and the remaining 25 percent from sales on online platforms like Amazon and Flipkart. Rage Coffee, which has grown 5X since January this year amidst the otherwise sluggish market conditions due to the nationwide lockdowns, is expecting a three-fold growth in turnover this year.
The brand has recently also expanded its product offering with the launch of Cold Brew Bags and Ground Coffee. The New Delhi-based coffee brand raised an undisclosed amount of growth capital as part of its pre-Series A funding round from a clutch of investors led by Refex Capital, in April 2021. It plans to use the capital for marketing and distribution purposes and to scale up production and launch new products.
“Our focus on ingredients, formulations, manufacturing techniques, packaging, and direct-to-consumer distribution to bring high-quality coffee products while offering a unique coffee experience to our customers place us in a great spot to build a strong brand. We are therefore planning to double down our efforts across all the channels. Besides, global expansion is also on our cart. So far, the response has been overwhelming. We experienced tremendous growth in an adverse market landscape which is highly encouraging for our entire team and our constant efforts,” asserted Bharat Sethi.
The company is now betting big on the growing demand for coffee in tier-II and tier-III towns.
With a vision to deliver premium coffee anytime anywhere, two friends Samayesh Khanna and Rahul Jain launched Beanly in 2018 as they brought to the market a unique three-step process they call ‘Tear, Anchor, Brew’.
Samayesh Khanna explained, “Coffee starts losing its flavour and aroma 17 minutes after the coffee beans are grounded. Hence, by the time the coffee reaches the customer, it is not in its fresh form. To ensure that coffee remains fresh, we came up with a special type of packaging. The paper for packaging is sourced from South Korea and Japan. The packaging has zero percent oxygen attrition, is nitro flushed, and hermetically sealed. The company also claims that the bags are never infused with any preservatives, additives, or aromatic infusions, and the coffee still remains fresh. The coffee is shipped, packed, and delivered within a ‘seven-day’ goal, without losing out on the flavor and aroma of the beans. The pour-over bags cost Rs 35 and one dip bag costs Rs 26. These are manufactured in-house.”
Beanly is a D2C brand and besides its own website, retails through Amazon. Currently, it is present in Bengaluru, Gurugram and Delhi, and will soon open doors in Mumbai and Kolkata. The coffee brand sells 30,000 to 50,000 coffee packs a month.
Launched in 2017 by Aditi Somani, Kolkata-based Country Bean is a popular D2C coffee brand known to offer premium flavored coffee powders. Packed with aroma and flavor, Country Bean offers pure vegetarian fine coffee powder without any additives.
“I started Country Bean in 2016 with a mission to serve cafe-like coffee at home. The first couple of years were challenging. I spent months contacting my favorite international coffee brands to bring them to India - and was turned down by all of them for my lack of prior experience in the field. I was about to give up but encouraged by friends and family began experimenting on my very own flavored coffee in the kitchen. I had no clue where to get ingredients, supplies and packaging materials in the initial days. Armed with an idea, we kept figuring things out and making mistakes along the way. A year later, we launched Country Bean to our first customer. Just last month, we served our 200,000th customer,” said Aditi Somani.
The brand recently launched Coffee Spreads by Country Bean available in two flavors – Hazelnut Latte and Dalgona.