- Gurugram-based Blue Tokai Coffee Roasters raised $30m in its latest funding round
- Investors are showing a growing interest in India’s specialty coffee sector
- India’s coffee consumption has been slow to develop – but premium offerings are on the rise
AMONG INDIA’S roasters, Blue Tokai Coffee carries more responsibility than most.
As the first to start selling Indian specialty coffee to the country’s 1.3 billion population back in 2013, it has long been seen as a bellwether for the sector and a fairly accurate barometer of how well it is doing. If Blue Tokai is thriving, then you can be sure India’s specialty coffee industry is doing well.
Hence, the news last week that the company had raised $30m in its Series B funding round sent a ripple of excitement that extended far beyond its Gurugram headquarters.
Led by Mumbai-based investment firm A91 Partners, it comes off the back of a year which saw eye-watering sums being invested into India’s specialty coffee industry.
Data sourced from research platform Tracxn shows that specialty coffee startups raised a total of $41 million in 2022, up from $11.4 million in 2021.
This latest funding round suggests that 2023 will see another sizable leap.
“Our recent funding round is a celebration of the work done by Indian coffee producers, a testament to our efforts in bringing Indian specialty to the forefront, and an acknowledgement of the growing coffee market in India,” Matt Chitharanjan, the co-founder and CEO of Blue Tokai, told Coffee Intelligence.
“When we started in 2013, specialty coffee here was an unknown and unaddressed segment – so much so that it took months to convince Indian coffee producers to sell a part of their produce to us. Ten years later, the specialty coffee industry in India is thriving and attracting attention from coffee drinkers globally. From a handful of specialty coffee producers to now more than 100, this segment has been swelling from both the supply and demand end.”

All eyes on specialty coffee
The interest shown towards India’s specialty coffee companies paints an intriguing picture.
While the growth of coffee consumption across the board has been modest in recent years, investors are increasingly throwing their weight behind the country’s premium offerings.
According to Matt, this reflects a broad shift in the preferences of India’s coffee consumers.
“It is due to the increasing disposable incomes and constant knowledge-sharing by brands like ours,” he says. “It has increased awareness of and demand for high-quality coffee. But [this trend] is no longer restricted to the metro cities – now even tier-two cities have multiple options for getting specialty coffee.”
Blue Tokai’s aim is to extend beyond the nine cities in which it is currently present, with plans on four more cities by 2027. “In our cafés, we will continue to focus on the larger metros in order to benefit from efficiencies of greater scale. But through our D2C and B2B offerings, we will target customers across the entire country.”
Like other emerging specialty coffee markets, such as China, this is a particular focus on the ways in which specialty coffee reaches the customers. The traditional café model serves an important role as it gives brands visibility and prestige.
However, India’s specialty coffee startups, from Blue Tokai to Third Wave, are also looking at capsules, vending machines, ready to drink products, and the rise of what Matt calls “hyperlocal” companies.
“In the last few years, we’ve focused on introducing new ways of presenting coffee that have led to more people lapping up the specialty experience like never before,” he says. “These include products like drip bags, cold brew cans, coffee capsules, and iced latte cans, among several others.
“One of the more interesting trends in retail has been the rise of the hyperlocal companies. With delivery in under 30 minutes happening in India, we’ve seen consumer behaviour shift from grocery stores and kirana shops to the hyperlocal players and this channel will also be increasingly important going forward.”

Can India’s coffee market compete with the US?
Movements in India’s specialty coffee scene are naturally observed with a veritable degree of interest elsewhere in the world.
With a population size of more than one billion and a nascent coffee sector, there is a vast pool of untapped potential for those who can get in there early.
Clearly, India is not at the same level as China, which, despite having a similar population size, has seen coffee consumption grow at more than seven times the global average in recent years.
There are various theories as to why growth has been slower. Price, in particular, plays a role. In India, tea is typically available for around five to 10 rupees per cup, whereas coffee is still considered a luxury.
Matt says regulations on green coffee from other origins may also have an impact. Although India’s estimated 350,000 metric tons of coffee last year 2022, opening the door to coffees from the likes of Latin America and East Africa could help break down the floodgates.
“India has a 100% duty on imported coffee, which at some point in the future is going to constrain growth,” Matt explains.
Rather than waiting for coffee to blow up in India like it has in other markets, some domestic brands have looked outside of the country. Blue Tokai itself has already started exploring opportunities in other parts of Asia.
“Travellers and foreign expats settled in India have also shown immense interest in our brand, becoming one of the key reasons for Japan being our first destination in our international expansion,” Matt says.
However, buoyed by the latest multi-million funding round, he remains equally optimistic about his country’s outlook. “While it may not overtake the US, given the size of the market and the growth forecasted, India will definitely be among the largest coffee markets in the world.”