Blue Tokai Bets On Premiumisation & Retail Scale To Power INR 1,000 Cr Revenue Push

It is no longer merely a storm in a coffee cup. A $2.9 Bn market for speciality brews in India is growing at 13.6% a year, reaching more than $6.2 Bn by 2030. This surge is steered by a 377 Mn-strong formidable economic force called GenZ.   

The booming consumer class of 18-24-year-olds is aided by millennials, those aged 25-39. Blue Tokai woke up and smelt the coffee in this demographic that seeks premium, artisanal experiences, served by concurrent growth in the café culture aesthetic and powered by social media trends. 

The coffee roaster ended FY25 with a topline of INR 340 Cr and aims to surpass INR 650 Cr ARR this fiscal. 

“India’s specialty coffee scene is rapidly maturing, now capable of standing shoulder-to-shoulder with any renowned global coffee origin. With distinct advantages like a diverse farming ecosystem, peculiar microclimates and sustainable practices yielding unique flavour notes derived from local spices and fruits, the Indian coffee landscape is uniquely positioned for global recognition,” Blue Tokai cofounder Shivam Shahi told Inc42. 

In a freewheeling conversation with Inc42, Shahi discussed how India’s coffee market was shifting from niche roasters to a full-blown specialty coffee movement, and how consumer expectations around coffee quality, experience and pricing were changing. 

He also talked about Blue Tokai’s long-term vision for revenue, retail footprint and brand evolution in specialty coffee. After the recent funding, Blue Tokai has geared up for aggressive business expansion, including new store opening, upgrades to its production and bakery facilities and technological enhancements. 

Here are edited excerpts from the interaction with the Blue Tokai cofounder and COO:

Inc42: Over the past decade, India’s coffee landscape has shifted dramatically – from niche roasters to full-blown specialty brews. How did this reshape consumer expectations around coffee?

Shivam Shahi: With a better understanding of coffee, consumers are now more open to experimentation, moving beyond the ordinary and seeking novelty. This shift has driven product innovation across various stages of the coffee journey – from the farms to the cup.

Earlier, limited awareness and a nascent industry meant that most brands focussed primarily on common beverages and set up coffee processes.

Today, there is a clear momentum for quality innovation within various product categories and formats. The entry of new players offering high-quality products in the specialty coffee sector is further driving this movement.

Customers now seek high-quality coffee beverages and are willing to pay a premium for these experiences. When it comes to overall experience, I believe consumers increasingly prefer immersive, process-driven coffee experiences rather than just upgraded café interiors.

Inc42: The speciality coffee market is projected to grow at 13.6% a year through 2030. What are the most defining consumption trends today – be it GenZ preferences or retail distribution or tech adoption – that make you believe India is finally entering its coffee moment?

Shivam Shahi: The resurgence of coffee culture across all customer segments, whether millennials or GenZ, is a major factor pushing the coffee moment. Coffee has evolved into more than just a beverage and is viewed as a lifestyle choice and a social experience, attracting a wider demographic than ever.

Accessibility is perhaps the most defining factor for this category. India is still heavily underpenetrated in terms of cafés and there is a strong correlation between the number of cafés and the frequency of coffee consumption. With low per-capita coffee consumption and a growing appetite for premium, quality coffee, the opportunities to expand both café density and home brewing are significant. The growth in home brewing, in particular, can be accelerated through quality, convenience-driven and differentiated products.

When we started, for instance, we estimated that we would open just four cafes in South Delhi in 2017. Today, we operate over 30 stores in the area, yet there’s no cannibalisation. This rapid expansion only reinforces our confidence that the category is on the cusp of substantial growth, with ample opportunities for both new and existing players.

Inc42: Blue Tokai has evolved from a D2C brand to a nationwide cafe and FMCG chain. Where do you see your revenue, footprint and branding by the end of 2027?

Shivam Shahi: We began as a home roaster and what has driven our growth into a multifaceted business is staying closely attuned to consumer needs, anticipating trends and innovating ahead of the curve to continue delivering value.

In terms of revenue, we closed FY25 at INR 340 Cr in revenue and are on track to surpass INR 650 Cr ARR in FY26. This positions us well to achieve an ARR of approximately INR 1,000 Cr by December 2027. This reflects our goal to scale significantly while maintaining profitability through a strong omnichannel approach.

On the retail front, we are on track to operate around 250 stores by March 2026, aligned with our current strategy. Over the next year, we aim to open 150 more outlets, with a longer term vision of reaching 800 stores by 2027.

Our focus will be on deepening our presence in existing locations to build stronger brand loyalty and optimise operations in established demand zones, rather than expanding into many new cities.

Blue Tokai is today a trusted brand among millennials, built on transparency, honesty and product quality. We aim to reinforce this trust by hosting events, forming partnerships, creating engaging content, improving our farm processes and delivering high-quality products consistently.

Our FMCG initiatives will focus on making home brewing more convenient, along with introducing unique market offerings. Leveraging technology and process improvements will be key to enhancing quality and consistency across our product range and cafes. This approach will solidify our leadership in premium specialty coffee and deepen our connection with the community by delivering an exceptional customer experience.

Inc42: After your recent funding round, how is capital being strategically distributed across physical expansion, RTD and D2C products, and backend technology?

Shivam Shahi: We are an EBITDA-positive business and expect to maintain this status despite our aggressive growth plans. Approximately 70% of the funds raised are allocated to capex for new store openings and business expansion. Around 10% is allocated to upgrading our production and bakery facilities to support quality and scale, while the remaining 20% is reserved as a buffer for new initiatives, technological upgrades and strategic investments.

Inc42: What is the ROI horizon you expect for each vertical, and how do they compound to your INR 1,000 Cr goal?

Shivam Shahi: We have never operated any channel at negative EBITDA. The previous burn was largely the result of deliberate strategic investments to build a capable team, particularly in backend operations and R&D. On the front end, our focus has always been on running profitable business operations. 

FMCG and RTD accounts for about 25-30% of the business. As we scale, we aim to maintain this split, ensuring steady growth across both our retail and FMCG verticals.

Now, with backend expenses effectively offset by front-end contribution margins, we are confident that achieving an EBITDA of INR 100 Cr at a revenue milestone of INR 1,000 Cr is feasible, if we can avoid costly missteps while continuing along this growth path.

Inc42: As you push into Tier II and III cities such as Lucknow, Kochi, Chandigarh, what specific behavioural or economic signals make these the next growth frontiers? And how do you balance affordability and aspiration in these markets, and what changes do you make in your store format, menu, or brand positioning?

Shivam Shahi: Customers in cities such as Lucknow, Kochi, and Chandigarh closely mirror the preferences of their metro counterparts. Their expectations are focused on high-quality products, rather than seeking cheaper options. We have been operating in Chandigarh and Dehradun on the same logic for quite some time and have found no reason to alter it.

Economically, fixed unit costs such as rent, manpower, and COGS remain broadly similar across markets. While rental advantages in these cities can be offset by logistics and management expenses, it suggests that simply lowering prices or drastically repositioning the brand to suit these markets may not resonate with consumers. If a brand is not confident that it can command the same price point and customer loyalty, entering these markets may not make sense.

Consumers in these cities tend to spend more time in stores and expect a richer experience. Our approach is therefore to enhance the overall experience through store ambiance, menu offerings, and brand positioning that resonates with their aspirations. We aim to maintain our premium quality while adapting the experience to suit local contexts, rather than compromising on brand essence or price point.

Inc42: Behind every successful café chain lies a strong supply chain. What key backend investments in roasteries, in-house bakeries, cold chain logistics, or training, do you prioritise to ensure consistency at scale?

Shivam Shahi: Our biggest competitive advantage is that we manufacture our own products and do not believe in outsourcing. From coffee farms to roasting, baking and food production, we have invested significant time and effort to build a robust backend, which, to my knowledge, is unmatched at this scale in the industry.

Our direct sourcing from coffee farms allows us to have a say in the farming and cherry processing methods. This gives us a strong edge in ensuring quality and consistency right from the source, further strengthening our supply chain oversight.

While this vertical integration provides a significant moat, it also poses expansion challenges, as balancing capacity and projections is crucial. To address this, we have been continuously upgrading our backend, incorporating learnings from our operations, and we can now enhance our facilities and supply chain management to support growth for the next seven years.

We expect to complete these enhancements within the next six to eight months. It is important to recognise that building this infrastructure took us nearly 12 years. Since day one, we have followed a principle of selling what we make, not trading market-ready products. This focus on core manufacturing and end-to-end process control will continue to underpin our growth and quality standards.

Inc42: How do you see the café market in India? How does Blue Tokai stand out in a competitive ecosystem? 

Shivam Shahi: The café market in India is not as crowded as it appears. In fact, it is heavily underpenetrated by branded cafés. In metro cities, there is roughly one branded café for every 3 to 5 lakh people, whereas in countries like the US or China, there is roughly one café for every few thousand. Nationally, India has only about 2,000 to 2,500 branded cafés, compared to around 30,000 in New York and 10,000 in Shanghai. 

The influx of new players is a positive development, as it helps build the category and raises consumer awareness. Otherwise, it would have been challenging for a handful of brands to establish and grow the category in a relatively underdeveloped market. 

Our unmatched backend gives us control over quality, consistency, and traceability at our scale – something not easy to replicate.

On the front end, we consistently push for innovative, unique products that align with our philosophy of freshness and quality, rather than just following market trends. This, coupled with our focus on customer service and experience, further distinguishes us.

Our storytelling, emphasising transparency, Indian art, traceability, and craftsmanship, fosters deep customer loyalty, turning coffee into an experience. Lastly, our pricing strategy of offering the best quality at a mass premium price point ensures customers perceive real value.

Inc42: As the category matures, how are you navigating the tension between mass premium and speciality coffee, ensuring growth without diluting brand equity?

Shivam Shahi: Globally, coffee is not viewed just as a premium beverage. In many countries with a well-developed coffee culture, speciality coffee accounts for over 50% of the market share, reflecting broad appreciation and demand for quality.

In India, however, there is a common perception that premium or high-quality coffee must come with a steep price tag. To navigate this tension, we focus on delivering exceptional quality and a unique experience at a mass premium price point. This allows us to grow our customer base without diluting our brand identity.

Our strategy is to offer products that are genuinely high quality, transparent, and rooted in craft, making premium coffee accessible and aspirational. We are committed to educating consumers about the value of quality, traceability, and craftsmanship, so that they associate our brand with authenticity and excellence, rather than just price.

Inc42: Blue Tokai is expanding in Japan, Dubai, and other geographies. How do you localise your cafés without losing your Indian origin story?

Shivam Shahi: Indian coffee has distinct advantages such as sustainable farming practices and unique flavour notes derived from local spices and fruits, thanks to our diverse farming ecosystem and microclimates. This provides a significant edge in the global coffee market, and we are actively positioning Indian coffee among the world’s top origins.

We have maintained the core of our business philosophy and operating model. Our cafés in foreign markets reflect the same brand ethos, offering high-quality, Indian speciality coffee without compromising on authenticity.

Even on the menu, we have largely retained international offerings, rather than over-localising, reflecting our belief that Indian coffee’s story and quality speak for themselves.

While we may consider aligning our food offerings with local preferences in the future, this will not be a major challenge. 

Inc42: What are the biggest operational and branding hurdles in positioning Blue Tokai as a global Indian coffee brand that can compete with the likes of Blue Bottle or Stumptown?

Shivam Shahi: Every demography and market is unique, and just as in India, where a brand may thrive in Delhi or Mumbai but face challenges in Hyderabad, similar differences exist internationally. Our approach is to follow the same gradual learning curve as we did in India, understanding that building a global presence takes time. We are in no rush and do not expect to achieve this overnight.

Adapting to each country’s specific preferences, consumer behaviour, and operational nuances while maintaining our core standards will be a significant challenge. Only a few Indian brands have successfully scaled internationally, particularly those that are committed to quality. 

Our focus remains on sustainable growth, consistent execution, impactful storytelling and staying true to our brand’s principles as we navigate this journey.

Inc42: Lastly, please tell us about your innovation pipeline in convenience-led formats, for example, pods, cold brews, or collaborations.

Shivam Shahi: In our FMCG division, we have a strong pipeline of convenience-led products, and in 2026 we will launch our highest number of FMCG products to date. Among these, we are excited about the upcoming launch of our high-protein bread in collaboration with Suchalis, along with several other innovations.

In coffee, we have begun piloting low-caffeine coffee beans, which we plan to scale based on consumer feedback. Additionally, we are experimenting with liquid espresso shots for home brewing, along with several other innovative offerings scheduled for rollout in 2026.

Our focus remains on continuously enhancing convenience, expanding our product portfolio, and meeting evolving consumer needs, all while maintaining our commitment to quality.