How Third Wave Coffee found success by embracing local culture
This article name is inspired by the book Steal Like an Artist! Nothing is original in this world because it’s always inspired. So there is no judgment on Indian founders who look at successful American brands and attempt to replicate their product range, packaging, and brand language in the Indian market.
While it’s true that India’s elite consumer segment is influenced by Western culture and aspires to an American lifestyle, connecting with the broader Indian audience by copying these brands verbatim often leads to failure, while scaling. The difference in cultural nuances between India and the USA is a critical factor that impacts the success and scalability of these brands.
However, this doesn’t mean new ideas don’t work in India.
What worked for Third Wave Coffee
A prime example of success is Third Wave Coffee, which managed to carve out a niche in the Indian market, despite being inspired by the American coffee giant, Starbucks.
Third Wave Coffee tapped into India’s burgeoning café culture, a trend initially popularized by Café Coffee Day but lacked the specialization in premium coffee that Third Wave offered. Unlike Blue Tokai, which focused primarily on the quality and artisanal aspect of coffee, Third Wave Coffee selected its audience better. It leveraged India's growing gig and entrepreneurial ecosystem to provide more than just a coffee experience. But just selecting an audience is not enough. They understood that they were at the helm of a cultural shift with an audience which is value-conscious.
Insight: Unlike the American market, where the café culture is well-established and premium coffee is a norm, India’s coffee culture is still evolving.
Challenge at hand: Consumers are value conscious so just a cup of coffee at Rs 200-250 bracket, might be hard to place in daily consumption.
Reframing the Challenge: How to make Third Wave Coffee a destination for an existing pain point and hook coffee to that experience.
Solution: Third Wave tailored their offerings to meet the growing entrepreneurs, gig-workers and wfh audience's painpoint of not finding a suitable place to work or meet with colleagues.
Creating a Hub for Entrepreneurs
Third Wave Coffee's success can be attributed to its strategic positioning as not just a café, but a vibrant community hub. These cafes became popular spots for entrepreneurs, freelancers, and startup teams to hold meetings, network with venture capitalists, and collaborate with partners. This approach resonated well with the urban, entrepreneurial demographic that sought out spaces conducive to productivity and creativity.
The brand’s alignment with the needs of the gig economy helped position itself for market dominance.
For instance, Third Wave Coffee’s outlets are designed to facilitate work meetings, featuring comfortable seating, ample power outlets, and high-speed internet. This made them ideal venues for informal business gatherings, pitch sessions, and brainstorming meetings. By creating an environment that fostered collaboration and innovation, Third Wave Coffee attracted a loyal customer base of young professionals and startup enthusiasts.
Financial Backing and Expansion
The brand’s unique positioning caught the attention of investors, leading to significant financial backing. Third Wave Coffee raised $35 million in a Series C funding round led by Creaegis, with participation from existing investors like Westbridge Capital. This funding was aimed at expanding their footprint across India, enhancing their supply chain, and investing in technology to improve customer experience (mint) (Business Today).
Cultural Nuances and Market Adaptation
Understanding and adapting to cultural nuances is crucial for any brand looking to succeed in India.
You can argue that Starbucks also has all the facilities that Third Wave does, so where's the difference?
It's in the taste of the coffee. But it's a subtle difference to fight over.
The customer experience at Third Wave Coffee is different from Starbucks. At Starbucks, baristas prepare your coffee and call out your name when it's ready, creating a standardized yet efficient service. In contrast, Third Wave Coffee bills customers at the counter before service but maintain a warm, welcoming atmosphere. This personal touch, combined with high-quality, locally sourced coffee, offers a more intimate and customized experience, appealing to Indian consumers' desire for both quality and connection.
Made in India is a place of pride for this exact audience of builders in India.
What to keep in mind when launching a foreign look-a-like in India?
The key takeaway here is the importance of cultural adaptation.
Simply replicating a brand without understanding the local market dynamics is a recipe for failure. Brands like Third Wave Coffee demonstrate that by aligning with cultural shifts and creating spaces that cater to the unique needs of the Indian market, it’s possible to build successful and scalable brands in India.
By providing a conducive environment for meetings and networking, Third Wave Coffee not only carved out a niche for itself but also played a pivotal role in supporting the entrepreneurial ecosystem in India. This approach is a valuable lesson for any brand looking to make a mark in the diverse and dynamic Indian market.
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