Professional Documents
Culture Documents
Group 2
Susmit Mulay 1911120
Purva Bansal 1911162
Sanjana V Kulkarni 1911183
Pranave Nanda 1911196
Vinay 1911220
Flying Squirrel Coffee
Industry overview
India, primarily a tea-drinking nation, is slowly making its shift towards coffee. This increase in the coffee consumers
is making more cafes open up, shifting the preferences of the Indian consumers. The shift became more evident after
chains like Starbucks spread across the country, leading to mass commercialization of the coffee industry. This is
popularly known as the second wave of coffee.
Making coffee is an intense process involving growing, harvesting, and processing the green coffee beans, followed by
cupping, roasting, and then brewing. Typically, coffee chains tend to standardize the final flavour, not paying much
attention to the up-chain processes, which tend to add and control the flavour of the coffee being consumed.
This led to the Third Wave, wherein the gourmet coffee, which offers a holistic coffee drinking experience, is seeing a
rise. The gourmet coffee market, which is now over 15 years old, focuses on processing the coffee beans and the origin
of the beans, which led to them acquiring specific flavours. Today, this artisanal coffee accounts for over 15% of the
cafes in India, with the key players being Blue Tokai, Halli Berri, Araku Coffee and Flying Squirrel, among others.
Company overview
Flying Squirrel is a Bangalore based artisanal coffee brand, which was started by Tej Thammaiah, a third-generation
coffee farmer, and Ashish D’Abreo, former Creative Director at Origami. It was started in 2013 with the attempt to make
a delicious cup of coffee accessible to friends and family every day. The brand offers a rotating menu of about nine to
twelve different seasonal blends of coffee, some of the famous ones being the Parama and Sunkissed brew.
The founder Tej is a coffee enthusiast and owns over 140 acres of coffee estates in Coorg, from where most of the coffee
comes from. He closely monitors every step in the coffee-making process up to roasting of the beans – in order to
introduce the wanted distinct flavours in the coffee beans, which leads to the distinct special flavours being sold by the
coffee chain.
Flying Squirrel began with a café in Bangalore and now has one cafe in India. The chain has recently moved online,
with sales happening through the channels like Amazon, the company website, and Placeoforigin.in. The founders want
to promote the artisanal coffee culture in India and make people aware of the various brews which result in the perfect
flavour of coffee for each person.
Qualitative Research
To arrive at the Research objective from MRP, we used literature review and secondary data review.
There is a huge gap between India’s potential to produce fine quality coffee and users' awareness. We also found that
beyond a small tribe of coffee connoisseurs, people do not pay much attention to coffee quality. Educating the customer
about the artisanal coffee experience is a challenge, with cafes being the current mode to generate awareness and interest.
The broad level of variety and brands with many taste profiles hampered purchase decision making online. They do not
appreciate the variety of flavors available because coffees are over milky and sweet. By and large, instant coffee and tea
are the most consumed beverages.
In addition to the secondary research, we look at peer-reviewed journals (mentioned along with hypothesis) to arrive at
research objectives.
Hypothesis
Based on our qualitative research, we arrive at 4 major factors influencing the brand awareness and subsequent purchase
of artisanal coffee)
We want to investigate how customer advocacy can influence customer purchase intention and brand value. The paper
‘Promoting customers’ involvement with service brands: evidence from coffee shop customers’ by Soon-Ho Kim et. al.
suggests that customer brand identification and customer involvement positively influenced the purchase decision, brand
satisfaction, and brand loyalty. This led to the forming of the first hypothesis:
H1: Customers' advocacy is a positive influence on brand and customer purchase intention.
(Based on symbolic interaction and involvement theory as theoretical backgrounds: Link1)
Many companies largely use advertising and endorsements to increase awareness among the customers and influence
their purchase decisions. For products like artisanal coffee where taste matters, we want to understand the importance
of online advertising to reach the target segment and its influence on the purchase decision. The thesis paper ‘The History
of Coffee and its Concurrent Marketing Strategies’ by Kristin Rudeen suggests the positive effects of advertisings and
endorsements on the USA's sales of coffee chains. Based on this report, we formulated the next hypothesis:
H2: Advertising/endorsement positively influences consumer purchase intention.
(Advertising has changed the landscape of coffee consumption in the USA: Link2)
In determining the acceptability of any product in the market, the packaging becomes an essential factor. This is more
important in the case of artisanal coffee. The coffee chain wishes to communicate all the sourcing and curing details of
the coffee on the package and simultaneously communicate the coffee blend's taste to the customer. Research by Nik
Zakaria and Zuharlida Harith in their paper ‘Coffee packaging: Consumer perception on appearance, branding, and
pricing’, it was shown that the consumers take into account the overall outlook of a coffee packaging during their
purchase decision. They concluded the importance of the need for packaging to create an emotional connection with the
customer and the positive effect on the purchase decision. This led to us forming the third hypothesis:
H3: Packaging of coffee is having a direct relationship with purchase persuasion.
(Packaging can generate an emotional link in consumers mind during their first glimpse: Link3)
Coffee purchase by the customer is a complex decision and without knowing the taste, deciding to purchase is quite
difficult. However, having tasted a blend at a café can help the customer make a decision. In the online selling model,
sampling is quite difficult, without enough awareness or a café or a partner to facilitate it in the target location. We wish
to understand the effects of category awareness and trials on the purchase decision of the customer.
H4: Category awareness (cafés and trials) has a positive effect on sales.
(Give greater visibility, instant exposure and allow consumers to try something before purchasing: Link4)
Graphical Model
Advertising/
Endorsements
Category Purchase
Awareness/ Intention & Packaging
trials Brand
Awareness
Customer
Advocacy
References
• Go Artisan Coffee - Twitter
• Flying Squirrel Website
• How Coffee Tasting and Micro-Roasteries in India are changing the coffee scene, The Quint
• Coffee Industry In India. IBEF.
• Why hasn't Artisanal coffee taken off in India, Economic TImes
• Indian Coffee Culture Website
• Going beyond cofee's Third Wave, Live Mint
• Lifestyle Asia Website - Artisanal Coffee India
• The Indian Consumer is embracing a new wave of Coffee, New Indian Express
• Meet an Award Winning Gourmet Coffee, CNBCTV 18
• Promoting customers’ involvement with service brands: evidence from coffee shop customers, Soon-Ho Kim et.al,
ResearchGate
• The History of Coffee and its Concurrent Marketing Strategies, Kristin Rudeen
• Coffee packaging: Consumer perception on appearance, branding and pricing, Nik Zakaria et. al., ResearchGate
Appendix
Case-in-point being The Flying Squirrel has its presence in both segments. TFS has an operational café in Bangalore.
It has a rating of about 4.2 on Google reviews and about 3.7 on Zomato, it has over 800 reviews. However, the
limitation is that the users have rated the café and not exactly the coffee. To understand the company from a coffee
specific point of view, focus group interview and in-depth interview from the supply side were needed.
In-depth Interview with Founder: A 90 minute interview with Mr Phalgun revealed the following insights.
Phalgun is an investor in TFS. It was an online store and was quite small.
1. Coffee consumption has been growing in India since the last 200-300 years. Most farmers are small, very few
large players and then 3-4 really large players like Tata etc. Starts with growing cherries, processing by
drying it, beans are roasted to get the flavour, powder it and use it.
2. Tea is more common in India as British popularized it. Coffee is used in South India predominantly. People
feel coffee is a luxury and maybe not healthy also due to caffeine content. The coffee that is used is also mostly
filter coffee.
3. Coffee Board of India: In order to protect small farmers, CBI used to buy all the coffee from them, checked,
graded them and marketed them. So, not very competitive – terrible job. In 1995, they opened up the market.
4. First wave in coffee: Commoditizing it, it is available everywhere- Nescafe, Bru, Cothas
Second wave in coffee: Starbucks, etc. Italian culture- cafés etc
Third wave in coffee: Like the wine industry. Grade on quality and parameters, use similar techniques for coffee
tasting, etc. Artisan or specialty coffee: Blue Tokai is doing the same
5. How is different from Blue Tokai? Blue Tokai is a market place, they source is from many farmers, they grade
it etc. Blue Tokai says we love farmers. BT are roasters.
Flying squirrel says we are the farmers. It has been started by a farmer.
Starbucks are just a marketing guys, they brand it. Bulk production + marketing
6. Running a café has a lot of costs – labour, production, etc. And it is important to build a brand also. TFS is a
farm-to-cup model. Worked with Ms. Sunalini Menon, chair of Tata coffee, to find the right flavours. You need
to know the coffee.
7. TFS sees coffee beyond roasting
Q. Did you try venturing into North before?
Yes, we are on Amazon. We decided to focus on Bangalore, did not spend a lot of time on it. But it has huge potential.
Let’s use Amazon for now. Only three sites online – Amazon, website, place of origin. For now, let’s see that only
Q. Do you think the onus is on the brand to build the coffee culture- who should bring in the third wave?
Yes, same like introduction of coffee, pizza or wine etc. Target the younger population. Typically, coffee is a
byproduct, you sell real estate in cafes.
Q. Are there issues with online sales currently?
Trying to sell something only online is difficult, as it is an experience good. So physical store adds credibility and
helps the brand. Online ROI is less. Physical stores are critical here as you show customers what is done, they taste,
and they know, use it and keep ordering. – Same like urbanladder, pepperfry, zivame, etc.
Q. What do you expect from us?
A. How much to spend and where? – Different social media like Facebook, Instagram, Google Ads, etc.
B. Customer acquisition and retention is key. How would you achieve that?
C. Can we build a coffee community? Where customer can talk, review, like, communicate about the brand. Can
we bring customer awareness about the brand, help in brand building and sense of belonging?