The Ultimate Guide to Starting a Coffee Business

Coffee is one of the most consumed beverages in the world, and India is no exception. In fact, the market has relatively less options, which means it has ample opportunities for new entrepreneurs. So, if you want to start a coffee business in India, here's how to make your dream happen.

 

Step 1 - Research the Market

 

Researching the market is the first step to starting a coffee business.

 

It will help you to understand customer preferences, what they are looking for, and what they are willing to pay for.

 

The best way to do this is by conducting surveys with coffee consumers and finding out:

 

• How do they feel about coffee?
• What do they like and dislike about it? 
• What brands do they prefer?
• Do they go for instant, premix or ground coffee?
• How much are they willing to pay?

 

You can conduct these surveys in workshops, colleges, supermarkets etc.

 

To attract people for surveys, you can organize a spin-and-win contest or offer incentives to the participants. 

 

Market Size of Coffee Business in India

 

"The current market size of coffee business in India is US $808 Million and is expected to grow by 8.9% CAGR annually in the FY 2022-2025." 

 

Step 2 - Plan your Coffee Business

 

For this purpose, use your observations and points from the research and prepare a business plan.

 

During the planning, you must decide the following:

 

• Will you keep the production and manufacturing in-house, or will you outsource them from other producers?
• What is the scope and objective of your business?
• What will you name it?
• How will you advertise it?
• What is your motto?
• How will your coffee stand out from other competitors?
• How much investment will you make?
• Will you open a cafe as well?
• What are the products you will make?
• What is the market size?
• What is ROI?

 

When you sit down to plan your business, keep the above questions in check and along with it, also plan for everything that comes to your mind.

 

Step 3 - Choose your Product 

 

Choosing the right product type for starting a coffee business is a crucial decision. 

 

The products can be classified as instant coffee, ground coffee, roasted beans or roasted and ground beans.

 

Instant Coffee: Instant coffee is the most popular product type in India and it’s consumed by the majority of the Indian population. It is also the most affordable and convenient to transport.

 

Ground Coffee: Ground Coffee is also very popular in India and it’s consumed by people who can afford to pay more for it as well as people who want a better-tasting cup of coffee but don’t have time to brew their cup at home.

 

Roasted Beans: Roasted beans are sold mostly in speciality shops or from roadside vendors. They are consumed mostly by people who are willing to pay more for better taste or because they want freshly roasted beans for their home-brewing machines.

 

Other popular products include ground whole-bean coffees, soluble coffees, and iced coffees.

 

Step 4 - Investment Planning

 

The minimum investment you will require to start a coffee business is a minimum of Rs. 20 Lacs - Rs. 30 Lacs.

 

Thus, if you are self-funding yourself, well and good. Otherwise, you can consider the following options for investment:

 

• Angel Investors
• Venture Capitalists
• Government Funding
• Business Bank Loans
• Private Equity Loans
• Crowdfunding
• SMERGERS

 

It may be difficult to get the investment initially. But with a great business pitch and a registered business, it will become easier.

 

Step 5 - Register your Business

 

Register your coffee business with the government to operate it legally in India.

 

You can register it as any of the following:

 

• Private Limited Company
• One Person Company
• Limited Liability Partnership
• Sole Proprietorship
• Partnership Firm

 

The most preferred business structure in India is private limited company registration online.

 

To know more, get in touch with an expert by filling out the form on your right.

 

After registering your business, open a business bank account for managing your funds easily and properly.

 

Step 6 - Find a Location

 

The next step is finding the right location to set up your coffee business.

 

As it is a crucial decision, it should be made with careful consideration. 

 

The factors that need to be considered while choosing the location are:

 

• Availability of raw materials
• Transportation costs
• Climate conditions
• Infrastructure availability
• Existing competition in the region
• Political stability
• Affordability

 

Also, check the availability of skilled labor nearby. You will need people with skill sets like roasting, blending, or grinding coffee beans.

 

Once you choose the perfect location to apply for a Shop and Establishment Act Certificate for the premises.

 

Step 7 - Set up your Office

 

If you are starting a small coffee business, you can set up your office with a production and manufacturing unit in the approx area of 1200-1500 sq ft.

 

Set up a cabin for yourself and a working space for employees.

 

Buy the furniture you need for your office like chairs, desks, tables, computers, printers etc.

 

After that, if you are manufacturing, packaging and branding in-house, buy the machinery.

 

Step 8 - FSSAI Registration and GST Registration

 

FSSAI Registration is a legal requirement for the production, storage, handling and sale of food items. 

 

The FSSAI Registration process can be done online at the official website of FSSAI.

 

However, it is best to hire an expert to do this on your behalf. 

 

We at StartEazy have a team of experts who can help you with the process and save you time, money and effort.

 

Step 9 - Hire Staff and Market your Brand

 

Some of the things that you should consider when hiring people are their skillsets, experience, work hours availability and salary expectations. 

 

Accordingly, you will need the following people initially when starting a coffee business:

 

• Manager
• Sales Team
• Coffee-Making and Tasting Experts
• Accountant
• Marketing Team
• Cleaners
• Laborers
• Security
• Machine Operators 
• Engineers

 

Once you have hired your initial team, start with production, package designing, marketing strategy and advertising.

 

After the final product is ready, make a list of stores you can ask to keep your coffee for sale and organize a sample tasting campaign. 

 

This will help you with building a customer base and collect feedback on your product.