After T2, it is Time for T3 Cities to Experience Rise in Coffee Culture

If there is no plan for a get-together or a perfect outing, perhaps coffee-based places are paving the way for a culture where one can sit, chat, and laugh together - a culture that has been prominent in T1 cities for at least a decade. From Delhi to Mumbai, Kolkata, and down south in Bengaluru, the streets are dotted with both minimalist and vibrant spots that claim to specialise in coffee. 

However, take a stroll through T2 and T3 cities in India, such as Lucknow, Patna, Amritsar, Meerut, Udaipur, Roorkee, Nashik, and perhaps as many as you can name; this is the same culture you observe - people sitting inside cafes with glass doors and working. 

Shreya Nayyar, who opened Tepah by The Bagh in Amritsar, cites travel exposure, social media, and people working or studying from cafés as major reasons for opening the outlet in the historical town. "We felt Amritsar was ready. People were already travelling to metros and asking for the same quality back home, good coffee, a nice vibe, and a place to sit, meet or work," the co-founder says, adding that her research showed how the younger crowd, students, and families "wanted something beyond the regular chai/restaurant format". "We brought in a café that could be that 'third space' in the city," she adds.

The aspirational value

The Indian coffee market was valued between USD 550 million and USD 600 million in 2024, with a projected growth of over USD 1.2 billion by 2032 at a CAGR of between 9% and 10%, according to Custom Market Insights.

One of the major reasons trends started in T1 cities spread to smaller cities is the value that the cities create — for instance, the recent fake wedding trend that evidently travelled to the T2 and T3, as it created the 'aspirational value' according to the industry leaders. Similarly, the rise of coffee culture can be seen as following the same reasons as long ago. 

As Nayyar says, "Coffee has become more of a lifestyle choice now; it’s not just about the drink, it’s about the experience." 

Jaipur-based Dushyant Singh, the founder of Coffee Sutra, believes the growth of coffee culture in the T3 cities is a 'natural progression'. "With increased internet penetration, social media exposure, and aspirational lifestyles, people in T3 cities are becoming more aware of global café trends. Young consumers, students, and professionals are looking for spaces that go beyond just coffee — places to connect, create, and experience," he says, stating that the "affordability of travel has also paved the way."

For 93 Degrees Coffee Roasters, which is also present in T4 cities through e-commerce, there is growing awareness about sustainability, ethically sourced, and well-brewed coffee, which has further encouraged coffee culture in smaller cities. 

On the other hand, while Vikram Khurana, from Kaapi Solutions, reiterates that the reasons can be varied, he counts increasing disposable income as one of them. 

Adapting to locals' taste buds 

Another popular name in the market, Barista, has expanded into multiple T3 cities, crediting the 'evolving coffee culture' and 'rising aspirations' as the primary reasons. However, to remain relevant, the brand adopted the cafe format to ensure it caters to local preferences.

"We have made thoughtful adjustments in both product offerings and pricing to suit Tier-3 markets. We have curated more value-driven combos and flexible pricing to match local demand," Rajat Agrawal, CEO, Barista Coffee Company, says, adding that going forward, the roadmap includes expanding with "scalable café formats, deepening franchise partnerships, and continuing to innovate with offerings that balance affordability and premium café experiences, ensuring Barista becomes an aspirational yet accessible brand in Tier-3 cities".

Talking about the specifics, Delhi-based Vikram Khurana, the CEO of Kaapi Solutions, says, "By integrating regional ingredients such as spices, local herbs, or traditional brewing techniques, these (local) brands are adding unique twists to the classic coffee experience. For example, infusing regional spices like cardamom, cinnamon, or local floral notes can create distinctive blends that resonate with local taste preferences."

Mr. Khurana believes that the regional customisation not only differentiates brands but also enriches the cultural connection with consumers, fostering loyalty and adding to the overall growth of the "third-wave coffee movement". 

Similarly, the Gurugram-based founder of 93 Degrees Coffee Roasters, Mishthi Aggarwal, notes local brands are experimenting with regional flavours. "They understand their community’s preferences and are using that knowledge to create coffee experiences that resonate with local tastes." She notes that this approach has significantly contributed to spreading coffee culture beyond larger cities, making it more relatable and accessible.

Rising revenue 

According to Barista’s Rajat Agrawal, their current revenue share from Tier-3 cities is smaller compared to Tier-1 and Tier-2 markets. “Tier-3 cities contribute a smaller portion of our overall revenue compared to Tier-1 and Tier-2 markets, but the growth trajectory is very strong,” he says.

He adds, “We are seeing double-digit growth in these regions, and with increasing demand, Tier-3 cities are set to become a significant contributor to Barista’s future revenue mix.”

With similar revenue expectations, brands like Coffee Sutra are also focusing on expansion in Tier-3 cities. “Tier-3 markets are very much on our radar. These cities are the next frontier,” says Dushyant Singh from the brand.

However, Singh believes that while demand is growing, these markets require a more nuanced approach—one that emphasises affordability, community engagement, and education about speciality coffee, all of which can play a crucial role.

Similarly, Kaapi Solutions has been actively developing partnerships, infrastructure, and training programmes to support Tier-3 cities in embracing the third-wave coffee culture and ensuring consistent growth for both the brand and its customers. “We believe this expansion is not just strategic but essential to shaping the future of India’s coffee ecosystem,” the founder states.