Report Overview

Increasing demand for Coffee is driven by shifting consumer preferences towards specialty and premium coffee varieties, alongside the growing café culture in urban areas. Additionally, rising disposable incomes, changing lifestyles, and a burgeoning awareness of health benefits associated with coffee consumption are expected to drive the India Coffee Market during the forecast period between 2024 and 2030.

India Coffee Market – Industry Trends & Forecast Report, 2030

India Coffee Market size was estimated at USD 9,240 Million in 2023. During the forecast period between 2024 and 2030, the India Coffee Market size is projected to grow at a CAGR of 11.99% reaching a value of USD 20,410 Million by 2030. A prominent driver of market growth is the shifting taste preferences of the people in this region. As consumer demographics and lifestyles undergo transformations, there's a noticeable shift in the preferences for coffee products. Increasingly, consumers are gravitating towards specialty and premium coffee offerings, driven by a desire for unique flavors, higher quality, and experiential consumption. This trend is particularly pronounced among younger generations who are more adventurous in their coffee choices and seek out novel experiences. Entering the Indian market in 2012, Starbucks initially prioritized establishing flagship stores in prominent urban centers. However, the company has since broadened its focus to encompass India's secondary and tertiary cities, introducing a range of smaller format outlets and drive-thru locations. Headquartered in Seattle, the chain has swiftly expanded its presence, boasting 375 stores spread across 50 cities and catering to over 400,000 customers weekly. This milestone underscores the evolving sophistication of the Indian coffee market, as consumers increasingly seek unique experiences and premium offerings. Additionally, there's a growing awareness and appreciation for ethical sourcing practices, sustainability, and the story behind the coffee beans. As a result, coffee producers and retailers are adapting to these changing preferences by offering diverse product ranges, emphasizing quality, and implementing innovative marketing strategies to cater to the evolving tastes of the region's populace.

Coffee – Overview

Coffee is an integral part of India's culture and economy. The country is known for producing high-quality Arabica and Robusta beans in regions like Karnataka, Kerala, Tamil Nadu, and Andhra Pradesh. India's coffee industry encompasses both large plantations and smallholder farms, supporting livelihoods across rural areas. Traditionally, South Indian filter coffee, brewed with a blend of coffee decoction and milk, is popular. However, urban centers have embraced a diverse coffee culture with cafes serving specialty brews like cappuccinos and espressos. The Indian coffee market has seen significant growth in recent years, driven by increasing urbanization, rising disposable incomes, and evolving consumer preferences. Additionally, India exports a substantial amount of coffee globally, particularly to Europe and the United States. Despite challenges such as fluctuating weather patterns and market competition, the Indian coffee sector continues to thrive, contributing to the nation's agricultural landscape and global coffee trade.

India Coffee Market

Growth Drivers

Rising Disposable Income

Rising disposable income is a significant driver fueling the growth of the coffee market in India. As the Indian economy continues to expand and urbanization accelerates, there is a noticeable increase in the purchasing power of consumers. According to data from the Ministry of Statistics and Programme Implementation (MOSPI), Disposable Personal Income in India witnessed a notable increase, reaching 297,059,026.70 INR Million in 2023, up from 273,364,818.90 INR Million in 2022. This surge reflects a positive trend in the country's economic landscape. Over the period from 1950 to 2023, Disposable Personal Income in India has shown fluctuations, with an average of 39,037,460.62 INR Million. The recent peak of 297,059,026.70 INR Million in 2023 marks a significant milestone, while the lowest recorded figure stands at 91,540.00 INR Million in 1950. These statistics underscore the dynamic nature of India's economic growth and the evolving trends in personal income over the years. This upward trend in disposable income has led to changing lifestyles and consumption patterns, with a growing preference for premium and specialty coffee products. Urban centers, in particular, have witnessed a surge in coffee consumption as cafes and coffee chains offering a variety of options gain popularity among the burgeoning middle-class population. Consumers are increasingly willing to spend on experiences, including visits to coffee shops, where they can socialize, work, or relax while enjoying their favorite brews. Moreover, rising incomes have facilitated the adoption of coffee as a lifestyle choice beyond traditional consumption patterns. Specialty coffee segments such as gourmet blends, single-origin coffees, and artisanal brewing methods are gaining traction among discerning consumers who are willing to pay a premium for quality and uniqueness.

Challenges

Intense competition

Intense competition in the Indian coffee market poses a significant challenge for various stakeholders. The market's dynamic growth is accompanied by several adverse effects. Firstly, fierce competition often triggers price wars, resulting in reduced profitability for growers, roasters, and retailers. This, in turn, squeezes profit margins across the industry, hindering investments in quality, innovation, and marketing efforts. Moreover, differentiating products and brands becomes increasingly difficult in a crowded marketplace, necessitating innovative strategies for product development, branding, and distribution. Additionally, smaller players face the risk of being marginalized as larger competitors dominate, potentially leading to market consolidation and limiting consumer choice. The competitive landscape is further intensified by the entry of international giants like Starbucks and Costa Coffee, alongside the growing influence of e-commerce platforms such as Amazon and Flipkart. To address these challenges, stakeholders are adopting strategies like focusing on quality and specialty coffee, embracing direct-to-consumer models, forming strategic partnerships, prioritizing innovation and branding, and employing targeted marketing approaches. However, understanding evolving consumer preferences and leveraging government initiatives are also crucial for maintaining competitiveness in the rapidly evolving Indian coffee market.

Impact of Escalating Geopolitical Tensions on India Coffee Market

Escalating geopolitical tensions, notably the Russia-Ukraine conflict and heightened US-China rivalry, pose multifaceted impacts on the Indian coffee market. The consequences range from negative outcomes like increased input costs due to rising fuel prices, potentially disrupting transportation and raising production expenses, to supply chain disruptions stemming from trade sanctions, affecting the availability of coffee beans. Fluctuations in exchange rates might render imported coffee more costly, impacting export competitiveness amid global economic uncertainties that could dampen consumer spending and, consequently, domestic coffee demand. Moreover, an uncertain investment climate may deter new players and investments in the industry.

Conversely, amidst these challenges lie potential positive outcomes. A surge in domestic demand could emerge as consumers turn to locally sourced coffee amid import concerns, fostering a sense of patriotism. This might prompt the government to prioritize domestic production, ensuring long-term supply security and self-sufficiency. Additionally, a heightened emphasis on quality and differentiation could position premium Indian coffee favorably, presenting an opportunity to command higher prices and stand out in the market.

India Coffee Market

Segmental Coverage

India Coffee Market – By Product

Based on product, India Coffee Market is divided into Whole-bean, Ground Coffee, Instant Coffee, Coffee Pods and Capsules. Instant Coffee segment holds a significant market share due to several factors. India is a nation known for its fast-paced lifestyle, where convenience often takes precedence. Instant coffee offers a quick and hassle-free solution for coffee lovers, aligning well with the demands of busy urban populations. Additionally, the affordability and accessibility of instant coffee make it a popular choice among a wide demographic, including students, working professionals, and households. Its long shelf life further enhances its appeal, particularly in regions where access to freshly brewed coffee may be limited. Moreover, the marketing efforts and distribution networks of major instant coffee brands like Nestle's Nescafe and Hindustan Unilever's Bru have contributed significantly to the segment's dominance. These brands have successfully penetrated both urban and rural markets, leveraging their strong brand presence and consumer trust. While Whole-bean and Ground Coffee segments cater to a niche market of coffee connoisseurs and specialty cafes, Instant Coffee captures the mass market with its convenience, affordability, and widespread availability, making it the largest segment in the Indian coffee market.

India Coffee Market – By Raw Material

Based on Raw Material, the India Coffee Market is segmented into Coffee beans, Sugar, Milk, Other Ingredients. Among the raw materials used in the Indian coffee market, coffee beans stand out as the largest segment. This is primarily because coffee beans are the fundamental ingredient in coffee production, serving as the core component in various coffee products such as whole-bean, ground coffee, instant coffee, and coffee pods. Coffee beans are sourced from coffee plantations predominantly located in regions like Karnataka, Kerala, Tamil Nadu, and Andhra Pradesh, where ideal climatic conditions support coffee cultivation. Furthermore, India is known for producing high-quality Arabica and Robusta coffee beans, both for domestic consumption and export purposes. The country's coffee industry has a rich heritage and is deeply ingrained in its cultural fabric. Indian coffee is renowned for its unique flavors and profiles, attracting consumers both domestically and internationally. While sugar, milk, and other ingredients play essential roles in certain coffee preparations, they are typically used in smaller quantities compared to coffee beans. Moreover, the emphasis on the quality and origin of coffee beans often drives demand and consumption preferences, further solidifying the dominance of coffee beans as the largest segment in the Indian coffee market.

India Coffee Market - By Demand

Based on demand, the India Coffee Market is divided into Home consumption, Café consumption, and Office consumption. Among the segments, home consumption stands out as the largest segment. This is primarily due to the cultural inclination towards home-brewed coffee in India, where families often prefer to enjoy their favorite beverage in the comfort of their homes. Additionally, the widespread availability of coffee-making equipment and ingredients in retail outlets and online platforms makes it convenient for consumers to brew coffee at home. Furthermore, home consumption is driven by various factors such as the growing trend of coffee consumption as a part of daily rituals, the desire for customized brewing methods, and the increasing awareness of the health benefits associated with coffee consumption. Many consumers prefer to control factors like the type of beans, brewing strength, and additives like sugar and milk, which are easily manageable at home. While café consumption and office consumption also contribute significantly to the market, they are comparatively smaller segments due to factors like limited accessibility, higher costs, and the evolving work culture. However, the café culture is gaining popularity in urban areas, especially among the younger demographic, contributing to the growth of café consumption. Nonetheless, the sheer volume of coffee consumed in households across India positions home consumption as the largest segment in the Indian coffee market.

India Coffee Market - By Price

Based on price, the India Coffee Market is divided into Low price, Medium Price, and High-priced coffee. The largest segment is the medium-priced category. This is because it caters to a broad range of consumers, offering a balance between affordability and quality. Medium-priced coffee attracts a significant portion of the market due to its accessibility to both budget-conscious consumers and those seeking a slightly higher quality. It often represents good value for money, appealing to a wide demographic range, including middle-income households and individuals looking for a satisfactory coffee experience without breaking the bank. While low-priced coffee may attract budget-conscious consumers, it may not always meet the quality expectations of discerning coffee enthusiasts. On the other hand, high-priced coffee, while appealing in terms of quality, tends to cater to a niche market segment consisting of more affluent consumers who are willing to pay a premium for superior taste, unique origins, or ethical sourcing practices.

Overall, the medium-priced coffee segment strikes a balance between affordability and quality, making it the largest segment in the Indian coffee market by catering to the preferences and purchasing power of a diverse consumer base.

India Coffee Market – By Region

The in-depth research report on the India Coffee Market covers many major regions across this country: North India, South India, East India, West India. South India emerges as the largest region for coffee production and consumption. This is primarily attributed to the favorable agro-climatic conditions prevalent in the southern states of Karnataka, Kerala, Tamil Nadu, and Andhra Pradesh, which are conducive to coffee cultivation. The region's tropical climate, ample rainfall, and hilly terrain create ideal conditions for growing coffee plants, particularly Arabica and Robusta varieties. Furthermore, South India boasts a rich coffee culture deeply embedded in its social fabric. The tradition of coffee consumption has been prevalent for generations, with households often brewing and enjoying coffee as a daily ritual. Additionally, the presence of well-established coffee estates and plantations, particularly in regions like Coorg and Chikmagalur in Karnataka, contributes significantly to the region's dominance in the coffee market. Information from the Coffee Board of the Government of India reveals that during the 2022-23 growing year, the total domestic production of coffee amounted to 352,000 metric tonnes. This output ranks India as the sixth largest producer globally in terms of volume. The southwestern state of Karnataka accounts for approximately 70% of this crop's production. Moreover, South India is renowned for its specialty coffee offerings, including single-origin beans and artisanal blends, which have garnered attention both domestically and internationally. This emphasis on quality and diversity further cements South India's position as the largest region in the India Coffee Market.

Competitive Landscape

Major players operating in the India Coffee Market include Tata Coffee Ltd., CCL Products India Ltd. (CCL), J.M.B. Huber India Pvt. Ltd., The Narayana Coffee Company Ltd., Aromatic Coffee Company Pvt. Ltd., Blue Tokai Coffee Roasters, Third Wave Coffee, Sleepy Owl Coffee Roasters, Barefoot Coffee Roasters, Seven Beans Coffee Roasters, and Other Prominent Players. To further enhance their market share, these companies employ various strategies, including mergers and acquisitions, partnerships, joint ventures, license agreements, and new product launches.

Recent Developments

• In Feb 2024 - Chief Minister Siddaramaiah unveiled an ambitious plan during the presentation of Karnataka's 15th Budget. The state, in collaboration with the Coffee Board, aims to empower one lakh women members of self-help groups (SHGs) by providing them with training to become coffee entrepreneurs. Alongside this initiative, the government plans to establish 2,500 coffee kiosks solely managed by SHG women, with an allocated budget of Rs 25 crore. This strategic move not only seeks to bolster the coffee industry but also aims to empower women economically and foster entrepreneurship at the grassroots level.

• In Jan 2024 - Starbucks Corp. announces ambitious expansion plans in India, aiming to double its stores within four years. With a target of 1,000 stores by 2028, equivalent to opening one new shop every three days, the global coffee giant underscores its commitment to tapping into India's growing middle-class market. The focus of expansion will be on tier-2 and tier-3 cities, extending beyond major metropolises.

Scope of the Report

By Product

• Whole–bean

• Ground Coffee

• Instant Coffee

• Coffee Pods and Capsules

By Raw Material

• Coffee beans

• Sugar

• Milk

• Other Ingredients

By Demand

• Home consumption

• Café consumption

• Office consumption

By Price

• Low price

• Medium Price

• High-priced coffee

By Region

• North India

• South India

• East India

• West India