The Rise of Speciality Coffee in India

India's coffee landscape is undergoing a remarkable transformation, as a growing preference for speciality coffee among the younger generation is reshaping the industry. Once dominated by instant or traditional commercial brands, the country is now witnessing a surge in demand for premium, artisanal coffee offerings, fuelled by rising disposable incomes and a shift in consumer preferences towards enriching lifestyle experiences. This coffee revolution is driving the expansion of speciality coffee shops, roasters, and innovative direct-to-consumer brands, poised to propel the sector's growth in the coming years.

Driving the Bean Boom: Factors Fuelling Speciality Coffee's Growth

Rising Disposable Income

Increasing disposable income stands as a prominent catalyst propelling the expansion of India's coffee market. With the nation's economy on a growth trajectory and urbanization rapidly advancing, consumers are experiencing a notable up tick in their purchasing power. This surge in disposable income is reshaping lifestyles and consumption habits, fostering a growing affinity for premium and speciality coffee offerings.

The Rise of D2C

Speciality coffee brands are capitalizing on the up tick seen in the demand for direct-to-consumer (D2C) brands. With many young and passionate people using these social media platforms, the brands can connect with them while nailing their presence amongst consumers who are wanting to try something different.

Focus on Health, Wellness, and Innovative Flavours

Amidst the heightened emphasis on health and wellness, certain brands are tailoring their offerings to align with specific dietary preferences, including gluten-free, organic, and plant-based choices. D2C brands are pushing boundaries by introducing unconventional flavours and ingredients to distinguish their products and attract consumer attention.

D2C Coffee Brands in India

Blue Tokai : 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.

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.

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.

Launched in 2017 by Aditi Somani, Kolkata-based Country Bean is a popular D2C coffee brand known to offer premium flavoured coffee powders. Packed with aroma and flavour, Country Bean offers pure vegetarian fine coffee powder without any additives.

The Speciality Coffee Effect

Established Players Embrace Speciality

Existing players like Tata Coffee, Nescafé, and Bru have upped their focus on the speciality coffee segment, launching dedicated brands and offerings to cater to the growing demand.

International Chains Enter the Fray

International coffee chains like Tim Hortons and Pret A Manger have entered the Indian market recently, with aggressive expansion plans to capitalize on the speciality coffee revolution.

Starbucks Doubles Down on India

Starbucks has announced plans to hit 1,000 outlets in India by 2028, with a focus on expanding beyond Tier 1 cities into smaller towns and cities with smaller, more efficient stores.

Futuristic Brewing Techniques

Nitro Coffee

Nitro coffee elevates the coffee-drinking experience by infusing nitrogen gas into cold brew, resulting in a creamy, velvety texture and a frothy head reminiscent of Guinness beer. This refreshing beverage is perfect for beating the heat on scorching summer days and is poised to be a favourite among the younger generation.

Cold Brew

Cold brew coffee, although not new, continues to soar in popularity. Its smooth texture and subtle, less bitter flavour profile have garnered praise from coffee aficionados, solidifying its place as a staple in cafés and households alike.

Sustainable and Ethical Coffee

Environmental Consciousness

As the younger generation grows more conscious of their impact on the environment, a rising demand for sustainable and ethical coffee is growing. Brands commit to eco-friendly and sustainable practices, such as sourcing from sustainable farms, repurposing coffee grounds for fuel or compost, and minimizing non-biodegradable packaging.

Educating Consumers

The aim of these sustainable practices is to educate customers about adopting environmentally conscious habits and to actively reduce the carbon footprint of coffee production. This dedication ensures the provision of high-quality, sustainable products on a consistent basis.

The Rise of Smart Coffee Makers

Precision Brewing

Technological advances have revolutionized the coffee industry, with smart coffee devices becoming the norm. The precision of the grind, the perfect tamping of the grounds, the pressure of the water, the water temperature, and even ambient humidity can all affect the final cup of coffee.

Automation and Convenience

The super automatic espresso machine handles all of these tasks for the user. With one press of a button, it will grind the beans to the exact specifications, tamp them, and extract the espresso into the cup, providing a hassle-free and consistent brewing experience.

Elevating the Home Experience

The growth in home consumption means consumers are looking for smarter and more convenient devices to make their own cup of coffee. These advanced machines allow coffee enthusiasts to recreate the cafe experience in the comfort of their own homes, catering to the rising demand for speciality coffee.

Investments and Expansion in the Speciality Coffee Sector

Venture Capital Backing

The potential of the speciality coffee sector is too lucrative to overlook, as evidenced by significant investments from venture capitalists. Brands like AbCoffee have raised substantial funding to expedite their supply chain and enhance their technology infrastructure, signalling the continued bullishness of investors towards this segment.

Expansion Strategies

Domestic brands like Blue Tokai Coffee Roasters and Third Wave are expected to follow suit with robust expansion strategies, mirroring the aggressive growth plans of international chains like Starbucks. Tier 2 and 3 cities present significant untapped potential in the speciality coffee revolution, attracting scrutiny from venture capitalists.

Innovative Offerings

Brands offering alternative vegan milk options for coffee and pioneering ready-to-drink cold brew solutions are poised for growth, as younger generations increasingly gravitate towards sustainably and ethically sourced products.

The Future of Speciality Coffee in India

Segment Growth

The speciality coffee segment is projected to grow at a rapid pace, driven by the evolving preferences of the younger generation and the influx of innovative offerings.

Expansion Potential

Tier 2 and 3 cities present significant untapped potential for speciality coffee brands, with venture capitalists closely monitoring this segment for further growth opportunities.

Sustainability and Ethics

Consumers, particularly the younger demographic, are increasingly prioritizing sustainability and ethical practices in their coffee consumption, creating a demand for brands that align with these values.

Technological Advancements

The rise of smart coffee devices and automation in the brewing process is enhancing the home coffee experience, catering to the growing preference for speciality coffee among consumers.