Nikhil KamathEp #22 | WTF are Craft Beverages? Nikhil ft. the Founders of Blue Tokai, Subko, Svami, and Mossant
CHAPTERS
What “craft beverages” means and why this episode exists
Nikhil sets the tone: this is a practical conversation for anyone curious about starting or understanding modern beverage brands—coffee, kombucha, and non-alcoholic mixers. The panel frames craft as more than a drink: it’s product quality, story, distribution, and culture.
- •Episode intent: actionable learnings for aspiring founders in coffee/kombucha/mixers
- •Craft beverages positioned as an emerging, still-underserved space in India
- •Conversation format: founder journeys + tactical business insights
- •Early hint of a key theme: culture/experience matters as much as product
Blue Tokai’s origin story: from finance/dev work to specialty coffee in India
Matt shares his cross-cultural upbringing (US/India) and a winding career path that ultimately led to starting Blue Tokai in 2012. The founding insight was simple: Delhi’s coffee scene was poor, and export-quality Indian coffee could be made accessible domestically.
- •Matt’s background: US upbringing, finance/economics, development projects, IFMR in Chennai
- •Discovery of specialty coffee culture in San Francisco and home roasting as a hobby
- •2012 Delhi: recognized a gap for quality coffee; launched from a bedroom with a 500g roaster
- •Early resistance from growers: belief that Indian consumers wouldn’t pay for quality coffee
Mossant’s beginnings: culinary, fermentation, and building kombucha for taste
Adithya describes moving from engineering to culinary school in Australia and restaurant work in Bangalore, then into fermentation. Mossant began in 2019 when kombucha awareness was low and the product was polarizing; their goal was to make it delicious and approachable, not just ‘healthy.’
- •Adithya’s path: engineering → culinary training → F&B consulting/restaurant work
- •Co-founder’s health motivation sparked home kombucha making; Adithya focused on taste/fermentation craft
- •Mossant named in memory of a friend; brand meaning rooted in personal story
- •Early category challenge: low awareness + consumers split on kombucha’s ‘funk’
Svami & Aneesh: photography to alcohol literacy to mixers (and ‘intent’ drinking)
Aneesh traces his unconventional path—skipping college, pursuing photography, then learning beverages through alcohol brand assignments and wine exposure. That journey informed Svami’s founding: a clear white space in premium mixers beyond Schweppes, starting with tonic water as a better base for cocktails.
- •Army upbringing across India; photography becomes profession immediately after school
- •Alcohol/wine assignments build palate and ‘drinking with intent’ mindset
- •Svami origin: gin drinkers frustrated with Schweppes; built a homegrown mixer alternative
- •Brand framing: not just tonic—part of a broader non-alcoholic beverage future
Subko’s origin: diaspora identity, ‘global Indian’ ambition, and craft as culture
Rahul shares the experience of growing up abroad as an Indian and how it shaped a desire to build something world-class rooted in India. Subko’s thesis centers on agricultural supply chains, design language, and building a cultural symbol—not just selling coffee.
- •Diaspora tension: shame/identity shift → embracing roots → moving back to India
- •Motivation: prove world-class brands can be built from India with global relevance
- •Coffee/chocolate/bakes framed as agriculture + supply chain businesses
- •Under-dog angle: India is a top coffee producer yet underrepresented globally
Blue Tokai vs Subko: mass-premium accessibility vs niche-premium design experience
The founders compare positioning: Blue Tokai as more accessible mass-premium, Subko as niche-premium with strong design and bakery integration. They discuss how timing matters—Blue Tokai helped create the market that later, more concept-driven specialty brands could build on.
- •Blue Tokai: broader accessibility, scale; Subko: higher experiential premium
- •Key differentiators: design language, bakery integration, chocolate/cacao offerings
- •Brand maturity: early entrants evolve brand identity; later entrants can launch fully ‘world-built’
- •Shared sourcing sometimes; roasting philosophy and customer experience diverge
How a 25-year-old can compete: differentiation beyond coffee quality
They answer a hypothetical: opening a café next to Blue Tokai and Subko. Advice: multi-roaster model, strong food program, and non-coffee differentiators like subculture, music, events, and ‘speakeasy’ coffee cocktails—because quality alone becomes table stakes as the market matures.
- •Multi-roaster café as a differentiation strategy (variety + discovery)
- •Food is often 40–50% of revenue; kitchen consistency is a hard operational challenge
- •Subculture hooks: vinyl, events, community activations, coffee-rave culture
- •Subko ‘speakeasy’ menu: coffee-based cocktail analogs using tonic/soda/NA ingredients
Café unit economics & operations: menus, kitchens, space, staffing, delivery
Founders share practical numbers and constraints: the best store size, how hot kitchens affect talent/consistency, staffing wages, delivery share, and what customers notice in pricing. India’s sit-and-stay behavior changes throughput versus the US pickup-heavy model.
- •Revenue split examples: Blue Tokai ~45% beverages/40% food/15% retail; Subko ~50/50
- •Hot kitchen can lift average check but increases complexity and talent challenges
- •Ideal size: ~1000 sq ft; too small causes walk-aways, too big inflates capex/rent
- •Staffing: baristas often hired via industry switching; ~₹21k–₹28k/month starting; delivery share ~35% for BT vs ~20% for Subko
Coffee category deep-dive: market size, taste debates, alt milks, and coffee ‘waves’
They quantify the Indian coffee shop landscape and explore how preferences evolve—black coffee growth, cold brew caffeine, and the subjectivity of ‘good coffee.’ Alternative milks show strong neighborhood variance, revealing how local culture changes product mix.
- •India estimate: ~5,000 branded coffee shops + similar unbranded; ~₹1B category estimate discussed
- •Coffee waves framework: roasters proliferate; not everyone needs to roast—wholesale grows
- •Black coffee/pour-over growth cited; ritual + hobby angle drives repeat behavior
- •Alt milk adoption varies sharply: ~2–3% at Blue Tokai vs 10–15%+ in Bandra/Subko context
Kombucha 101: SCOBY, fermentation, and what ‘healthy’ really means
Adithya explains kombucha as fermented sweetened tea where yeast creates alcohol and bacteria convert it to acids—kept below 0.5% ABV for FMCG legality. The group clarifies health claims: it’s best framed as a better-for-you replacement for soda rather than a miracle product.
- •Definition: fermented sweetened tea; SCOBY = symbiotic colony of bacteria & yeast
- •Process: yeast breaks sugar → alcohol/CO₂; bacteria consume alcohol → acids/probiotic ecosystem
- •Regulatory constraint: must be <0.5% ABV to avoid excise and be shelf-stable FMCG
- •Health framing: ‘better than Coke’; water is best—kombucha is a substitution play
Kombucha market realities: India’s size, pricing experiments, and quick commerce dependence
They estimate India’s kombucha market at ~₹200 crore versus ~$4–5B in the US, implying growth headroom. Mossant’s key insight: price accessibility dramatically expands demand, and quick commerce solved early distribution—though it introduces platform power risks.
- •India kombucha size discussed: ~₹200 crore; growth from ~₹30 crore in 2021 cited
- •Mossant pricing: ~₹130 MRP; testing ₹99 drove ~6x growth in ~3 months
- •Quick commerce now ~60% of Mossant sales; platform fees ~30%
- •Category building requires awareness + taste adaptation (India prefers less sour than US)
Hard kombucha, seltzers, and India’s alcohol-adjacent opportunity (and limits)
They discuss ‘hard kombucha’ and why India may be early: consumers still need to understand kombucha first, and alcohol licensing adds friction. The panel compares with hard seltzers’ muted performance in India, arguing the country favors strong beer and straightforward drinking formats.
- •Hard kombucha: significant in the US; India adoption likely later due to education + licensing
- •Low-calorie alcohol appeal debated; health halo vs alcohol reality tension
- •Hard seltzer as cautionary example: strong beer preference + limited readiness
- •Pandemic anecdote: kombucha used as a ‘beer substitute’ when alcohol access was limited
Policy and industry moats: India’s 40% tax on sweet carbonated drinks
A major barrier emerges: taxation. Carbonation + sweet taste triggers ~40% GST, which the founders argue blocks innovation and forces brands to reverse-engineer MRP instead of improving product quality. They compare with the UK’s slabbed sugar tax as a more rational model.
- •India tax: ~40% on sweet carbonated beverages; lower if non-carbonated or non-sweet
- •‘Sweet’ treated as a blanket category—regardless of sugar source (date syrup, juice, etc.)
- •Innovation impact: startups constrained; incumbents can absorb or scale around it
- •UK comparison: sugar tax slabs per liter incentivize reformulation rather than punishing category
Manufacturing, packaging, and the ‘bottling/canning mafia’: scaling constraints for new brands
They explain why packaging and co-manufacturing become bottlenecks: custom bottles require huge MOQs, cans are expensive and technical, and contract manufacturers are being acquired/allocated to larger players. The practical advice is to start with serviceable local machinery and scale up later.
- •Glass bottle/can economics: bottles ~₹8–₹9; cans similar, savings mainly in freight
- •Custom packaging requires large MOQs; small brands struggle to access supply
- •Co-manufacturing capacity tightening as larger companies acquire/lock-in bottlers
- •Equipment guidance: prioritize local serviceability; avoid China early due to spares/service friction; Hymek cited as reliable but expensive
Distribution & growth playbooks: HoReCa, quick commerce, and why performance marketing is contested
All founders emphasize offline discovery—especially restaurants/bars/cafes—as critical for craft beverages. They debate quick commerce sustainability and platform power, and strongly critique performance marketing as generic and short-term, preferring founder-led storytelling, collaborations, and organic brand love.
- •HoReCa discovery: getting served at trusted venues drives trial and repeat (Svami’s core channel)
- •Quick commerce: likely to persist due to changed consumer expectations, but can ‘own’ brands via fees/data
- •Performance marketing skepticism: agencies repeat templates; auction dynamics hurt brands (especially on QC platforms)
- •Alternative growth: collaborations (bands, restaurants, brands), micro-influencers, in-house design/content, founder-on-camera authenticity
Closing: favorite spots, investor lens, AI/creativity, and the pro-India brand thesis
They wrap with recommendations for favorite coffee and kombucha brands and reflect on investing in the category. Nikhil shares an investor perspective: coffee’s addictive/ritual nature and geopolitics potentially favoring domestic brands, while AI may increase the premium on true creativity and counter-trend thinking.
- •Recommendations: coffee shops and kombucha brands across cities; HoReCa as discovery engine reiterated
- •Investor lens: coffee as ‘legal high’ + habit; craft beverages may benefit from global fragmentation
- •AI discussion: creativity and contrarian thinking could become more valuable in a world of commoditized outputs
- •Final message: craft beverage community is collaborative; founders invite outreach via Instagram for guidance
