Making Coffee The New Chai In India

Abhijeet Anand, a petroleum engineer from IIT Dhanbad with over eight years of experience at Schlumberger, transitioned from the oil industry to the world of coffee after observing a gap in India’s market. Inspired by his experiences in Europe and the contrast between how coffee is perceived abroad and in India, Anand founded abCoffee in 2022. abCoffee is a technology-enabled, grab-and-go coffee chain that aims to make quality coffee accessible and affordable, shifting its status from a luxury item to a daily necessity. With an ambitious vision to establish 10,000 outlets across India by 2030, abCoffee’s 2024 growth strategy includes expanding to 150 outlets, with plans to reach 1,000 by March 2026.

Challenging Giants with a Coffee-First Approach
While major coffee chains like CCD, Starbucks, and Barista dominate the market, abCoffee has taken a different approach. For Anand, abCoffee is not just about creating a third space for people to hang out; it is a product-centric company. The brand's mission is simple: great coffee at the right price, available everywhere.

One of abCoffee's key differentiators is its "coffee on the go" model. Traditional cafés often make customers wait for up to 17 minutes for a cup of coffee. abCoffee prioritises efficiency, ensuring customers can grab their coffee quickly and get on with their day. This approach resonates with today’s fast-paced lifestyles, where time is of the essence.
Affordability is another cornerstone of abCoffee’s strategy. The brand offers high-quality coffee at prices that make it accessible to everyone, reinforcing its position as a daily lifestyle product. This focus on product quality, speed, and affordability has helped abCoffee carve out a niche in India’s competitive coffee market.

Thriving in a Competitive Market
The coffee sector in India is highly competitive, but abCoffee has managed to stand out. India’s coffee market is still in its early stages, with per capita consumption much lower than in many other countries. Despite the global coffee market growing at a modest 2 per cent, India is experiencing a growth rate closer to 12 per cent, making it a lucrative space for new entrants.

abCoffee has leveraged this growth by staying true to its core principles: offering great coffee at affordable prices, operating efficiently, and tailoring its menu to the Indian palate. The brand introduces new beverages monthly, ensuring that its offerings remain fresh and exciting for customers.

Scaling Up with a Different Strategy
In March 2024, abCoffee secured Rs 28 crore in funding for its expansion plans. Unlike many other coffee startups, which invest heavily in creating large, extravagant cafés, abCoffee has taken a more cost-effective approach. The brand focuses on building smaller, high-efficiency outlets with low capital expenditure. This strategy allows abCoffee to keep its costs low while generating higher revenue per square foot than traditional cafés.

This approach has not only enabled abCoffee to expand quickly but also to achieve profitability at an early stage. Anand believes that this model is more sustainable and scalable in the long-term, especially in a market where price sensitivity is a critical factor.

Performance and Consumer Trends
abCoffee has been growing at an impressive rate of 20-25 per cent month-on-month. The majority of the company’s revenue—around 85-90 per cent—comes from beverages, reinforcing its focus on being a beverage-first coffee company. This focus allows the brand to innovate constantly, introducing five to seven new items to its menu each month.
Consumer preferences vary across different regions in India, and abCoffee tailors its offerings accordingly. For instance, cold beverages are more popular in Delhi, while Mumbai shows a more balanced preference for both hot and cold drinks. These insights help the brand cater to local tastes while maintaining its commitment to delivering high-quality coffee.

“The company's current focus is on ensuring accessibility, aiming to be located within 10 to 15 minutes of its customers, either through physical outlets or delivery options. This focus on convenience is a critical factor in abCoffee’s continued success and growth,” says Anand.

Looking to the Future
Anand sees a bright future for India’s coffee market, predicting that coffee shops will become as ubiquitous as tea stalls are today. Coffee, once seen as a luxury, will be democratised, making it accessible to people from all walks of life. “Coffee will become a mainstream daily habit for many Indians, much like chai or filter coffee in the southern states,” says Anand.

“By 2027 Indian coffee market could expand to Rs 5 billion, far exceeding current projections. abCoffee plans to play a significant role in this growth by continuing to focus on quality, price, and accessibility.”

The Journey Ahead
As abCoffee continues to expand, it is clear that the brand is not just selling coffee—it is creating a movement, making coffee an integral part of daily life for millions of Indians. With ambitious plans for the future, abCoffee is well on its way to becoming a household name in India’s rapidly growing coffee market.