Sleepy Owl Coffee Brand Lecture Notes

Introduction to Sleepy Owl

• Founded by Armanu and his co-founders.
• Focus on creating a premium, authentic coffee experience without the hassle of traditional brewing.
• Concept arose from dissatisfaction with office coffee quality.

Founders' Journey

• Arman’s personal experience with bad office coffee in Bombay.
• Co-founders: Aj and Ashit, all coffee enthusiasts.
• Research revealed a lack of great coffee options in the market and an opportunity to innovate.

Insights on Coffee Consumption

Coffee Habits

• Different coffee drinking habits among users.
• Common consumption of instant coffee from brands like Nescafe and Bru.

Market Research

• Exploration of coffee farming in Chickmangalur, discovering that premium Arabica coffee was mostly exported.
• The rise of social media leading to increased awareness of quality coffee.

Target Audience

• Early adopters of new D2C brands who had a taste for black coffee and were willing to pay more for quality.
• Initial focus on a niche market.

Product Development and Innovation

Cold Brew Introduction

• Realized potential in cold brew coffee as a product.
• Launched as a cold brew company focusing on convenience: just steep a bag in water overnight.
• Initially targeted a small customer base familiar with black coffee.

Product Line Expansion

• Transitioned from cold brew to ready-to-drink cold brew products.
• Adjusted formulations based on customer feedback, eventually introducing traditional cold coffee options.
• Launched a premium instant coffee line with innovative flavors after recognizing that many households still consume instant coffee.

Scaling the Business

Growth Strategy

• Initially launched online, gradually expanded to marketplaces and omni-channel presence.
• E-commerce now comprises 25% of their business, with significant sales through platforms like Amazon and quick commerce.

Customer Acquisition Costs (CAC)

• High customer acquisition costs (CAC) affecting profitability on first orders.
• Emphasis on increasing Average Order Value (AOV) through bundling and merchandise to improve profitability.
• Importance of product quality and customer experience in retaining customers.

Challenges Faced

• Supply chain issues affecting raw materials and packaging.
• Navigated compliance regulations in the food and beverage industry.
• Experienced financial challenges but managed to bounce back.

Current Status and Future Growth

• Sleepy Owl has become a household name in India.
• Recent launch of new packaging for their premium instant coffee.
• Present in over 7500 stores, valued at over 100 crores, with prospects for further growth.