DropKaffe, an on-demand ready-to-drink beverage startup, has raised a pre-Series A funding of $550,000 from GrowthStory, Apurva Salapuria, Kanwal of Fireside Ventures, Naukri CEO Hitesh Oberoi, Primac Group Director Sidharth Pansari, and Nirupa Shankar, Brigade Group.
DropKaffe had initially raised a seed round of $300,000 led by Manish Singhal, Silicon Valley-based fund P39 Capital, and other angels based out of India, US, and Singapore. The current funding will be used to ramp up their production capacity, marketing, and talent acquisition.
Speaking of their plans, Chaitanya C, Co-founder of DropKaffe, says they are aggressively ramping up their distribution and availability across several modern trade outlets like Godrej Nature’s Basket, HyperCity, Namdhari’s and FoodWorld and even food delivery and hyperlocal platforms like Swiggy, Grofers, Faasos and BigBasket.
Started in 2015, Currently, DropKaffe beverages are available in Bengaluru. It was founded by Lakshmi Dasaka, Chaitanya Chitta, Rakshit Kejriwal and Amar Yashlaha. Currently available in Bengaluru, the team plans to expand to Chennai and Hyderabad in the next three to four months. The first product line in their ready-to-drink category is Coffiato, which is a line of cold coffees.
Chaitanya adds that DropKaffe follows a no preservatives and only natural ingredients policy, thus limiting the shelf life of the product. The team also plans to launch milk and fruit-based smoothies in the near future.
A number of beverage focused brands have raised funding in recent months. ChaiPoint, a tea outlet brand, raised $10 million funding from Eight Roads Ventures (formerly Fidelity Growth Partners India), with participation from Saama Capital and DSG Consumer Partners. Chaayos, the NCR-based tea-outlet chain, had raised $5 million in funding from Tiger Global, and Teabox from Siliguri has raised $6 million from Accel Partners to take Indian tea to the world.
But DropKaffe operates in a segment where it competes, almost directly,with biggies like Nestle's Nestea, Coco Cola, Fresh Gold and Godrej along with newer ethnic drinks brand Paperboat. The packaged food industry is extremely large - estimated to touch $52 billion by 2017. However, there are several challenges in the ready-to-drink beverages market. Most expensive of all is building up the brand, which traditionally needs high ad spends. That requires deep pockets and DropKaffe, like Paperboat before it, will have to focus on brand building to ensure success.