Indians and tea have a long existing and unique relationship which is virtually irreplaceable. But in recent years, coffee has become an increasingly popular drink. Coffee’s rise and the expansion Indian coffee market are apparent in the popularity of many cafe chains such as Starbucks, Cafe Coffee Day, Costa Coffee and Barista.
Studies show that 40% of today’s millennials consume coffee round the clock to stay productive as they work from home. More importantly, the Indian coffee market has been revolutionized and many start-ups have sprung up in this category, offering coffees for all tastes, home blends, innovations and textures.
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According to a report by Mordor Intelligence, the Indian coffee market is currently valued at $1.46 billion and is expected to reach $2.03 billion by 2025.
India’s Coffee Market: Facts and Figures
India is the third largest producer and exporter of coffee in Asia and ranks sixth in the world. According to India Brand Equity Foundation (IBEF) data, India produced 299,300 million tonnes (MT) coffee in 2019-20P and approximately 342,000 million tonnes (MT) during 2020-21. However, 70% of the country’s coffee produce is exported and only 30% is used locally.
Traditional brands such as Nestlé, Unilever and Tata Coffee currently dominate the country’s coffee market. However, new players are now accelerating the development of the market and are trying to offer consumers a more authentic experience through new flavours and aromas, which are good for overall health.
D2C Coffee Start-ups Brewing Success in the Coffee Market
Rage Coffee
Founded by Bharat Seth as a fast paced consumer goods company based in New Delhi, Rage Coffee is a plant-based coffee brand which offers coffee that is rich in vitamins.
Beanly
Beanly is a D2C coffee brand that sells on Amazon in addition to its website. The start-up offers a wide range of coffee that’s made from freshly roasted beans and products that can be used as per customers’ needs. The coffee brand sells 30,000 to 50,000 packages of coffee each month.
Blue Tokai
Blue Tokai was founded by Matt Chitharanjan and Namrata Asthana in 2013 with the goal of bringing delicious coffee to Indians and growing the coffee market in India. The company produces high quality brews customised to the taste of Indian consumers.
Country Bean
Launched in 2017 by Aditi Somani, Country Bean is a D2C coffee brand that offers high-quality aromatic coffee with rich natural aroma and vegetarian powdered coffee without additives.
Drivers of D2C Coffee Start-ups
A variety of direct consumer (D2C) coffee start-ups are serving consumer preferences and needs by responding to their demands in real time.
Some of the reasons for their success are:
Online purchase of coffee is primarily driven by flavour/taste and aroma as these matter the most to shoppers. D2C brands majorly focus on these aspects.
The increase in people’s basic (disposable) income and the resulting lifestyle changes have led them to turn to good food and drinks, especially coffee.
COVID induced growth for D2C coffee brands peaked during lockdowns and the ubiquitous digital infrastructure made it easy for consumers to buy coffee online.
What can budding start-ups in the segment learn?
It is clear from the trends that new players in the segment are taking shape by catering to the unserved categories in the industry. While the cafe culture has been extremely successful in India, news start-ups must work towards bringing a sense of ‘the cafe’ to people’s homes as they continue to work from home. This will give companies an immediate market and a model for future delivery services as well to grow rapidly.
Players like Chaayos in the retail and D2C tea market have successfully mastered the ‘hot tea’ delivery segment. It is time for D2C coffee brands to bring the homely feeling and coffee rush to customers at their homes while following the latest industry trends.
