Third Wave on India’s thriving coffee market

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Third Wave Coffee Co-Founders Anirudh Sharma and Ayush Bathwal on building one of India’s fastest growing café chains, the country’s changing tastes, and introducing homegrown specialty coffee to the local market.

Despite being one of the world’s top 10 producing countries, until recently India hasn’t drunk much of the coffee it grows. Traditionally, the majority of its beans has been exported to the rest of Asia, Europe, and North America, while chai tea has been the beverage of choice for Indian consumers. It was this fact that inspired three childhood friends to introduce the nation to the high-quality coffee being grown in their backyard.

Anirudh Sharma, Ayush Bathwal, and Sushant Goel founded Third Wave Coffee in 2016, starting out as a specialty coffee shop in Bengaluru, South India. As of October 2024, the company has 114 cafés across the country, with plans to reach 160 by the end of the financial year and ambitions to launch 80 to 100 coffee shops annually from 2025.

One of the key contributors to Third Wave Coffee’s success, according to Sharma and Bathwal, has been ensuring the quality upon which the friends established the brand has been upheld in every venue
that’s followed the first.

“We focused on quality and consistency from day one and that’s become one of the key pillars of Third Wave Coffee today,” Bathwal tells Global Coffee Report.

“In the first 20 months of the business, Anirudh and I were on the shop floor every day, taking orders, preparing coffees, and mopping floors to ensure the customer experience was the best it could possibly be and to convince consumers to try something new. We built a reputation for our quality coffee and food, so now training is an essential part of each venue launch to ensure consistency across the Third Wave Coffee locations.”

Origin story

Bathwal is the driver behind the company’s focus on quality, inspired by San Diego’s established specialty coffee culture when working and studying in the United States (US).

“I started drinking a lot of good black coffee while I was in the US and was interested to see how passionate the baristas and roasters were about the beans. They’d visited the coffee farms and worked with the producers to elevate the quality, and that was a completely novel concept to me,” he says.

“I liked the fact you could sample these wonderful coffees from around the world and no two would taste the same. It was like nothing I’d tried before.”

Eager to return home to India and start a new project, Bathwal got in touch with Sharma and shared what he’d learnt about specialty coffee. With a hospitality degree and a family background in the industry, Sharma was the perfect business partner, along with their mutual friend and entrepreneur Goel. As specialty coffee was still in its infancy in India, the friends saw a gap in the market.

“We spent almost a year researching the industry and understanding how coffee shops worked before we launched our first venue,” says Sharma.

“One of the most important things we discovered was that coffee shops were a third space for people in India: they didn’t just visit them to drink coffee but also to socialise, have meetings, and study. At the time, coffee was less functional and more of a social beverage and our concept had to reflect that.

“We also wanted our coffee shop to be a part of the community, a safe space for people to connect and relax.”

This period was also spent visiting farms and meeting farmers to secure the best coffee beans to produce the high-quality product they were aiming for.

“We were well aware that India was producing some of the best beans in the world, but Indians didn’t have access to these coffees as most of them were being exported,” says Sharma.

“Meeting and working with local farmers to make Indian coffee available to local consumers was one of our core purposes. We wanted to educate the public, show them the amazing coffee being produced here, and tell them the story behind it.”

When they first started working with the producers, Bathwal says the farmers didn’t believe there was a local market for these high-grade, more acidic and nuanced coffees.

“It was a huge task for us to convince them that Indians wanted to drink these coffees. They thought we were wasting our time, but slowly we forged relationships,” he says.

As such, Sharma, Bathwal, and Goel chose Koramangala, Bengaluru, as Third Wave’s first location because of its proximity to South India’s coffee farms. To further highlight the provenance of the coffee, they installed a five-kilogram Diedrich roaster into the café space so customers could see how and where the beans were roasted. To the Co-Founders’ knowledge, the Koramangala venue was the first specialty café-roastery of its kind in the country.

“Much of our research time was also spent sourcing the best equipment to realise our ambitions. We started with a semi-automatic espresso machine – I don’t recall any other cafés in India having that sort of quality equipment at the time,” says Bathwal.

“We didn’t have any external funding, but I think the fact we had the right equipment and offered something quite distinct in the market meant we got a lot of free PR and interest, which contributed to our success.”

Scaling up

Today, Third Wave Coffee is one of India’s fastest growing café groups. Yet, its Co-Founders admit it took longer than expected to get to the point where they could comfortably open a second venue and start expanding.

“We spent a lot of time focusing on consumers’ tastes and understanding our customers before we could think about scaling up,” says Bathwal.

“At the time, most Indians were drinking milk-based coffees such as cappuccinos and lattes, and it took time to introduce the pourover and French press black coffees we were also offering.”

It would be 15 months from the launch of the first venue that the trio opened their second, which they admit had its challenges.

“Ensuring we were able to deliver the same quality at the second site was a huge hurdle, but we soon figured out that introducing standard operating procedures were going to be the key to expansion,” says Sharma.

With lofty ambitions to introduce their concept to cities across India, they studied the procedures of international coffee chains and hired an experienced team who knew how to successfully scale up a business. By 2019, they had 10 cafés and external investment, and were opening a new venue every 45 days until COVID-19 stopped them in their tracks.

“Like any other business, COVID-19 was a difficult time for us. However, what was interesting was that every time restrictions were lifted, people came to our cafés in huge numbers and trusted the brand to deliver quality and consistency in a safe manner,” says Bathwal.

“We saw our revenues reach much higher numbers than before the pandemic and that gave us the confidence to go back to our investors, raise more money, and continue to expand.”

As well as seeking investment, Bathwal and Sharma have forged partnerships with leading equipment suppliers to grow the Third Wave Coffee footprint across India. One such company is Eversys, which supplies all the brand’s super-automatic espresso machines.

“We’ve been working very closely with Eversys as we scale up to ensure we can continue to deliver the same barista-standard coffee without compromising on quality,” says Sharma.

“We switched to Eversys’ Cameo machine around 18 months ago. At first, we were cautious of transferring from semi to fully automatic machines, but the company has spent a lot of time showing us how we can improve our output with these machines. We’re very happy with the result.”

Roasting by numbers

With venues across India – from Pune to Punjab, Delhi to Noida – the Third Wave Coffee roastery output has grown steadily each year. In October 2024, the roasting operation moved to a new, more automated plant in Bengaluru.

“We’ve always roasted all the beans for our cafés. Currently, we’re roasting anywhere between 10,000 and 15,000 kilograms per week, but that will increase as we introduce more sites,” says Bathwal.

“The new plant has a much larger roaster and a dedicated green-bean cleaning facility. We’ve also partnered with an Italian packaging machine company to install equipment to ensure our beans stay fresher for longer.”

The company’s rapid venue growth means the focus so far has remained on supplying its own cafés. However, with the introduction of the new roastery, Bathwal and Sharma see an opportunity to introduce a wholesale wing to the brand.

Third Wave Coffee’s success also means it has been able to support its long-term producer partners and work with them to improve the quality of the coffee they’re growing.

“The focus has been on working with local farmers to build one of the world’s top coffee-producing nations,” says Sharma.

“The farmers are increasingly spending time learning to understand processes that could elevate their coffee quality. We work with many producers to help cup and score their beans and give them feedback.”

The Third Wave Coffee team hold cuppings throughout the year to find the best single-origin beans to serve at their venues, trying hundreds of coffees from all over India’s growing regions. These are served alongside the house El Diablo blend, which remains consistent throughout the year. Bathwal says El Diablo was developed to appeal to the Indian palate.

“We found Indians don’t like bitter notes if the coffee has been roasted too dark, but at the same time they don’t like it too acidic either, so we wanted to strike the right balance,” says Bathwal.

During the company’s eight-year history, the El Diablo blend has been the catalyst of friendships, marriages, and businesses.

“Creating a space to nurture the local community has been one of our key missions. We’ve heard countless stories of people getting married after meeting in Third Wave Coffee and multi-million-dollar businesses that have started in our stores,” says Sharma.

The fourth wave?

In terms of their plans to launch 100 cafés each year going forward, Bathwal and Sharma admit it’s an ambitious goal, but believe they have the capacity to achieve it.

“The speed at which we want to grow is quite aggressive, however, we’ve put the work in to getting to know the market, the economics, and the audience,” says Bathwal.

“In the next 10 years, we want to ensure wherever someone might be in India, they’ll always have access to a great cup of Third Wave Coffee – whether that’s at one of our stores, at home, or in the office.”

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