Luckin coffee effect in India. Is a coffee shop about coffee or is it about providing space for a meeting. Starbucks made a model selling usd 0.5 coffee for usd 5 or more by bundling it with meeting space.
Then brands like Spinelli in Singapore or Magnolia added sinful deserts to complement coffee merging a sugar high with a caffeine high. It works well for some and so it had takers. Then as McDonald is trying, brands started selling a subscription service for coffee hoping that the returning customer walking in daily would buy other things.
And then formats emerged which focused on coffee without offering space to sit. The Bangalore players have been doing this for 200 years. Pay, drink and go. Or take and go. Ab coffee came up with a micro format.
A while ago, one of the new coffee players launched a sourdough sandwich and bespoke coffee format. To make things interesting, they put up a live bar with seven ways of brewing coffee. They don’t cater to the meeting market. But to a market where people want to kill time. Lutyens delhi seems like a good place to start with this format.
The brewing time ranges from 3 minutes to 30 hours. And the taste varies. They don’t use biotech to ferment the beans yet to get the cat poo coffee – but they do a good job of getting different tastes. Most Indians don’t know much about tea of coffee. Tea is a way to get milk and sugar and to wake up. Coffee was milk, sugar and instant coffee. Milk and sugar was common. Someone even mixed tea and coffee to create a different taste.
Book shops from Crossword to Kitab Mahal in Bombay have been adding coffee shops as books don’t sell but the space does. Jewellery shops now serve nespresso. And startups now make cheaper pods. Sleepy owl managed to retail cold brew and even sell it in powder form.
But the winner in the end is neither the consumer nor the coffee startup – it is the retail space landlord.
In the end, the Starbucks model coffee shop is a real estate play. There isn’t much expertise involved in making a decent cup of coffee – and anyone can do it. Some use packaged milk and mineral water to ensure the same taste.
The tea shops haven’t worked though some have burned a lot of money. The truck driver chai has added some options like kulhad chai with jaggery. But in general – people will pay Rs 80 for a good coffee but not for a cup of tea.
Jean King Mike Murjani of Gloria Vanderbilt jeans fame came up with the TWG tea boutiques – a Singapore take on the McLeodganj Tea House of 1860 vintage (arguably the worlds first tea house). But the format struggled in India. The House of Shambhala though now produces the worlds very best teas. Some of which are sold in Harrods under the East India Company brand.
The Tatas bought Tetley in Europe but couldn’t do much. They compete well with CTC tea because Unilever couldn’t get Brooke Bond right.
The game isn’t over yet.
New leaders will emerge.
