Behind Blue Tokai's ₹650 Cr. story ☕️
Behind Blue Tokai's ₹650 Cr. story ☕️
A brand that has created a "Starbucks kind of cult" in India .
Welcome to the 231st edition of the GrowthX Newsletter. Every week, I write two pieces that go to over 100,000 product, marketing, business leaders & ambitious founders in marquee internet companies around the world. If you haven’t subscribed yet, I would recommend doing so - I promise to change the way you think about business growth.
Blue Tokai Story ✨
It raised at a ₹650 Crore valuation and is disrupting India’s ₹4,000 Crore coffee industry. A brand that made ₹130 Crores in annual revenue and has created a loyal set of “fans”. So how did it nail it?
How did it all start?
India is the world’s 8th biggest coffee producer but we export 70% of what we produce. We’ve been slow in coffee adoption where the world has seen 3 waves —
In 1800s when coffee was commoditised & instant coffee became industrialised.
170 years later when Starbucks entered the market & made “cafe experience” cool.
In 1980s people started caring about the beans, farms, and roasting of the beans.
So when Matt came to India in 2011 after spending most of his life in the US, he noticed that India was stuck in the second wave while the world had moved on to the third. This was his lightbulb moment!
Indian coffee scene was split into 3 buckets: instant coffee market, the cafe market, and the “desi” filter coffee market. But no one was drinking / talking specialty coffee.
What did Blue Tokai crack then?
Mastered Product Depth.
Specialty Coffee = coffee that scores 80+ points on a 100-point scale by the SCAA (Specialty Coffee Association of America). Blue Tokai went for the 100% pure Arabica coffee beans which are technically considered the most superior beans with the best flavour profile. Doubling down on picking the right farms + long-term relationships.
Earlier, farmers were getting better deals from traders as there was no domestic demand. Traders were exporting it thereafter to foreign countries. Blue Tokai barged in between the supply chain.
They offered better incentives to farmers by giving them better rates, making their estate names printed on each packet, and teaching them how to maintain quality in production - farmers felt valued, marketing masterstroke honestly.
Educated the category of customers.
Blue Tokai has invested a lot of time in educating customers about various aspects of coffee consumption be it beans, brewing, processing, or farms’ altitudes. Each product on their website teaches you first & then lets you buy the product.
They aim for 100% transparency for not only their farmers but also their customers. For that, they ensure that the customer knows what he/she is buying. The funnel here is clear Educate Customer → Generate Trust → Deliver Quality → Create “Word of Mouth” → Drive repeat.
They understood Indian customers to the core. Specialty coffee demands equipment to brew it - but we as Indians hate the extra cost of buying equipment. Blue Tokai introduced a new cheap way of brewing coffee at home called “Channi Brew”.
Customer retention & acquisition.
Blue Tokai is a coffee company that also runs cafes. This Cafe strategy is such a big lever for them that they are now getting 66% of revenue from this source.
They are using a top-down penetration strategy for cafe expansion. They’re targeting tier-1 cities first. That’s why they are even more bullish on cafes now and planning to add 80 stores every year.
Their cafes solve 2 problems — Acts as TOFU (Top-of-the-funnel) for the new customers and makes them aware of the brand by offering an offline experience. Second, allows them to not lose their current customers to offline competitors like Third Wave Coffee & Starbucks.
B2B & B2C Diversification
While Blue Tokai might look like a completely B2C brand, it is not. In fact, B2B is such a big revenue source for them that they get 50% of their coffee sales from this stream.
These B2B clients include hotels, corporations, and even startups. More people have started to care about the quality of the “caffeine kick” their employees or customers are getting at the premises. A glimpse of the kind of clients they have —
That’s not all, we launched a new episode of GrowthX Wireframe, where we cover the Blue Tokai story in depth —
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