The narrative of Sleepy Owl Coffee is a classic case of how an innovative concept, combined with an extensive insight into the gaps in the consumer base, may change an old-fashioned industry such as coffee in India. The brand was established in 2016 by three childhood friends, Ajai Thandi, Arman Sood, and Ashwajeet Singh, who started in a small two-bedroom apartment in Dwarka, Delhi, and not in a boardroom.

The Indian coffee scene was then highly polarized between cheap instant coffee producers such as Nestle and upscale and expensive cafe experiences such as Starbucks. It also lacked a glaring “middle ground”, a space where people could make good, convenient, and accessible coffee at home. The discovery of this whitespace saw Sleepy Owl develop a path that would later see it reach an impressive growth target of ₹100 crore.

Advertising campaigns and growth

The first innovation of Sleepy Owl was a cold brew coffee, which was a concept that was not exposed to the Indian market in 2016. The founders spent months of trial and error in the kitchens of their respective homes with different ratios and coffee beans to be able to get what they desired, that is, single-origin Grade-A Arabica beans that were sourced in Chikmagalur. Their first product was the Cold Brew Box that was an innovative solution to the brewing process that simplified it.

The founders soon discovered that the boxed format was very popular in Delhi, but it was not easy to expand to other parts of the country because it was heavy, and its shelf life was limited. They came up with their signature Brew Bags. These bags enabled the consumer to make a fresh, ground coffee at home without any special equipment, essentially democratizing the experience of the real coffee. This move was important because it enabled the brand to deliver its products to all parts of India, and this was the start of the miracle in terms of revenue growth.

A large portion of the success of Sleepy Owl can be explained by its peculiar branding and marketing approach, which does not resort to the snobbism that is commonly linked with artisanal coffee. The brand took a turn to the arts of “Simply Good Coffee – an ethos where simple and jargon-free language was used, which targets a young and ambitious audience. 

They did not emphasize complicated flavor notes because it was replaced with color, humor, and a friendly owl mascot to create a friendly identity. This involvement, through the use of this mascot, contributed to building a community of coffee lovers and not merely a customer base.

Their advertising campaigns, such as the famous series of so-called muted advertisements on Instagram, were about the sincerity and simplicity, which were extremely close to the consumers who felt fed up with over-edited traditional advertisements. The positioning of Sleepy Owl as a challenger of the status quo also enabled it to attract the interest of first-time coffee drinkers between 24 and 30 years old.

Financial milestone and omnichannel distribution network

The growth in distribution complexity accompanied the expansion of the brand. Sleepy Owl shifted towards becoming an omnichannel player, which is based on a digital-first approach. Although their direct-to-consumer (D2C) website continues to be a significant platform in building the brand and customer loyalty, the brand realized that the only way to grow sustainably was by being where the customers shop. It began to expand widely into offline retail and fast-commerce apps such as Blinkit and Zepto.

By March 2020, the brand was already represented in more than 1,000 stores in Delhi-NCR and Mumbai. The sales distribution today is balanced on three pillars, which are their own site, online marketplaces, and physical retail stores. This strategy approach has played a huge role in ensuring that the brand increases its revenue by up to ₹1.8 crore in FY19 to the current milestones, so that its products become a staple on both digital and physical kitchen shelves. Sleepy Owl has made its financial path with a pattern of investor trust and capital investment strategies.

The ₹100 crore growth milestone is not only an indication of the volume of sales that they were able to achieve but also the ability to maintain business operations, particularly in the face of the pandemic, where they were able to adjust and continue growing despite logistical challenges. The fact that the brand has a high rate of repeat purchases, 60% of online purchases, implies that the brand has a high product-market fit, which has continued to drive its valuation up.

Conclusion

The path of Sleepy Owl Coffee to become a ₹100 crore-valued company is a masterpiece in contemporary brand-building within the FMCG industry. The founders created a niche that did not sacrifice quality to achieve convenience by bridging the gap between a mass-market product, appearing as instant coffee, and high-end cafes.

With their ever-increasing presence in India and the introduction of new formats such as their Xpresso line, Sleepy Owl is a pioneer that has been able to make the Indian consumer realise a new experience of consuming coffee in the comfort of their homes. The brand development experience demonstrates that a combination of genuineness and openness is enough to make a startup established in a small apartment shake up the market dominated by worldwide industry leaders.