India’s Coffee Market Witnesses New D2C Players in the Work-From-Home Paradigm

Aakash Sharma — Mon, 05 Jul 2021 03:35:04 +0000

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.

The post India’s Coffee Market Witnesses New D2C Players in the Work-From-Home Paradigm appeared first on Dutch Uncles.

Why D2C Start-Ups Are Attracting Investors ?

Shalmoli Sarkar — Sat, 06 Feb 2021 02:35:02 +0000

Buying from online markets emerged as the lifeline to the people during the catastrophic times of the pandemic. Apart from the major e-commerce players Flipkart and Amazon, the D2C start-ups were not behind in storming the retail sector, making them one of the biggest contenders of the established e-commerce players. With cheaper data plans, less expensive smartphones, and consumption of digital content, D2C players are witnessing more online shoppers from the Tier-II and Tier-III cities of India. The growth has been so positive that a report from Avendus Capital says D2C markets to be a market worth $100 billion by 2025, which has caught the interest of the investors.

So, what is it that the D2C start-ups are doing differently to attract investors or let us put it in this way that investors are interested to invest in D2C startups?

The answer lies in the use of customer data to offer personalized shopping experiences to customers that eventually leads to sales. The start-ups have moved from the idea of randomly displaying banner ads and pop-ups on websites for reaching out to customers to more precise targeting. As the D2C start-ups eliminate the intermediaries, they get complete autonomy of their end to end business right from the receiving orders to delivery that gives them access to customer information containing customer’s geographical and socio-economic data. Data analytics helps them reduce the cost of marketing and customer acquisition.

To understand this better, we will talk about two tech-driven D2C start-ups SockSoho and Rage Coffee.

SockSoho, a D2C fashion tech-brand born in the year 2018, decided to make fashion accessible to the modern man by offering premium quality designer socks for men. A pair of socks? Yes. Their product offering is a beautiful pair of socks that should suit the feet of every man and make it as a style statement. SockSoho is backed by its in-house AI-based recommendation engines resembling Netflix and Amazon. It pushes out new sock designs in small batches to gauge customer responses and scale those products that get large orders. It also uses the messenger for marketing and A/B product testing on WhatsApp.

Apart from AI, they have adopted a multi-platform distribution strategy. But, SockSoho’s secret weapon is generating sales through WhatsApp that accounts for 70 per cent of its sales. With a user base of over 400 million, it is the most popular messaging app in India and customers find it convenient to order through it. It has also changed the narrative of limited gifting options for men by having customizable gift boxes as an option, which otherwise narrowed down either to a Pierre Cardin pen set or a wristwatch.

Y-Combinator, an American investor, who has invested in SockSoho feels that their innovative ways of leveraging technology to acquire and service customers across platforms and using A/B product testing to scale business is unusual for a fashion brand.

It is challenging to launch coffee products in India especially when the market is dominated by behemoths Nestle and HUL. Rage Coffee, a Delhi -based D2C coffee brand that offers natural vitamins infused innovative coffee products has raised funding from GetVantage, an emerging revenue-based investor for e-commerce. Founded in 2018 by Bharat Sethi, he came with a simple thought of creating great tasting coffee without spending much time in brewing and money in cafés. Rage Coffee, instead of going for a multi-social media approach, markets its brand vigorously on Instagram to increase customer engagement and collects insights from it. The collection of data helped Rage Coffee understand their users’ needs that led to innovative packaging by launching portable coffee tubes, hence no need to carry big coffee bottles.

So, coming back to the question since our story says, what attracts an investor to invest in D2C start-ups?

Leveraging technology by D2C companies to get consumer insights and coming up with innovative ideas to offer products as per their preferences, helps to scale their businesses bolstering the revenue pipeline and giving good returns and this does attract investors.

The post Why D2C Start-Ups Are Attracting Investors ? appeared first on Dutch Uncles.

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