THE INDIAN COFFEE INDUSTRY
Author : Shefali Soni
Lately, the promoted ads on a person’s social media can tell a lot more about them than themselves. Mine, for example, is filled with homegrown coffee brands popping out of almost nowhere. And there’s always one such friend in the group circle - who is always trying out new types of coffee and encouraging others to consume the beverage more often as well. The coffee industry in India has seen a huge surge in the past few years with trends such as Dalgona and hype around freshly brewed coffee popping up every few months. The country that has majorly been a tea-drinking nation is now moving on to newer beverages. The one that seems to have the greatest potential is coffee.
Growth of Coffee Industry in India
Making it to the top 10 countries of the world in terms of coffee production, India exports about 80% of its produce. Currently amounting to $940 million , the industry is expected to grow at a 7.18% CAGR. Within this industry, retail sales make up the majority, with Nescafe and Bru being the top brands in terms of instant coffee. Now that the trend is moving in favor of caffeine, companies are constantly coming up with newer variations, types of equipment, organic/healthier variants, technological advancement through product development, and so on.
Drivers of increased caffeine consumption in India
Accessibility While Google Trend shows a spike sometime in 2019, it is the pandemic and the accompanying lockdown that has made coffee more accessible than ever. The rise of D2C brands and collaborations with platforms such as Amazon and Flipkart has made it abundantly convenient to get it delivered to one’s doorstep.
Selling product as well as experience Coffee is generally considered to be a more expensive beverage, especially when compared to tea. So when Starbucks and Cafe Coffee Day came into existence in the early 2010s and established multiple outlets across metro cities, consumers did not shy away. A trend of higher disposable income compiled with the need for social acceptance through higher spending worked like a charm for these retail outlets.
Expanding target segment What selling coffee more as an experience than just a product did was expand the target segment for the sellers. With coffee brands entering the high-end category, more earning individuals spent on beverages, and names such as Starbucks, Cafe Coffee Day and Barista, etc, became synonymous with a luxurious lifestyle. Adults aside, recent research showed that about 69% of respondents (millennials) started considering coffee as their companion and a majority started off the day with coffee as their first meal.
Increased consumer awareness Filter coffee has been a household name for most South Indians for a long time now. However, with social media being the most important channel for reaching out to the millennials and Gen-Z, information sharing and developing a brand presence through differentiation has become an easier task. The last few months have seen an increase in workshops for coffee, social media presence of upcoming coffee brands, tutorial videos, and so on.
Population Explosion of coffee brands in India
Teenagers and young adults have made brands such as Blue Tokai, Slay Coffee, and KCRoasters a regular, non-negotiable part of their fast-paced lifestyle. With extensive marketing and advertising, and quirky, unique packaging, these brands started capturing the attention of teens and young adults.
There has been a surge in interest for artisanal coffee, and affluent brands that started off in high-end localities and stores, and metro cities are slowly making their way to tier 2 cities as well. With so many options at hand, Indian consumers, too, are spoiled for choice, but the saving grace is that they aren’t afraid of experimenting with upcoming ventures.
Perhaps what is equally interesting about the growth of the coffee industry globally is the list of startups that offer products and services based on caffeine that isn’t the usual cafe beverage.
Mcaffeine, for example, is a personal care brand that has coffee as the main ingredient in all of its products. F&B brands such as iD are coming up with coffee decoctions, while Coca-Cola is coming up with a coffee variant of its global favorite soft drink.
It is indeed interesting to see how the consumption of coffee rises further in the next few years, and if India can come in line with its global coffee production ranking in the near future.
References
https://www.statista.com/outlook/cmo/hot-drinks/coffee/india
https://casereads.com/coffee-industry-in-india-growth-analysis-and-the-future/