India Coffee Market Definition:

Coffee is a brewed beverage made from roasted coffee

beans, which are the fruit seeds of certain types of coffee.
Grains are separated from the coffee berries to obtain a
stable raw product, unroasted green coffee. The seeds are
then roasted into a consumable product. India coffee
market report's segment analysis is studied by considering
segments, by source, type, process and geography.
India Coffee Market Dynamics:
Over the past two decades, India has seen an
unprecedented increase in the number of coffee lovers.
Increase in disposable income, global exposure, digital and
media penetration, urbanization, lifestyle changes, are
responsible for India Coffee Market growth. These changes
have led to what we call coffee culture and are driving the
growth of coffee in the market. Factors driving demand for
coffee in India include rising incomes, growing demand
from the institutional sector, changing eating habits, health
benefits, increased coffee cultivation in India, etc.

The growing obese population, unhealthy eating habits

among children and adults, hectic lifestyles, and hectic
work schedules are factors driving consumers towards
healthy alternatives. Coffee is also one of the functional
drinks available with proven health benefits. Various
coffees are introduced to the market, to serve a wide range
of consumers as calorie-conscious consumers and diabetic
populations are looking for alternatives to sugar in their
drinks. This increases the rate of preference for
antioxidant-fortified drinks among them. India coffee
market is also driven by strong demand from young
consumers amid a thriving coffee culture.
The major challenge for India Coffee Market that nation has
being traditionally a tea-drinking nation and still doesn't
have the appeal for coffee in the commons. As models
evolve, brands must move beyond product innovation and
connect with consumers to create a habit of it. There
should be brand resonance for a larger segment of
consumers. The new generation is more inclined towards
coffee than tea as a preference for a morning beverage.

In India, Coffee was an Out of home thing, which then

aroused the Café culture in the country, giving rise to
branded service stores such as CCD, Starbucks, etc. The
love for coffee has encouraged major domestic and
international companies to launch a wide variety of coffees.
Many retail stores have begun to offer a wider range of
coffees. The Indian Consumers are different than other
regions as they mostly prefer to have coffee sitting in
cafes, enjoying with friends, etc. rather than go to coffee.

Most of today's India Coffee Market growth is due to out-of-

home consumption, this category is likely to increase
consumption at home. But penetration appears to be a
major obstacle, coffee's geographical penetration is largely
confined to urban populations in tier I and tier II cities,
putting South India aside. 70% of the Indian population
lives in the rural belt, and coffee is an acquired taste.
Brands that offer packaged products are trying to enter
with CPGs like sachets, helping to differentiate themselves
in these markets.

Rural India is gradually changing in all aspects. Consumers

don't hesitate to try new things, whether it's online
shopping or digital banking. Brands can link up with rural
India, the market will see exponential growth in overall
coffee consumption in the country.

Globally, the coffee market has grown steadily by 2.5 to 3%

year on year, but the growth rate is much faster in India.
The India coffee market is growing 10.15% year on year.
India's strong growth is due to weak fundamentals as the
Indian coffee market is smaller than the rest of the world.
During the Covid period, internal coffee consumption
increased significantly around the world with the closure of
cafes and hotels. Before Covid, household consumption
accounted for 70%. This number has increased to about
90% during the Covid crisis.

Women coffee entrepreneurs are roasting an aroma of

change in a predominantly tea-drinking nation. Fueled by
India's coffee revolution, the women who lead the country's
"bean business" have taken interesting routes to discover
the diversity of local coffee. Coffee consumers in India no
longer see coffee as a bittersweet drink that effectively
wakes you up in the morning. These factors are driving the
demand in the India coffee market.

The first-generation drinkers in North India started with

instant coffee, while in the South, where coffee was grown,
filter coffee is popular. With the second generation, cafes
like Cafe Coffee Day came in. These were more than the
coffee but about the culture of meeting friends, hanging
out, going for dates – a melting pot of young people which
is driving the demand of the product in the market.

The coffee shop is always positioned as the last place

where food and culture meet in this region. With the
energy of revolution and wisdom, the cafe has become an
important space for the exchange of ideas over the years.
Wi-Fi replaced books, today's coffee shops are crowded
with young people who are hard at work using laptops or
trendy monitors. Consumers' knowledge of coffee here is
much greater, thanks to the support of internationally
renowned Indian shops such as Blue Tokai and Araku
Coffee placing handcrafted cups on the table. Metros have
more access to cafes and brands. Though tier 2 and 3 cities
don't have that access, there is a consumer base there.
Brands are delivering cold brew sachets, micro cans, or
coffee beans through orders placed online. This factor is
driving the growth of the India coffee market.

In recent years, the industry has witnessed a rising demand

for disruptive and premium products, and a dozen or so
coffee start-ups/direct-to-consumer brands are catering to
the evolving consumer taste and requirements. The rise in
disposable income and a subsequent change in lifestyle
have certainly driven India's young demography towards
delectable foods and beverages. But it peaked when the
food craze born out of lockdown isolation peaked, and the
ubiquitous digital infrastructure made it easy to buy and
taste at a tap or a click.

India Coffee Market Trends:

Coffee Beer: Coffee mixes well with almost everything, and

there are some breweries that have already begun
experimenting with this concept. Therefore, the choice of
such sour coffee-infused beer is trending. Coffee-injected
beer is quickly becoming the best-selling cocktail on the
India Coffee Markett.
 Nitrogen-rich coffee: India has seen continual growth in the
adoption of fizzed or rather nitro coffees. This process of
nitrogenization gives the coffee a silky mouthfeel. Most
importantly, the inclusion of nitrogen will discourage the
requirement for dairy and cream as coffee whiteners and
thickening agents.

Gen-Z cafes and coffee shops: By 2020, the number of

smart cafeterias increased, allowing individuals to engage
in professional activities over a hot coffee. The perfect
fusion of IoT in the world of potent drinks, with a focus on
providing professional rooms that are more reminiscent of
the GenZ Cafeteria. This will certainly shift towards a more
cohesive workspace that accommodates the modern
workforce and aspiring entrepreneurs.

Competitive Landscape: Indian Coffee Start-ups

Company Revenue Product Categories
2020
Blue Tokai $ 5.6 Mn Roasted and Ground Coffee, Cold
Brew Bags, Starter Kits, Coffee
Mugs, Brewing Equipment
Sleepy Owl Coffee $ 0.7 Mn Cold Brew, Hot Brew, Filter
Coffee, RTD Coffee, Latte,
Merchandise
Rage Coffee $ 0.2 Mn Instant Coffee, Cold Brew Bags,
Flavored Coffee
Slay Coffee $ 0.3 Mn Coffee Ground and Beans, Coffee
Pour Over, Coffee Concentrate,
DIY Coffee Brewing Kit
The Flying Squirrel $ 0.2 Mn Coffee Ground and beans, Cold
Brew, Brewing Equipment and
Accessories

The objective of the report is to present a comprehensive

analysis of the India Coffee market to the stakeholders in
the industry. The report provides trends that are most
dominant in the India Coffee market and how these trends
will influence new business investments and market
development throughout the forecast period. The report
also aids in the comprehension of the India Coffee Market
dynamics and competitive structure of the market by
analyzing market leaders, market followers, and regional
players.

The qualitative and quantitative data provided in the India

Coffee market report is to help understand which market
segments, regions are expected to grow at higher rates,
factors affecting the market, and key opportunity areas,
which will drive the industry and market growth through
the forecast period. The report also includes the
competitive landscape of key players in the industry along
with their recent developments in the India Coffee market.
The report studies factors such as company size, market
share, market growth, revenue, production volume, and
profits of the key players in the Indian market.

The report provides Porter's Five Force Model, which helps

in designing the business strategies in the market. The
report helps in identifying how many rivals are existing,
who they are, and how their product quality is in the India
Coffee market. The report also analyses if the India Coffee
market is easy for a new player to gain a foothold in the
market, do they enter or exit the market regularly if the
market is dominated by a few players, etc.

The report also includes a PESTEL Analysis, which aids in

the development of company strategies. Political variables
help in figuring out how much a government can influence
the India Coffee market. Economic variables aid in the
analysis of economic performance drivers that have an
impact on the India Coffee market. Understanding the
impact of the surrounding environment and the influence
of ecological concerns on the Indian market is aided by
legal factors.

India Coffee Market Scope:

 India Coffee Market Scope
Market Size
USD 1.74 Bn.
in 2022
Market Size
USD 2.33 Bn.
in 2029
CAGR (2023-
4.3%
2029)
Historic
2017-2021
Data
Base Year 2022
Forecast
2023-2029
Period
By Source

 Arabica
 Robusta

By Type

 Instant Coffee
Segment
 Ground Coffee
Scope
 Whole Grain
 Others

By Process

 Caffeinated
 Decaffeinated

KEY PLAYERS

• Bru
• Nescafe
• Narasu’s
• Café Coffe Day
• DAVIDOFF
• STARBUCKS
 • Continental
• Tata Coffee Grand
• Blue Tokai
• Sleepy Owl Coffee
• Rage Coffee
• Bloom Coffee Roasters
• KC Roasters
• Araku
• The Flying Squirrel
• Slay Coffee
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Note 2
Indian Coffee Market: Industry Analysis and Its
Future

Introduction
Coffee has been a beloved beverage in the western world
for ages, but its popularity extends far beyond those
borders. The demand for this delicious drink is at an all-
time high worldwide, and India has long been a significant
producer, consistently ranking in the top 10 coffee-
producing countries.
In this blog, we'll check out the business growth of the
Indian coffee market, exploring both the export and import
potential of Indian coffee.
Do you know?
Robusta is a majorly manufacturing coffee brand in India,
with almost 72% of total production.

Coffee is majorly an export commodity; therefore, the

demand and consumption of coffee in India do not affect
the price factor.
Indian coffee is among the best in the world and a highly
sought-after product in foreign markets due to its
exceptional quality. Robusta and Arabica are the two
varieties of coffee produced in India. Strong-flavoured
Robusta coffee is used to create a variety of mixes and
flavours.
On the other hand, high-value Arabica coffee is renowned
for its delicate fragrant qualities.

Overview of the Indian Coffee Industry

The bulk of coffee production in India occurs in the
southern region.

 Karnataka is the dominant player, contributing around

70% of the total coffee output.
 Kerala ranks second, but its share of the production is
much lower at approximately 23%.
 Tamil Nadu comes in third place, responsible for 6% of
the total coffee production in the country.

The Nilgiri district in Tamil Nadu is a significant Arabica

growing area, accounting for nearly half of the state's
coffee production. Other regions, such as Orissa and the
northeastern areas, have a relatively minor share of coffee
production in India.

The Evolution of the Coffee Era in India

Initially, the focus of coffee production in India was mainly
on exports, and the country was a significant provider of
coffee to the worldwide market. However, in the 1950s, the
Indian government implemented policies to promote coffee
consumption within the country, contributing to domestic
coffee culture's emergence.

Types of Coffee Production in India

The majority of the coffee produced in India, which is
currently the sixth-largest coffee producer in the world, is
of the Arabica and Robusta kinds.
With each location making coffee with a different taste
profile, the Indian coffee industry is renowned for its
distinctive flavours.
The Indian coffee industry has come a long way since its
inception and continues to evolve to meet the changing
demands of both the domestic and global markets.

Largest Coffee Producer State of India

Almost 70% of all coffee produced in India is produced in
the state of Karnataka, which dominates the market.
Karnataka produced 2.33 lakh metric tonnes of coffee in
the preceding fiscal year, the most of any state in India.
Importantly, approximately 1.58 lakh metric tonnes of
Robusta coffee comprised most of this production.
Karnataka further generated 74,755 metric tonnes of
Arabica coffee.

Post Monsoon
Estimate 2022-2023
State/District
Arabi Robus
Total
ca ta
Karnataka
37,87 85,15
Chikkamagaluru 47,280
5 5
19,22 1,13,4 1,32,6
Kodagu
0 00 20
15,85 36,80
Hassan 20,950
0 0
72,9 1,81,6 2,54,5
Sub total
45 30 75
Kerala
 61,95
Wayanad 0 61,950
0
Travancore 900 8,150 9,050
Nelliampathies 1,100 1,650 2,750
2,00 71,75 73,75
Sub total
0 0 0
Tamil Nadu
Pulneys 7,950 490 8,440
Nilgiris 1,175 4,450 5,625
Shevroys (Salem) 3,925 0 3,925
Anamalais (Coimb
800 550 1,350
atore)
13,8 19,34
Sub total 5,490
50 0

Reference for the table is from Coffee Board of India

(indiacoffee.org)
Coffee Consumption in India

In recent years, India's consumption of coffee has been

continuously rising. Coffee has significantly increased in
popularity among younger generations and urban
populations, even if tea continues to be the nation's most
widely consumed hot beverage.
The main coffee-producing states in India are Karnataka,
Tamil Nadu, and Kerala in the south. The northeastern
regions also produce a sizable amount of coffee. With many
young professionals and college students frequenting these
places, coffee shop chains like Café Coffee Day and
Starbucks have helped to expand India's coffee culture.
While making classic filter coffee is still a common practice,
other coffee varieties like cappuccinos and lattes are
becoming increasingly popular.
Coffee Consumption Based on the Rural and
Urban Areas of India

Industry Analysis

The Indian coffee market has seen significant growth over

the past few years, driven by increasing demand from both
domestic and international consumers.
The industry is valued at approximately INR 25,000 crore
and is expected to grow steadily in the coming years.

Increase in Coffee Demands in India

One of the major factors driving the growth of the Indian
coffee market is the increasing demand for speciality
coffee. With consumers becoming more discerning about
the quality and origin of their coffee, speciality coffee has
emerged as a significant growth area for the industry. It
has led to the emergence of several speciality coffee shops
and roasters in major cities across India.
Another factor driving growth in the Indian coffee market is
the increasing popularity of coffee among younger
consumers. As more and more young people in India adopt
a more Western lifestyle, coffee has become an essential
part of their daily routine. It has led to the growth of coffee
shops and cafes in major cities nationwide.
Export Trends of the Coffee Industry in India

As the world's most favoured beverage, coffee is prominent

globally. In 2020, the coffee market worth exceeded
US$466 billion. India, a significant player in this industry,
mainly exports Robusta coffee beans, known for their low
acidity and high bitterness compared to Arabica coffee.
Besides green coffee beans, India's export basket includes
various coffee preparations, including instant coffee,
constituting around 31% of the exports. Instant coffee
alone contributes to almost one-third of India's coffee
exports.
Do you know?
In the 2021-22 fiscal year, the nation exported over 70% of
its products, with a total export value of US$1.04 billion,
representing a 42% increase from the previous year.
Specifically, coffee exports experienced a 22% increase
from February 2022 to March 2022, reaching US$114.7
million.

Over the past decade, instant coffee exports have

witnessed a CAGR of 4% until FY20, depicting the growing
demand for convenient and easily accessible coffee
products.
The export business of coffee beans is only drastically
increasing year by year. Here is a chart depicting the
growing trends of export reach of Indian coffee. The
business growth of coffee exports looks immeasurably
profitable.

The Overall Growth of the Coffee Export in Market of

India
Import Trends of the Coffee Industry in India
The Indian coffee market has seen a rise in imports, with
the nation becoming the 42nd largest coffee importer
globally in 2020 with $109 million worth of imports. But it's
fascinating to notice that among the most imported goods
into India, coffee only comes in at number 345.
Vietnam, Uganda, Indonesia, Cote d'Ivoire, and Brazil are
the countries that supply the majority of the coffee that is
imported into India. Significantly, with an increase in
imports of $8.87 million between 2019 and 2020, Indonesia
has become India's fastest-growing import market for
coffee.
In a similar vein, imports from Brazil and Uganda have
increased significantly as well, by $5.38 million and $3.7
million, respectively.
Top Countries to Export Coffee Worldwide

India's coffee industry is witnessing steady export growth.

Italy, Germany, Belgium, and the Russian Federation are
the largest importers of coffee from India, accounting for
about 45% of the total share.
The bitter and more assertive flavours of the Robusta blend
are preferred in Europe, which makes up 42% of India's
coffee exports, with Italy alone accounting for 20% of bean
coffee exports.
Indian exporters are also focusing on building a significant
market share in Poland and the USA for instant coffee, with
India being the third-largest exporter of coffee to Poland.
Furthermore, coffee preparations exported to the USA have
grown at a CAGR of 9%.

Despite facing challenges such as competition from other

coffee-producing countries, climate change, limited
availability of suitable land, and fluctuating prices in the
global market, the Indian coffee industry has immense
growth potential.
Did you know?
Initiated by the Government of India, subsidies ranging
from US$ 2,500-US$ to 3,500 per hectare have been
provided to farmers to develop coffee in traditional areas.
With the increasing demand for speciality coffees and
organic coffee products, along with the potential to
increase domestic consumption of coffee by creating
awareness and developing a coffee culture in India, the
coffee industry is poised for a bright future. The use of
technology and innovation in coffee farming, processing,
and distribution can improve efficiency and quality, while
sustainable and ethical practices can meet the growing
demand for socially responsible and environmentally
friendly products.
Overall Growth Potential

The Indian coffee industry is expected to grow by leaps and

bounds, with the potential to tap into new markets and
develop new products. With a focus on sustainability,
quality, and innovation, the coffee industry is set to
become a significant contributor to India's economic
growth.
Challenges and Opportunities

Recently, a renewed focus has been on sustainable coffee

production practices, with initiatives to promote organic
and shade-grown coffee. There are specific challenges
faced in India that affect the coffee industry and business
growth in India.

 Coffee-producing nations like Brazil, Vietnam, and

Colombia compete directly with us.
 The Indian coffee business has survived despite
unpredictable weather, pests, and low yields.
 Land that is appropriate for growing coffee is scarce.
 Due to antiquated methods and inadequate
infrastructure, coffee cultivation experiences low
productivity and quality problems.
 Fluctuating prices impact the profitability of coffee
farmers and exporters on the world market.
 Absence of promotion of Indian coffee brands and
goods through marketing campaigns.
 Possibilities to capitalise on the rising interest in
speciality coffees and organic coffee products.
 By raising awareness and fostering a coffee culture in
India, there is the potential to enhance domestic
coffee consumption.
 Coffee growing, processing, and distribution should
use more innovation and technology to boost
productivity and quality.
 It creates ethical and sustainable coffee production
methods to satisfy the rising demand for socially and
environmentally responsible goods.
Future Outlook

The coffee sector is anticipated to create US$0.92 billion in

revenue in 2023, with an annual growth rate of 2.06%.
(CAGR 2023-2025). With revenue of US$95,580.00m in
2023, the United States will dominate the international
market. In 2023, each person is anticipated to contribute
an average of US$0.65 to the revenue.
By 2025, spending on out-of-home consumption is
expected to represent 54% of total spending and 6% of
total consumption. By 2025, the Coffee segment is
expected to have a total volume of 50.68 million kg,
growing at a 2.3% annual rate. The typical person is
projected to consume 0.03 kilogram of coffee by 2023.

Best Indian Coffee to Hop on to for All Coffee Lovers

What sets Levista Coffee apart is its focus on sourcing high-
quality coffee beans from the best farms across the
country. The brand prides itself on using only 100% Arabica
beans, which are handpicked, sun-dried, and roasted to
perfection, resulting in a rich, flavorful, and aromatic
coffee.
Not only do we excel in quality and sustainability, but we
also offer a wide range of coffee blends and flavours to
cater to diverse tastes. There is something for everyone,
from medium to dark roasts, single-origin to blends, and
even decaf options.

To Wrap Up
In conclusion, Levista coffee stands out as the best coffee
brand in India due to its commitment to sourcing high-
quality coffee beans, sustainable practices, transparency,
and a diverse range of flavours. A cup of Levista Coffee is a
soothing, refreshing beverage that reflects the brand's
values and dedication to providing a superior coffee
experience.
The states of consumers who consume Levista coffee is so
satisfying and contending. There are several repeat
customers, and word of mouth plays the play here. So, you
know what to rely on than any other source.
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Growth in Indian Coffee Community
he Indian Coffee Industry has been steadily growing over
the years, with a steep increment in coffee consumption in
recent years. Before 2000, coffee consumption in India
grew at 2% per annum, but it has been uplifted in this
century to 5% per annum with continuous growth.

As one of the largest coffee producers in the world, India

constitutes about 3.5% of the world’s coffee production
(around 3600 million kg). Maximum production takes place
in the Southern and North-Eastern regions of the country,
thanks to adequate weather conditions.

Indian Coffee Industry

According to reports, the coffee segment amounts close to

$808M, expected to grow annually by 8.9% CAGR from
2020-2025. Despite having a low consumption because of
Tea, India is the 3rd largest coffee producer in Asia. Nearly
80% of coffee grown in India is exported, making it a
revenue-generating segment for India. Majorly, coffee is
exported to Italy, Germany, Belgium, Turkey, and Russia.

The ever-evolving lifestyle of urban consumers to fast-

paced lives leads to a drastic increment in the demand for
coffee in India. Furthermore, the increase in cafe culture
has also promoted the beverage in a fashionable and
luxurious way. In India, Specialty coffee is escalating at a
terrific pace. People are fascinated by the different types,
varieties, flavors, and coffee brewing methods. This in turn
led to a drastic rise in single-origin coffee beans with
distinct flavored profiles.
Since 2012, coffee has become a topic of discussion,
replacing wine. Everyone was fascinated by coffee bean
production and the benefits associated with it. With coffee
shops established in the country, job opportunities and
entrepreneurship chances for the coffeeholics increased.
This led to the establishment of a highly profitable coffee
industry. Cafes started presenting both espresso-based
beverages and manual brews like pour over / syphon,
French Press, Aeropress, Chemex, etc. The range of coffee
beverage options also increased from Cappuccino to Cold
Brew.
Conclusion

The Indian Coffee market is still in the infancy stage with

tons of growth prospects in the world. Major metropolitan
cities like Delhi, Mumbai, Bangalore, and Chennai are
already witnessing strong coffee culture with tremendous
growth in the demand for coffee. Even cafes are setting up
their own Micro Roastery to present unique coffee flavors
and create their own customized blend for the standout
beverage. Additionally, the Indian Government is showing
severe interest in the Coffee Industry. They sanctioned an
INR 1,000 Crore special package for proper cultivation of
coffee in non-traditional areas, post-harvest infrastructure
development, and establishment of coffee cultivation
centers in various regions.

Indian Coffeeholics, it is our time to blossom in the Global

Coffee Market. Your immense support for promoting Indian
Coffee Brands is highly recommendable.

India Cafes & Bars Market SIZE & SHARE ANALYSIS -

GROWTH TRENDS & FORECASTS UP TO 2029.
The India Cafes & Bars Market is segmented by Cuisine
(Bars & Pubs, Cafes, Juice/Smoothie/Desserts Bars,
Specialist Coffee & Tea Shops), by Outlet (Chained Outlets,
Independent Outlets) and by Location (Leisure, Lodging,
Retail, Standalone, Travel). Market Value in USD is
presented. Key data points observed include the number of
outlets for each Food Service channel; and, average order
value in USD by Food Service channel.

Study Period 2017 - 2029

Market Size
USD 17.54 Billion
(2024)
Market Size
USD 26.17 Billion
(2029)
Largest Share by Specialist Coffee & Tea
Cuisine Shops
CAGR (2024 -
8.33%
2029)
Fastest Growing
Cafes
by Cuisine

India Cafes & Bars Market Analysis

The India Cafes & Bars Market size is estimated at USD

17.54 billion in 2024, and is expected to reach USD 26.17
billion by 2029, growing at a CAGR of 8.33% during the
forecast period (2024-2029).
Rising work from trend and increased disposable income
fueling the cafes and bars sales

 The growth of cafes in India, driven by the rise in the

trend of people working remotely or freelancing, has
led to an increased demand for comfortable and
functional workspaces that also offer food and
beverages, leading to the emergence of coworking
cafes. In 2020, flexible workspace leasing in India
accounted for over 5.4 million sq. ft of space, a 43%
increase from 2019. The ambiance and atmosphere of
restaurants have become an essential aspect of their
appeal. Many cafes now offer unique and quirky
themes and decor to attract customers and provide
live music or entertainment. Hence, cafes in India are
anticipated to be the fastest-growing by value,
registering a CAGR of 17.06% during the forecast
period.
 In the bars and pubs sub-segment, there is an
increasing awareness of health and wellness among
consumers in India, and many bars and pubs are
responding by offering low-calorie drinks, mocktails,
and non-alcoholic cocktails. This trend is driven by the
growing demand for healthier drinking options,
especially among younger consumers. Over 40% of
consumers in India were willing to choose low-calorie
and low or no-alcohol drinks as of 2020. Around 43%
of consumers wanted low-calorie alcohol, 32% wanted
gluten-free beers, and 34% were looking for low-
calorie beers.
 India has a long-standing tea and coffee culture, and
specialty outlets are tapping into this by offering
premium and unique blends of tea and coffee. The
coffee culture emphasizes high-quality coffee, ethical
sourcing, and sustainable practices, which has gained
popularity among Indian consumers and is boosting
the growth of specialist coffee and tea shops. Hence,
specialist coffee and tea shops are anticipated to
register a CAGR of 6.95%, by value, during the
forecast period.
India Cafes & Bars Market Trends

India's tea chains: A new trend for millennials that offers

diverse options at lower prices

 Cafes and bars outlets held a major share of the

market at 22.52% in 2022. India has more than 800
bars and clubs that provide alcohol. The younger
generation has more disposable income, which has
ultimately increased demand for India's pub and bar
cultures. The majority of customers prefer to visit
businesses that serve food and alcohol. People are
drawn to the ambiance of cafes and bars, which
makes it easier for customers to socialize.
 Specialty tea and coffee stalls are popular in India,
with the informal sector accounting for the vast
majority of them. As an alternative to the ubiquitous
tea stall, branded tea chains have sprouted across
Indian cities. Millennials are especially attracted to
companies that offer more diverse options at lower
prices than coffee chains. For instance, a cup of
masala chai costs USD 0.85 at Chaayos, one of India's
largest tea chain companies, while the cheapest coffee
at Starbucks costs USD 1.95. Tea chains also have a
larger food menu, which will likely appeal to younger
adults who prefer to eat out more than older people.
 Targeting millennials is not surprising since almost
one-third of the country’s population is in the age
group, thereby promoting such establishments.
 Over 70% of consumers in India were focused on
improving their overall health and immunity through
dietary changes in 2021, boosting the demand for
juice and smoothie bars to offer a healthy menu. The
popular juice/smoothie/dessert bars in India include
Jus Booster Juice, Drunken Monkey, Smoothie Factory,
and The Thick Shake Factory. These bars offer a range
of fresh juices, smoothies, and desserts made from
natural fruits and cater to the growing demand for
healthy food and beverage options.

India's coffee market: growing demand for filter coffee and

popular local dishes

 The average order value for cafes and bars is low.

However, the number of orders registered per day has
an impact on the growth of the market value for this
segment in India. India has traditionally been a tea-
drinking country, but coffee consumption has recently
increased. Urban consumption accounts for
approximately 73% of total volumes, and the
remaining 27% account for rural consumption,
particularly in South India. Tamil Nadu accounts for
 60% of South Indian consumption, while Karnataka,
Andhra Pradesh, and Kerala account for 25%, 10%,
and 5%, respectively. Instant coffee is more popular in
the North, East, and West zones than filter coffee.
Occasional drinkers account for 52% of total
consumption in these regions. However, in the South
Zone, filter coffee consumption outnumbers instant
coffee consumption.
 Since the COVID-19 outbreak in 2019, people have
switched to tea as a wellness superfood. India
consumed 89.24% of its total tea production during
the fiscal year 2020-2021. India's consumption
increased from 1,116 million kg in the previous fiscal
year to 1,145 million kg in 2020-2021, reporting an
increase of 2.6%. About 443 million Indian millennials
spend more than USD 50 monthly on their health and
wellness products, thereby promoting the growth of
immunity-boosting tea containing several ayurvedic
ingredients like Turmeric, Ashwagandha, Moringa, and
Tulsi. This gives an upper edge to budding start-ups
and even established companies that spark new
trends in this segment. India’s average per capita
consumption of hard liquor is the highest in the world
at 13.5 liters of pure alcohol compared to 1.1 liters of
pure alcohol from beer. However, the cost of alcohol in
bars and pubs is driving people to consume at home,
acting as a major restraint for the market.
India Cafes & Bars Industry Overview

The India Cafes & Bars Market is fragmented, with the top
five companies occupying 2.53%. The major players in this
market are Barista Coffee Company Limited, Graviss Foods
Private Limited, Gujarat Cooperative Milk Marketing
Federation, Impresario Entertainment and Hospitality Pvt.
Ltd. and Tata Starbucks Private Limited (sorted
alphabetically).

Other important companies include Coffee Day Enterprises

Limited, Kitchen Fragrances India LLP, Massive Restaurant
Pvt. Ltd., McDonald's Corporation, Monginis Foods Private
Limited, Mountain Trail Foods Private Limited, White
Monkey F&B LLP.

India Cafes & Bars Market News

 October 2023: Barista Coffee opened its 350th store in

Udaipur and is planning to reach the count of 500 in
two years.
 March 2023: Monginis collaborated with the nStore
Technologies Pvt. Ltd, allowing Monginis to present its
catalog at hyper-local levels and consumers to order
food through QR code scanning.
 March 2023: MMG Group, which owns and operates
McDonald's restaurants in northern and eastern India,
announced an investment of USD 47.8 to USD 73.1
million over the next three years in reimaging outlets
and opening new ones.

-----------------------------------------------------------------------------------
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different-types-of-coffee-beans-in-india
Coffee has become a daily staple for many people around
the world, and India is no exception. In recent years, coffee
consumption in India has been on the rise, with numerous
people seeking out high-quality, speciality beans. If you’re
a coffee lover, you may be interested in learning about the
different types of coffee beans available in the Indian
market. In this blog post, we’ll explore four of the most
popular types of coffee beans in India.

Arabica Beans

Arabica beans are the most widely cultivated and

consumed coffee beans in the world. These beans are
grown at high altitudes and in cooler climates, giving them
a more delicate flavour and aroma compared to other
coffee beans. Arabica beans have a sweet, fruity flavour
with notes of chocolate and nuts. They also have a lower
acidity level than other types of coffee beans, making them
less bitter.

Arabica beans are farmed largely in the southern Indian

states of Karnataka, Kerala, and Tamil Nadu. This region’s
beans are noted for their exceptional quality and are
majorly used in speciality coffee mixes. Coorg,
Bababudangiris, and Chikmagalur are famous Indian
Arabica cultivars.
Robusta Beans

Robusta beans are the second most popular coffee bean in

the world, and they are known for their strong, bold flavour
and high caffeine content. These are grown at lower
altitudes and in warmer climates, which gives them a more
robust flavour compared to Arabica beans. They have a
strong, bitter taste with notes of chocolate and earthy
flavours.

These are largely farmed in Kerala and Tamil Nadu. These

beans are frequently combined with Arabica beans to give
a well-rounded taste profile. Robusta Parchment and Kaapi
Royale are two famous Indian Robusta types.

Liberica Beans

Liberica beans are a rare type of coffee bean that is grown

primarily in Southeast Asia. These beans have a unique
flavour profile with hints of floral and fruity notes. They also
have a slightly woody taste and a full-bodied texture.
Liberica beans are known for their low acidity level and
high caffeine content.

In India, Liberica beans are grown in the southern state of

Kerala. While not as commonly accessible as Arabica or
Robusta beans, they are often used in speciality coffee
blends. Some prominent Indian Liberica types are Kaffa and
Dewevrei.
Excelsa Beans
Excelsa beans are a lesser-known type of coffee bean that
is grown primarily in Southeast Asia. These beans have a
complex flavour profile with notes of tartness, fruitiness,
and earthiness. They also have a slightly nutty taste and a
medium body. Excelsa beans are known for their high
acidity level and unique flavour profile.

Excelsa beans are cultivated in the Indian state of Kerala.

These beans are not as widely available as Arabica or
Robusta beans, but they are often used in speciality coffee
blends. Some popular Indian Excelsa varieties include Dalat
and Catimor.

In conclusion,

India is home to a diverse range of coffee beans, each with

its unique flavour profile and characteristics. Whether you
prefer a mild, fruity Arabica or a bold, robust Robusta,
there is a coffee bean in India that is sure to satisfy your
taste buds. With the rise of speciality coffee culture in
India, there has never been a better time to explore the
world of Indian coffee beans and discover your new
favourite brew.

Industry Spills The Beans On How Is

India Turning Into A Coffee Loving
Country
The Indian retail coffee business has increased by
around 20 per cent in the last two years. In FY 2022,
India's coffee consumption totaled 1.21 million bags
of 60 kgs each. On International Coffee Day on 1
October, Businessworld spoke to industry insiders to
know how India is really turning into a coffee loving
country
India's domestic coffee consumption has increased significantly in recent years. With
a growing middle class and increasing awareness of coffee culture, more and more
Indians are embracing the pleasures of a freshly brewed cup of joy.

As Indians lead increasingly busy lives, the convenience and accessibility of coffee
has made it a popular choice for many. However, this increase in coffee
consumption also presents challenges and opportunities for the coffee industry.

The rise in domestic coffee consumption in India reflects the country's evolving
tastes and preferences, as well as the growing influence of global coffee trends.
According to the statistics of the Indian Coffee Market report 2022, the Indian retail
coffee business has increased by around 20 per cent in the last two years. The retail
coffee market in India is growing rapidly. In 2021, the market was valued at around
Rs 1700 crore, and it is expected to grow at a CAGR of over 20 per cent in the next
few years. During the financial year 2022, India's coffee consumption totalled 1.21
million bags of 60 kilograms each.

The rise of coffee chains and specialty coffee shops across the country has
contributed to this trend, offering a wider variety of coffee options and experiences to
cater to different tastes and preferences. Moreover, the popularity of instant coffee
has also played a role in fueling the growth of domestic consumption.

As the world celebrates International Coffee Day on 1 October, Indian industry

players share their views with Businessworld on how India is turning into a coffee
lovers country.

“The coffee category is pegged at Rs 3200 crore and is growing at about 10 per cent
annual growth. As per volume, approximately 40 per cent of the total segment is
made up by filter coffee volume and 60 per cent by instant coffee,” reveals Puneet
Das, President, Packaged Beverages India & South Asia, Tata Consumer
Products. Tata’s bouquet of coffee offers Tata Coffee Gold, Tata Coffee Grand
Premium, Tata Quick Filter, Tata Coffee Cold Coffee decoction and Tata Coffee
Café Specials premix.
Das says that in recent years, India witnessed a variety-seeking behaviour in India’s
beverage preferences, with a number of Indians embracing coffee and its different
formats.
“The café culture has gained immense popularity creating a strong social coffee-
drinking experience. For at-home consumption, consumers across the country are
looking for convenience and choose to experiment with coffee at home,” says Das.

Rajat Agrawal, Chief Executive Officer at Barista Coffee says that the Indian coffee
revolution has just started, it was over the past few decades restricted to few, but
that’s changing at a rapid pace. With 385 stores including Sri Lanka, Barista is one of
India’s most favourite coffee destinations. “Tier 2 consumerism has evolved in the
last 5-6 years, today the Tier 2 consumers are ready to pay a premium for branded
products, further attractive real estate opportunity and better yields are enabling
brands to consider Tier 1 & tier 2 cities as well on their growth agenda.”
Bharat Singhal, Founder Bili Hu Coffee contributes the trend and the awareness to
social media as well. “Today, tier 2 cities are well aware of what is happening in
metro towns. Given the exposure & reach through social media, brands are able to
bring awareness to people from far ends of the country. Today the boundaries of
lifestyles between metros and tier 2, are blurring,” says Singhal. He adds, “the
availability of specialty coffee brands, dialogues on coffee brands, massive
awareness just adds to this trend. Time will see a roaster in almost every
neighbourhood.”
For coffee estate owners, the shift is fascinating. Mridhul Prakash, Managing
Director at Vaishnavi Estate says that the domestic consumption of coffee in India
in the last two financial years (FY 2021-22 and FY 2022-23) for 60 kg bags has
increased from 1.21 million in fy 2021-22 to 1.24 million in FY 2022-23. This
represents a growth of 2 per cent from the previous financial year. “India is rapidly
evolving into a coffee-loving nation, and we are witnessing a significant shift in
consumer preferences. Indians are increasingly choosing coffee over other
beverages due to its rich flavour, versatility, and the unique experience it offers. This
trend is not limited to metro cities; it's expanding to tier 2 cities as well. The coffee
business is thriving in these regions, thanks to the growing awareness and
appreciation for high-quality coffee. There is a growth in the inspirational needs of
the population that is also helping the overall demand,” says Prakash.
For Cafes too, this trend is a welcome move. “In recent years, coffee in India has
transcended its utilitarian origins, evolving into a powerful symbol of luxury and
modern living. This transformation has been underscored by a notable enhancement
in the quality of coffee offerings at local cafes and coffee shops, elevating it to a
socially significant and cherished indulgence," Sandeep Nagaiah, Co-founder
of Paper & Pie Cafe Bengaluru. Vamsi Reddy, Co-founder of Paper & Pie adds,
“The dynamic growth of specialty coffee, the emergence of fast-casual dining
venues, and the increasing popularity of communal workspaces have collectively
propelled the coffee industry to new heights. What's particularly exciting is that this
trend isn't confined to the bustling metropolises alone; it has gracefully spread its
wings to tier 2 cities, where coffee culture is flourishing. Today, coffee stands as an
integral facet of our daily routines, embodying both comfort and sophistication."
Sahil Taneja and Swati Upadhyay, husband and wife duo behind Concu cafe chain
Bengaluru say that over the past two years, the retail coffee business in India has
experienced substantial growth. “Notably, cities like Bangalore have witnessed a
surge in coffee shops, both multi-chain establishments and artisanal cafes. In
Bangalore alone, there are now over 300 coffee shops, reflecting the expanding
landscape of the coffee industry,” they share.
Parth Gupta, Founder and Head Chef at Bloom Cafe Delhi says, “This growth has
also promoted competitions and fairs for baristas, motivating both homebrewers and
professionals to further grow their coffee knowledge and skills. As a result, coffee
education and awareness are on the rise, expanding the coffee market in India. The
collective efforts of emerging coffee brands, roasters, and cafes are pivotal in
shaping this transformation, as they play a crucial role in educating the populace and
fostering a thriving coffee culture in the country.”
Anurag Bhamidipaty of Ahmedabad-based Roastea too shares similar sentiments.
"The rise of coffee shops in malls and urban areas has played a pivotal role in driving
up coffee consumption. Several factors contribute to this shift, including the
perceived health benefits of coffee, the influence of Western culture, and the
demands of our modern, fast-paced lifestyles, where coffee provides the energy
boost we need," says Bhamidipaty.
He further adds, "What's great is that this coffee trend isn't just in big cities. Even
smaller towns, (Tier 2) cities, are getting into it. Coffee shops are spreading, making
it easy for more people to enjoy coffee. It's like a mix of our old morning tea tradition
with new and exciting coffee flavors. India's coffee business is booming, keeping our
traditions alive while adding new and delicious options for everyone."
Coffee consumption pattern &
trends in India
India has largely been a tea-drinking nation since time immemorial.
However, coffee has become an increasingly popular drink since the turn
of the twentieth century. It is now no longer a typical drink, but a
refreshing and voguish beverage.

While the urban consumption dominates with about 73 percent of total

volumes, the remaining 27 percent it is speculated to account for rural
consumption, especially in South India. Among the South Indian States,
Tamil Nadu accounts for 60 percent of consumption, while Karnataka,
Andhra Pradesh, and Kerala account for 25%, 10%, and 5% respectively.
In the North, East and West zones, consumption of instant coffee is more
predominant than filter coffee. Occasional drinkers in these regions
contribute to 52% of total consumption. However, in the south
zone, the consumption of filter coffee is higher than that of
instant coffee.
Indian coffee intake
As per Euromonitor International statistics, on an annual per capita basis,
Indians drank 15.6 cups of coffee in 2014 and 16.6 cups so far. The
number of cafes in the country that are primarily frequented by
millennials has certainly been growing.

While coffee has traditionally been dominant in India’s south, where it is

known as filter coffee, the drink gained nation-wide popularity in the early
2000s amid a cafe culture boom that some say mirrored the growth of
India’s tech sectors. The filter coffee was made popular by the Indian
Coffee House set up the Indian Coffee Board in the 1930s.

Trends have, however, changed drastically over the past decade, as

coffee drinking has rapidly

Picked up in the North, East & Western parts of the country. The
domestic per capita coffee consumption is negligible especially in
regions other than South India when compared to black tea
consumption. The recent proliferation of various chains of cafes and
vending machines in Tier 1 and Tier 2 cities PAN India has given a boost to
the popularity of coffee among consumers.
India has seen a growth in the consumption of coffee sold at
coffee and tea chain stores including homegrown Café Coffee Day,
Barista, Starbucks and Costa Coffee. The value of this market has
grown to an estimated 25 billion Indian Rupees in 2018.
A surplus production of milk & coffee
An interesting fact is that according to the National Dairy Development
Board (and FAO), India is the world’s largest milk producer, contributing
about 19 percent of the world’s total milk production, with over 150
million tones of milk produced every year. And the country is the sixth-
largest producer of coffee in the world. Therefore, it can be assumed
that the abundance of both milk and coffee in the country has
resulted in a large variety of options of coffee drinking.
While coffee consumption in the country grew at an average rate of 2
percent per annum in the 50 years leading up to 2000, it has since picked
up and has been growing at about 5 percent per annum since the turn of
the century. It is estimated that India now consumes 120,000 tons
of coffee per year.
Coffee marketing manoeuvre
Coffee retailers and cafes nowadays not only roast and sell rich creamy
coffee, but, they also aim at giving customers the experience of picking
their beans and brewing them through various techniques. Over the years,
Indian coffee culture has progressed from Aero press coffee tournaments
to experience centers and coffee-centered events. A fine example of
this is best illustrated by the fact that, for the past three years,
India has begun to conduct its own National Barista
Championships & the Fine Cup Award; which are two of the most
prestigious brewing competitions held in the country.
Apart from government initiatives, the HORECA sector also has a major
role to play in revolutionizing the importance of a quality brewing
experience. One such notable contribution is by the luxury resort,
The Tamara Coorg and its one-of-a-kind Coffee Festival; a three-
day experience that allows its guests to learn about the different
varieties of coffee, how it is grown and how it can be made into a
perfect brew.
Internal vs External Consumption
Coffee consumption in India would double during the next five to six
years, with this growth being led by out-of-home consumption. Moving
forward, the rise of coffee-related businesses may see this drink’s
consumption surge even further cap coffee’s growth.
Consumption at home, too, could see exponential growth.
Navin Gurnaney, CEO, Tata Starbucks Pvt. Ltd., says “Coffee consumption
patterns will constantly evolve. However, the rise of consumption in the
country tells us that brands need to go beyond product innovation and
build an emotional connection where the consumption habit becomes a
ritual, and eventually synonymous with the brand.”

Coffee Consumption Habits in India

India, like many other Asian countries, is traditionally a tea-
drinking nation. It has a massive population that has, for
ages, preferred tea to other beverages. But even with its
over a billion people, India hasn’t been able to avoid the
influence of the West.

Coffee, a wildly popular beverage in the US and Europe is

slowly making its way through the Indian population. Like
many other countries in Asia, this change in preference is
being spearheaded by young people between the ages of
20 and 40.

These are people who have grown up in a time when

Hollywood has had a huge influence on the global
population. Hollywood created the notion that coffee was a
‘cool’ way to socialize and make new friends.

So the big question is, what are the coffee consumption

habits in India today?

Origin of coffee in India

The earliest recorded evidence of coffee in India can be
traced back to the 17th century. An Indian Sufi saint known
as Babu Budan went to Mecca and came back with coffee
seeds, which he planted in the southern region of India in
the state of Karnataka.

Karnataka is the largest producer of coffee in India. Over

70% of the total coffee India produces comes from
Karnataka, followed, at a distance, by Kerala, which
accounts for roughly 23% of the total coffee output.

Despite being introduced in India centuries ago, it wasn’t

until the British occupied the country that coffee
consumption started to take off. And even then, it wasn’t
as popular as coffee.

India is the second largest producer of tea in the world, and

approximately 80% of that is consumed locally.

Coffee production in India

India is the sixth-largest producer of coffee in the
world. According to Statista, India produced over 393,000
metric tons of coffee in the year 2023. This is the highest it
has ever been in history.
Two established varieties of coffee grown in India are
Arabica and Robusta, with Robusta taking the lead as the
most common one. Unlike tea, India exports most of its
coffee. In 2022, it exported over 80% of its coffee to
countries like Germany and Italy.

Coffee drinking as a lifestyle

The growing number of coffee consumers in India can be
linked to several factors, like the booming tech sector. This
means more disposable income in the hands of younger
people that can be spent on coffee in cafes.

Increased coffee consumption can also be attributed to the

launch of several coffee chains like Third Wave Coffee,
which launched in 2021 during the Covid-19 pandemic.
These chains create ambient cafes where young adults like
to spend time and socialize.
Popular coffee types in India
About two to three decades ago, when coffee was not
nearly as popular as it is today, instant coffee was the
most common type of coffee in India. Instant coffee in
sachets is inexpensive compared to other types, mostly
because it’s also low-quality coffee.
As more people have embraced coffee consumption, there
has been a steady increase in the types of coffee available
in the Indian market. The rise of coffee chains like Third
Wave Coffee has led to the increased adoption
of specialty coffee.
Some of the most popular types of coffee servings in India
include Americano, Latte, Cappuccino, Macchiato, and Cafe
Mocha.

The role of coffee machines in increased

coffee consumption
It is no secret that those doing well financially in society
often migrate to urban areas. This is true in many countries
around the world, and India is no exception. Most people
living in urban areas have disposable income and can
afford to buy coffee machines.

Since large coffee chains like Starbucks, Costa Coffee, Cafe

Coffee Day, and Breberrys Cafe launched in India, coffee
intake has been surging. People are now more informed
about the various kinds of coffee they can have and the
benefits they can get from them.

Consequently, a lot of people have been getting coffee

machines so they can prepare their favorite coffee from
home in an instant. Coffee machines go hand in hand with
coffee capsules.
Companies like Espresso India have introduced coffee
capsules with various fruity flavors, which broadens the
spectrum of coffee flavors that people can enjoy. The more
machines people buy, the more coffee they drink, and the
bigger the coffee market becomes.

Conclusion
Coffee intake in India is not showing signs of slowing down.
If anything, the rate at which more people consume coffee
is only going to go up. Younger people born in the past two
decades have come to find an already established coffee
market.

They are able to choose from a wide array of coffee

options, which wasn’t possible two decades ago. However,
the older generations are stuck in their ways and most of
them still prefer tea to coffee.

We are going to witness a reduction in the amount of

coffee India exports to other countries due to an increase
in the rate of consumption locally.

Considering that importing green coffee for processing is

costly, coffee processors are going to turn to local coffee
from farmers to produce various coffee products.

Even with the growth of the coffee market, it will still be a

while before coffee gets as widely adopted as tea.
However, the growth opens doors for investment
opportunities by private label businesses and other
investors.
Total distribution of coffee in India 2019/2020-
2023/2024
Published by A. Minhas, Jul 5, 2023
In market year 2023/2024, total distribution of coffee was at 7.83 million 60
kilogram bags in India. This was an increase as compared to the last
year. Coffee consumption amounted to over 1.2 million 60 kilogram bags in
India during the same year.

Specialty Coffee Courts Indian

Consumers
India’s growth in coffee drinking is
outpacing growth in tea, driven by
premiumization, rising affluence, and savvy
roasters.

Tea-loving India hasn’t yet fallen for coffee in a huge way, but consumption has been on the rise
during the past 10 years. And the past three years have seen the emergence of a coffee culture
with increasing sophistication. A diversification and premiumization of products and services is
positioning the category for growth, especially among Gen Z, millennial, and high-income
consumers.

New roasters and coffee shops are proliferating in first- and second-tier cities. International
chains are on the rise. Starbucks is expanding, and so are recent entrants like the U.K.’s Pret-a-
Porter and Canada’s Tim Hortons. Investments by venture capital funds and corporates like Tata
have been growing. New and better RTD coffees have been launched, including cold brews.
Export-focused farms are now collaborating with domestic roasters. Home-grown cafes are
cultivating customers through coffee education and events.

Fitch Solutions, the credit ratings group, forecasts that retail spending on coffee will grow at 7.6%
per year during the 2021–2025 period to reach $51 million (Rs 4.3 trillion), outpacing the 7%
growth rate expected for tea. Supporting the trend is a 23% total rise in per-capita disposable
income during that period, to $2,123 by 2025. Statista market research forecasts that India’s
coffee industry will have total revenues of $920 million in 2023. The specialty market represents
about 5% of the formal coffee market according to the 2021–22 annual report of Tata Consumer
Products.

One sign of the times came in January, when the nation’s most popular home-grown roastery,
Blue Tokai, won $30 million in Series B funding, the biggest-ever investment in Indian specialty
coffee. Founded 10 years ago, Blue Tokai says it will expand its cafe count from its present 60,
adding 200 across the country over the next three years. Another vencap-backed domestic chain
is Third Wave Coffee, launched in Bengaluru in 2017, with more than 50 locations. Starbucks
already has 271 venues, in a joint venture with Tata.

To be sure, India has long been big in coffee. But mostly in production and export. It is the
world’s six-largest producer, and the third largest in Asia, after Vietnam and Indonesia, at more
than 6 million 60-kg bags. About 70% of the crop is robusta. Some 4.1 million bags of all
varieties were exported, along with 2 million bags of soluble, making India the 6th or 7th leading
exporter, with Europe as the top market. Ninety-five percent of the crop is farmed in the southern
states of Karnataka, Andhra Pradesh, and Kerala. Plantations employ 700,000 workers
nationwide, according to the U.S. Department of Agriculture. The broader industry has
employment of 1.7 million.

India’s domestic market for coffee has long been concentrated in a few states in the south, with
Bengaluru as the hub for specialty roasters. Blue Tokai helped change that by taking Indian
coffee to north India. Its founders, Matt Chittaranjan and Namrata Asthana decided to promote
the more flavorful arabica coffee and experiment with roasts, grinds, and brewing styles.

Blue Tokai first opened in Delhi in 2012 and started to show customers what fine coffee is all
about. The chain was slow to arrive in the south, but when it did, in late 2018, it gave rise to a
new wave of coffee drinking focused on specialty brew — the kinds of premium coffees that
score at 80 and above on the 100-point scale of the Specialty Coffee Association of America.

Better beans

What’s remarkable is that more and more India-grown coffees are scoring in the elite range of 90
and above, says Abhinav Mathur, who runs Kaapi Machines, which supplies roasting gear and
other coffee equipment to the food service sector. “The distance between crop and cup is
reducing,” Mathur says, noting that even small cities now have quality roasters.

Indian roasters are going direct to coffee farmers, paying the prices that producers ask. Long
used to selling for export, now farmers are gaining new markets at home. India’s roasters are
serving as the bridge between farmers and coffee lovers, backed by continual efforts to improve
and diversify their roasts and serving styles.

This has helped change perceptions about coffee. In south India, the beverage is usually taken
as instant or filter coffee, often blended with chicory and served with milk and sugar. Coffee has
long been promoted as an energy boost. Like tea, it has been treated as a commodity.

Roasters have showcased coffee at its best, by offering better-quality beans, promoting single-
estate and single-origin coffee, and making it about flavor, not caffeine.

Roasters keep proliferating, especially in cities like Bangalore, which is close to the coffee
districts-growing districts of Coorg and Chikmagalur in Karnataka state. The Covid-19 pandemic
actually gave the coffee scene a lift. Says Mathur, at Kaapi Machines, “Roasting became a
mega-trend during this time. Until then only big companies were buying roasters to cater to the
filter coffee market. But more than 40 B2C brands came up in 1.5 years. Some launched physical
roasteries or cafe chains.”

One new brand is Grey Soul Coffee Roasters, opened in Pune in 2021. Chirag Oswal, one of the
founders, says the roasters are trying to market India’s own specialty coffee because it’s “truly a
great cup.” Home-grown beans are often better value than imported ones, which are inflated by
tariffs.

Farmer to cup

The relationship between the farmer and roaster is changing. “We meet producers and exchange
ideas,” says Chirag. “We are now also involved in coffee processing. Farming and roasting
knowledge is being shared. We are cupping coffee together, and we sample roasts together.”

Ratings agency Fitch notes that arabica growers are diverting more and more of their crop away
from foreign sales to serve the domestic market. Balanoor Plantations, for example, has reduced
its exports from 80% of production to 60% in order to supply Indian cafes and restaurants.
Robusta growers are going upmarket, upgrading their production to serve the domestic premium
niche.

Roasters educate consumers about coffee via their websites and in-person workshops on tasting
and coffee cupping. In Pondicherry, Marc’s Coffees, one of the first specialty coffee brands in
India, offers a five-day master class on “The Foundations of Specialty Coffee.” Nearly all roasters
offer brewing equipment and detailed guides on preparation.

In Bangalore, Kaapi Machines extended their Something’s Brewing online shop with an
“experience center” where customers can walk in, browse coffee gear and beans, and learn,
explore, try, and buy. They aim to serve as a coffee know-how hub, to build the specialty market.

Wallet growth

One reason that venture capitalists are targeting India’s coffee businesses is growth of the
affluent segment.

Households in the middle- and upper-income bracket — those having more than $10,000 in
disposable income per year — will grow at a 19.7% compound annual rate over 2021–2025,
putting a total of 47.4 million families into this category by 2025, according to Fitch.

But the Indian market is price-conscious overall. Starbucks India got trolled for an advertisement
touting coffee at Rs 290 a cup, about 20 times the cost at street vendors.

This may be why in cities other than Bangalore, specialty coffee is expanding modestly, not
booming, despite the many new venues. Says Chirag, of Pune’s Grey Soul Coffee, “We don’t
need more roasters, we need consumers.” He notes that on a trip to Dubai, he saw cafes selling
100 cups an hour, about the same number as he sells in a day in Pune.
India’s burgeoning youth could generate a boom. Gen Z consumers are drawn to the coolness of
coffee. That’s one reason that Mathur opened his company’s hands-on showroom: “There is a lot
of drama around roasting. It’s very visual, and coffee is able to do that. It’s closer to cooking. I
remember when Flying Squirrel opened in Bangalore, and people were queuing to go in.”

Coffee offers as much variety as tea, and consumers in India are only beginning to discover it.
Luckily for them, there are many domestic producers, brands, and retail venues ready to help
them embark on their journey of exploration.

Coffee Industry and Exports

INTRODUCTION
India became the world’s fifth largest coffee exporter during 2021-22, with
6% of the global output during FY22. Indian coffee is one of the best coffees
in the world owing to its high quality and pertains to be premium in the
international markets. India produces two types of coffee: Arabica and
Robusta. Arabica has a higher market value than Robusta coffee due to its
mild aromatic flavour. Robusta coffee is mainly used in making various
blends due to its strong flavour. Robusta is a majorly manufactured coffee
with a share of 72% of the total production of Indian coffee. India is
considered the fifth largest producer of Robusta coffee globally. The industry
provides direct employment to more than 2 million people in India. Since
coffee is mainly an export commodity for India, domestic demand and
consumption do not drastically impact the prices of coffee.

India's combined Arabica and Robusta harvest is forecast to decline by

400,000 bags to 5.8 million. Robusta production is forecast to drop 300,000
bags to 4.6 million, primarily due to a prolonged dry spell from December
2022 to March 2023 which was followed by poor pre-monsoon rains. Arabica
production is seen slipping from 100,000 bags to 1.2 million. Bean exports
are forecast to up just 100,000 bags to 4.3 million on a slight inventory
drawdown.

Coffee is largely produced in the southern part of India. Karnataka is the

largest producer accounting for about 70% of the total coffee production in
India. Kerala is the second-largest producer of coffee but accounts only for
about 23% of the total production. Tamil Nadu is the third-largest producer
with 6% of India’s total coffee production. Nearly half of Tamil Nadu’s coffee
is made in the Nilgiri district, a major Arabica growing region. Orissa and the
north-eastern areas have a smaller proportion of production.
EXPORT TREND
Coffee is one of the world’s most popular commodities, and as of 2023, the
export of Indian coffee was valued at US$ 1.12 billion. The exports for the
year are higher by about a tenth in dollar value terms over the previous
year’s US$ 1.02 billion and surpassed the target of US$ 1.08 billion fixed by
the Commerce Ministry. Indian coffee exports have increased by 6% during
April-July 2023 at US$ 451.94 million on higher prices and increased demand
for instant coffee from countries such as Russia and Turkey. India majorly
exports Robusta coffee beans, a coffee bean species with low acidity and
high bitterness compared to Arabica coffee. Apart from green coffee beans,
preparations of coffee (31% of which is instant coffee) also have a significant
share in India’s export basket. Almost one-third of the country’s total coffee
exports constitute instant coffee. Exports of instant coffees, which account
for about a third of overall Indian export volumes, were up 11% at 82,675
tonnes (74,422 tonnes).

In recent years, India’s speciality coffee has become a popular product,

garnering interest from global coffee enthusiasts. Speciality coffee is
distinguished by careful cultivation practices, a clear origin, a routine of
plucking, special processing, branding, handling, and appearance.

According to The Food and Agriculture Organization (FAO) statistics, India is

the eighth largest exporter of coffee by volume. Indian coffee exports display
a seasonality, with exports peaking from March to June. The country exports
over 70% of its production. For the financial year ending March 2023, exports
of coffee were valued at US$ 1.12 billion, around 18% growth from last year.
In FY23 (until December 2023), the export of coffee stood at US$ 525.25
million. This strong growth in the export of coffee has improved realizations
for coffee growers in key states.

TOP EXPORT DESTINATIONS

India exports coffee to more than 50 countries around the world. Italy,
Germany, Belgium, and the Russian Federation are the largest importers of
coffee from India, with an average total share of about 45%. The other coffee-
importing countries are Libya, Poland, Jordan, Malaysia, the US, Slovenia, and
Australia.

Italy, India’s largest export market, accounts for 20% of bean coffee exports.
Europe, where people prefer comparatively more bitter and stronger flavours
of the Robusta blend, makes up 42% of India’s exports. Arabica coffee blend
has high demand from the Middle East region, which can be traced back to
the Arabian region. In 2019-20, Russia, Poland, the USA, Turkey, and Malaysia
imported coffee preparations produced in India, worth close to US$ 141
million. Also, the Government of Japan’s assurance to purchase all the coffee
produced in the Manipur state will drive mass-scale coffee production in
areas like Chandel, Litan, and Nongmaiching Hills, which were once regarded
unsuitable for coffee production.

India exports about two-thirds of the 3.6 lakh tonnes of green coffees
produced in the country.
GOVERNMENT INITIATIVES
The Government of India took the initiative to provide subsidies to the
farmers between US$ 2,500-US$ 3,500 per hectare for developing coffee in
the traditional areas. Additional assistance for water augmentation,
equipment, marketing, and promotion is also provided under the schemes.
The government also supports the non-traditional coffee-growing regions
under Coffee Development Programmes (CDP). Additionally, by the national
policy of tribal development, coffee cultivation is being encouraged in non-
traditional areas such as Andhra Pradesh, Orissa, Maharashtra, the
northeastern states, and Andaman and the Nicobar Islands. Under various
export promotion initiatives, transit and freight assistance are provided to
help maximize export earnings.

Export Promotion scheme - Providing Export incentive

The scheme aims to maximize export earnings by enhancing the market

share of value-added coffees and high-value differentiated coffees in
important high-value international markets. The government provides an
export incentive of Rs. 2/- per kg (US$ 0.02/- per kg) for exporting high-value
green coffees to high-value markets such as the USA, Canada, Japan,
Australia, New Zealand, South Korea, Finland, and Norway. There is also an
incentive of Rs. 3/- per kg (US$ 0.03/- per kg) for the export of value-added
coffees in retail consumer packs exported as “India Brand” calculated on the
green coffee utilized for preparation at the maximum rate of 2.6 kg for
instant/soluble coffee and 1.19 kgs for Roasted coffee seeds and R & G
Coffees.
GOVERNMENT BODY
Coffee Board of India
The Coffee Board of India is an organization managed by the Ministry of
Commerce and Industry and was established in 1942. The primary activities
of the board are to promote sales and consumption in the domestic and
international markets, conduct research and provide financial assistance, etc.
After the discontinuation of pooling in 1996, Coffee Board served as the
friend, philosopher and guide to the coffee sector covering the entire value
chain. The board plans various activities which aim at the enhancement of
production, productivity, and quality. It also aimed at promoting exports to
achieve higher value returns for Indian coffee and to support the domestic
market as well.

How coffee is reshaping India’s

beverage scene
In a nation known for its rich and diverse tea traditions, coffee is quietly but
decisively reshaping India’s beverage scene. Once considered a niche or
foreign luxury, coffee has steadily gained ground and captured the hearts of
millions of Indians. This transformation isn’t just about the shift from tea to
coffee; it’s about the evolution of taste, culture, and social experiences.
Here’s how coffee is making its mark on India’s dynamic beverage
landscape.

The coffee revolution in India

The coffee landscape in India has undergone a remarkable transformation in
recent years. Historically known as a tea-loving nation, India has seen an
exponential rise in coffee consumption. According to the Coffee Board of
India, coffee production in the country has been steadily increasing, and the
specialty coffee segment has witnessed significant growth. With an
estimated annual growth rate of 15-20%, the Indian coffee industry is on an
upward trajectory, driven by a burgeoning café culture and an increasing
preference for high-quality coffee.

A growing café culture

The café culture in India is thriving, with numerous domestic chains and
international coffee chains establishing their presence across the country. In
addition to these established players, artisanal and specialty coffee cafes
have sprung up in metropolitan cities, catering to a discerning clientele
eager to explore the world of coffee.

The economic impact

The impact of this coffee boom on the Indian economy is noteworthy.
According to data from the Food and Agriculture Organization (FAO), the
Indian coffee sector contributes significantly to employment generation,
with over 350,000 coffee growers in the country. Moreover, the Indian
coffee industry has an annual export value of approximately $1.05 billion,
making it one of the key players in India’s agricultural exports.

Apart from green coffee beans, approximately one-third of which is instant

coffee have a significant share in India’s export basket.
The transformative journey of the hospitality and F&B industry in India is a
testament to its resilience and adaptability. By embracing changing
consumer preferences, integrating technology, promoting sustainability,
fostering culinary innovation, and staying attuned to global trends, this
industry is poised for continued growth and success. As it evolves, it not
only enhances the dining and travel experiences for consumers but also
contributes significantly to the nation’s economy and cultural diversity

The Indian Tea & Coffee Industry –

Coffee to register a higher consumption
growth compared to tea …
Demand for tea in India has remained consistent as tea is being consumed in over 90% of the
households as an integral part of the daily routine. On the other hand, coffee, the alternative
hot-beverage in India, has found popularity among the nation’s youth population owing to
mushrooming of coffee bars and organized cafe outlets and the overall expansion of cafe
culture in the country. Tea consumption to grow at a CAGR of 2.2% during the period CY12-
15... During the decade CY02-12, tea consumption in India registered a CAGR of 2.4% to
reach a level of 875 million kg in CY12. The per capita tea consumption of tea also increased
from 652 grams in CY2000 to 725 grams in CY12 owing to the steady demand. Tea is a
highly penetrated beverage in the country and also has alternative such as coffee. CARE
Research estimates domestic tea consumption to at grow at a CAGR of about 2.2% in the
period CY 12-15 and reach a level of 935 million kg by CY15

Historically, loose tea demand constituted more than 60% of the total tea market in India.
However, with increased branding activities by tea companies, number of choices available
for consumers and consistently better quality of the packet tea, the demand of packet tea has
witnessed a rising trend over the years. The share of packet tea in total tea consumption
increased from 37% in CY2000 to 48% in CY12. Going forward, CARE research expects
packet tea consumption to grow at CAGR of 4% in the period CY12-15 and reach a level of
467 million kg by CY15 capturing a share of about 51% in the total tea market. Coffee
consumption to register a CAGR of 6% in the period CY12-15... Coffee consumption has
seen a robust growth during the past decade. Coffee is being increasingly consumed in cafes
and other commercial establishments apart from South India where coffee is readily
consumed by households. The key drivers of this growth can be attributed to increase in
income along with growing middle class and urbanization. This also led to the trend of
emerging café culture in the country. CARE Research estimates domestic coffee consumption
to grow at a CAGR of 6% in the period CY12-15.
Also, the per capita consumption of coffee in India is only about 90 grams. This is
considerably low when compared to other coffee exporting nations such as Brazil (6 kg),
Colombia (1.8 kg), Ethiopia (2.4 kg) and Vietnam (1.1 kg) among others. This shows the
immense potential for the domestic coffee industry to grow. Domestic tea prices to remain
elevated in CY13... Average auction prices of tea increased by about 16% in CY12. CARE
Research expects average tea auction prices to increase by about 7-8% in CY13, owing to
lower tea production and passing on of the higher manufacturing cost by the tea producers.
Incremental growth in domestic tea consumption compared to production in CY13 and
sustained exports will keep tea prices elevated. 94,400 1,02,000 1,08,000 1,15,000 1,21,900
1,29,214 1,36,967 1,45,185 0 20,000 40,000 60,000 80,000 1,00,000 1,20,000 1,40,000
1,60,000 CY08 CY09 CY10 CY11 CY12 CY13(P) CY14(P) CY15(P) Tonnes Industry
Updat

Domestic coffee prices to decline in CY13, in line with international coffee prices...
International coffee prices have a strong influence on the domestic coffee prices. In CY12,
domestic price of Arabica variety declined from the peak level in CY11 but the price of
Robusta variety increased as the demand pattern slightly shifted to Robusta variety. CARE
Research expects domestic coffee prices to remain subdued in CY13 in line with the global
coffee price trend.
International coffee prices witnessed a significant correction in CY12. The average price of
Arabica variety declined to US cents 186 per lb from a peak of US cents 271 per lb in CY11,
whereas average price of Robusta variety moderated to US cents 103 per lb compared to US
cents 109 per lb in CY11. This fall in price can be attributed to slowdown in demand from the
major coffee consuming markets. In the CS12-13, the total coffee production is estimated to
be at 144.6 million bags, an increase of 6% from the previous coffee season. This will
continue to exert downward pressure on international coffee prices in CY13

‘Nestle investing in India’s evolving coffee culture to

double growth’

New Delhi: David Rennie, deputy executive vice-president and head of

Nestlé Coffee Brands, oversees its global coffee business, including
Nescafe, Nespresso and Starbucks. In an interview, Rennie said India’s
coffee market is expanding with the company making market share gains
on account of launches such as ready-to-drink cold coffee and frappe
mixes. Coffee cafe culture in India is transforming with more consumers
now turning to speciality coffee and demanding exotic brews from
companies. Edited excerpts.

Can you please elaborate on the reach of

Nestlé’s coffee business?
Coffee for Nestlé is really important; it’s a strategic drive category. Last
year, we sold 23 billion Swiss Francs worth of coffee, which is roughly a
quarter of Nestlé’s global turnover. We have operations in all Nestle’s
markets, roughly one in seven cups of coffee drunk globally, is going to be
a Nescafe. One in every four cups of coffee drunk in India, is a Nescafe. In
1963, we started selling in India. Our factory in Nanjangud was opened in
1989 and we have been producing coffee in India directly since then.The
vast majority of the production is made in India, with Indian coffee, for
Indian consumers. We’ve announced last year, a further investment in that
factory of 110 million Swiss Francs to increase the capacity of that factory
by 2025. By 2025, we will have that capacity. The majority is going to be for
Nescafe and Nescafe Sunrise.
While 25% of your global revenues come from
coffee, it’s your smallest segment in India. Is
India under-developed for the coffee business?
One way to think about how developed a category is, is to look at average
cup consumption per consumer. In India today it is around 30 cups per
annum.
To give you a sense of where that fits, the average for the globe is 200
cups. So, it’s a strong business for us, and it is growing incredibly quickly at
double-digit.
But in terms of potential we’ve really only just begun. It is clear Indian
consumers are getting a taste for coffee, they enjoy it, it’s a category
generating great interest.
Where is the Indian coffee business stand vis-
vis other global markets?
India is very clearly within our top 20 (coffee) markets in the globe and it’s
growing very fast, moving up in the rankings every single year. We’ve been
growing double-digit for many years. We’re growing in absolute size. We’re
also growing market share, and have taken really strong market leadership.
So it’s a combination of having the preferred brand in the market and that
preferred brand driving the category.
Will coffee emerge as a larger business in India
any projections?
We absolutely do see a huge growth potential. That’s why we are investing
to double the size of the factory. I don’t want speculate where we’ll be in
five or 10 years, but we know we’re going to need more capacity. Driven by
a young population, in both rural and urban as they are really getting into
understanding what coffee is about. It’s the taste of a young generation,
and not just hot coffee, it’s also cold coffee. It is partially driven by coffee
shops, there’s lots of cold coffee and exotic coffees. With experimentation
the youth are getting into the category and it’s definitely going to grow. I
think the coffee shop culture itself helps create an interest. The other thing
is as a coffee-producing country, India has the ability to create more jobs
and infrastructure around coffee growing. It is exciting.
Will the Starbucks association extend to India,
as the cafe business is with Tata Consumer
Products Ltd?
Today, Tatas have a license for the cafes and a license for some of the
products. For us, it is only a matter of time and we will definitely be building
our business out in time. The main focus is not so much Starbucks but
Nescafe. We believe Nescafe has strong potential. This is where our main
focus is.

So, the Starbucks-Nestle association could be

independent of Tata in India?
Yeah. In time, everything is possible.
Will core brands continue to drive household
penetration for Nestlé’s coffee business in
India?
The Nescafe brand that we’ve got—we have Nescafe Classic and Nescafe
Sunrise are two really strong brands. There is huge potential for both of
those brands to continue to drive their household penetration. Every single
year, we are increasing the number of households that have those brands.
I don’t think there’s any limit to what we can do with the core and actually
we are seeing a bit of an acceleration in terms of penetration of those
brands over the last two or three years. Within that though, I think
innovation is super important, and we are seeing lots of innovation in
different formats. One of the one innovations is ready-to-drink coffee, so
coffee in cans and that’s a market again with young people, particularly on-
the-go, is growing incredibly quickly. You’ll see innovation into these new
territories but predominantly on the core brands. For the next five years,
Nescafe will continue to grow in terms of soluble, no doubt. We’re investing
a lot to continue to grow it. But ready-to-drink is another platform that has
huge potential in India.
India is a tea drinking nation. Do you see a
bigger focus on the cold beverages?
I think they’re both are big potential. I think hot coffee consumption,
especially in the winter months and cold coffee consumption particularly
with no exclusivity in the summer months is a really big potential. They’re
not a number of markets, that are traditional tea drinking markets, they get
to know and get to love coffee over time. And I think that’s exactly the
journey that India is on. You’ll find people over time develop habit for tea
and coffee. Certainly what we’ve seen in many places—not like you
suddenly stop drinking tea and 100% drink coffee. There’s plenty of
opportunity for us to take more of the cup occasions in hot beverage by just
introducing more coffee into the mix. You think of markets like Russia
which was historically a very big tea drinking market, now a very big coffee
drinking market; Japan, a very big tea drinking market, now, very big coffee
drinking market. The UK, which was a very big tea drinking market, and just
this year coffee overtook tea as the number one beverage in the UK. It’s
just a certain natural evolution. That’s why I sound really optimistic about
the potential of India to continue to adopt to coffee.
So what fuels such changes in consumption
habits? Is it linked to economic prosperity?
It’s not really economic, it’s taste and opportunity to try. It takes a long time
to change and establish taste. Our Nescafe offerings are very affordable,
we make them very affordable so there’s no barrier in terms of cost for
people to try the product, but it just takes time to adopt the habit.
India is still not a large coffee export market for
Nestle. What are your views on coffee sourcing
from India, especially as climate change
promises to threaten coffee production?
The way I think about India is the potential is huge. There are clearly issues
everywhere, with regard to climate. We know that if we don’t tackle climate
change, half of the coffee producing regions of the world could end up not
producing any coffee by 2050. In India though, because of the way coffee
is produced, coffee here is a long established crop. We farm in India with
small-hold farmers, between two and six hectares. The notion of
intercropping which is a key part of our Nescafe Plan of diversifying farmer
incomes and getting different crops alongside coffee, it’s already a part of
the Indian tradition, as they grow pepper and banana etc. That’s not true in
the rest of the world. India starts from actually a very solid base in terms of
regenerative agriculture and also in terms of resilience. But our
commitment via the Nescafe Plan is that by 2025—100% of all of our
coffee sourced in India for India will be responsibly sourced. We’re working
with over 5,000 farmers directly today in over 250 villages across India
giving on ground support through our agronomy program.
What is your outlook on global coffee demand
and coffee prices for the next one year?
Commodity price is just something you can never speculate on. By it’s very
nature, when you look at a 10 year cycle—you have highs and you have
lows, so I’m not going to speculate on the future. In terms of demand for
coffee—we see a consistent growth in terms of volume in the category of
about 1% or 2%. In terms of value, which is to your premiumization point,
we see that the value growth for the category globally is about 5%. So
there is an increasing trend to premiumization across the world as people
get into new habits, new brands, new ways of drinking coffee etc. It’s very
consistent mid-single digit value growth and low-single digit volume growth,
year-on-year.

Will India’s growing coffee culture be a domestic

story?
 Research shows young people in India are more likely
to drink coffee than their predecessors
 Consumption is closely linked to changes on the
country’s coffee estates
 The high cost of importing coffee is driving the
growth of specialty robusta

Afew years ago, India’s preference for tea-drinking looked

impenetrable.

Recent data showed close to 90% of households consume tea on

a regular basis, while around 70-80% of all domestically produced
tea remains in the country.

However, the first signs of change are starting to appear.

Since the outbreak of Covid-19, a quarter of Indians say they

think hot beverage culture has shifted to drinking coffee. The
same research by YouGov reveals that younger generations, like
those in Gen Z, are more likely to opt for a cup of coffee than
their predecessors.

Further evidence of India’s growing coffee scene came in

November 2021, when specialty coffee chain Third Wave
Coffee secured a multimillion dollar investment to support the
opening of 300 new stores by 2023.

This trend has been identified in other majority tea-drinking

nations, such as China, where spending time in coffee shops often
represents a new lifestyle choice for young urban consumers.

Between 2008 and 2018, for example, China’s total coffee

consumption grew at an average annual rate of 16% –
considerably outpacing the 2% global average.
In India, increasing demand can be attributed to several factors,
including a growing tech sector and the introduction of drinks
such as cold brew.

Yet the most intriguing aspect is not only the increasing number
of coffee consumers, but its inextricable ties to the country’s
production.
‘Influencer’ coffee estates
Mithilesh Vazalwar owns Corridor Seven Coffee Roasters. One
day, he took some oranges grown in Maharashtra to a coffee farm
over in Karnataka.
Working alongside the estate owner, he added the juice to a
fermentation tank filled with carefully selected coffee cherries and
regularly measured the pH levels. The resulting orange-fermented
coffee was then sold to widespread acclaim to consumers.

This, says Vardhman Jain, who runs his own Bangalore-based RTD
company, Bonomi, is just one example of how the coffee market
in India is growing in sync.

“Things are changing,” he says. “The estate owners are opening

up. They realise everyone has to work together, from the roasters
to the equipment sellers. It’s where the market has really
benefited over the last 18 to 24 months.”

This is a marked departure from before, where India’s large coffee

estates frequently kept themselves to themselves.

“The ecosystem is working together,” Vardhman adds. “Before, I

wouldn’t have reached out to an estate directly, but now I am
speaking to five different estates who are doing lots just for me
for cold brew.”

Evidence for this change can be seen most clearly on social

media, where estate owners regularly post about what’s
happening on their farms.

They’re also rolling out in-person tours, where people can go to

learn about what goes into making their cup of coffee.

A big part of why this matters to domestic consumption is the

impact it’s having on education.

Although India still lags behind the likes of China in terms of total
coffee consumed, a new generation of consumers is emerging
that knows the difference between a carbonic macerated coffee
and an anaerobically fermented one.

And, as a result, it’s this generation of consumers that’s

demanding higher quality coffee and driving further innovation in
India’s coffee sector.
‘A domestic story’
In India, the cost of importing green coffee is high. Naturally,
businesses are wary of translating this additional cost onto their
fledgling customer base.
Instead, the country is witnessing the growth of its own “specialty
robusta”: high-quality robusta beans that many believe can
compete with the historically superior arabica species.

“The growth of coffee consumption is an entirely domestic story,”

Vardhman says. “Not many people will pay $12 to $15 for a 250g
of imported coffee, but what we are seeing is roasters working
closely with premium estate owners to produce coffees. Some of
these have similar cup scores to origins like Kenya.

This is exciting news not only for Indian consumers, but also for
roasters and coffee shops abroad. Arabica prices have reached all
time highs in recent months, triggering a search for cheaper
alternatives.

If India can position itself as the main producer of specialty

robusta, it could reap the rewards both at home and abroad.

“The ones who will win this race are the ones who educate the
consumer that robusta can be as good if not better than arabica,”
Vardhman says.

“Then people will start realising that India can contribute to

specialty coffee around the world.”

COFFEE STATISTICS
Production in Major States/Districts Of India(in MTs)

Post Blossom Final Estimate 2022-

Estimate 2023-2024 2023
State/
District
Arabic Robust Arabic Robust
Total Total
a a a a
Karnataka
Chikkamagaluru 41,900 51,150 93,050 37,150 45,300 82,450
130,28
Kodagu 21,060 109,225 5
19,120 109,600 128,720

Hassan 19,000 24,550 43,550 15,750 21,100 36,850

Sub total 81,960 184,925 266,88 72,020 176,000 248,020

 5

Kerala
Wayanad 0 61,050 61,050 0 60,800 60,800

Travancore 975 8,050 9,025 875 8,000 8,875

Nelliampathies 1,100 1,650 2,750 1,100 1,650 2,750

72,825
Sub total 2,075 70,750 1,975 70,450 72,425

Tamil Nadu

Pulneys 6,825 465 7,290 7,350 480 7,830

Nilgiris 1,350 4,375 5,725 1,175 4,420 5,595

Shevroys (Salem) 4,000 0 4,000 3,900 25 3,925

Anamalais

870 550 1,420 825 525 1,350

(Coimbatore)
Sub total 13,045 5,390 18,435 13,250 5,450 18,700

Non Traditional

Areas
Andhra Pradesh 15,340 40 15,380 12,225 40 12,265

Orissa 500 0 500 465 0 465

Sub Total 15,840 40 15,880 12,690 40 12,730

North Eastern
80 95 175 65 60 125
Region
Grand Total 374,20
113,000 261,200 100,000 252,000 352,000
(India) 0
 <o:p < o:p="" style="margin: 0px; padding: 0px;"></o:p <>
No.of Holdings

Name of the Region 2019-2020

<10 >10 Total

Chikmagalur 20513 1338 21851
Hassan 13854 385 14239

Madikeri 22043 277 22320

Virajpet 21203 242 21445

Total for Karnataka 77613 2242 79855

Kerala 77584 277 77861

Tamil Nadu 17665 345 18010

Total for Traditional Areas 172862 2864 175726

Non Traditional Areas 196940 26 196966

NER Region 7000 5 7005

Grand total 376802 2895 379697

Calender Year Quantity (in MT)

2000 60000
2001 64000
2002 68000
2003 70000
2004 75000
2005 80200
2006 85000
2007 90000
2008 94,400
2009 102,000
2010 108,000
2011 (prov.) 115,000
Latest buzz: India and
Vietnam to lead Asia's
growth in coffee
consumption
HO CHI MINH CITY -- India and Vietnam will lead the growth in
coffee consumption in the coming years across Asia, where fierce
competition is forcing chains to innovate to survive, industry
professionals say.

Coffee drinking is correlated with discretionary income and

urbanization, said Euromonitor Asia beverage insights manager
Nathanael Lim, who used those two factors among several to
determine which countries would drive the boom in consumption
in 2022-27.

Developing countries like the Philippines and Indonesia also will

rush for a bigger caffeine fix, but India and Vietnam top the list,
with consumption forecast to increase 37% and 32%,
respectively, through 2027, Euromonitor data shows.

Vietnam was already a coffee king as the world's biggest robusta

exporter. But now coffee is a cultural export, too, with the
country popularizing its distinctive drip filters and ca phe sua
da (iced milk coffee) around the globe. The soft power draws
from the domestic market, where locals have branched out to a
dizzying variety of coffees and maintain the leisurely cafe culture
of their former French colonizers.

"Coffee is energy for creativity," Dang Duong Hai, assistant to

the chair at local chain Trung Nguyen, told Nikkei Asia.
His company made forays abroad this year, opening shops in
China and the U.S. He described the drink in lofty terms as a
symbol of the rise of Asia, not only because Asian brands can
penetrate new markets, but also because the region's coffee
habit is increasing in parallel with economic growth that is
surpassing that of Western economies.

Gross domestic product, consumer awareness and young,

growing populations were other factors Euomonitor considered
in its forecast.

India, for example, became the most populous country on the

planet this year, and the International Monetary Fund predicts it
will leap from the fifth- to the third-largest economy by 2027.

The highest annual jumps in urban disposable income in Asia

came from China, 6%, India, 5% and Vietnam, 4%, in 2017-22,
Euromonitor said.

"More people are drinking coffee, and they're willing to pay

more," Lim said in a presentation at the Asia International Coffee
conference, which took place Tuesday and Wednesday in Ho Chi
Minh City. But "steep competition" is forcing companies to try
"creative solutions to excite consumers" all over Asia, he said.

They're pushing smartphone apps, for example, that allow

customers to pick up orders from "robot baristas," that are
essentially vending machines.

App-based pickup and delivery in general surged during the

pandemic, minimizing contact, powered by the region's army of
motorbike drivers. The practice has continued post-COVID, with
businesses offering rewards to promote their apps, potentially
collecting millions of users' data.
Coffee brewers are localizing menus, too, Lim said, offering
flavors from coconut to pepper peach.

These efforts are helping domestic companies dominate. The

world's biggest coffee chain, Starbucks, lags behind Highlands in
Vietnam, for example, and trails Luckin in China despite the
latter's faked-sales scandal in 2019.

Local businesses are producing better instant coffee and moving

up the value chain, not just farming beans, said Kim Knudsen,
sales head at equipment supplier GEA.

And drinkers are becoming more discerning, according to

Nguyen Hoai Tam Anh, chief representative in Vietnam at
sourcing company JDE. She said the market has moved beyond
lower-grade blends that used to mix coffee and soy beans.

"The young generation knows how to taste the coffee, how to

look for quality," she said.

Required Report: Required - Public Distribution Date: May 12, 2023 Report Number:
IN2023-0033 Report Name: Coffee Annual - 2023 Country: India Post: New Delhi Report
Category: Coffee Prepared By: Dhruv Sood, Agricultural Specialist and Mariano J. Beillard,
Senior Regional Agricultural Attaché Approved By: Mariano Beillard, Senior Regional
Agricultural Attaché Report Highlights: FAS Mumbai (Post) forecasts marketing year (MY)
2023/2024 coffee production (October-September) at 5.8 million 60-kilogram bags. Deficit
pre-monsoon rains (March-May) are expected to impact yields negatively as fruit setting
drops significantly, especially for the arabica variety in the major growing regions. Farm gate
prices have risen since the beginning of this marketing year due to the anticipation of lower-
than-expected supplies. Post forecasts exports to rise by two percent to 6.3 million 60-
kilogram bags thanks to strong export prospects. India's domestic consumption is forecast to
decline marginally to 1.285 million 60-kilogram bags as a result of rising input costs
including that of raw coffee beans. Carryover stocks will remain limited due to higher export
volume.
COMMODITY COFFEE, GREEN Table 1: India: Commodity, Coffee, Green – Production,
Supply and Distribution (PSD)

CROP AREA FAS Mumbai (Post) forecasts marketing year (MY) 2023/2024 (October-
September) area planted at 477,000 hectares, with an area harvested of 434,000 hectares.
Arabica coffee (Coffea arabica) bearing area is expected to reduce marginally (i.e., less than
one percent), with expected yields dropping seven percent to 360 kilograms per hectare. With
arabica coffee entering its ‘off-year’ in its biennial crop production cycle, fruit production
will be lower this alternating year. Post anticipates robusta coffee (Coffea robusta) bearing
area to increase by five percent, but yields are nonetheless still expected to come in lower by
11 percent at 1,200 kilograms per hectare. The drop in yield numbers in MY 2022/2023
compared to last year is attributed to poor pre-monsoon rains occurring in March-May 2023,
Page 3 of 12 followed with the expectation of an average, normal southwest monsoon.
Robusta coffee crop yields, nonetheless, are still arriving above both the three-year and five-
year averages. Table 2. India: Coffee Planted Area in the Major Production States (Hectares)
Table 3. India: Rainfall Statistics for Coffee Growing Regions in Karnataka and Kerala
PRODUCTION FAS Mumbai forecasts India’s MY 2023/2024 coffee, green (i.e., arabica
and robusta combined) production at 5.8 million 60-kilogram bags. Post foresees arabica
coffee production at 1.23 million 60- kilogram bags or 73,800 metric tons (MT), while
robusta coffee production is seen at 4.58 million 60- kilogram bags (274,800 MT). For MY
2022/2023, lower yields for arabica (down seven percent) and robusta (down 11 percent)
coffee crops are expected compared to the previous market year. Lower yields are anticipated
as a result of reduced alternating year fruit production in the case of arabica coffee, combined
with poor pre-monsoon rains in March-May 2023, that followed the earlier prolonged dry
spell that ran from last December 2022 through March 2023. Post estimates India’s MY
2022/2023 coffee production at 6.25 million 60-kilogram bags (375,000 MT). The Coffee
Board of India has just published its post-monsoon MY 2022/2023 production estimates. It is
estimating arabica coffee production estimated at 1.58 million 60-kilogram bags (~101,500
MT) and robusta coffee production at 4.11 million 60-kilogram bags (~246,600 MT). The
Coffee Board forecasts, however, are made three times during the season – post-blossom
(May-June), post-monsoon (OctoberNovember), and final (March-April). Trade sources
report that the coffee board’s post-monsoon forecast for arabica coffee is much higher than
industry’s own estimations, while robusta production should actually be higher. Post is not
adopting the Coffee Board of India’s current estimation as trade sources indicate further
revision may be necessary and will be reflected in the final estimates. Timing of India’s
Coffee Harvest: In India, the arabica coffee crop harvest normally takes place from
November to January, while the robusta crop harvest runs December to February. This makes
timely, rains in February and March crucial for realizing robust overall crop yields. This
year’s robusta crop is expected to produce less fruit compared to the previous year, which
Post attributes to a deficit in rainfall and irrigation water availability. Robusta coffee is
India’s most popular coffee type, accounting for over 70 percent of the national coffee crop
production. 1 India’s Coffee Production: Coffee in India is a silvi-horticulture (AGRO-
forestry) crop. It is cultivated under a two-tier shade canopy; that is, a top canopy of
permanent tree cover combined with a lower canopy of fast-growing temporary shade trees.
This cultivation method generates microclimatic conditions highly favorable for coffee
production. It also allows for intercropping, which is the growing of associated crops such as
peppers and cardamom alongside coffee on the same plantation. Arabica coffee plants are
self-pollinating and are typically grown at higher elevations under rain-fed conditions. The
plants are grown under shade to prevent variation in soil temperature and moisture levels, as
well as for protection in case of heavy rainfall downpours. In India, there is two-tier shade for
the arabica coffee crop. The higher canopy shade (about 10-12 meters high) is composed
mostly of evergreen trees such as Indian rosewood and jackfruit trees, while Dadap
(Erythrina subumbrans) and silver oak trees (at about 4-6 meters high) are used for the lower
canopy shading. The leaf litter from these trees acts as soil cover, preventing the direct
impact of rainwater and controls soil erosion. The planting space for the arabica coffee crop
is 2 by 2 meters with an average of 3,000 plants per hectare. 1 Higher yielding robusta coffee
beans are used primarily in instant coffee, espresso, and as a filler in ground coffee blends.
Low acidity and high bitterness, accompanied by a distinct woody and nutty taste
characterize robusta coffee. It is an easy to care for crop requiring less herbicides and
pesticides, and with higher yields and less susceptibility to disease than arabica coffee.
Robusta also provides almost double the caffeine and more antioxidants than arabica coffee.
Page 7 of 12 The planting space for the robusta coffee crop is 3 by 3 meters with
approximately 460 plants per hectare. As the arabica variety is a deep-rooted plant, it can
sustain itself during drought conditions. Whereas the robusta variety, with its shallow roots,
requires irrigation throughout the season. In India, about 80 percent of the arabica and 20
percent of robusta coffees are wet processed (parchment coffee) and the remaining volumes
are dry processed (cherry coffee). 2 Wet processing of coffee consumes substantial amounts
of water at the various processing stages when conventional pulper and washers are used,
resulting in the generation of substantial amounts of effluent. Table 4. India: Coffee Varieties
Cultivated

Indian Meteorological Department (IMD) Reports a Rainfall Deficit: The coffee growing
regions in southern Karnataka’s interior received deficit rains throughout January-February
2023. This was followed by drier conditions during the pre-monsoon rains (known
colloquially as the blossom showers); these showers provided limited moisture. Once the
blossom showers end, plant flowering is complete. However, for the fruit to set, backing
showers (i.e., received within 15-20 days after the blossom showers end) are crucial. The
blossom showers, and backing rain showers, are critical aspects governing the coffee plant’s
flowering and productivity. Timely arrival of rainfall, and right intensity levels, are necessary
to break the flower buds’ dormancy stage. If rainfall is delayed, or weak, fruit setting drops
significantly, negatively impacting yields. Limited water availability will also increase the
possibility of crop failure. Monsoon Patterns Disrupted, Production Impacted – Climate
Change Evidenced: Coffee planters and agricultural researchers alike report growing
concerns with the northeast (October-December) and the southwest monsoons’ (June-
September) rainfall patterns. Monsoon rainfall patterns are increasingly varying, impacting
production and yields over the last three years. While rainfall has increased during the
northeast monsoon, rainfall volume during the southwest monsoon has dropped. Increased
rainfall in November-December is coinciding now much more closely with the arabica coffee
harvest period. Rainfall downfall intensity is also increasing, damaging the standing coffee
crop, while also hampering harvest operations. Unseasonal rainfall, along with higher
temperatures, will damage and discolor coffee beans. Excessive rainfall will dislodge flowers
and fruits. Heavy rainfall during the harvest will increase moisture levels, leading to greater
proclivities for mold growth, disease, and excessive fruit fermentation, all of which may
increase coffee bean defects. INPUTS Indian coffee production is a highly labor-intensive
crop. It deals with multiple pickings/harvesting, pruning, drying, cleaning, and packing layers
and requirements. India’s hilly terrain limits the ability of coffee plantation farmers to adopt
mechanization. Labor costs as a result constitute about 60 percent of 2 In wet processing, ripe
coffee fruit is placed in a fresh mill to remove the peel of the fruit. The coffee bean is the
peeled fruit, whereas the husk is known as the parchment coffee. In order to remove the
husk’s viscous outer layer; the fruit goes through a soak and wash phase (wet processing)
the total cost of production. With rising labor costs, due to its limited availability, growers are
reducing the number of berry pickings to one round, instead of the usual two or three
pickings, as well as circumventing certain maintenance and drying operations. Trade sources
indicate that coffee plantations are ever more dependent on lower cost seasonal migrant labor,
coming from India’s lower income northeastern states. According to the Coffee Board of
India’s statistics, the general daily wage rate in Karnataka state rose by five percent in 2021.
Similarly, wage rates increased by two and four percent in Kerala and Tamil Nadu states.
Aside from high labor costs, prices for fertilizers, pesticides, and energy, along with
government mandated benefits, have also risen. Due to increased costs, growers are not
profiting much despite higher market prices.

Table: 5. India: Permanent and Casual Labor Engaged in Coffee Cultivation

Source: Coffee Board of India (Database – July 2022)

YIELDS FAS Mumbai forecasts India’s MY 2023/2024 arabica coffee yields to fall to 360
kilogram per hectare, a seven percent decrease from last year. Robusta yields foreseen at
1,200 kilograms per hectare, are set to also come in 11 percent lower than the previous
market year. Post foresees arabica coffee yields set to continue witnessing a downward trend
over time; the variety is more sensitive to temperature increases and vulnerable to climate
induced upticks in pest infestations.
Farmers are seeking to adapt by shifting cultivation away from arabica to increased robusta
plantings. Robusta is less susceptible to white stem borer pest infestation and leaf rust. The
robusta coffee plant is also more economical to grow not just due its disease restraint traits,
but also its demonstrated ability to survive a wider range of temperature fluctuation within
the 18.5 to 36 degrees Celsius range. The robusta crop variety is also better suited to
withstand harsh climatic changes, including major variations in rainfall and stronger, more
intense sunlight. With rainfall pattern’s increasingly being disrupted over the course of the
past decade, arabica coffee cultivation has been migrating to higher altitudes.
CONSUMPTION FAS Mumbai forecasts India’s MY 2023/2024 domestic coffee
consumption at 1.285 million 60- kilogram bags, down by just under three percent compared
to MY 2022/2023 estimated 1.32 million bags. Post attributes the drop to a slowdown in
demand being driven by higher coffee prices. Rising coffee prices are biting into consumers’
wallets, curbing spending, and driving consumers to downgrade to more affordable at-home
consumption options. Coffee prices in the short-term have been climbing upwards as a result
of rising energy costs, which impact raw material processing costs and other expenses such as
packaging, freight, and logistics. Post expects that household consumption of soluble coffee
will constitute a much larger share (69 percent) of domestic consumption during the next
year. Strong sales since the COVID-19 pandemic have led regional coffee processors/retailers
to pursue and expand their footprint in additional cities, while exploring new retail channels
(other than traditional retail stores) with wider product offerings. Trade sources indicate that
new investments are being made in retail channels, to include specialty cafes, kiosks, pop-up
café, and café bookstores. Investment is targeted at consumers seeking to trade up, looking
for premium/gourmet options with wider specialty offerings like espresso or instant, cold
brews, functional coffees (including immunity boosting functional ingredients and
botanicals), and flavored coffees. The emergence of specialty coffee shops, which roast
specialized blends in smaller quantities, is helping to expand consumption along with
consumer awareness of coffee varieties, processing and roasting methods, and styles. TRADE
Exports: FAS Mumbai forecasts MY 2023/2024 exports at 6.33 million 60-kilogram bags
(~380,000 MT), two percent higher than last year due to increased demand in major export
markets. Post expects export demand to remain strong throughout MY 2023/2024, however
trade sources do indicate that current prices are limiting international buyers from placing
larger orders. Indian farmgate coffee prices are trading at decade high rates, driven by a
global surge in international coffee prices due to supply issues. According to Coffee Board of
India data, green bean prices for arabica parchment and robusta cherry have increased by nine
and 24 percent, respectively, since the beginning of Indian marketing year in October 2022.
Both varieties are trading well above International Coffee Organization (ICO) indicator
prices. Both increases are a function of a crop shortages. During the first four months
(October 2022-Januanry 2023) of MY 2022/2023, Indian coffee exports fell by 24 percent
and 74 percent in volume compared to the same period last year. Italy remains the major
export destination for Indian coffee followed by Germany, Russia, and Belgium.
Nonetheless, while India’s coffee export market share for Italy, Germany and Belgium has
reduced significantly, India’s Page 10 of 12 export market share of Russia (primarily soluble
coffee) has increased by 15 percent during the first four months of the marketing year.
According to preliminary data published by India’s Ministry of Commerce and Industry,
while coffee exports have reduced by volume, Indian coffee exports in March 2023 were 18
percent higher by value as compared to same period last year. Similarly, cumulative (April
2022 to March 2023) coffee exports were 12 percent higher as compared to similar period
last year. The normalization of freight costs, weaker Indian rupee, along with availability of
containers has supported exports. Increasingly, international coffee processors/retailers are
realizing that their branding is a critical component for coffee sales. International brands feel
it is easier, much more economical, and safer to procure from the other existing
manufacturers. International brands are increasingly partnering with Indian suppliers who can
create new products for them, while outsourcing additional requirements. This has taken on
increased relevance for European brands, that due to Russia’s unprovoked war with Ukraine
in 2022, witnessed surging energy prices along with supply chain and logistical disruptions.
Indian suppliers are actively seeking to position themselves as better, more dependable long-
term partners. Imports: FAS Mumbai forecasts MY 2023/2024 imports at 1.55 million 60-
kilogram bags (93,000 MT), a nine percent decline from last year. With some large Indian
processors setting up and or adding capacity in Vietnam, imports for green beams for
processing and re-exports will be lower. Trade sources inform that instant coffee plants are
operating at near peak capacity. The upswing in processing is being fueled by higher instant
coffee revenues being realized along with plantation operations’ optimization. Post foresees
soluble coffee exports increasing by two percent as the demand for instant coffee is expected
to grow by between 2-2.5 percent in the long-term. Imports of raw coffee green beans in the
first four months (October 2022-January 2023) of MY 2022/2023 rose by 23 percent
compared to the same period a year ago. Most imports are green beans (99 percent share)
meant for processing and re-exports. Indonesia, Vietnam, Kenya, and Uganda are major
green bean suppliers for the Indian market. STOCKS FAS Mumbai forecasts MY 2023/2024
carryover stocks at 473,000 60-kilogram bags (~28,000 MT), on strong domestic and export
demand. India has no government-held stocks. Coffee bean stocks are held by growers and or
traders. Trade sources indicate that current high coffee prices have led to limited stocks of
robusta on the market. Processors are now augmenting supplies through imports. Post finds
that MY 2022/2023 opening stocks at close to record lows, with the sparse number being
driven by strong exports after major exporting countries faced supply issues.
India cited as one of the ‘fastest-growing
coffee markets’ for Nestlé globally
Rising at-home coffee consumption, café footfall and a premiumisation
of the market present strong growth opportunities for Nestlé in India,
according to the Head of the Swiss food and beverage giant’s Coffee
Strategic Business Unit

India is among the fastest-growing coffee markets for Nestlé globally, according to the Head
of the Swiss food and beverage giant’s Coffee Strategic Business Unit.

Philipp Navratil said rising at-home coffee consumption and the growth of café culture across
India present Nestlé with increasing opportunities for further growth.

Speaking at the Nestlé India headquarters in Gurugram, Navratil said the world’s most
populated country was ‘one of the most fast-growing markets today’ and that Nestlé’s coffee
division was ‘gaining household penetration’ as consumers seek more premium beverages.

“In India and in other Asian markets, there is a trend towards more sophistication, we call it
authenticity; consumers want to know more about their coffee, what it’s made of, how it’s
brewed, its origins, etc. That leads to a trend of premiumisation. There is another trend, which
is the coffee shop inspired trend and that’s true in India as well where you see coffee shops
coming up and specialty coffee brands coming up as well," he said.

Nestlé, which sells a range of retailed Nescafé products in India, including the Nescafé
Classic, Gold and Sunrise blends, reported its coffee division contributing 12% revenues in
the country last year. The group's full-year sales reached Rs 16,997.9 Cr ($2.05bn).
In September 2022, Nestlé said it would invest Rs 5,000 Cr ($613m) in India by 2025 to
capitalise on growth opportunities for its products in the country, with half the investments
focused on scaling the company’s coffee and confectionery portfolio.

However, while Navratil said premiumisation and a rising number of high-income

households is changing the coffee landscape across India, Nestlé does not currently have
plans to introduce its more premium portfolio of coffee machines and pods to the Indian
market and will continue to focus on ‘core’ product sales.

“The speed of growth is faster in the premium segment at the moment. But I think the
opportunity, or the size of the market, is still bigger in what we call the ‘core’ products,
which is Nescafé classic, Nescafé Sunrise, and the pre-mixed products that we have," he
said.

Nestlé faces competition in the Indian retail packaged coffee market from Tata Coffee, which
said revenues and profits rebounded in its fourth quarter following a recovery in consumer
footfall at hospitality venues across India.

The Bangalore-based Tata Group-subsidiary, which operates retail packaged coffee brands
Eight O'Clock Coffee, Tata Coffee Grand and Sonnets by Tata Coffee, reported 20% year-on-
year consolidated net profit growth to reach Rs 48.8 Cr ($5.9m) and a 10% rise in revenue to
Rs 723 Cr ($87.9m).

India's Coffee Culture

Steams Ahead: A Tale Of
Espresso Dominance
India has embraced coffee as a daily ritual. The love
for this caffeinated elixir is expected to grow
exponentially, with forecasts predicting that by 2027,
coffee consumption in India will more than double.
On National Espresso Day, it is time to take a
flavourful journey into India's burgeoning coffee
culture
As the world celebrate's National Espresso Day, it is time to take a flavourful journey
into India's burgeoning coffee culture. In 2022, India embraced the rich aroma and
bold taste of coffee with gusto, consuming a staggering 1.21 million 60-kilogram
bags of coffee.

Fast forward to the financial year 2022-2023, and the country elevated its coffee
consumption to an impressive 1,235 thousand bags, signifying a notable increase in
just a year. The love for this caffeinated elixir is expected to grow exponentially, with
forecasts predicting that by 2027, coffee consumption in India will more than double.

India's Annual Coffee Sip: A Steaming 120,000 Tons

India, known for its diverse culinary landscape, has embraced coffee as a daily ritual.
Annually, the country savours around 120,000 tons of coffee, offering a diverse
palette of flavours to its coffee enthusiasts. However, when one breaks down the
numbers, it is interesting to note that on an individual level, Indians consume
approximately 30 cups of coffee per year. This pales in comparison to the global
average of 200 cups, showcasing immense growth potential for the coffee market in
the country.

Ravi Bhamidipaty, Chairman of Ahmedabad based brand Roastea says that coffee is
having a major moment in India. “In the last 50 years, our coffee consumption has
grown steadily by 2 percent each year. Since the year 2000, that growth has
skyrocketed to an impressive 5 percent annually. We are now consuming a
whopping 120,000 tons of coffee every year.”
Bhamidipaty adds that Espresso is one of the most favoured variants of coffee. “As
more people discover the world of espressos, from the macchiato to the americano,
this coffee culture is set to grow even more. In the evolving landscape of B2B2C and
D2C segments, covering cafes and corporate vending solutions, Roastea is making
noteworthy strides and currently holds the third position. The market's swift nature
makes it intricate to pinpoint precise figures. Nonetheless, Roastea's substantial
growth in these specific sectors reflects its increasing influence and positive
trajectory in catering to diverse consumer preferences within the vibrant coffee
culture of India.”

Commenting on the trend, Vamsi Mareddy, co-founder of Paper & Pie Bengaluru
says, “The coffee consumption trend in India has undergone a shift over the years.
Traditionally centered around filter coffee, the market has diversified with the
emergence of espresso-based beverages.

This variety has broadened the appeal across all age groups, thus significantly
expanding the customer base. This positive trend, which is set to rise further, not
only meets diverse consumer preferences but also fosters the growth of numerous
unique cafes and businesses that align with evolving market demands for coffee.”
Mareddy further adds, “In our brand’s journey, we have witnessed a significant
growth in coffee over the months. Across our two outlets, we average around 400
coffee-based beverage sales daily. 80 per cent of these are attributed to
cappuccinos, lattes, and mochas, which are all crafted with espresso as the base
ingredient.”

Espresso Takes Centre Stage: The Preferred Brew

In this caffeinated narrative, espresso emerges as the hero. As one of the most
favoured variants of coffee, espresso has become synonymous with energy and
sophistication. Espresso-based beverages, including Cappuccino, Latte, and
Americano, have become the go-to choices for millions, establishing themselves as
the lifeline of cafes across the nation. Impressively, espresso-based variants
contribute a significant 30 per cent to the overall coffee consumption market in India.

Chef Parth Gupta, Founder, Bloom Cafe and Cakery in New Delhi says that
Espresso is not just a beverage, it is the cornerstone of countless favourites like
Cappuccino, Latte, and Americano. “What is fascinating is the evolving trend within
this espresso landscape. While Cappuccino remains the default choice for hot coffee
enthusiasts, the increasing awareness and appreciation for other espresso
beverages like Latte, Mocha, and Flat Whites are noteworthy. Although alternative
brewing methods like pour-overs and AeroPress are gaining traction, the lion's share
still belongs to espresso-based drinks,” says Gupta.
“From my observations, I estimate that espresso-based beverages command an
impressive 80-85 per cent share, reaffirming their dominance in the Indian market.
This stronghold signifies not just a preference for coffee but a cultural affinity toward
the art of espresso crafting and its myriad delightful variations,” he adds.

Bharat Singhal, Co-founder Bili Hu Coffee says that until 2070 India will be the
youngest economy in the world and it looks like there is an entire market that is yet
to be discovered in urban cities.

“The growth in coffee consumption is imperative and given how aspirational coffee
has been, it only makes sense that it grows multi bounds in the coming years.
Espresso based beverages like cappuccino & lattes are super popular, among
nuanced audiences and the masses, alike. Classics like cappuccino, latte &
americano will continue to stay, flavoured lattes and experimental concoctions come
and go with trends, again fueled by what is online on social media.”

Singhal adds, “In menus at coffee shops around the country, we see blends of
unconventional flavours like popcorn syrups to really cool alternative milks that are
being used to make coffee more accessible, appealing and inclusive. The idea is to
play with coffees and create personalised, customised beverages that one can call
their own.”
Brewing Success: The Coffee Segment's Economic Impact
The coffee segment's economic significance cannot be overstated. Reports reveal
that the coffee industry in India amounts to a substantial USD 808 million, with a
projected annual growth rate of 8.9 per cent CAGR from 2020 to 2025. This robust
growth underscores the increasing demand for high-quality coffee experiences and
innovative brews in the country.

Sahil Arya, Co-founder and Director at Fat Tiger says that the budding café culture in
India has also contributed significantly to the escalating preference of espresso-
based drinks.

“The Indian consumers enjoy plenty of choices as they go for different coffee brands
and variants including specialty cafés and chain outlets. The diversified market
environment has greatly accounted for the general increase in popularity of coffee in
India. Generally speaking, rising coffee consumption, as well as the preference for
espresso beverages in India indicate that the country’s coffee culture is on the rise.
The opportunities exist, and there are plenty for both local and global brands to find a
strong niche in the Indian coffee market that is growing every day,” Arya adds.

A Global Sip: India in the World Coffee League

While India's coffee consumption is on a commendable rise, it is essential to place it
in the context of the global coffee landscape. In 2022-2023, global coffee
consumption exceeded a staggering 167 million 60-kilogram bags. Notably, the
European Union and the United States were at the forefront, accounting for the
highest volumes globally.

Kavita Narayanan, Co Founder of Trelish says that social media has given great
exposure to coffee to the youth of the country. “Not just in the urban areas but even
rurban markets are becoming more aware about different types of coffee. Espressos
are quick to brew & have a creamy texture, but you can enjoy them mainly in a cafe
setup since it requires specific equipment and know-how. Going forward, we see
people starting to experiment with coffees more in their personal spaces.”

On National Espresso Day, as we revel in the aromatic allure of coffee, it is evident

that India is not just a consumer but an emerging player in the international coffee
arena. With its unique coffee traditions, growing market, and an evolving taste
palate, India is poised to become a significant influencer in the global coffee
community.
Starbucks plans to double stores in India as coffee
consumption booms
The global coffee giant wants to operate 1,000 stores in India by 2028, and the focus will be in
so-called tier-2 and tier-3 cities - those outside of its biggest metropolises

Starbucks Corp. plans to more than double its stores in India in four years,
opening the equivalent of one new shop front every three days, as the
country’s growing middle class fuels a boom in coffee consumption.
The global coffee giant wants to operate 1,000 stores in India by 2028,
and the focus will be in so-called tier-2 and tier-3 cities — those outside of
its biggest metropolises, it said in a statement Tuesday. It will also expand
drive-thrus, airports and 24-hour cafes, and expects its Indian workforce
to double to 8,600.
The global coffee giant wants to operate 1,000 stores in India by 2028,
and the focus will be in so-called tier-2 and tier-3 cities — those outside of
its biggest metropolises, it said in a statement Tuesday. It will also expand
drive-thrus, airports and 24-hour cafes, and expects its Indian workforce
to double to 8,600.
While tea — particularly sugary, milky chai — has long been the hot
beverage of choice in India, coffee drinking has grown increasingly
popular as aspirational consumers flock to cafes. Along with Starbucks,
high-end cafes and farm-to-cup local chains, such as Blue Tokai, have
proliferated, selling beverages sourced largely from locally harvested
crops.

“Over the past 11 years, the India market has grown to become one of
Starbucks fastest-growing markets,” Chief Executive Officer Laxman
Narasimhan, who is visiting the country this week, said in the statement.
“With a growing middle class, we are proud to help cultivate the evolving
coffee culture.”

Growth Ambitions

For Starbucks, the stronger push in India is part of broader ambitions to

increase its foothold in some of the world’s most economically promising
markets.
The company has operated in India since 2012 through a 50 per cent joint
venture with Tata Consumer Products Ltd., an arm of one of nation’s
biggest conglomerates, and currently has 390 stores across 54 cities. In
the quarter ended Sept. 30, a net 22 new Starbucks outlets were opened
in India, according to Tata Consumer, with revenue growing 14 per cent
from a year earlier.

The target for 1,000 stores would make India one of the company’s major
overseas markets, though dwarfed by the more than 6,500 stores in
mainland China.
Coffee and Tea dominate the beverage market, and while globally, Coffee
is the preferred drink, Tea is the favorite drink in India by a large margin.
Tea has more than 80% market share in the North, East, and West zones.

The South Zone is the only zone where Coffee has more than 25% market
share in both metro and non-metro areas.

How coffee can compete against tea in India

Coffee innovation in India is on the rise, with a 1% growth from the
previous year. This places India among the top 10 global markets for
coffee innovation. However, the strong preference for tea among Indian
consumers is a considerable barrier to coffee’s category growth prospects.

Tea is the most active category in beverage innovation in India, and its
consistent launch activity over the past three years reflects its enduring
popularity among consumers. A significant 62% of Indian consumers have
consumed regular hot tea (with/without milk), compared to 43% who have
drank hot coffee.

The gap in consumption highlights the need for coffee brands to enhance
their appeal to capture a larger market share. For over one-third of Indian
non-coffee drinkers, their preference for tea is the primary reason for not
consuming or consuming less hot coffee.

To break through this barrier, brands can consider the following

strategies:

Link coffee consumption to stress relief

Nearly half of Indian coffee consumers associate coffee with stress relief.
Coffee brands can strengthen this association by positioning coffee as the
go-to beverage for stress-relieving occasions, such as socializing with
friends or self-care routines.

For example, the Indian brand Rage Coffee leveraged this association on
Instagram by collaborating with the beauty brand Conscious Chemist.
Together, they offer a self-care bundle featuring Rage’s coffee and
Conscious Chemist’s sun cream.
 Rage Coffee and Conscious Chemist’s self-care hamper Insta giveaway;
Instagram

Address taste concerns surrounding coffee

In India, 23% of non-hot-coffee drinkers cite an ‘unpleasant taste’ as a

barrier to consuming hot coffee. Coffee brands can take a cue from the
tea industry in addressing this concern. Social listening data from 2021 to
2023 reveals that while many coffee posts mention flavour, these are less
frequent than tea posts.

Tea is commonly made from a variety of tea leaves, fruits and spices
which allows a clear taste to be communicated (eg ginger, lemon).

Given that most (non-flavoured) coffee is made from just two bean types
(Arabica and Robusta), coffee brands must differentiate taste through
blends, roasts, and brewing methods. Highlighting tasting notes (eg
chocolate) that connect coffee to familiar flavours could help overcome
taste barriers.

For example, Dope Coffee Roasters’ Mysore Nuggets Roasted Coffee

Beans offer a light to medium roast with taste notes of toasted cornflakes,
butterscotch and caramel (India).

Dope Coffee Roasters Mysore Nuggets Roasted Coffee Beans; Mintel GNPD

Capitalise on demand for RTD coffee with protein

In India, one in four coffee consumers express a willingness to pay more

for ready-to-drink (RTD) coffee with added protein. Coffee brands that
may be sceptical about incorporating proteins should note that 41% of
Indians claim to consume protein supplements and/or beverages daily.

Demand for the taste of coffee also exists within this format. 40% of
Indian protein supplement/beverage consumers are interested in coffee
flavours. Indian coffee brands can look to markets abroad for inspiration
on partnering coffee with protein.

Caffeine Army’s Choconilla Flavored Super Coffee combines 11g of protein

and 100mg of caffeine which the brand links to an energy boost (Brazil).
This can resonate with 44% of Indian protein supplement/beverage
consumers who express interest in products that offer an energy boost.
 Caffeine Army Choconilla Flavored Super Coffee; Mintel GNPD

What we think

The Indian retail coffee market, valued at $570.3 million in 2022, is

projected to grow by 13% to reach over $640 million by 2025, according
to Mintel Market Sizes. This growth presents a promising opportunity for
both local and international coffee brands. However, the challenge lies in
persuading tea-loving India to embrace coffee. Identifying consumer-led
strategies to drive purchase will be crucial for the coffee category to
thrive in this competitive market.

If you are interested in learning more about this topic, please contact
us today.

What kind of a coffee drinker are you?

My divide is much more nuanced and connected to those of
us who wake up to filter coffee every morning. The question
is: where do you buy your coffee from?

o my mind, there are only two types of coffee drinkers. And

there are only two South Indian states that can lay claim to
coffee: Karnataka and Tamil Nadu. Per an India Coffee
Board publication, South India consumes 78% of Indian
coffee. Among the southern states, Tamil Nadu accounts for
36%, Karnataka 31%. Andhra and Kerala are 18% and 15%,
respectively. The latter two states make better tea than
coffee. Between Tamil Nadu and Karnataka there is the
usual divide and endless debate about which coffee is
better. The answer is so obvious that I don’t even need to
mention it here.

My divide is much more nuanced and connected to those of

us who wake up to filter coffee every morning. The
question is: where do you buy your coffee from?
Stay tuned for all the latest updates on Ram Mandir! Click here

Are you a “coffee works” kind of person? Or are you one of

those high-falutin, cold-brew drinking altu-faltu types that
patronise coffee brands that are maverick and have
nothing to do with farmers? Bangalore is full of places
where the coffee…well, works. There is Sri Suma Coffee
Works in Jayanagar, Gokul Coffee Works in Gandhi Bazaar,
Sri Vasanth Coffee Works in Sajjan Rao Road, Mahalakshmi
Coffee Kendra in Chamarajpet, and Sri Vinayaka Coffee
Beans in Malleshwaram where you can “drink and feel
lovely”.
These are honest, homely and heritage coffee purveyors
who sell the beans or ground coffee powder to you without
too much fuss. They don’t talk about which
unpronounceable estate the beans are from, what
elevation it is at, and whether the beans are ‘monsooned.’
This is irrelevant for filter coffee, as are questions about
whether the beans were nourished by cow dung from desi-
breeds and harvested in the moonlight by light-fingered
women. Most of us who consume filter coffee don’t care
about all this halo-effect stuff.
All we want is strong frothy piping hot coffee. Not some
Ph.D dissertation. The fact that we all morph into versions
of ourselves later in the day when we care about organic
foods and child-labour is another matter. Maybe it is the
filter coffee that makes us enlightened beings that
suddenly spout homilies about regenerative agriculture and
reductivism in art.
To me, good filter coffee bought from a store with a
Western sounding name is an oxymoron. It is not to be
trusted because you see, these brands proffer everything
from cold-brew to pour-over. Filter coffee for them is also-
ran: something that they add on.
It is not the focus. Give me a Panduranga Coffee anyday,
couriered straight from Chikmagalur. Failing that, give me
Cothas coffee with 15% chicory.
I love the Black Baza, a bird found in the Northeast but
please, I don’t want this in coffee. Nor do I want sleepy
owls, flying squirrels, or the blue tokai (feathers) of a
peacock. I don’t want to slay coffee or rage with it; or even
surf the third wave.
Araku sounds like arachu, which means grind in Tamil. I like
it in ‘nellikai’ or amla, not in coffee. I may like Cafe
L’Orange later in the day, but in the morning, I want coffee
served in silence in glass cups like at the Airlines Hotel.
And I definitely don’t want waiters who show up every
minute and ask me if I like my coffee.
How do I like my coffee? I like it the way I have always had
it. The way my mother gave it to me. Sans questions, sans
interrogations, sans lecture about grind and source. Just
give it to me already, why don’t you? And please don’t go
on about single-blends because we Indians who drink filter
coffee already know one inescapable fact: single blends
don’t work in filter coffee. Blended coffee is the way to go.
Medium roast also doesn’t work in filter coffee, beloved as
it is with the “aroma police” of coffee who disdain dark
roasts because it kills aroma, according to them. But
medium roast in coffee means that the decoction won’t be
dark, which creates a whole assembly-line of problems. If
the decoction isn’t dark, the coffee will look milky, not dark
brown even with a little milk. It won’t taste strong because
the milk flavour will dominate. Medium roast just does not
work for filter coffee.

Single estate coffee has specific contours and flavour

profiles that may suit black coffee but when you pour hot
milk on it, the decoction gains an unpleasant edge like day-
old wet-laundry. In order to make good filter coffee, you
need the magic ingredient called chicory, either 15% or
20%, depending on how thick you like your coffee. And you
need frothing that comes from two hands, two tumblers
and a precise wrist.
My taste in filter coffee is a result of what was served at
home in Chennai. Isn’t this true for all of us? You know
what the best part is? Amongst filter coffee drinkers in
traditional Chennai or Bangalore homes, there is
consistency of taste, a uniform flavour profile that you
could bank on. Once you did the due diligence on which
house serves good coffee, you can go back time and again
with no unpleasant surprises. This is because good filter
coffee relies on more than one factor for perfection. The
decoction has to be of a certain thickness. Too thick and
you need to add more milk which makes the coffee too
gooey. The milk makes all the difference. It has to be frothy
and hot. This will conceal many of the inherent flaws in
milk. Sugar is according to taste, but I use the golden rule.
Add just enough sugar to reduce the bitterness without
messing with the taste.
Good filter coffee is not about provenance. It is about
proportion. Write that on your sign. Hang it around your
neck.
So all these jokers who wax poetic about their coffee being
grown in such-and-such hills, surrounded by wild elephants
don’t know what they are talking about. As for the Kopi
Luwak beans that are eaten by the Asian palm civet which
then excretes these beans, thus making them the most
expensive coffee in the world, well, all I can say is that I
have tasted it and it is shit coffee, quite literally.
My father loved coffee beyond logic or reason. Once a
month, he used to take me with him to the local Leo Coffee
store. No gleaming shelves, no filter press, no descriptions.
Instead, there were gunny sacks full of coffee beans, a
giant grinder, and the aroma that permeated the entire
neighborhood. My Dad would choose a blend of plantation,
peabury and chicory and have it ground right there. We
would carry it back in a bright yellow Leo’s coffee bag.
Sometimes we would go to Narasu’s coffee for a change.
But never to cafes. We didn’t trust cafe coffee at home.
That was only for impressing foreign visitors. As for bad
coffee, that was easy to spot: watered-down decoction,
heated in the microwave, and day-old milk were the main
culprits.
With that, we come back to the question often asked.
Where do you get better filter coffee: Tamil Nadu or
Karnataka? The answer is so obvious that I don’t need to
repeat it here.

Growth in
Indian Coffee
Community
The Indian Coffee Industry has been steadily growing over the years, with a steep
increment in coffee consumption in recent years. Before 2000, coffee consumption in
India grew at 2% per annum, but it has been uplifted in this century to 5% per
annum with continuous growth.

As one of the largest coffee producers in the world, India constitutes about 3.5% of
the world’s coffee production (around 3600 million kg). Maximum production takes
place in the Southern and North-Eastern regions of the country, thanks to adequate
weather conditions.

Indian Coffee Industry

According to reports, the coffee segment amounts close to $808M, expected to grow
annually by 8.9% CAGR from 2020-2025. Despite having a low consumption because
of Tea, India is the 3rd largest coffee producer in Asia. Nearly 80% of coffee grown in
India is exported, making it a revenue-generating segment for India. Majorly, coffee
is exported to Italy, Germany, Belgium, Turkey, and Russia.

The ever-evolving lifestyle of urban consumers to fast-paced lives leads to a drastic

increment in the demand for coffee in India. Furthermore, the increase in cafe
culture has also promoted the beverage in a fashionable and luxurious way. In India,
Specialty coffee is escalating at a terrific pace. People are fascinated by the different
types, varieties, flavors, and coffee brewing methods. This in turn led to a drastic
rise in single-origin coffee beans with distinct flavored profiles.
Since 2012, coffee has become a topic of discussion, replacing wine. Everyone was
fascinated by coffee bean production and the benefits associated with it. With coffee
shops established in the country, job opportunities and entrepreneurship chances for
the coffeeholics increased. This led to the establishment of a highly profitable coffee
industry. Cafes started presenting both espresso-based beverages and manual
brews like pour over / syphon, French Press, Aeropress, Chemex, etc. The range of
coffee beverage options also increased from Cappuccino to Cold Brew.
Conclusion
The Indian Coffee market is still in the infancy stage with tons of growth prospects in
the world. Major metropolitan cities like Delhi, Mumbai, Bangalore, and Chennai are
already witnessing strong coffee culture with tremendous growth in the demand for
coffee. Even cafes are setting up their own Micro Roastery to present unique coffee
flavors and create their own customized blend for the standout beverage.
Additionally, the Indian Government is showing severe interest in the Coffee
Industry. They sanctioned an INR 1,000 Crore special package for proper cultivation
of coffee in non-traditional areas, post-harvest infrastructure development, and
establishment of coffee cultivation centers in various regions.

Indian Coffeeholics, it is our time to blossom in the Global Coffee Market. Your
immense support for promoting Indian Coffee Brands is highly recommendable.

Tea V/S Coffee: Which One

Is India’s Favorite
Beverage?
Our love for chai-tea is not unknown in this world, we Indians love
our hot “adrak wali chai“. Not just chai-tea, Indians love different
types of teas and coffees as well. Coffee consumption and beverage
trends in the Indian market are rapidly changing; according to a
survey report, about 25% of the respondents said they feel
the hot beverage culture has shifted.

Tea v/s coffee is also one of the favourite online battle topics for the
lovers of these beverages. So, this one is for all tea and coffee
lovers. In this blog, we will trace consumption data of these
beverages in our country, their history, and health benefits, amongst
other things, to settle the final question: Tea v/s coffee, who takes
the win?

Table of Contents
 Tea v/s Coffee Consumption Rates In India
 History of Tea And Coffee in India
 Health Benefits and Side Effects: Tea v/s Coffee
o 1. Caffeine Content
o 2. Antioxidants
o 3. Weight Loss
o 4. Other Effects
 Giants In The Industry
 o 1. Coffee
o 2. Tea

Tea v/s Coffee Consumption Rates In

India
Both the drinks are extensively popular in India. But to know how
much, and to settle the tea v/s coffee debate, here are some quick
data points for you!

 Tea consumption in India has increased consistently over the

years; it was approximately 1.1 billion kilograms in 2021. In
comparison, coffee consumption amounted to 1210
thousand 60-kilogram bags across India in 2022.

 The value of the coffee cafe market has grown to an

estimated 25 billion Indian Rupees in 2018 and was
estimated to reach about 125 billion Indian rupees in 2020.

 In a survey by YouGov Omnibus, tea was preferred over

coffee by more than two in five respondents
(44%). Eighteen per cent of people chose coffee, and 38%
said both. A variance based on the region has also been
observed; west India has a higher number of tea drinkers at
55%, while the southern part has more coffee consumers at
26%.
As per the data, India has a higher tea-drinking population but
a rising coffee market!

History of Tea And Coffee in India

Tea originated in Yunnan province of China and was
introduced by the British in the nineteenth century to
eliminate the monopoly of China. China supplied approximately
90% of the tea consumed by Britain before India started its
production. Beginning in the 1850s, the tea industry rapidly
expanded, taking vast tracts of land for tea plantations. By the turn
of the century, Assam became the leading tea-producing region in
the world. India is the second largest tea producer in the
world, and 70% of it is consumed in India itself.
Interestingly, coffee had existed in India since the 17th
century, when the Baba Budani (infamous Indian Sufi saint)
smuggled seven coffee beans out of the Yemini port of
Mokka. He brought some mocha beans to India and planted them in
his home in Karnataka. It eventually led to coffee plantations in the
south and all over India.

I
nterestingly, India is home to 16 unique indigenous coffee flavours. India is the world’s sixth-largest
coffee producer.

Health Benefits and Side Effects: Tea

v/s Coffee
One of the most crucial factors in the tea v/s coffee battle is the
question of their benefits and side effects on our health. Let’s settle
that question together!

RECOMMENDED READ Hybrid Restaurant Model: A Rising Trend

1. Caffeine Content
People look for caffeine to start their day and power through it. It is
an alkaloid compound found primarily in tea and coffee plants and is
a central nervous system stimulant. Coffee contains more
caffeine than tea; however, tea leaves contain more
naturally occurring caffeine than unfiltered coffee beans. Tea
also has other chemical compounds like l-theanine that boost
attention & focus.

2. Antioxidants
Antioxidants are found in many food items; they are manufactured
or natural substances preventing or delaying some types of cell
damage. Both the beverages, tea and coffee, are loaded with
antioxidants. They both have polyphenols, which give them their
unique flavour and health-promoting properties. Studies have
shown that black tea may have cancer-protective properties,
though more research is needed.

3. Weight Loss
As coffee has high caffeine content, it helps you lose weight
faster. Coffee is also associated with fat-burning properties. In
comparison, tea has polyphenols like theaflavin, which also seem to
contribute to weight loss.

4. Other Effects
Given their antioxidant compositions, both coffee and black tea are
fine sources of compounds that protect people from heat diseases
and cancer. However, coffee has various side effects, like heart
failure, increased heart rate, and high blood pressure. The high
caffeine content of coffee, although good for an instant
energy boost, may also cause anxiety and sleeplessness in
some people.
As per the data, India has a higher tea-drinking population but
a rising coffee market!

Giants In The Industry

As the beverage market in India is rapidly growing and changing
trends, we explore different industry giants in both beverages in this
section.

1. Coffee
Nescafe dominates the Indian coffee market, accounting for
55% of the market share. Apart from Nescafe, Tata Coffee and
BRU are other significant players. Tata coffee is one of the largest
integrated coffee-producing companies in the world, and Bru
(second to Nescafe) accounts for a 49.6% market share of the coffee
industry in India.

2. Tea
The tea market is divided into product types like green tea,
black tea and oolong tea. Some big players in the Indian tea
market include Amar Tea Pvt. Ltd., Duncans Industries Ltd.,
Hindustan Unilever Limited, Organic India Private Limited, Tata
Consumer Products, and Wagh Bakri Tea Group.

If you are a coffee lover, check out our blogs, “The Ultimate Guide
To Coffee Roasting Techniques” and “7 Different Types of Coffee
Brewing Techniques“.

Conclusively, we can say that tea and coffee are pretty popular in
India, with tea taking the lead in terms of consumption and health
benefits. However, with changing trends and more research being
conducted about these beverages, a lot can change in the future.

But there is one thing we can say for sure – whether you like tea or
coffee, there is a place for you and your love in the Indian market!

We hope you like this blog!

Post-Covid perk-up: As coffee market warms up, cafes

brew a makeover

Barista Coffee Company, for one, is majorly into

expanding its diners, which offer a
comprehensive food menu beside the coffee. The
brand recently opened its fifth diner in
Gurugram, with CEO Rajat Agrawal optimistic
about business.
When brands like Starbucks entered India, coffee was termed the social
lubricant, with cafes becoming hotspots for meetings and conversations.
Then Covid happened and the coffee went cold. As the pandemic waned
and life returned to normal in 2022, cafes in India reopened with a new
vigour, and also faced competition from international majors like Tim
Hortons and Pret a Manger.

Barista Coffee Company, for one, is majorly into expanding its diners,
which offer a comprehensive food menu beside the coffee. The brand
recently opened its fifth diner in Gurugram, with CEO Rajat Agrawal
optimistic about business.

Speaking on the post-Covid revival, Agrawal said business has

jumped over pre-pandemic levels and is witnessing good
momentum. “We are at double-digit growth compared to pre-
pandemic years. We have opened 100-plus stores in the past three
years, taking our count to 350 stores,” he said. “In business, you
have to take the long-term view,” Agrawal said on the decision to
open outlets during the pandemic. “At that time, real estate got very
attractive for long-term value creation, which is why there was a
spur in the opening. Further, there was the opportunity to
consolidate in the market with lot many stores shutting down, which
we capitalised well,” he said.

The coffee market in India is expected to grow annually by 2.06% (CAGR

2023-2025), as per Statista. Evidently, everyone wants a share in a
market that includes homegrown and international coffee brands, along
with local manufacturers and companies selling instant coffee.

Canadian multinational coffee house Tim Hortons is among the newest

ones in the market. Reportedly, its CEO and former Starbucks India CEO
Navin Gurnaney said that the Indian coffee market is expected to reach
over $4.2 billion in size by 2025. Out-of-home consumption is set to
account for 20% of it.

Blending cozy and inclusive is how one can describe the Barista Diner’s
feel, as well as the menu. From simple yet widely-consumed types of
pastas and pizzas to salads, desserts and appetisers that most Indians are
familiar with, it caters to people across ages. “We did not want to be very
niche in our offerings which are more suited to fine dining formats and
keep changing our menu periodically with the introduction of seasonal
flavours and festivities. A few hot sellers from our menu are Mexican
bowls, 3 chicken pizza, Hawaiian chicken burger, cream of parmesan
soup, and a wide range of pastas,” Agrawal said.

Being a beverage-centric brand, coffee’s contribution to Barista’s total

revenue is considerably higher than diners’. “Beverage-to-food ratio is
around 65:35,” Agrawal said. Since the focus is on food in the diner
format, the contribution of food is higher than that of beverage. Speaking
of expansion, he said, “Now that we are more sure about the business, the
focus is to open a few more diners in the near future.”

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Despite witnessing good momentum, Agrawal admits that coffee

consumption in India is minuscule compared to mature markets. “India’s
coffee consumption is still around 100 gm per capita annually compared
to about 12 kg per annum in Western markets,” he said, highlighting the
still nascent coffee-drinking culture in India. India produced 342,000
metric tonne (34.2 million kg) of coffee in 2021-2022, as per the Coffee
Board of India, but only a third of it was consumed domestically, it
estimated.

Compare this with tea consumption in the country. Of the 1,344.4 million
kg of tea India produced in 2021-22, a whopping 85% was consumed
domestically, as per figures by the Tea Board of India.

Coffee giant Starbucks too expanded in 14 new cities last year, marking
its largest store expansion in a single year in India. In September, it
topped the milestone of 300 outlets in India. Reliance, too, has entered
the food and beverages space through a strategic partnership, signed last
year, with UK-based food and organic coffee chain Pret A Manger.

The forecasts are wrong, India’s coffee industry

is not growing
 Coffee consumption in India has fallen 3.2% since
2019
 Companies such as Dunkin’ are rebranding to target
younger consumers
 Coffee, both instant and specialty, continues to be
priced well above tea

IT IS a frustrating time for coffee companies in India. A year that

was expected to see coffee consumption finally take off has
turned out to be another in which it has merely inched along.

Recent estimates put this year’s coffee consumption at 1.2 million

60kg bags across the entire country, representing just a 2.5% rise
on the year before and 3.2% below the peak of 2019.

This is in spite of an expanding middle class and rapidly growing

population, which is expected to surpass China as the world’s
largest next year.

In response to the disappointing consumption figures, a number

of big coffee chains are rethinking the way in which they position
themselves in the market.

Popular US coffee chain Dunkin’, for example, overhauled its

stores and revamped its menus late last month in a bid to attract
younger consumers.
The company has struggled to replicate its success in other
markets since opening its first store in India in May 2012.
Dunkin’s franchisee, Jubilant FoodWorks Limited (JFL), cited a lack
of profitability and operational inefficiencies for a wave of closures
in 2018 that saw its store numbers cut in half. Its new menu
includes a selection of “premium” coffees and cold beverages,
which have proved the most popular segments among under 35s.

“Dunkin’ is embarking on a new journey, and will cater to ever

changing consumer trends, offer more international choices, and
move to cold espresso beverages,” said JFL’s CEO, Sameer
Khetarpal. “The entire brand overhaul reflects our intent to be a
young-at-heart, go-to coffee destination.”

Misreading the market

For years now, there has been a general buzz around India’s
anticipated shift from a tea-drinking society to one based on
coffee.

Its 1.3 billion-strong population size is viewed as untapped

potential for a lot of the world’s largest coffee brands, who want
to be at the front of the queue when the time comes.

But it is taking longer than many expected. Like Dunkin,

Starbucks, who partnered with local distributor Tata Consumer
Products Ltd in 2012, entered the market expecting similar
success to its Chinese ventures. However, a decade on, it is still
reporting losses.

Most agree that the disappointing results largely come down to

price. In India, tea is typically available for around five to 10
rupees per cup, whereas coffee is still considered a luxury.

Even street side vendors serving instant coffees will charge

upwards of 15 rupees, while most items on Starbucks’ menu are
priced at 200 rupees and above. As Indians tend to be price
sensitive, they opt for tea instead.
This was reflected in a 2017 study by McCann Worldgroup, a
marketing services company, which found that for every 16 cups
of tea, just one cup of coffee is consumed.

There’s a feeling, then, that international coffee chains have

misread the market. A higher disposable income doesn’t always
correspond to a greater willingness to spend it on coffee, as
India’s middle classes prioritise travel, clothing, and saving.

That said, Dunkin’s decision to streamline their focus on younger

consumers may prove to be an astute move. Of all the
demographics, it is the 18 to 35-year-olds who show the most
interest in making coffee part of their everyday lives. And,
ultimately, it is capturing that market which could be key to
unlocking growth.

“For Gen Z and millennials, caffeine flows through their entire

day,” says Aparna Sankar, a coffee roaster based in Bengaluru.
“They need a good cup of coffee to start their morning and work.”

She adds that for companies to be successful, they must

acknowledge the whims of younger consumers.

“As of now, Indian consumers are more focused on traceability

and quality. Home brewing is the newest addition, with people
investing in home brewing equipment and high-quality coffee.

“There is no doubt that coffee consumption will develop,

particularly as the government is making efforts to promote
Indian specialty coffee across the country in an interactive and
experiential way.”

A Brief Overview Of Global & Indian Coffee Sector

By Zain Iqbal / Articles, Coffee, Industry & Sector Reports / Coffee Industry in India, Coffee Market

in India

Disclaimer: The Blog on Indian coffee sector is not a recommendation to

buy / hold / sell any stock. The published post is for information purpose
only. Please read the detailed disclaimer at the bottom of the post.
Coffee is world’s premiere caffeine provider, 2.5 billion cups are drunk everyday. It
provides 54% of the world’s total caffeine, followed by tea and soft drinks.
Coffee Plantation
Coffee plant is woody shrub that is grown in subtropical and tropical climates. Coffee
beans are seeds of this plant. There are two major types of coffee: Arabica and
Robusta. Arabica coffee is generally considered superior to Robusta. About two thirds
of world production is Arabica and one third Robusta. From planting, it takes three to
five years before the coffee plant begins bearing cherries. This long lead time can
create periods of supply-demand imbalance, as farmers plant coffee when prices are
high but then do not produce a crop for several years, by which time circumstances
may differ.

Processing
Coffee beans are seeds of the coffee plant. Processing a coffee bean requires many
stages of processing before it can be brewed into a cup of coffee. Coffee cherries are
either plucked by hand or machine. The purpose of processing is to separate the
coffee bean from the cherry and dry it.
Once dried, we call coffee bean ‘green coffee’.
In second stage of processing we have two methods:
1. Dry method
2. Wet method.
Dry method involves laying the coffee cherries in the open sun and letting them dry
out. The seed or bean is later separated by a process known as hulling.
The wet method involves the usage of water and seed or bean is separated from
cherry before drying. Wet method of separation produces higher quality and
therefore higher priced coffee.
Almost all Arabica coffee is processed by wet method.
Next step in coffee processing is roasting. Roasting brings out the flavor we like in a
coffee.
Roasting generally takes place in the importing country because once roasted the
coffee beans begin to lose their freshness. Importing nations will always have
captive or domestic roasting facilities for coffee.
World Coffee Production

Coffee is produced in approximately 70 countries, but the world’s largest coffee

producer by far is Brazil. This makes the price of coffee sensitive to weather
conditions in Brazil.
The countries of west Africa and Vietnam produce mostly Robusta coffee. Although
Brazil produces mostly Arabica coffee, it is actually world’s second largest Robusta
producer, behind Vietnam.

Spot Prices : Average ICO indicator Prices (cents/pounds)

Coffee prices dynamically vary based on weather situations in major coffee

producing nations such as Brazil and Vietnam. In the year 1994, Arabica and Robusta
coffee prices made new highs at 147 and 119 cents per pound due to frost damage
in Brazil, frost in Brazil was followed by drought in 1997, when again coffee prices
touched 132 and 83 cents for Arabica and Robusta coffee respectively.
Coffee touched its low in the year 2002 when Arabica and Robusta were priced at 60
and 30 cents per pound and this happened due to oversupply of coffee in the world
market.
In the same period (2000-02), India dramatically produced 301,200 MT of coffee
which encompassed 104,400 MT (35%) of Arabica coffee production and 196,400 MT
(65%) of Robusta Coffee production. Since 2002 and till 2018 India has grown from a
nation producing 301,200 MT of coffee to a nation producing 316,000 MT of coffee, a
meager .28% of CAGR.
Coffee Prices again made a new peak although short lived this time in the year 2010-
11 when there were concerns about supply in Brazil and Columbia and it was
followed by aggressive speculator activity.
Arabica coffee prices touched 271 cents per pound and Robusta coffee touched 106
cents per pound on the commodity exchanges that year.

Indian Coffee Sector – Area, Production & Productivity

Over a period of 68 years from 1951 till 2018, we observe that the area under
cultivation for coffee has gone up from 92,523 hectares in 1951 to 454,722 hectares
in 2018. During this period the area under cultivation for Arabica coffee as
percentage of total area has decreased from 73% in 1951 to 50% in 2018, whereas
the area under cultivation for Robusta coffee has gone up from 27% in 1951 to 50%
in 2018.
Today (2018) we observe that Arabica coffee, despite covering 50% of the soil in
India for production produces only 30% of the volume (tonnage) and in value terms it
is 39% ($256 million worth of Arabica coffee at 135 cents per pound) and the rest is
Robusta coffee which is 61% ($388 million worth of Robusta coffee at 88 cents per
pound).
It is no surprise that growing Arabica coffee is dragging Indian coffee sector behind
when it comes to optimally utilizing its resources (land and labor).
If we observe closely the productivity of a Arabica coffee farm land is decreasing
(from 1971 to 2018), India witnessed increased productivity of Arabica soil from 229
kg per hectare in 1951 to 725 kg per hectare in 1971 and since then it has
decreased gradually and today (2018), despite mechanization and the best in class
technology available, Arabica soil in india produces 478 kgs of coffee per hectare.
At the same time Robusta soil’s productivity has gone up gradually from 136 kg’s per
hectare in 1951 to 1031 kg’s per hectare in 2018.
Karnataka’s Coffee Farms – Time To Mechanize

Karnataka accounts for over 50% of the coffee land under cultivation in India at
226,244 hectares and it produced 222,300 MT of coffee in 2017-18. Karnataka also
has the highest soil productivity at 983 kg’s per hectare in contrast to Tamil Nadu
which has the lowest soil productivity among the three states at 519 kg’s per
hectare.
Although Kerala has the marginally low soil productivity at 774 kg’s per hectare but
it has comparative advantage versus Karnataka and Tamil Nadu in terms of labor
utilization. Kerala employs an aggregate ~44,000 people in its coffee farm lands but
at a unit level in terms of coffee produced per labor, Kerala has the highest
productivity at 1.5 tons of coffee production per labor.
Karnataka and Tamil Nadu states lag behind kerala on these metrics and this
comparative advantage of kerala is possible because of more mechanization of
coffee farm lands versus that of Karnataka and Tamil Nadu.
Coffee producers in Kerala will see operating leverage kicking in when
coffee prices rebound as there operations are less labor intensive versus
coffee producers of Karnataka and Tamil Nadu.
Mechanization proves to be a major challenge considering the undulating terrain that
coffee is grown on. Much work needs to be done in this area.
In Brazil where coffee is cultivated on a flat terrain, mechanization is employed
successfully where a single worker covers 100 acres.
It is evident from the table above that wages in major coffee producing states such
as Karnataka, Kerala and Tamil Nadu are high with the highest wages in Kerala
followed by Karnataka and Tamil Nadu.
However kerala has the lowest labor density per hectare and per ton of coffee
produced therefore the blended labor cost would be lower for companies growing
coffee in kerala.

Major Indian Coffee Exporters

Allanasons pvt ltd is the biggest exporter of Arabica coffee from India and its export
volume for the year 2018 stand at a staggering 10,719 tons or ~28 Million USD
worth of exports of Arabica coffee.
Coffee Day Global ltd, parent of CCD stands second to Allanasons at 4,771 tons of
Arabica coffee exports or 12.8 million USD of exports. Tata coffee follows coffee day
global at the third spot with 4.8 million USD of Arabica coffee exports.
The biggest exporter of Robusta coffee is Olam Agro India Pvt ltd at 17,640 tons or
31 million of Robusta coffee exports.

Major Export Destinations For Indian Coffee Producers

India’s largest market in volume terms is the Italian Market and that too for Robusta
coffee and so far this year, India has exported 70,438 tons of coffee beans to Italy
and of the total export of coffee beans, Italian exports stand rock solid at 23%.
Other major export destination after Italy are Germany, Russia and Belgium
Striking observation in the table is that of Belgium which imports a staggering 7,770
tons of Arabica coffee from India dwarfing other export destinations.

Modest Increase In Indian Coffee Consumption

Bulk of the Indian Coffee production is exported and the domestic industry focuses
much of its marketing effort on export promotion. There are signs that the popularity
of coffee is increasing with the spread of foreign and home grown coffee shops.
However, exports continue to siphon large amounts of coffee away from domestic
market and consumption estimates are largely unchanged in recent years.
While the coffee consumption is increasing moderately, it can be difficult to establish
a repeatable trend given the industry emphasis on exports, especially when the
export demand is high.
Tea continues to be the hot drink of choice for many Indian consumers. Consumers
in southern India, where much of India’s coffee is produced, consume more coffee
than in other areas of the country. While there is a small but growing cafe culture.
Over the longer term, Indian coffee consumption is not likely to increase significantly
until the practice of home consumption becomes more common because the hard
reality is that coffee consumption in India has not budged beyond 100 gms in the
last 4 years.

Coffee Market Explodes In China

Rapid increase in coffee consumption in China particularly from 2005 to 2013 can be
compared to a similar trend in Japan from the years 1964 to 1973. For japan, it took
30-40 years total to become a recognizable coffee consumer and become the worlds
fourth largest coffee consumer, China on the other hand, is still in premature stages
of coffee development.
Today China’s coffee sector is valued at $4.72 Bn and Starbucks dominates the
sector with 58.6% market share. Starbucks operates 3,400 cafes with each store
generating $800,000 of sales per annum. The starbucks management has a target to
have 6,000 cafes by FY22.
While India and china have similar coffee consumption (120,000 MTPA, 2018), the
rise in disposable income which gives a boost to discretionary spending is driving
growth in China. India would see similar growth in the number of cafes and hence
greater coffee consumption with rise in per capita income.

Global Per Capita Consumption Of Coffee

Coffee Inventories In Importing Nations

Stocks of green coffee in importing nations, have remained at high levels in the last
two years. After reaching 17.94 million bags at the end of December 2010, stocks
grew to record level of 26.44 million bags at the end of June 2017 and as of June
2018, stocks of green coffee in importing nations have been 24.64 million bags
which is still high. High stocks of coffee in importing nations put downward pressure
on global coffee prices.

Key Indicators In Coffee

 While studying coffee, be watchful of production levels in Brazil,
Vietnam and Colombia.
 Any weather disruptions in major coffee producers such as Brazil and
Vietnam will impact global coffee prices.
 Because importing nations import green coffee (Arabica or Robusta),
they can store green coffee in cool and dry warehouses and this
inventory build up will have impact on global coffee prices. Higher
inventory levels in importing nations leads to downward pressure on
coffee prices.
 Coffee consumption, however rising at 2% can see substitution by
other caffeine rich beverages like cold drinks and tea which will put
downward pressure on coffee prices.
From farm to cup – How the coffee brewing culture in
India is evolving
ndia is majorly considered as a tea-drinking nation, with filter ‘Kaapi’
mostly consumed in the southern parts of the country. With time, coffee
became a part of our lifestyle. People started counting on coffee farmers,
beans and roasters, not just the high-end luxury coffee shops. This came
when people started showing interest in the flavour profiles of each bean
a region or processing method produces. To understand this evolution,
details about the coffee market, the per capita consumption of coffee, and
more, we got in touch with Nishant Sinha, founder of Roastery Coffee
House. Here’s what he has to say:

How is coffee brewing culture evolving in India?

India’s coffee culture is undergoing a revolution at the moment. We

are drinking and brewing more coffee than ever before. There is
genuine curiosity, interest and eagerness to drink, brew, understand
and know more about Indian coffee among Indians.

What are the coffee trends?

The biggest change that has happened is the exodus from instant coffee
to specialty coffee. It’s not a fleeting trend, rather a lifestyle change that
is here to stay.

More people are inclined to drink good coffee and they are ready to go the
extra mile for it. The ‘extra mile’ in this case happens to be, investing in
specialty coffee, investing in home brewing equipment, and investing a
little more time every day in brewing specialty coffee at home.

What is organic coffee? How is it better?

Speciality coffee refers to the highest-grade coffee available. It is single-

estate coffee that is grown in small batches under expert supervision and
care.

Speciality coffee is grown in small batches, at the perfect altitude, at the

right time and in quality soil. From cultivation to processing, the coffee is
always under expert supervision and care at all stages.

The beans are then roasted by experts with utmost attention and care.
These freshly roasted beans are then brewed to produce coffee that has
complex flavour profiles and is delicious.

How does the taste differ?

Specialty coffee is delicious coffee. Store-bought instant coffee lacks
complexities in flavour, depth, and freshness and is stale. Speciality coffee
tastes delicious because of the effort and attention that goes into
cultivating it, roasting it and then brewing it.

Is coffee harmful?

Coffee is not harmful. It has many health benefits, it is anti-inflammatory,

an antioxidant, it boosts heart and brain health. However, anything in
excess can be harmful and coffee is no exception.

How coffee became an art and became a lifestyle beverage in a

predominantly tea-drinking nation like India?

India has always been a tea-drinking nation. As far as coffee is concerned,

it was always instant coffee except in southern India, where filter coffee is
a popular beverage.

In the 2000s, when Indian youngsters started to travel and explore the
world, they were introduced to delicious coffee in the west, but more
importantly, they explored a coffee culture that didn’t exist at all in India.
Exposure to American films and sitcoms also contributed to the demand
for a coffee and cafe culture among Indian youth.

There was a growing demand and slowly, there were brands to fulfil the
need for good quality coffee, various brews and active cafe culture.

How has India seen a Spike in the per capita consumption of

coffee over the last 10 years?

India is brewing and drinking more coffee than ever before. Interestingly,
there is a raging demand for good Indian coffee. In fact, the demand is
such that Indian farmers are more inclined to sell their produce to Indian
brands rather than exporting, which they have always done before.

Young Indian speciality brands like ours pay premium if not fair prices to
farmers. This further motivates farmers to produce superior-quality crops.

-The rise in the awareness of coffee and its types in the younger
generation

There is awareness, interest and eagerness about coffee among students

and working professionals across cities and towns in India.

The pandemic worked in favour of the Indian coffee industry. The

youngsters were already actively visiting cafes for specialty coffee. When
the cafes were closed during the lockdown, there was a demand for cafes
like coffee so they started educating themselves about home brewing. As
a matter of fact, once somebody sets on the home brewing journey, there
is no looking back. The community of homebrewers began to grow ever
since.

-New-age Indian entrepreneurs – Indian market and developing products

for making artisanal coffee

New coffee entrepreneurs realised the potential of Indian coffee. Indian

coffee is one of the world’s finest shade-grown coffees. Plus, monsoons
contribute significantly to its complex flavour profile. There is a demand
for Indian coffee among coffee lovers across the globe.

For centuries, 70 per cent of our coffee was exported. Only since the last
decade, farmers in India are choosing to sell their crops to Indian brands
rather than exporting. New coffee brands like us, pay a premium if not fair
prices to the farmers. We have been able to build a relationship with
farmers where we work closely with them to produce superior-quality
crops.

Indian consumers are drinking more coffee than ever before. They are
eager to explore various estates and various brews. The home brewing
community is growing and more people are dropping by cafes to drink
their choice of brew.

A strong coffee culture is brewing in India, bit by bit

Something big is brewing in India’s coffee market. Not only are new coffee
chains coming up and expanding their footprint, direct-to-consumer
artisanal coffee brands are claiming brisk sales as young urban Indians
switch to coffee as their preferred drink.
Last week, the Allana group, an exporter of coffee from India for the last 40
years, announced its entry into the domestic market to meet the
burgeoning demand for the brewed beverage. The company said it will
supply its premium coffees to hotels, Quick Service Restaurants, cafes,
and coffee startups.
“We already have tie-ups in place with 7-8 coffee chains," said young Asim
Allana, part of the promoter family, who is spearheading the coffee
business and its entry into India. So far, Allana group was exporting coffee
to Nordic countries, the US, and the Middle East.

The trigger for entering the Indian market was the evident rise of coffee
culture here, Allana said. The market has been brimming with new
packaged coffee brands and cafés for some years, more so with the arrival
of Starbucks in India.
The pandemic fuelled growth further. Indian students who were studying
abroad came back during the pandemic. They had exposure to cafés and
craved for the brews, said Allana, who believes that “coffee culture", is a
Western import. “Cafes abroad are designed specifically for a generation to
sit there and use free WiFi, use it as a place to meet socially," he said.
Bharat Sethi, founder and chief executive officer (CEO) of Internet-first
coffee brand Rage Coffee agreed. Café culture has come up very
significantly and people now know what a good cup of coffee really means,
he said. However, he takes credit for building scale in getting people to
upgrade to good coffee through his packaged craft brew which balances
quality, convenience, and affordability. Cafés are expensive, he said.
For a brand that launched in 2019, the pandemic lifted sales for Rage
Coffee as offices and cafes were shut and coffee drinkers were looking for
alternatives, Sethi said. “We have grown 500% year-on-year since the
launch, with significant demand—nearly 60%—coming from smaller towns,"
he said.
Allana agreed that work-from-home culture also drove coffee consumption
at home. Plus, the boom in domestic tourism on account of the pandemic is
opening up tourist destinations for coffee. “Tourism and coffee go hand in
hand. Coffee demand is now coming from travel destinations like Jaipur
and Udaipur," he said.
Allana attributes the growing coffee craze to the availability and affordability
of a variety of coffees. “Tea was for our parents and grandparents. Massive
growth in coffee is coming from consumers aged 20 to 40 years. It is the
future business drink," he said.
Coffee chain Barista may have been ahead of its time when it launched
more than 20 years ago—as tea was still the popular drink and a habit that
expensive coffee couldn’t break. But Café Coffee Day and other cafes
popped up and lay the ground for building a coffee culture in India.
Currently, the market is swamped with new-age coffee chains as well as
packaged artisanal brands such as Blue Tokai, Third Wave Coffee, Dope
Coffee, and Sleepy Owl, ready to expand. Dope packaged coffee is
opening experience centres in Mumbai and Delhi. Blue Tokai is eyeing
markets beyond Delhi-NCR. Canadian QSR chain Tim Hortons too is
opening its first outlet in India.
Sales of coffee machines, too, have improved. Speaking to Mint last week,
Ravi Saxena, founder and managing director of Wonderchef Home
Appliances, said his newly launched coffee machines priced
between ₹3,000 and ₹15,000 have sold like hot cakes. Asim Allana agreed
that cheaper coffee machines are aiding market growth.
Meanwhile, Rage Coffee, which signed up cricketer Virat Kohli as its brand
ambassador last month, has been selling complex flavours such as
Butterscotch Delight, Vanilla Bubblegum, and Citrus, which Sethi said are
game-changers as they give café experience at an affordable price.
The attractiveness of Indian market has inspired Asim Allana to promise
50% of his coffee revenue to come from domestic operations in the next
five years. “For the first 40 years we were in coffee exports; for the next 40,
we will focus on domestic market," said Allana.
Shuchi Bansal is Mint’s media, marketing and advertising editor. Ordinary
Post will look at pre-ssing issues related to all three. Or just fun stuff.

Indian Coffee Market

It is estimated that only under 15% of the Indian coffee consumption was
under B2B or the ‘Away from Home’ channels in 2019.

The larger share of coffees consumed in India have always been in the
Home channel with the Traditional retail stores playing a vital role in
ensuring availability & sometimes, delivery to households. The last few
months have been challenging in the face of the pandemic. An interesting
trend that we are witnessing is the important growth happening in e-
commerce sales as well as hyper-local deliveries. Brands are experiencing
high double-digit growths thanks to the increasing dependence &
patronage of e-commerce portals such as Amazon & Big Basket.

In the Away from Home channels, Hotels, Restaurants & Cafes, commonly
clubbed under the acronym HoReCa, have been severely impacted by the
ongoing pandemic. The increased awareness & trials for the food and
beverage market, that the HoReCa has always ensured, have now
resulted in a latent demand from the customers, many of whom are WFH.
All major Coffee brands have embarked upon online sessions to impart
knowledge and to train the millennials on ‘how to brew’ coffees at home
with relative ease and by using simple brewers & equipment.

The impact that the social media influencers have had on engaging with,
showcasing & sharing tips have immensely helped in the overall cause.
The Indian coffee industry was seeing very high single digit growths,
consistently, over the last few years & now, with the further rise &
demand of home consumption, will get back to its growth trajectory in the
next year. We are seeing Brands embarking on various experiments in a
bid to anticipate and shift to the ‘new reality’. Now, the possible future,
anticipated by recent trends, will be determined largely by the extent to
which brands & customers are exposed to the changes caused by the
pandemic.

What e-commerce has done is demolish the complexities of traditional

FMCG distribution in a single stroke and enable/ create the confidence to
help many brands & businesses launch their product & offering on the
portals with relative ease. More importantly, many café-roasters have
taken to e-commerce with a vengeance, not only to offset the B2B drops
but to gain the first mover advantage amongst millennials & coffee lovers,
who can now get a wide variety of choice at the click of a button. The
added benefits of having a ready insight into the ‘who’ & ‘where from’ for
every single sale offers them a chance to build their brand, one consumer
at a time.

An important Coffee B2B player in Dubai, for example, has already made
clear their strategy to shift to the B2C model. Their Cafes have embraced
the new reality of their customers WFH & have launched an aggressive
home-deliver model. In India, many Café brands are looking at home-
delivery models apart from promoting the take-aways. When the country
& its key cities finally open back, all industry watchers will keenly observe
the shifts in demand, from sit-ins to take-away queues, with a lot of
interest.
The Millennials in India have been at the forefront of the coffee culture
and are very enthusiastic to try alternate coffee brewing methods at home
and we can see a considerable shift where they are looking at different
options to try to brew a very good cup of coffee at home.

A recent survey conducted earlier this year found that nearly 50% of the
respondents opt for a cup of coffee as the first meal of the day and 69% of
Indian millennials relate to coffee as a companion. This overall puts across
this industry as an extremely experiential one for the Indian audience.

As we can see above, often simple innovations that have been marketed
well can help build trials. It is with deep consumer understanding that a
Brand can go a long way in capturing a country’s imagination.

In addition to relevance, the importance of training the Baristas (Coffee

brew masters, in Italian) in India’s fast changing & growing café market is
so very essential in ensuring knowledge, preparation methods and skills &
in consistency. Lavazza has built 3 Coffee Training centers in India, one
each at Delhi, Mumbai & Chennai where Barista training programs are
offered free of cost, to build this essential need in the coffee ecosystem.

What’s interesting is the demand for online sessions from the Training
centers, where we not only have Baristas & new Café owners signing up,
but also many ''working-at-home-corporate clients'' who are taking
advantage of the WFH scenario to build connections within their teams by
such programs.
The ‘Master your Brew or MYB’ campaign, launched by Lavazza during the
pandemic has helped us reach across to more than 20 clients & educate
more than a thousand employees who are WFH. In a nutshell, this is what
Lavazza & other pure play brands are doing in India, creating an authentic
coffee culture, one cup at a time.

An abridged version of the above article was published by the Financial

Express, dated 4th September'20. The link for the same can be found
here How the Indian coffee industry is poised for revival

The Indian consumer is embracing a new wave

of coffee
Be it espresso, americano, cappuccino, latte, mocha or frappe, we all have
our go-to coffee variants. But with new flavours and variants of gourmet
coffee hitting the shelves every other day, are people moving out of their
comfort zone and trying something new?

“India, primarily a tea-drinking nation, is slowly and unwaveringly liking

coffee, making cafés a meeting place for tradition and modernity, leading
to a new kind of coffee consumers. But maximum drinkers still stick to
their usual cappuccino, latte and expresso,” says Rahul Kumar, founder of
Red Mango, Chhatarpur. While Red Mango serves a variety of premium
coffee blends from espresso to americano, cappuccino, latte, mocha,
white chocolate and a range of frappes. The most picked up at the cafe
still remain the first three.

A restaurant, Cicchetti by Mr Beans, Gurugam, occupies a special space as

chef Neha Singh and the team observes customer behaviour play out in
real time. “On the basis of my experience in F&B and hospitality,
customers don’t often experiment with their choice of coffee. In fact,
serious caffeine drinkers stick to their usual orders and are not easily
swayed,” says Singh.
“There has been an undeniable increase in the global exposure of patrons
as discretionary spends have gone up substantially.

These increases, coupled with social media expansion have led to patrons
open to experimentation. But any serious coffee drinker still mostly
experiments with brands and the type of roasts they can drink, but not
coffee styling as much.”

Disagreeing with the above observation is Puneet Gulati, CEO of Barista,

who feels Indians are getting more and more drawn towards coffee
innovation, leading to excitement in domains like Cold Brew, Pour Over
and French Press. “Regular customers are getting evolved whereas new
customers are joining the bandwagon. Coffee is the new fad,” says Gulati.

Jai Ganesh Ramnath, MD Lavazza India, observes that customers today

are open to experimenting, which is why the trend of ‘aromatic coffee’ is
on the rise. “There is coffee in food, in ice creams, in frozen desserts and
affogato (Italian coffee-based dessert).

With the introduction of innovative products and methodology of serving

it, customers have kept pace and experiment. As long as there will be
innovation, we will always find people who are willing to try.”

Coffee trends
Indian consumers’ palette is evolving and they are open to adapting and
experimenting with innovations. Talking about the current coffee trend,
Navin Gurnaney, CEO, Tata Starbucks Pvt. Ltd., says, “Coffee consumption
patterns will constantly evolve.

However, the rise of coffee consumption in the country tells us that

brands need to go beyond product innovation and build an emotional
connect where the consumption habit becomes a ritual, and eventually
synonymous with the brand.”

Even gourmet coffee is seeing a rise. This includes artisan, hand blends
and high quality coffee, says Rahul Kumar. “People are ready to try more
regional and international blends prepared in aero press, French press and
more.

Coffee bars have begun to usher in the experiential proposition to coffee

drinking, with an ambience that’s inviting, invigorating as well as
relaxing,” he shares.

Noting how this 15-year-old market (of artisanal coffee) is doing splendid,
Akanksha Chaudhary, marketing head, Foxtrot, a Coffee & Cocktail Bar,
has been observing people indulge in the actual flavour of the coffee, and
doing away with add ons. “The youth is a large market and lot more open
to newer flavours and brewing methods. No wonder cold brews have
become significantly popular too.”
Adding to it, Ajai Thandi, co founder, Sleepy Owl, says that now, especially
with the entry of cold brews in the market, coffee consumption is not just
restricted to a hot cup of coffee.

He says, “More players are recognising the massive potential of the

untapped coffee industry in India, and with more consumers from the
middle-class spectrum, the discretionary spending will go up and the
consumers will spend more on curated consumer experiences.”

Elements to remember
Numerous elements are considered before a packet of coffee is brewed or
a new drink to the menu is introduced. “We make an effort to engage with
our customers by conducting extensive market surveys.

We try to match the expectations of our guests with respect to beverage

flavours and the introduction of different types of milk (dairy, vegan, etc.)
that go well with the coffees we have to offer,” Kazem Samandari, founder
of L’Opéra. They are currently working on a delectable beverage list
especially for the winter season.

When introducing a new drink, chef Singh says she factors in a lot of
variables. “So colder beverages in hotter months and vice versa, a little
more punched up or spiced drinks in monsoons and drinks with warmer
ingredients in winters.

Then chocolate-based drinks work best with younger patrons as well as

families, especially with smaller kids.”