What Is Special About Third Wave Coffee? Business Model Breakdown

Third-wave coffee was a distinct revolution in the coffee industry that focused on quality, sustainability, and transparency. It occurred in the US in the 1990s. 

Do you know that a similar movement took place in India too? 

Yes, in Bengaluru!

Third Wave Coffee is a Bengaluru-based startup that pioneered India’s artisanal coffee culture. What’s so special about it? How did it become so successful? You may wonder.

Go through this article and you will find the answer!

Third Wave Coffee: A Brief Overview

We all are aware of the fact that Coffee is the highest consumed beverage in the world. But when it comes to Coffee vs Tea in India, Tea is the winner. Reason? Apart from personal tastes, a lack of proper knowledge about coffee brewing is also responsible for it. To break this monotony, the trio- Sushant Goel, Ayush Bathwal, and Anirudh Sharma decided to serve the perfect coffee that will suit the Indian palette. 

Third Wave Coffee Roasters began its journey in Bengaluru but now it has over 70 cafes across different cities in India.

Let’s have a brief overview of the company-

What is special about Third Wave Coffee Roasters?

Third Wave Coffee Roasters is a manufacturer and distributor of easy coffee bags. With these coffee bags, you can make barista-quality coffee without the need for any equipment. But other coffee companies also provide coffee bags. But what’s so special about the brand Third Wave Coffee Roasters? What makes it special and distinguished from contemporary coffee brands?

Well, the answer lies in its name and product. As the brand’s name says- “Third Wave Coffee Roasters.” This name is inspired from the “Third Wave Coffee” movement in America in the 1990s. It focused on specialty coffee that focused on the entire supply chain using single-origin coffee.

It serves the perfect blend of 100% Arabica coffee. Also, the other coffee beans are obtained from 14 different estates in North Karnataka. The firm offers two types of coffee-

• Arabica Coffee: Comes from the Coffea Arabica plant found in Ethiopia (African country) and India (Karnataka). These are rich in flavor, sweeter, low caffeine content, and less bitter which makes them unique to other coffee types.
• Robusta Coffee:  It comes from Coffea robusta, a plant found in western Saharan Africa and Karnataka. It is quite bitter and rich in Caffeine. Also, it is rich in antioxidants that provide health benefits like lower blood pressure and high metabolism. It is comparatively healthier.

The brand Third Wave Coffee also offers specially crafted blends for its customers.

Reasons for Specialty

Some of the key aspects of the Third Wave Coffee business model that make it special are-

• Direct Relationship with Coffee Producers: They emphasize building sustainable relationships with farmers and working closely with them to ensure fair and sustainable practices. By establishing direct trade relationships, they can source high-quality beans and support the livelihoods of coffee farmers.
• Artisanal Roasting Techniques: They take great care in roasting their beans to bring out the optimal flavors and aromas. This attention to detail and craftsmanship sets them apart from mass-produced, commercial coffee brands.
• Educating Customers about Coffee: The goal is to educate consumers about the origin, processing, and flavor profiles of the coffee they are consuming. By sharing the story behind each cup of coffee, Third Wave Coffee Roasters aim to enhance customer appreciation and engagement.

Third Wave Coffee Funding

Till now, Third Wave Coffee has raised $6 million (Rs.49.2 crore) in total 3 funding rounds. The lead investors were-

• Arpan Sheth
• Ayyappan Rajagopal
• Sujeet Kumar
• Neelesh Bhatnagar
• Nikhil Kamath

Its latest funding round occurred on December 15, 2021.

General Information about Waves of Coffee

Before diving deep into Third Wave Coffee Roasters, it is important to have an understanding of the waves of coffee. The following points will help you to realize the depth of the term “Third Wave Coffee” and the revolutionary movement related to the beverage-

These movements primarily occurred in America and Europe. 

Third Wave Coffee is a distinct movement in the coffee industry that focuses on quality, sustainability, and transparency. Unlike previous waves, it emphasizes the craft and artistry of coffee production, from the sourcing of high-quality beans to the precise roasting and brewing methods used. This movement values the unique flavors and characteristics of different coffee varieties and seeks to elevate the coffee-drinking experience for consumers.

Now, it’s time to dive deep into the Third Wave Coffee Roasters business model.

Working Strategy: How does Third Wave Coffee work?

Third-wave coffee roasters operate with a focus on quality, sustainability, and the unique characteristics of coffee beans. 

Its working strategy typically involves the following methods-

1. Sourcing High-Quality Coffee Beans

The firm prioritizes sourcing specialty-grade coffee beans from specific regions or farms known for producing exceptional coffee. It establishes direct relationships with coffee farmers and cooperatives to ensure transparency and fair prices. This factor makes them special when it comes to the players of the Indian coffee industry.

2. Emphasis on Traceability and Coffee Education

The term “Traceability” refers to the ability to determine the origin of a product. The startup “Third Wave Coffee” knows and shares information about the origin and journey of the coffee beans of your cup. 

It prioritizes educating consumers about coffee, including its origin, processing methods, and tasting notes. They aim to elevate the coffee-drinking experience by providing information and engaging customers in the story behind each cup of coffee. In this way, they educate the customers and folks about coffee. Thus, it increases the customer base of the coffee industry.

3. Artisanal Roasting

Third-wave roasters take a hands-on, artisanal approach to roasting. They use small-batch roasting techniques, carefully monitoring time and temperature to bring out the unique flavors and characteristics of each coffee bean. This allows them to achieve nuanced and complex flavors in their coffee.

4. D2C Sales

It sells coffee directly to consumers through its specialty coffee shops or online platforms. This allows the firm to maintain control over the entire coffee experience and build a direct relationship with their customers

5. Quality over Quantity, and Community Building

Don’t you wonder why this coffee startup hasn’t expanded like others despite being established 7 years back? Because instead of mass production, Third-wave coffee roasters focus on quality and a personalized touch. It offers limited edition or seasonal roasts to cater to the preferences of coffee enthusiasts. The firm fosters a sense of community around its brand. 

It hosts coffee tastings, workshops, or events to bring people together and share their passion for coffee. It also over franchise partnership. We will cover it in the upcoming sections.

6. Branding & Packaging

As you know, packaging plays an essential role in showcasing the brand’s identity and commitment to quality. Third-wave coffee roasters invest in aesthetically pleasing and eco-friendly packaging to appeal to the target audience.

Revenue Sources: How does Third Wave Coffee make money?

Third-wave coffee roasters generate revenue through various sources related to their specialty coffee products and services. Some of the key revenue sources are described below-

1. Coffee Sales

Being a D2C brand, its primary source of revenue is “Coffee Sales” meaning it makes money by selling its coffee beans, brewed coffee, and other snacks. Also, it offers a range of single-origin and blended coffees. Each of them has distinct flavor profiles to cater different preferences of the customer. It includes both online and offline sales.

2. Coffee Subscription and Membership

It offers subscription plans and membership plans where you can receive regular shipments of freshly roasted coffee beans. These subscriptions provide a consistent revenue stream and foster customer loyalty.

3. Franchise

Third Wave Coffee franchise is gaining popularity due to high profits and lesser inputs. The franchise fee is Rs.5 lacs + 18% GST. Other details are described below-

Thus, the franchises act as an important source of revenue for “Third Wave Coffee.” It is planning to open over 300 stores in India this year.

Note: We have explained “10 Most Profitable Business Franchises in India.”

Marketing Strategies

The marketing strategies of Third-Wave Coffee Roasters revolve around creating a unique and premium coffee experience for their target audience. Some of the common marketing strategies employed by it are- 

1. Storytelling & Branding

The firm focuses on telling the story behind its coffee. As you have read above, it emphasizes the origin of coffee and educating the customers. Here, you will get info about every aspect of the coffee that you’re sipping. From sourcing practices, and the efforts taken to bring out distinct flavors of the coffee, everything is described in detail.

2. Educational Content

The firm educates its customers about coffee through blogs, social media posts, or videos. It shares information about different coffee origins, processing methods, and brewing techniques. This method empowers the customers and enhances their appreciation for specialty coffee.

3. Partnerships & Collaborations

The partnerships with local cafes, restaurants, and other vendors allow third-wave roasters to reach new audiences. Also, they create limited-edition coffee blends or merchandise that spark interest and exclusivity.

Conclusion

In terms of the business model breakdown, Third Wave Coffee Roasters has experienced significant growth and plans further expansion shortly. It has already expanded to several Indian cities. This expansion indicates the success of the Third Wave Coffee concept and its growing popularity among consumers.

Overall, what makes Third Wave Coffee special is its commitment to quality, sustainability, and the elevation of the coffee-drinking experience. Through direct relationships with producers, artisanal roasting techniques, and emphasis on customer education this startup is redefining the coffee industry. Thus, Third Wave Coffee Roasters is creating a revolutionary movement in India.