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Coffee chains such as Blue Tokai, Third Wave Coffee and Dope Coffee are expanding the number of outlets, helped by the availability of cheaper real estate and younger consumers seeking new hangout spots.

The relatively new chains believe that their distinct branding, store aesthetics and an assortment of gourmet food will draw younger coffee-drinking consumers.

Third Wave plans to open more than 300 cafes over the next few years. Dope’s packaged coffee is set to open its experience centres in Mumbai and Delhi, and, after a pandemic-induced slump, Blue Tokai, too, is opening in cities beyond Delhi-NCR.

The expansion is symbolic of an uptick in coffee consumption, especially among consumers seeking speciality coffee and convenient meeting places. Besides, with real estate costs falling due to the pandemic, newer coffee firms are locking up prime locations to open cafes.

In the last decade, higher disposable incomes, younger consumers and greater exposure to global trends have driven up demand for coffee that is “better than just a commodity coffee", said Shivam Shahi, co-founder and chief operating officer of Blue Tokai.

Blue Tokai started in 2013-14 as a roasting company—sourcing coffee from single estates in Karnataka and Tamil Nadu, ground according to the customer’s requirement, and shipped in a packaged format. The chain opened its first cafe in 2015, but expansion has picked pace in the last six months. It currently has more than 40 cafes; by mid-January, it will cross 50. It plans to have 120 -150 cafes in the next two years.

The number of people we see coming into the fold of ordering speciality coffee is huge, said Rizwan Amlani, who started Dope Coffee in 2016.

It plans to open experience centres and host shop-in-shops with existing restaurant and cafe chains such as Social and Mocha. It plans to add a total of five outlets annually—with a combination of such store-in-stores and stand-alone outlets.

“People are seeing what’s happening in the coffee scene globally. They realize that coffee is not supposed to taste like burnt caramel or had black. Instead, it can taste of cherry or dragon fruit," he explained.

Third Wave’s Sushant Goel also points to “tremendous revenge consumption" that he reckons will ensure that offline businesses are here to stay. Goel said that the availability of high-quality real estate in key markets in the last six to 12 months is helping the brand expand.

“Now is the right time to press the accelerator and grow the business to multi-fold from here onwards," he said. The brand has 21 cafes in India—18 in Bengaluru and three in Delhi and Gurgaon. It plans to expand to over 300 stores in 20 cities by FY ’23.

Coffee at Third Wave is about 25% cheaper than Starbucks. Goel said the availability of fresh food is a key insight the chain picked up from consumers.

These brands are expanding in a market served by entrenched global chains such as Starbucks, Costa Coffee, Coffee Bean and Tea Leaf, among others. However, homegrown Café Coffee Day also saw its store count shrink from 1,722 in 2017-18 to 1,192 in 2019-20, creating a vacuum to be filled.

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