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 Beverages3 in a 50:50 joint venture.
Starbucks is now popular among regular coffee lovers and the executive, musicians, students, artists, and many more.
History Of Coffee Production In India
Coffee is mainly produced in the hill tracts of South India. Karnataka2 contributes to 71%. Kerala4 contributes to 21%, and Tamil Nadu5 contributes to 71% of the total annual harvest of coffee beans in India. Currently, other regions in India have started growing coffee. Andhra Pradesh6, Orissa7 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 Budan8. 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 varieties cultivated in India. But later, to prevent rust infestation9, 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 the global coffee export from India, the Indian Government introduced the Coffee VII Act of 194210. 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 regarded as the finest of their kind grown in the shade, away from direct sunlight. The southern states have a monsoon rainfall climate. Thanks to the environment, coffee is grown in this region have the same characteristics as most pacific coffee beans. Unlike other coffee-producing nations, India grows both Arabica and Robusta 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.
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 the 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.