A specialty coffee wave is brewing in India

A disappointing shopping trip paved the way for a boom in the Indian specialty coffee market.

Matt Chitharanjan and Namrata Asthana had just moved from the southern Indian city of Chennai to the national capital, Delhi, in 2012, and were desperate for a good cup of coffee.

In Chennai, they loved piping hot “filter coffee,” a strong, frothy South Indian drink served with milk. And before coming to India, Chitharanjan drank freshly roasted aromatic coffee from a high-end chain near his home in San Francisco.

But the coffee they found in the local Delhi supermarket had been roasted months ago and seemed stale.

They saw an opportunity: Earlier that year, long lines had stretched out outside India’s first Starbucks outlet in the city of Mumbai.

But the couple discovered that some of the best coffee in the country was being exported.

“We started making cold calls to coffee plantations and making appointments. We had to convince them to sell us their export-quality coffee beans,” says Mr. Chitharanjan.

And soon, in early 2013, Blue Tokai Coffee Roasters was born: Mr. Chitharanjan roasted the beans and Ms. Asthana packaged them to sell online.

Today, the trendy coffee brand is a popular choice for India’s urban millennials, with 33 outlets in some of India’s most expensive locations and thousands of customers across the country. They have roasted more than 1,000 tons of coffee and served close to three million cups so far. Now, they don’t need to convince coffee farmers to sell them their best stock.

The founders of Blue Tokai understood early on that wealthy Indians are willing to pay more for specialty coffee roasted in smaller batches and customized for different palates.

Rohan Kuriyan, a second-generation coffee grower and exporter, credits Blue Tokai with turning the tide in the Indian specialty coffee market.

“People began to see Blue Tokai as a landmark and realized there was money to be made from coffee,” he says.

And finally, more local brands (Third Wave Coffee, Sleepy Owl, etc.) have found their niche. But analysts say this is still a nascent industry.

“You could have 1,000 of these coffees and you’d still have a hard time finding a specialty coffee near you,” says Arvind Singhal, a consultant at Technopak Advisors. He adds that the same is true of the artisanal cheese industry.

“There are about two dozen startups across India. But it’s not mainstream yet. The dairy market is worth billions of dollars; the artisanal cheese market is only $10 million to $20 million. Same thing.” happens with these premium specialty coffees”.

Until 1991, when economic reforms opened India to the world, coffee farmers sold their beans to the federally-backed Coffee Board of India, which then auctioned off the product to buyers.

But after 1991, when farmers were able to market and sell their coffee, Mr. Kuriyan’s father and other farmers began traveling abroad.

“They wanted to know how we could improve the overall quality of the coffee grown here in India,” says Mr. Kuriyan, whose coffee plantation in the mountainous Chikmagalur district of southern India is more than 80 years old.

Production increased, but most of it was exported.

In 1993, India exported 2.1 million 60-kg bags, the standard unit of measure for the coffee trade, according to the Coffee Board of India. By 2010, the number more than doubled to 4.6 million 60kg bags.

When the coffee market opened up, entrepreneurs like VG Siddhartha established the Café Coffee Day (CCD) chain where thousands of Indians tasted their first cappuccinos.

CCD’s first cafe in the city of Bangalore in 1996 became an instant hit with students and corporate executives.

Cafes like these were ideal and accessible for young people looking for a place to meet friends. With cheap coffee, a rarity at the time, it was also an obvious choice for young workers.

By 2011, fueled by an aspiring middle-class Indian, there were over 1,000 CCD cafes, ushering in a new cafe culture.

Starbucks arrived a year later, seven years after the debut of another international brand, Costa Coffee. By then, the Indians were willing to pay more for coffee.

But Indian coffee habits haven’t changed much in all this time: they still like the brew with a healthy dose of milk and sugar. The closest thing to it, the cappuccino, is Blue Tokai’s best-selling coffee.

Indians also love the sweet, milky cold coffee, available in Indian markets long before the advent of coffee shops. And that’s what inspired entrepreneurs Arman Sood, Ajai Thandi and Ashwajeet Singh to create Sleepy Owl in 2016.

“We wanted to make India’s first cold brew coffee that goes well with milk or drunk black, that can be delivered to your home,” says Sood.

They also wanted to reach customers who preferred a cup of instant coffee. “Not everyone in India was ready for manual brewing with a French press or an Aeropress. It had to be something easier.”

They focused on convenience rather than property names and tasting notes, which they say might have turned off new customers. After cold brew packs became a hit, Sleepy Owl launched “hot brew packs”: ground arabica that can be steeped in hot water like a tea bag.

They are now sold in 2,000 stores across India and even on domestic airlines.

specialty coffee retreat

The rebound in demand also changed the outlook for coffee growers.

In 2012, Kuriyan was only exporting coffee to roasters in Sweden, Norway, and the US, but shortly thereafter it was supplying Blue Tokai with export-grade Arabica from its Merthi Subbangudigy Estate (MS Estate).

“What Matt [Chitharanjan] what he did was focus on specialty coffees from a single farm and was willing to take the risk of marketing high-priced coffee. His entire modus operandi was focused on a niche market that knew what good coffee is,” says Kuriyan.

But other growers disagreed: they thought good-quality, expensive coffee would not take off in a price-sensitive Indian market.

“One grower said, ‘I’ll sell you the coffee, but mix it with robusta (a cheaper, stronger tasting coffee bean) or chicory (a woody plant used as a coffee substitute) and lower the price or you’re going to fail. “. ” Chitharanjan recalls.

But his gamble paid off. Today, MS Estate is the most popular medium roast at Blue Tokai, says Chitharanjan. And domestic producers like Mr. Kuriyan also became more confident.

Other local roasters followed suit.

“We decided to source green coffee beans and roast them ourselves because we thought it would be great to show the customer the quality of coffee on offer, from sourcing the farms to the roasting process,” says Ayush Bathwal, co-founder of Third Wave. Coffee.

He says coffee drinkers now want to know where their coffee comes from, how it’s sourced and how it’s roasted.

“We saw the pride our farming partners took in seeing their coffees served under their farm names in our coffee shops in Bangalore,” says Mr Bathwal.

“Coffee is now more of a social transactional drink than it was in the past.”