India and coffee might not be the best match. But this nation is undoubtedly an emerging market for Coffee. The two major coffee chains in India are Starbucks and Café Coffee Day.
The current retail market size for coffee in India is Rs 1,7000 crore. Economists predict that the market will grow 20% each year in the coming decade.
Along with coffee retail stores, another major part of the Indian coffee industry is coffee production. Currently, India makes up 4.5% of the entire global coffee production. 80% of all its harvest is exported. Germany is the largest exporter of coffee beans from India, buying 70% of its entire annual harvest.
Starbucks is the first coffee chain that opened its first store in India back in 20121. And since then, this global coffee chain has opened over 50 stores across major cities such as Delhi, Mumbai, Chennai, Bangalore, and Pune. Starbucks was launched in India in partnership with Tata Global Beverages in a 50:50 joint venture.
Starbucks is now popular among regular coffee lovers and the executive, musicians, students, artists, and many more.
Read How Starbucks Became The Most Popular Global Coffeehouse.
History Of Coffee Production In India
Coffee is mainly produced in the hill tracts of South India. Karnataka contributes to 71%. Kerala contributes to 21%, and Tamil Nadu contributes to 71% of the total annual harvest of coffee beans in India. Currently, other regions in India have started growing coffee. Andhra Pradesh, Orissa on the Eastern Coast of India, and many regions in the Seven Sister States of India are now harvesting coffee beans for export.
Coffee production in India dates back to the 18th Century. It all started with an Indian Muslim Saint named Baba Budan. When returning from his pilgrimage from Mecca, he brought seven coffee seeds to Mysore, India, which is now part of the Karnataka State. He planted the beans in the Chandragiri Hills, which was renamed Baba Budan Giri years later.
The first formal coffee plantation farm was established around the Baba Budan Giri in the 1840s. Primarily, Arabica was the prominent coffee variety cultivated in India. But later, to prevent rust infestation, Robusta and different hybrids between Arabica, Robusta, and Liberica were introduced.
Just like Colombian growers, 98% of all Indian coffee farmers are small-scale. To regulate and boost global coffee export from India, the Indian Government introduced the Coffee VII Act of 1942. Thanks to these efforts, India’s coffee harvest over the last 15 years has increased by 15%.
The Growing And Harvesting Process
Indian coffee beans are cherished for their distinct flavor and aroma, often compared to certain Indonesian coffees like Java Arabica due to their full-bodied nature, yet with an acidity more akin to Guatemalan coffee. They are known for spicy flavors which may include notes of cardamom, clove, pepper, and nutmeg, with possible hints of tropical fruit. These beans are left exposed to the elements throughout the monsoon season, absorbing air and sea moisture, which contributes to their unique smoothness, medium body, and pleasant finish.
The growing conditions of Indian coffee, especially in the southern regions, are comparable to those of Sumatran or Sulawesi coffee beans due to similar climates and heavy rainy seasons, which also influence the flavor profiles of these beans. Notably, the Indian coffee, at its best, shares flavor characteristics with Pacific coffees, although it might fall short at times, being described as bland and uninspiring.
The southern states of India, particularly Karnataka, Kerala, and Tamil Nadu, are the primary regions where coffee is cultivated, thanks to their favorable climate and geography. These areas are nestled in the hills of the Western Ghats, providing an optimal environment for coffee growth with their monsoon rainfall climate. This region hosts a mix of frequent showers and bright sunlight, with an altitude range of 600-750 meters above sea level, conditions which are conducive for the maturation of coffee beans, especially Arabica which constitutes over 60% of the crop harvested in this region.
India is rather unique in the coffee-producing world as it cultivates both Arabica and Robusta coffee. The coffee-growing tradition in India was largely encouraged during the British colonial rule but has since evolved significantly, with Karnataka now accounting for 70% of the country’s coffee production.
For further exploration, you might want to delve into the distinctions between Indian and Pacific coffee beans, particularly in terms of their growing conditions and the resultant flavor profiles. Moreover, understanding the impact of the monsoon rainfall climate on the coffee beans’ characteristics could provide a more nuanced appreciation of Indian coffee.
Coffee Retail Stores In India
Along with Starbucks, there is another coffee retailer in India. Currently, it is the largest operating inside the country. Café Coffee Day has over 150 stores across India. This retail store has over 1550 retail stores spread out over 200 cities.
Along with the popular coffee stores in India, a few more factors have contributed to the rise of coffee culture. Increased disposable income and westernization are the major ones among these factors that drive the coffee industry’s growth in India. The current Indian consumers are comfortable with spending Rs. 200-400 on coffee when eating out.
Moreover, a few coffee shop formats have also led to the popularity of coffee in India. When visiting India, you will find coffee shops on highways, lounges, malls, and city squares. All of these stores offer take-away coffee service.
To succeed in India, Starbucks adopted a unique marketing formula. They Indianized their stores and their food menus. They have made necessary adjustments to their menu to align with the traditional food items that most Indians are comfortable with. Moreover, they have decorated their stores so that they have an Indian vibe to them. Indian paintings, tables with solid Indian teak, painted vintage trunks, and carved wooden screens are what make the Indian Starbucks store special.
Along with the classic Breakfast chicken sandwich, you will find Reshami Kabab on India’s Starbucks menu. You will also find Indian Chai Latte, Murg Kathi Roll, Konkani Twist, and others on the Starbucks menu, along with the other Starbucks beverages. Thanks to the renovated food and beverage menu, families make repeated visits to these Starbucks stores.
India And Coffee: And Economic Perspective
Costa Coffee is the second largest coffee retailer in the world, and they have some 100+ stores spread out across India. Despite having that many stores, this coffee retailer has struggled to find a firm footing in the Indian coffee industry.
So, in a nutshell, the Indian Coffee industry is a two-player market. Starbucks and Café Coffee Day are head-to-head battles to prove their superiority and win most of the Indian market. But is it good for the economy? Having only two key players have limited the scope for innovation. If there were more coffee retailers in the country, there would have been a fierce fight between the parties to become the market leader. And as we know, the struggle for establishing superiority in an Open Market Economy11 leads to better service, better quality, and more innovation.
The Verdict
This article covered the topic of India and Coffee. We first looked at coffee production in India. And then we looked at the coffee retail sector.
Along with Starbucks and Café Coffee Day, there are a few other popular coffee stores in India. Barista, Gloria Jean, Costa Coffee are a few of them. Barista had a strong market presence in the initial days. But now its parent company is scouting for a buyer. Gloria Jeans is considering pulling out of the Indian market. On the other hand, as far as coffee bean production is concerned, according to an FAO report, coffee is cultivated in India on 342,000 hectares of land, which have an aggregated yield of 262,000 tonnes. Coffee Research Institute India12 is a prominent R&D body in South East Asia. India might surpass the top coffee producers in the coming years and become one of the top 5 coffee exporters.
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