Abhinav Mathur says that they are in discussions with the investors regarding a fundraise and are looking to close the round in the next three to four months
Emphasising that the demand for coffee is rising rapidly in the country, Abhinav Mathur, Chief Executive Officer (CEO) and Managing Director (MD) of Something’s Brewing, a coffee brand eyeing to enhance brewing experiences for consumers, has stated that they are confident of becoming a Rs 200 to 250 crore business in the next five years.
Talking to BW Retail World, Mathur noted that they are in discussions with the investors regarding fundraising and are looking to close the round in the next three to four months. To tap the metros and mini-metros, the company is eyeing to open around 25 stores in the next two years, the top executive said. Edited Excerpts:
As people earn more, they tend to look for better choices, premium choices. What is your take on the premiumisation? Do you see it overtaking the instant coffee?
Premiumisation has already started. If you see on the cafe side, there is higher growth and there is more funding which is going to the speciality premium coffee space like a Blue Tokai or a Third Wave. All the premium coffee brands are getting funded because everybody from the investor to the consumer, they think that people want better experiences and they are willing to pay for it. So premiumisation is already happening.
Standard coffee always will have a space. In South India typical outlets which serve snack and coffee will always be there. But then what is happening, especially in the north and west part of the country is that the consumer thinks of coffee as a slightly more premium beverage than tea.
The trend of premiumisation is also going to continue because the area in which coffee is grown is reducing. There are climate change reasons, so coffee production will go down, quality is going up. When there is higher-quality coffee, the prices go up. So the cafes are also charging more, and they are delivering a better cup of coffee.
What is your current distribution strategy and what is the sales breakup across various channels?
From day one, one thing we decided was that we will be a very high touch business, which means that we will interact very closely with our customers. We do not want to just be a website where you click a button and buy. Most of our sales, 65 to 70 per cent, happens through a human interaction. Almost 55 per cent of our business happens from our own website. Normally, if you talk to any D2C brand, they will say 30, 40 per cent Amazon and then other other ecommerce portals and then something like that.
But in our case, the biggest distribution channel for us is our own website. Second biggest is our marketplaces like Amazon, which is around 20, 25 per cent. Then almost 15 per cent is our own stores. We only have two stores, but already our store contribution to sales is around 15 per cent. It comes in the same high touch bracket. So let’s say 65 to 70 odd percent sales is happening from our own retail formats, either online or offline.
Are there any plans in place to expand offline in this particular fiscal year?
We definitely want to expand offline. We feel that the more retail stores we will have, the more customers will get to experience all the products. We want to open around 25 stores in the next two years, mostly metro cities, but a few mini metros like our second store came up in Surat. After Bangalore, our second store was Surat because we also feel there are some cities like Nagpur, like Chandigarh, which we feel are high potential. There are many coffee lovers there and they are willing to invest in coffee machines.
Our expansion strategy will be metros, but also these smaller cities. And 25 is a number that we are looking at in the next couple of years. This is our own store. Beyond that, we will have 50 to 75 other touch points, which will be multi-brand retail chains like Chroma, Vijay sales, a couple of other gourmet food retailers like Food Square and a couple of others.
Since you want to open 25 stores in the next two years, it will require funds. Are there any plans to raise funds in the future?
We have been talking to a few investors. They are very interested in what we are doing. We think this is the right time. We have reached a certain size where investors are taking our business seriously. When we had launched four years back, everyone thought that this is a very, very niche category. It will not really become big, but now there is a very, very clear interest amongst investors, especially since they’ve seen the way specialty coffee has really blown up and it’s not stopping.
You know, so they do realize that so many consumers are having such good coffee outside their homes. They will want to have a better coffee at home. So they see the need, they see the market coming up. So we have started, it is a process. I think it will take some months, but we are very confident we should be able to close our round in the next three to four months.
What is the revenue goal that you have in mind for this particular fiscal year and for the near term as well?
This year, we are planning to touch around Rs 25 crore of revenue, which will be around a hundred per cent growth over last year. We have been growing at a very fast pace, double, triple digits in the last few years also. We have been recognized by many platforms. In the next five years, we hope to be close to a Rs 200 to 250 crore business. And we genuinely feel that this can be a fairly large business very, very quickly.
While the coffee consumption in India is rising, it is still behind the global average. how do you plan to bridge this gap in India?
We see ourselves as enablers. We cannot change the habit of anyone, but we can tell them what all the options are. Everybody knows instant coffee, and they know how to put instant coffee and put milk and make coffee at home. Very few people know that instant coffee is not coffee, it is just a flavour. Also, the fact that India grows such beautiful coffee and that coffee is mostly exported. Our goal is to spread the word that coffee brewing is not very difficult. You make chai at home.
Nobody has instant tea. They all make tea and but they do not make coffee. They just mix coffee. We just want to make people understand that brewing coffee is also fairly simple. It just needs a little bit of skill, a little bit of knowledge about coffee. We do not know when the gap will be closed, when coffee will be bigger than tea, or will it ever be bigger. Our idea is just to make people know what coffee brewing is all about and then let them choose whatever they decide to choose.
Do you think that the demand in the metro cities is saturating and the smaller cities are going to overtake them going ahead?
For us, we are very early in our growth story. So for now, not really. We think even in metros, there is a high growth. What I can say is there are a lot of coffee lovers which are staying in small cities and they do not get access to good coffee products. So they buy from our site and we are very happy to provide them everything.
We also sometimes arrange trainings for them and all of that. So even mini metros, as I explained to you, are seeing a good growth. But for now, at least in speciality coffee, the segment that we are talking about still for some time, maybe next four or five years, it will still be metro cities. Then it will move to the next few cities.
What is trend when it comes to repeat purchases?
Anybody who buys a machine buys something from us again in the next three to four months. Then every three to four months there is a repeat. In a year, probably two or three transactions are happening. We also have started coffee subscriptions. Many people are now opting for a coffee subscription. So then it becomes a monthly revenue for us. But our subscription numbers currently are very limited because I am not like a Zepto or an Amazon that I can promise next day delivery with their bigger platform that can have better access for consumers.
We keep very select coffees which are very premium, which are not available in the normal public. So we have a slightly differentiated strategy in terms of our coffee offering. We have a product called the explorers box where we give you four coffees of our choice. You buy it and then you get access to some interesting coffees. And if you like, you can order it again and again.
While Gen Zs like the aesthetics of a coffee shop, they also want convenience and want to stay at home and brew. What has been the demand for the machines?
There now products which are very, very convenient to brew. And our whole idea is to tell people coffee brewing is not very difficult, but there were no good machines available till now in India. We have developed a few products. You can start as simple as a French press. You go to a specialty coffee shop, and you are paying Rs 250 for a cup of coffee. Your bill value will come to Rs 1,000, including sandwich and other things. In Rs 1,000 , you can own a French press and make coffee in your own home every day.
Our basic espresso machine is now priced around Rs 12,000, 13,000, something like that. So it is not such a crazily expensive price point. What we also have are equated monthly instalment (EMI) plans because sometimes Gen Zs, they do not want to spend so much money upfront. We offer a six-month scheme. You are just paying Rs 2,000 a month and in six months, you own the machine.
