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Indian coffee has created a niche for itself in the world
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Sunday, 01 March, 2020, 08 : 00 AM [IST]
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Jai Ganesh Ramnath
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India is the sixth-largest producer of coffee in the world and Indian coffee has created a niche for itself in the international market. The domestic coffee market is ever growing with the entry of multiple domestic and international coffee brands making their entry, year on year.
Indian coffee retail chains witnessed tremendous growth as cafes are gaining popularity as hangout zones with friends, family, colleagues and business associates, among others. Be it reading, working, or just a casual discussion in the coffee shop, catching up over coffee is the most predominant trend one sees these days.
The complementary services that are typically provided by the coffee shops such as free WiFi, music and other perks have succeeded in retaining customer footfalls. In India, there has been an increase in the trend of take-away among the working class, but the dine-in coffee retail market maintains a substantial majority, in this segment.
The southern tradition
Coffee in India is more popular in the southern region of the country, where the term used is ‘Kaapi’- the regional phonetic pronunciation of ‘coffee.’ It is a blend of frothed and boiled milk with the decoction of finely ground coffee powder which is in turn brewed in a traditional Indian filter comprising of two cylindrical metal cups. Outside the country, Indian filter coffee is referred to as drip brew coffee.
Filter coffee became widely popular when Indian Coffee House – a café of the 1940s, run by the Coffee Board of India served it on their menu, thus becoming the drink of many Indians. There are about 400 chains of the Indian Coffee House across the country, following the first one in Jabalpur. Independent and regional outlets continue to emerge mainly in urban centres, resulting in a highly fragmented retail market.
India is now the world’s 10th fastest growing market for specialist coffee and tea retail chains, valued at Rs 2,570 crore in 2018, says a report by market researcher Euromonitor International.
As per the report, the outlook for both independent and chained cafes and specialist coffee and tea shops remained strong on the back of constant innovation and wider offering. Some product categories, such as cold brew coffees, display exceptional growth.
Exporting and importing of coffee
Indian coffees are known for their unique taste and for the environment-friendly practices that some of the country’s coffee planters have persisted with over time. Various practices like organic farming, prudent use of land, water, biodiversity, labour, knowledge and technology to both grow crops and reduce negative environmental impact such as pesticide pollution and soil erosion. These have garnered a positive image for coffee originating from India. Added to that is the fact that coffee growing areas in the country have diverse climatic conditions, which are suitable for the cultivation of different varieties of coffee and thus bring in a healthy bouquet of flavours.
India exports both the varieties of coffee - Robusta as well as Arabica. Robusta tastes slightly bitter and contains more caffeine. Whereas, Arabica is half the amount of caffeine as compared to Robusta. As per the Board’s latest data, the shipment of Robusta coffee jumped 28.42 per cent to 34,090 tonne during January-February 2019, from 26,545 tonne in the same period last year. Similarly, the export of Arabica coffee increased by 14.39 per cent to 11,156 tonne, from 9,752 tonne in the said period. The volume of coffee re-exported also remained higher at 13,392 tonne, as against 11,516 tonne in the said period.
However, the export of instant coffee showed a decline as volumes remained at 3,047 tonne during January-February of 2019, when compared with 5,704 tonne in the previous year. Italy, Germany and Russia were the major export destinations for Indian coffee during the period. The bulk of India’s coffee production is exported and the domestic industry focusses much of its marketing effort on export promotion.
Growth of Indian market, a new coffee era
The Indian coffee cafe market is expected to register growth at a CAGR of over 12% during 2019-2024. The growth of this market can be largely attributed to millennials and India’s younger population who comprise of the newer demand drivers. Their rising disposable incomes, along with rapid urbanisation, an ever-evolving corporate culture alongside increased exposure to global lifestyles fuel the surge in demand for coffee in the country.
A new coffee era was established steadily over the past two decades. One that comprised of Caffe Lattes, Espresso Macchiatos, Cappuccinos and Frappuccinos. This era of specialty coffees has continued to grow over the years to include a variety of innovations and new methodologies of brewing coffee, to produce an enhanced consumption experience. Small-scale specialty coffee retailers now compete with large to small international and domestic retailers with different exposures to specialty coffee. While the largest concentration of coffee consumption remains the south of India, there is a burgeoning group of coffee aficionados all over the country.
The increase in the growth of home-grown coffee shops in India can be attributed to the increasing love and passion for coffee among the youth interested in the what, where and how of the coffee rather than look at it as just a beverage. Home-grown and boutique coffee shops cater to the curiosity and passion of this segment of coffee lovers.
Varieties of coffee in India
Some of the popular coffee variations we have in India - Americano; Latte; Café Mocha; Cappuccino; Frappe.
Nowadays people have also started incorporating coffee into cooking as well. Café Mocha cookies as well brownies have coffee as an ingredient in them. These are perfect for a coffee fanatic.
Overall, we foresee a robust and growing market for coffee over the next few years, marked by even more innovation in flavours and brewing methodology, for the Indian market.
(The author is MD, Lavazza India)
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