Milk coffee will give birth to a new unicorn in Indonesia

In 2019, the third-wave coffee revolution hit Indonesia.

Small coffee shops sprang up like mushrooms in every nook and cranny of the country. Decorated in minimalist and modern designs, most of them use eloquent names for their brand and menu. Office employees and recent graduates also started following their passions to brew and share the Indonesian coffee legacy.

One item on the menu that stood as the crowd favorite was milk coffee, or kopi susu in Bahasa. Sold at around US$1 a cup, it is truly the backbone of the third-wave coffee revolution in the archipelago. The drink is so popular and unique to this country that I personally think it should be classified as an extra wave above the third.

The new retail players

Here are some of the local coffee shops that are taking the country by storm.

Kopi Tuku

Kopi Tuku is considered as the trendsetter of the milk coffee wave. In 2017, President Joko Widodo, along with his family, visited Kopi Tuku’s store in Cipete and posted about it in his vlog. He was promoting its signature brand “Kopi Susu Tetangga,” while appreciating the founder’s bravery to promote local brands. After that, drinking milk coffee became a trend – and it spread like wildfire.

Beside Tuku, notable brands such as Kopi Kenangan, Fore Coffee, and Janji Jiwa are also dominating the milk coffee market. However, unlike its competitors, Tuku does not aggressively open new branches, and it grows slower than its peers. According to the founder, this move was taken to ensure quality and to focus more on the interaction between the barista and the coffee lovers.

Kopi Kenangan

Kopi Kenangan is one the fastest-growing coffee chains in the country, making it very attractive to venture capital funds.

With 250 outlets spread across Indonesia’s major cities, the chain serves 3 million cups of coffee per month (as of December 2019) and is planning to add another 1,000 outlets in the next two years. According to Nielsen, the brand has the no. 1 position in the milk coffee category.

After bagging US$20 million in a series A round in June 2019, it secured another undisclosed extension round led by Sequoia India, with participation from celebrities like hip hop mogul Jay-Z and tennis star Serena Williams, at the end of last year.

The numbers game

Global equivalents

Quick and dirty valuations

The future of the new retail