Coffee Funding, Growth & Investment Scenario in India

Some Major Coffee Funding, Investment & Acquisition News

Some Coffee Funding Breaking News:

• USD 5.1 billion – The whopping funding amount with which Coco-Cola brought Costa Coffee chain in 2018, one of the biggest acquisitions.
• USD 7.15 billion – The financial volume agreed by Nestle to Starbucks in 2018 for buying the rights to sell Starbucks coffee goods at retailers. One of the biggest deals ever in their 152-year history.
• USD 15 million – Flash Coffee raised the amount – A Rocket Internet-backed coffee chain, in series A funding headed by global tech investment firm White Star Capital.
• USD 109 million – Raised in series B funding Kopi Kenangan in 2021 by Sequoia Capital

Coffee Funding- The newest trend in the industry 

The aroma of freshly brewed coffee, the texture of the coarse granules, and the hot liquid bubbling in the mug- without even trying hard, the visual of the description above is clear in our mind’s eye. The drink that has been stimulating all our 5 senses for so many years, now is an extremely profitable investment option.
Multiple coffee brands are challenging each other with their quality of beans, richness, texture, and aroma. Amongst the front runners who made some impact recently in the industry are:

Blue Tokai:

Funding has been done by 4 Investors. 8i and Snow Leopard Technology Ventures are their more recent investors. The raised amount was $5.6 million in funding over 3 rounds.

The Country Bean:

The brand is still not funded yet. Extremely popular in e-commerce platforms Amazon, Flipkart & Instagram

The Sleepy Owl:

Funding has been done by DSG Consumers, Rukam Capital, Angel List, and First Principles. Raised amount 2.39 million.

A brief glimpse of a Coffee Startup at FreeFlow

Recently, FreeFlow Venture Builders, Kolkata, welcomed a new baby with open arms in their start-up creche. Jigsaw Coffee, a special variety of coffee that is fully organic, handpicked, and shade-grown. Conceptualized and founded by 4 young entrepreneurs- Nikhil Chawla, Vinay Manglani, Sharan Chawla, and Ridhima Chawla.

As Nikhil Chawla, the Founder and a veteran from the F&B industry mentions “As a brand, we intend to commit to bringing good coffee to every table. Our coffee is 100% ethically sourced and negating middlemen and roasters in between. Giving us the ability to buy our beans at the best possible prices and giving us entire control to roast our coffee to bring out its best possible flavors. Further, we remove any scope otherwise additives that change the narrative of coffee.”

As we embark on this journey of coffee investment discussion, let us give a small peek into the history of Coffee production in India

The history of coffee for India is unlike other agricultural backgrounds that we have. A certain holy pilgrim to Mecca, Baba Budan had smuggled 7 coffee beans back to India around 1670 from Yemen. He strapped those beans around his body since it was illegal to take coffee beans out of Arabia as it was only grown there at those times. Coffee was exclusive to Arabia and its adjoining areas. Later the arrival of the British Raj to India further increased commercial coffee farming. Arabia and Robusta are mainly the two categories grown in India.

Coffee Board of India

The establishment of the Coffee Board of India in 1970 further solidified the presence of coffee production in India. Formed with the background plan to increase intensive research and education activities. The board acts as a friend, philosopher, and guide to the coffee sector to cover the entire value chain. As of date, a vast majority of coffee farming is still very dominant in regions like the southern states of Karnataka, Kerala, and Tamil Nadu, which produces around 90% of coffee beans. Regions like Andhra Pradesh, Orissa, and the Northern states like Assam, Manipur, Meghalaya, Mizoram to Tripura, Nagaland, and Arunachal Pradesh take up the remaining pie of harvesting.

Coffee growth expected figures as per Statista

1. The coffee segment amounts to $808m and the expected growth is 8.9% CAGR annually in 2020-2025.
2.  The graph shows the revenue in US dollars from 2012 to 2025 (expected) and differs from roast coffee and instant coffee.
3. Generation of highest global revenue is by the United States (US$67,663m in 2020).
4. In India, the average per capita consumption and revenue stood at 0.03 kg and $0.6 in 2020.
5. By 2025, 54% of spending and 6% of volume consumption in the Coffee segment can come from out of home consumption (Cafes & Restaurants)

As per a news article released in The Hindu Business Line on Jan 27^th, 2018, various coffee shops and coffee entrepreneurs, are on their way to get benefits from the backing of niche venture capitalists and crucial assistance from the government. The Ministry of Commerce and Industries further has instructed the Coffee Board of India to identify those startups from the coffee industry, that require considerable guidance to take their venture further.

Status of India in Coffee Production and Export

1. Currently, India is the 3rd largest producer cum exporter of Coffee in Asia.
2. The country ranks as the sixth-largest producer and fifth-largest exporter in the world.
3. Therefore, that accounts for 31.4% (2019-20) of world coffee production.
4. So the exported percentage is around 70% and 30% consumed domestically.

The tag of “Coffee of India” can be found often on exported containers from India which serves as an indication of the source and destination of the production. This is because Indian states, especially the southern states still rule a quality coffee source.

Growth of Coffee Consumption amongst the Urban society

Over the last two decades, we have seen unprecedented growth in the section of coffee lovers mostly amongst the niche urban youth. The drink suddenly had global exposure for multiple reasons. They are:

1. High media and social media penetration
2. Lifestyles changes and the unexpected rise in urbanizing
3. High disposable income amongst the urban class
4. The price of coffee is higher than a glass of tea
5. During pandemic times, the tendency of buying specialty coffee via e-commerce platforms has increased via Amazon and Big Basket. This trend is not solely to counteract the B2B drop during these times, but also each brand tried the first-mover advantage. Therefore, more and more coffee lovers are now searching for new specialty brands on e-commerce platforms.

Let us face it- Coffee is a much cooler and smarter drink to hold and flaunt in the crowd. Therefore, Coffee Startups has created a new business revamp which is attracting a very niche kind of investors pan India.

Recent Coffee Funding & Investment News from India

Recently Rage Coffee a Delhi-based FMCG coffee company is making some noise in the coffee segment. The brand raised a growth capital of an amount of $592K. It was a part of the funding round which was led by a squad of investors guided by Rafex Capital. The funding session also saw participation from 9 Unicorns, Vistra ITCL, Keiretsu Forum, GetVantage to name a few. Its market penetration story is commendable since its inception in 2018. They made an exponential leap by getting accepted into Amazon’s Global Selling Accelerator Program. This leap will take Indian brands to global markets through the Amazon network

Why Jigsaw can become the next breaking news for coffee funding?

The brand is currently selling beans to coffee drinkers at home. They have specialty cold brews, pre-workout concentrated cold brew coffee shots. They also have brewing kits for homes to make the fresh coffee availability process simpler.

Enthusiastically shared Vinay Manglani, Co-Founder of Jigsaw “We plan to create Jigsaw Experience Centres soon where the brew will be made in the most scientific way possible by the best Baristas to create the perfect cup of Coffee lover. The usage of precise equipment from the industry, finest of freshly roasted beans and brewed to perfection by Barista champions to serve a whole work of art kind of experience in the mug.”

What else the investor can expect from Jigsaw to think of the brand as being perfect for Coffee funding?

The answer is the passion and belief all the 4 masterminds of Jigsaw have in the brand. They want to create an essence for every drinker of Jigsaw to understand the science and art behind a perfect cup of coffee. A one-stop solution for all coffee-related shopping: Bean supply, Instant Coffee, Home Brew Kits, Cafe-in-Cafe Model, E-commerce, Kiosks, Independent Experience Centres.

Further, the plans are there to expand to global markets like UK, Australia, Thailand, Bangladesh, etc. The source of the coffee beans at Jigsaw is directly from farmers. Their plantations bloom to their finest quality under the shade of exotic trees like Durian, Mangosteen, Nutmeg, Macadamia, and Mandarin at Hidden Falls Estate, Yercaud. No addition of chicory or any other fillers- just plain beautifully textured coffee.

Some words from the 4 Pillars of Jigsaw as a conclusion  

Nikhil Chawla: Having run award-winning cafes and having served a couple of lakhs of cups of coffee I can say that the current coffee audience is a lot more evolved than 5 years ago.

Vinay Manglani: It is not just about providing the best cup of coffee. But it is also our mission to grow the coffee community. Educate the audience, share constructive feedback & ideas, support farmers, roasters, and cafes. Also, we pledge to maintain the surrounding biodiversity in all our associated coffee estates.

Sharan Chawla: Tech is going to play a strong part in not only powering the distribution chain to B2C and B2B markets via E-commerce and Apps. But, also looking forward to educating the audience by creating engaging content around specialty coffee and its unique brewing methods.

Ridhima Chawla: There’s a commitment to bring in innovative products that are biodegradable and carbon neutral. After lots of market research and sampling, we take pride in having created an Indian coffee brand with a world-class feel. Jigsaw aims to cater not only to the millennials but also to coffee lovers of all ages.

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