- Verlinvest recently made a $35m investment in India’s Blue Tokai Coffee Roasters
- A tea-drinking nation to date, India’s retail coffee market is projected to grow by 13% until 2025
- After China, India looks like the new hub for investors and specialty coffee players looking to expand
GLOBAL investment firm Verlinvest recently made headlines in India’s emerging coffee market by leading a $35 million Series C funding round for Blue Tokai, a specialty coffee and bakery brand.
Existing investors Anicut Capital and A91 Partners also participated in the round, signalling growing confidence in India’s evolving coffee scene.
Verlinvest, which has a strong track record of scaling consumer brands in India – including Epigamia, Lahori, Heads Up For Tails, and Wakefit – continues to deepen its commitment to the Indian market, an emerging hub for consumer-driven growth.
This investment highlights Verlinvest’s ongoing strategy of backing high-quality food and beverage (F&B) brands globally, from Europe’s Insomnia Cookies to Tony’s Chocolonely.
Blue Tokai, founded in 2013, has already built a reputation for championing India’s specialty coffee movement, with a focus on traceability and single-origin coffees sourced from Indian estates. The brand has more than doubled its store count in the last year to 130 outlets currently, mirroring the ever-increasing demand for specialty coffee.
The infusion of capital will help Blue Tokai expand its retail footprint, scale its roasting operations, and broaden its presence in both domestic and international markets. In July of this year, it opened its first store in Japan.
Verlinvest’s move is not just about expanding Blue Tokai, but also about tapping into India’s nascent yet rapidly growing coffee culture. As the middle class grows and urbanises, consumers are increasingly looking for premium experiences, including high-quality coffee.
In the press release announcing the investment, Matt Chitharanjan, Co-founder and CEO of Blue Tokai, highlighted this focus on rapid expansion and reaching new consumer segments.
“With this latest funding, we have the opportunity to bring our passion for coffee to even more people,” he said.
“We will utilise these funds to accelerate our expansion across all channels – from our own cafes to B2B and B2C platforms. By introducing innovative coffee product offerings through new producers, we will enable ourselves to reach new consumers with varied offerings and continue delivering consistent coffee experiences.”
Verlinvest’s confidence in the Indian market reflects the broader opportunity that exists within the country’s consumer ecosystem, where rising disposable incomes and shifting consumption habits are creating fertile ground for investment in premium brands.
A new coffee market for investors
India is increasingly emerging as a key growth market for investors, particularly in the coffee industry.
While traditionally a tea-drinking nation, India is witnessing a shift in beverage preferences, driven largely by urban youth and a rising middle class.
Recent years have seen a spate of investments in India’s coffee sector, with companies like Rage Coffee securing capital to fuel expansion. GRM Overseas Limited just acquired a 44% stake in Rage Coffee through a combination of primary infusion and secondary buyouts to expand its presence in the fast-growing Indian coffee market.
Global brands, too, are eyeing the market. Starbucks, for example, continues to open new stores across the country. Despite having around 400 stores in India, Blue Tokai’s products are at least 25-30% cheaper than Starbucks – making it a competitive adversary.
Other local players like Third Wave Coffee Roasters, who led the national artisanal coffee movement, are also flourishing and competing with the international iconic chain.
The estimated $17.54-billion Indian cafe and bar market is projected to reach $26.17 billion by 2029, and India’s coffee industry is forecast to surpass $4.2 billion. India’s attractiveness to investors lies in its unique blend of opportunity and complexity.
As China’s coffee market has proven to be more insular and challenging than expected, with distinct cultural barriers and slower-than-anticipated consumer adoption, India is becoming a more appealing alternative.
“In my opinion India is a diverse country with an evolving young population who are well travelled, ‘coffee aware’, and ready and willing to explore and chase new experiences – be it beverages like coffee, cuisines, fashion or other trends,” says Dr. Mandappa IM, Divisional Head of Coffee Quality at the Coffee Board of India.
“What better audience can specialty coffee brands ask for?”
India’s open market dynamics, younger population, and strong consumption trends are propelling it forward as a coffee-consuming nation. Moreover, the diversity of coffee preferences—from traditional filter coffee in the south to espresso-based drinks and cold brews favoured by urban youth—creates multiple entry points for brands across the commercial, premium, and specialty segments.
India’s Gen Z, in particular, is shaping the future of coffee consumption. This generation is willing to pay a premium for quality, sustainability, and experience, aligning perfectly with brands like Blue Tokai, which emphasise traceability and craft.
Ready-to-drink (RTD) coffee beverages are also gaining traction, driven by convenience and an increasing preference for on-the-go lifestyles in metropolitan areas.
Specialty coffee brands are drawn to India for the same reasons as investors: a large, untapped market that is still forming its coffee habits. As consumers become more educated and discerning, the demand for high-quality, locally-sourced, and ethically-produced coffee is on the rise.
This makes India an attractive growth market for brands looking to expand beyond the saturated markets of Europe and North America.
The Indian coffee story: a unique path or Western influence?
As India’s coffee consumption evolves, it raises the question of whether it will carve its own path, or follow the Western model of coffee consumption – which has largely defined the global industry so far.
Traditionally a tea-drinking nation, India’s relationship with coffee is still relatively young. However, its retail coffee market, valued at $570.3 million in 2022, is projected to grow by 13%, reaching over $640 million by 2025. Its patterns of consumption are also already beginning to diverge from the West in notable ways.
Unlike so-called “traditional” consumer countries in the Global North, where the waves of coffee consumption (from instant to specialty) have followed a linear trajectory, India is experiencing a more fragmented journey.
Indian consumers are experimenting with all types of coffee simultaneously – filter coffee continues to hold sway in many southern households, while espresso-based drinks dominate urban cafés. Instant coffee, still prevalent, is now competing with RTD coffees and cold brews favoured by younger consumers.
This simultaneous embrace of different coffee styles suggests that India may not adhere strictly to the Western model, but rather develop its own unique coffee culture that blends tradition with modernity.
In China, coffee brands struggled to crack the market until the country developed its own coffee identity, marked by a preference for sweetened beverages and innovative formats like bubble tea-inspired coffee.
India could take a similar approach, deciding what suits its tastes and cultural preferences rather than fully adopting Western trends. Given India’s deeply-rooted chai culture, coffee consumption may not simply be “Westernised,” but could evolve into a hybrid that reflects local palates and traditions.
Third Wave Coffee Roasters, for example, have a diverse menu that includes drinks that combine cinnamon with condensed milk, or that pair rose water with organic honey and cardamom.
“I strongly believe India is already carving its own coffee narrative,” says Mandappa. “The proof of which lies in the large number of Indian microroasters and cafes cropping up across the country, not only serving some high quality coffees, but also creating experiences around coffees to a young Indian audience.”
Looking ahead, India’s coffee market presents a wealth of opportunities. As specialty coffee brands like Blue Tokai expand, and more international investors show interest, India is poised to become a significant player in the global coffee industry.
However, this growth will likely be shaped by India’s own cultural context, rather than a wholesale adoption of Western consumption patterns.
International investors like Verlinvest will need to navigate these cultural nuances while capitalising on the country’s vast potential, positioning brands in a way that resonates with India’s emerging coffee identity.
Coffee Intelligence
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