A nation traditionally known for its tea-drinking culture, today India is witnessing a remarkable shift in the preferences of its urban population. As coffee gains popularity, a new wave of homegrown coffee brands and chains have emerged, challenging the dominance of international giants like Starbucks. With brands such as Blue Tokai, Third Wave Coffee, and Colocol, capturing the hearts of coffee enthusiasts, India's coffee industry is experiencing a transformative phase.

As per Statista's findings, the coffee industry in India is valued at $808 million, and is projected to exhibit a compound annual growth rate (CAGR) of 8.9 percent from 2020 to 2025.

Rohan Kuriyan, a second-generation coffee grower and exporter credits Blue Tokai for changing the tide of India's specialty coffee market. "People started to see Blue Tokai as a benchmark and they realized that there is money to be made in coffee," he said.

Eventually more homegrown brands - Third Wave Coffee, Sleepy Owl, etc - found their niche. But analysts say this is still a nascent industry. "You could have 1,000 of these cafes and you'll still be hard pressed to find one specialty coffee café next to you," said Arvind Singhal, a consultant at Technopak Advisors. He added that it was the same with the artisanal cheese industry.

Rise of Homegrown Coffee Chains 

In recent years, India has witnessed an extraordinary surge in coffee consumption, especially among the younger generation and urban dwellers. This shift in consumer preferences has paved the way for the rapid growth of homegrown coffee chains, which have successfully established their own unique identities. Let's take a closer look at the notable players in this flourishing landscape.

Blue Tokai, founded in 2013, has emerged as a leading name in the Indian specialty coffee scene. By sourcing high-quality beans directly from Indian coffee farmers, Blue Tokai has created a loyal following. The brand's commitment to educating consumers about the intricacies of coffee and offering an exceptional experience also contributed to its success.

Third Wave Coffee, another prominent player, is deeply immersed in the "third wave" coffee movement. With an emphasis on showcasing single-origin coffees and empowering local growers, Third Wave Coffee has resonated with conscious consumers. Their commitment to sustainability and direct trade practices has added to their appeal.

Colocol, a relatively new entrant, has quickly gained recognition for its innovative approach. Specializing in coffee-based beverages, Colocol positions itself as a premium brand. By focusing on flavor experimentation and creative presentations, Colocol appeals to coffee aficionados seeking unique and visually appealing experiences. 

There are several other homegrown brands like Billi Hu, Country Bean, etc who are making their presence felt strongly in the market. 

Driving Factors 

Specialty Coffee Culture: The rise of specialty coffee culture in India has been a significant driving force behind the success of homegrown coffee chains. Consumers are increasingly discerning and appreciate high-quality, specialty coffee. Homegrown brands have capitalized on this trend by offering unique flavor profiles, highlighting the sourcing and roasting process, and providing immersive coffee experiences.

Localization and Indian Identity: Homegrown coffee chains have successfully tapped into the Indian identity and localized their offerings. By showcasing Indian coffee beans, highlighting the diverse coffee-growing regions within the country, and promoting sustainable practices, these brands have established an authentic connection with consumers.

"We decided to source green coffee beans and roast it ourselves because we thought it would be great to show the customer the quality of coffee on offer from sourcing from farms to the roasting process," elaborated Ayush Bathwal, Co-Founder of Third Wave Coffee. He said that coffee-drinkers now want to know where their coffee was coming from, how it was sourced and how it was roasted.

Direct Trade and Ethical Sourcing: Homegrown brands prioritize direct trade and ethical sourcing practices, forging strong relationships with Indian coffee farmers. This emphasis on fair trade and sustainability resonates with conscious consumers who value transparency and ethical consumption. These practices also contribute to building trust and credibility for homegrown brands.

Experiential Focus and Education: Homegrown coffee chains go beyond serving coffee – they create immersive experiences for consumers. By investing in skilled baristas, training them in the art of brewing, and educating customers about origin, processing, and brewing techniques, these brands enhance the overall coffee experience and foster a loyal customer base.

Shining Future 

The future of homegrown coffee chains in India appears bright, with immense potential for growth and expansion. As the specialty coffee culture continues to flourish and evolve, homegrown brands are poised to play a dominant role in shaping the industry. Their emphasis on quality, localization, and community engagement provides a strong foundation for long-term success.

Can International Brands Exist?

While homegrown coffee chains in India have gained significant traction and pose a formidable challenge to international brands, the future coexistence of both is possible. Feeling the heat of the competition, Starbucks is working on cheaper beverage options in a bid to woo coffee lovers away from homegrown rivals such as Third Wave Coffee and Blue Tokai. At a store in Delhi, where Starbucks sells 7,500 cups of coffee a month, a barista said that the chain had lost 30 cups a day to domestic rival Third Wave Coffee which opened an outlet nearby. The latter sells 3,700 cups a month.

Over the past 11 years, Starbucks expanded to 343 stores in India. The global coffee chain is now competing against homegrown brands such as Blue Tokai and Third Wave Coffee, which have 150 outlets each in less than half the duration taken by Starbucks. International brands like Starbucks and Tim Hortins can still find opportunities in this thriving competition by adopting certain strategies: 

Localization and Adaptation: International brands can leverage their global expertise while adapting to the local Indian market. By incorporating traditional Indian flavors, catering to regional tastes, and embracing local coffee growers, international brands can create a sense of familiarity and authenticity that resonates with Indian consumers.

Differentiation Through Innovation: International brands can differentiate themselves by introducing innovative products and brewing techniques that cater to evolving consumer preferences. By offering unique and exclusive blends, incorporating local ingredients, and embracing sustainability practices, they can carve out their own niche within the market.

Collaboration with Homegrown Brands: International brands can explore collaboration opportunities with homegrown coffee chains. By partnering with local brands, they can tap into their knowledge of the Indian market, leverage their strong local networks, and benefit from their understanding of Indian consumer preferences. Such collaborations can result in a win-win situation, combining global brand recognition with local expertise.

Enhanced Customer Experience: International brands can focus on delivering exceptional customer experiences by investing in well-trained baristas, creating inviting ambiances, and engaging with customers through loyalty programs and community initiatives. By offering a unique and memorable experience, they can compete effectively with homegrown chains.

In the ever-evolving Indian coffee landscape, homegrown coffee brands have emerged as fierce competitors, giving tough competition to international brands. Through their emphasis on quality, localization, and a deep understanding of Indian consumers, these homegrown chains have successfully captured the hearts of coffee enthusiasts. As the competition intensifies, it is clear that homegrown coffee chains have become a force to be reckoned with, challenging the dominance of international players in the Indian coffee market.