Brewing the perfect mix: How this D2C coffee brand generates 75pc sales through its website
According to IBEF, India is the third-largest producer and exporter of coffee in Asia. In fact, it is the sixth-largest producer and fifth-largest exporter of coffee in the world.
Besides, of the total coffee produced in India, only 30 percent is consumed domestically while 70 percent is exported.
Seeing this trend, Bharat Sethi decided to launch— a Delhi-based coffee brand — which he calls a “digitally native FMCG company.”
The direct-to-consumer brand manufactures and sells different and innovative coffee products through its online and offline channels.
Recently, it raised an undisclosed amount as part of its pre-Series A funding from a slew of investors led by Refex Capital.
Founder Bharat Sethi claims that the business reported an annual recurring revenue (ARR) of Rs 10 crore for the calendar year December 2020. He also claims the brand has grown 5X during the pandemic.
Building a D2C FMCG brand
Bharat always wanted to be an entrepreneur. In 2016, when his startup PosterGully was acquired by an exhibition company, he started looking for new opportunities. This is when he realised that the coffee industry is “highly underpenetrated.”
“When we started speaking to the consumers, we realised there was no innovation happening despite coffee being one of the fastest-growing sectors,” he tells SMBStory.
While Bharat realised this gap, the decision to enter the market was not easy. Several reports suggest that the Indian retail coffee is dominated by Hindustan Unilever (HUL) and Nescafe.
Besides, café chains like Cafe Coffee Day and Starbucks have further made the market more crowded. He says it is difficult to compete with the bigger brands as they “occupy the shelves, control the market, and then you get thrown out.”
While retail had a bleak opportunity for a new coffee brand, the online space also had nothing new to offer. However, he found an opportunity to tap.
Taking data-driven decisions
In 2018, Bharat started researching to launch a data-driven company. “Unlike my previous venture that was only governed by passion, I decided to take a data-driven approach this time,” he says.
Bharat started collecting and collating data by speaking to several distributors, super stockers, and traders, among others in the market.
By the end of 2018, he concluded that he needed to build a brand, which has taste, quality, and gives the much-needed caffeine kick that today’s consumers look for to make their days or mornings fresher.
His research made him realise that the fourth wave of coffee — which is all about bringing the coffee experience home — means he will have to build a brand that makes great instant coffee — convenient to procure, make, and affordable at the same time.
Brewing the perfect mix
Rage Coffee’s USP lies in its small-batch crystallisation process used during manufacturing.
Bharat doesn’t give many details since he wants to protect the IP, but adds that the coffee is manufactured through third-party sources, and the products are brought to the company’s facility in Delhi to carry out the final phase of enhancement and flavouring.
Rage Coffee products — that are vegan-friendly with no added sugar — are infused with six plant-based vitamins. The coffee beans and other raw materials for packaging come from different places in India and the world, including Chikmagalur, Indonesia, Firozabad, etc.
It offers Irish Hazelnut, Dark Chocolate, Chai Latte, Butterscotch Delight, Sparky Orange, and a few other flavours in the instant coffee range.
A 100 grams jar of instant coffee is priced at Rs 449. These are also available in 33, 65, and 98 grams, and the coffee shots are priced at Rs 50, Rs 30, and Rs 25 per shot.
As a D2C focussed brand, about 75 percent of its sales come from its website, while 25 percent is generated from sales on ecommerce platforms, including Amazon and Flipkart. In fact, it also sells through its distributor network of 20 in the offline space.
Rage Coffee has also innovated with the packaging of its products. It also launched cold brew bags (contains five small sachets), which have zero plastic packagings. The packet is made up of corn, fibre, and mesh. One cold brew bag is priced at 500.
Listening to the customers
Bharat says the reason why the company has been able to scale is because of its customer-centric approach.
The brand has a “no questions asked” refund policy, which Bharat claims have been availed only by 100 customers so far. It has been able to scale up because of its repeat customers, which account for 35 percent of total customers.
During the first quarter of this calendar year, about 50 percent of its sales came from Rage Coffee’s repeat customers.
In the initial years, Bharat would obsessively seek customer feedback. Anyone who would give low ratings below 4 to the brand on Amazon would immediately get a call.
“My team, and even I, would ask numerous questions from our customers like, ‘Why did you not like the coffee?’ ‘What is wrong?’ ‘Didn’t you get the caffeine kick?’ and other things related to taste,” he adds.
Bharat says he is focussing on building a brand of innovative coffee products. The brand launched a special coffee concentrate keeping in mind the South Indian market, which is largely dominated by filter coffee.
The concentrate is not only for the South Indian market, but it will appeal to those who like the bitterness associated with filter coffee. The ground coffee is priced at Rs 499.
Going forward, the brand plans to launch in the UAE markets. It is already selling in the US and UK. In fact, Rage Coffee is gearing up to get listed on Walmart.