Forbes India 15th Anniversary Special

Trends that are redefining your cuppa

Targeting younger buyers, tea and coffee brands in India are breaking traditional category codes; spending aggressively on advertising and marketing, and expanding offerings, brewing hot, cold, slow and instant, for all seasons

Published: Mar 17, 2022 11:08:36 AM IST
Updated: Mar 17, 2022 11:06:13 PM IST

Trends that are redefining your cuppa
Several food and beverage brands have relied mainly on digital tools and storytelling to drive demand the past few years. Image: Shutterstock 

Tea and coffee have come a long way from being available in just two options—with and without milk and typically served hot. Millennial tea and coffee drinkers now want their cuppa in various flavours, served at different temperatures, brewed in different techniques, and vegan too. To make the most of this growing trend, marketers have been investing in innovation and marketing with new brands being launched almost every week. Ad spends almost across brands have gone up, with a significant portion of this ad money going into digital, due to the pandemic-driven spike in online buying. While newer consumers might like their beverage served cold, the Indian tea-coffee category is hot, hot, hot.

Drip, pour, shake, stir

Several direct-to-consumer brands have emerged in the food and beverage category over the past five years, with a jump in activity in the past two. These brands have relied mainly on digital tools and storytelling to drive demand.

For Bharat Sethi, founder of D2C brand, Rage Coffee, every person who has access to the internet is a prospective customer these days.

But it’s not just the new brands that are boosting growth in the segment and focusing on online and D2C selling. Even century-old brands like Luxmi Group known for their popular tea brand, Makaibari, are experimenting with their blends and keeping their social media calendar busy with promotions and collaborations.

While traditional brands like Luxmi Group, Tata Tea and others are experimenting and innovating, new age labels like Sleepy Owl, Woke Coffee, Blue Tokai, Country Bean, Slay Coffee, Rage Coffee, Bili Hu and many others are also propelling the growth story of the category with unique offerings and disruptive marketing strategies.

What’s written in the leaves

Changing perceptions has been one of the biggest challenges for brands in the segment.

Especially for coffee brands.

Ajai Thandi, co-founder at Sleepy Owl, says their customers didn’t understand how coffee could be brewed in cold water, and yet taste so good. But once they were past that, they were able to experiment with the concept of hot brew bags and more lately, their very own premium instant coffee.

“Indian coffee is now increasingly being appreciated by customers, which is encouraging for brands like us to bring more to the table. The category has gone through a revolution in the past few years, and the growth in homegrown coffee brands is a testament to this,” Thandi says.

The shifting definition of a coffee or tea experience is part of what’s changing the category.

Prachi Bali, national head-partnerships and business head, FoxyMoron, said that for many years, we’ve had very standardised definitions of tea and coffee in our country but the inflow of new brands has created conversations around ingredients, flavour profiles, ethical sourcing, all of which has resulted in the consumer having a myriad of choices across price points.

“What is impressive is that these brands aren't just packaging and branding the product but are actually focused on the development of it in a professional manner,” she says.

Focus on millennials and younger consumers

From mute ads to influencer collaborations, tea-coffee brands are trying it all to create buzz and capture consumers on social media.

Rage Coffee collaborates with distributors in their city, analyses data from retail outlets, and then creates their market entrance strategy. The brand’s media promotion budget this year is more than Rs10 crore. 70 percent of their offline wholesale business comes from tier-II cities.

While the clientele as Sethi says is anyone looking to improve their everyday coffee experience, a particular sphere of market that they’ve appealed to is between 18 and 25 years old.

Some brands are bringing in the wellness factor to stand out and hence tea has enjoyed a great rekindling of interest due to its natural benefits and functionality that come with tea blends, says Rudra Chatterjee, managing director, Luxmi Group.

“Younger audiences are indulging in wellness teas, thanks also to the health awareness that came with the pandemic which laid bare the necessity to maintain a healthy lifestyle. The shift in lifestyle of the consumer is definitely compelling for us to keep innovating and introducing teas that are relevant to their wellness needs,” he says.

The brand enjoys a healthy conversion rate with a majority of conversions taking place on social media. In fact, Luxmi Tea's online presence came into being during the pandemic. “So while the spending bases were smaller as we were learning, there is definitely intent to increase our investments as well as our results at least by 50 percent over the last year,” Chatterjee said.

The 110-year-old tea brand now has a dedicated ecommerce team which focuses purely on digital sales and social media. Luxmi’s content is not just about the product offerings but also about the farmers’ community, with a mix of influencer and user generated content.

Investments in the right digital channels have helped the brand reach a higher audience and generate awareness, and helped them build strong funnels of growth through targeting sharply, Chatterjee tells us.

“We have also managed to reach a wider global audience through digital marketing tools,” he says.

The growth of the online marketplace

Like beauty and fashion, online tea-coffee marketplaces are also helping in category’s growth alongside promoting ancillary businesses.

Kaapi Machines, for instance, which was established in 2007 to address the gap of efficient and sophisticated coffee equipment in the country, is witnessing strong growth in all segments including coffee roasters, café equipment as well as specialty coffee and manual brewing ranges.

In the last two years, Kaapi Machines has been part of the launch of close to 20 new coffee brands, with a lot of new coffee roasters setting up shop.

“This was an area dominated by a few Italian and large Indian brands – but the market has truly opened up, with a lot of new roasteries, who are innovating and growing the market,” says Abhinav Mathur, CEO and managing director at Kaapi Machines.

According to Mathur, while 2021 was all about the growth in the café segment, 2022 will see much more expansion in the RTD (ready-to-drink) coffee market along with a return to offices and hence a strong coffee vending market.

Taking digital to the next level, Kaapi is working on an iOT project.

“We are ready with our own Kaapi-iOT system, which allows any customer in a retail space or office, to dispense coffee from a machine using just their phones. Millennials also do not like to carry cash around—so this system allows them to pay using their mobile wallets, pick up their favourite coffee from the station and walk away,” Mathur says.

The brand’s consumer-facing offering, Something's Brewing, saw their monthly revenue jump 5x since their launch in 2020 with coffee connoisseurs experimenting with their drink.

In sync with the growth, the brand is also increasing their digital spends by up to three times this year compared to 2021.

Targeting younger buyers, tea and coffee brands in India are innovating and launching more products faster than ever before, and changing traditional category codes. Brewing hot, cold, slow and instant, for all seasons.

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