Brewing up a business that needs a few cold, artistic touches
People in India snack a lot but won’t drink anything other than tea and water. One has to be resilient to survive
Not to be confused with regular cold coffee, cold brew is a form of coffee that is extracted by steeping ground coffee beans in cold water thus cutting down on its acidity and bitterness. While cold brew emerged as a big trend in the US few years ago, three friends—Arman Sood, 26, Ajai Thandi, 28 and Ashwajeet Singh, 27, decided to capitalise on the trend and set up Sleepy Owl in June 2016 to sells cold brew kits and packs online as well as through retail outlets in Delhi NCR.
A coffee brewing enthusiast, Singh would often experiment with roasting and brewing his own coffee while studying law at O.P. Jindal Global University in Sonepat, Haryana. At the same time, Thandi, a childhood friend of Singh’s, who was working with JP Morgan in New York, had discovered cold brew in the US. Given their mutual love for good quality coffee, they would rue the fact that most people in India use instant coffee at home. “We realised that India has some of the best coffee suppliers in the world but it’s all exported. Brewing a good cup of coffee is an art which requires expertise and equipment. We wanted to remove those complications and create something for people who wanted to consume good quality coffee at home,” Thandi says. According to Thandi, cold brew is 70% less acidic, less bitter and naturally sweeter compared to normal coffee. “We thought it would appeal to the Indian palate because of these reasons. And also to millennials who consume a lot of cold coffee,” he adds.
Banker and lawyers to entrepreneurs
Singh and Sood, who met at law school, realised that they both wanted to be part of entrepreneurial ventures eventually and even setup their own start-up. While at O.P. Jindal, the duo started an e-commerce venture selling party and drinking accessories. Post law school, Sood went on to work with an edutech start-up, Embibe, while Singh joined a denim company. In 2015, Thandi gave up his investment banking job in the US to return to India. The trio’s decisions to change career paths didn’t meet with immediate approval from their families. But as Thandi puts it, their conviction in the idea managed to see them through.
Sleepy Owl started out of a two-bedroom apartment in Dwarka owned by Singh’s parents. “We would live there as well as brew and pack our coffee there,” Thandi says. They spent about six months experimenting with coffee beans, roasts and brewing processes till they found the right formulation. They source single-origin Arabica beans grown at 5300ft in Chikamaglur which is then roasted in small batches and ground to a certain specification. The ground coffee is then stepped in cold water for 20-24 hours to extract the brew, filtered and then packed. Within six months of their launch online, retailers started approaching them to stock Sleepy Owl products in their stores. Today, they retail out of 110 stores in Delhi and ship across India. Recently, they raised $500,000 seed funding from DSG Consumer Partners.
When Sleepy Owl launched over two years ago, they found it expensive and difficult to stock their products with retailers. So, they changed tactics and went online. “In India, F&B sells from retail spaces. Only about 1-1.5% people buy groceries online. But retailers were sceptical about listing our products. So, we went against market theory which states that FMCG products should be made for retail only,” Thandi says. The gamble paid off when their customers started asking for their products at popular retail stores and six months later, Sleepy Owl was in stores.
Their first product was Brew Box: this 1.5 litre ready-to-drink coffee packed in a sealed bag placed inside a carton box fitted with a small tap. “It was heavy and difficult to be shipped outside Delhi. Plus, it had a one-month shelf life,” Thandi explains. They had to go back to the drawing board and figure out another product that would cater to a wider audience. “Cold brew requires coffee, filtration, water and time. We figured that everyone has a jar and water at home where they can steep the coffee as per their convenience. So, we decided to focus on filtration,” he adds. This is how their Brew Packs were designed containing roasted and ground coffee packed in Japanese filtration bags.
Chasing the millennial dream
According to Thandi, beverage is the hardest category for start-ups to break into. “People in India snack a lot but won’t drink anything other than tea and water. One has to be resilient and have fortitude,” is Thandi’s advice. Above all, he says, it pays to listen to one’s customers and take feedback.
Cheers To That is a series which looks at beverage start-ups set up by millennials and how they deal with trials and triumphs.
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