India has been a tea sipping society.
But the aromatic wave of coffee culture is wafting across it.
'A lot can happen over coffee'. That's how Bengaluru-based Café Coffee Day had announced itself, back in the early 2000s.
Something would have clicked: The chain quickly became a favourite hangout among the youth and expanded across the country.
Things went downhill for CCD when a debt crisis emerged in 2019, forcing it to shut several outlets. Founder V G Siddhartha died by suicide after writing an apology note for not coming up with a profitable business model.
That will go down in India's corporate history as an unmitigated tragedy. But the spirit of that CCD slogan --- 'A lot can happen' -- lives on.
India has been a tea sipping society. But the aromatic wave of coffee culture is wafting across it.
"In recent years, coffee consumption in India has witnessed a surge, with a discernible trend towards in-home consumption," said Suresh Narayanan, Chairman and Managing Director, Nestlé India, while announcing the company will be launching its premium coffee and coffee machine range, Nespresso in India.
According to Statista, the Indian coffee market is worth $0.5 billion and is expected to grow at a compounded annual rate (CAGR) of 9.4 per cent until 2028.
Beyond the metros
In March, American coffee chain Starbucks, now a familiar sign in several Indian cities, opened its first stores in Coimbatore and Varanasi, and had people queueing up for a taste.
Last year, according to CBRE, Starbucks entered Tier II cities Indore and Visakhapatnam.
"India is one of Starbucks' fastest-growing markets globally, attributed to the rapid transformation the country has undergone in the last decade," Sushant Dash, Chief Operating Officer at Tata Starbucks, told Business Standard.
For an embodiment of this rise of coffee, consider the gift hampers given to G20 leaders who came to India last September.
If you looked inside a hamper, you would have found Araku Coffee in it, a brand that is said to be from organic plantations in Andhra Pradesh.
'As the chairman of the board of Araku Originals, I can't argue with this choice of gift! It just makes me very, very proud...,' industrialist Anand Mahindra had posted on X on September 12, 2023.
New customers
India is no stranger to coffee. The brew has been part of Indian culture for long, but now there is a new consumer base with evolving tastes and cravings. Naturally, brands are awake to the opportunity.
"A growing young population, exposure to global trends, and new experiences has established India as one of the fastest growing coffee markets for Nestlé," Narayanan said.
The Starbucks Coffee Company, which entered India in 2012 through a 50:50 joint venture with Tata Consumer Products Limited, said in January this year it planned to more than double its presence in the country by 2028.
That will mean 1,000 Starbucks outlets in India by that time -- a new one every three days.
"The confluence of infrastructure development, a booming consumer base, and widespread technology adoption presents a prime opportunity to establish Starbucks stores as 'The Third Place' -- a space between the office and home," Dash said.
Last year, British coffee chain Costa Coffee said India was among its top 10 priority markets. It plans to add 40 to 50 new specialty stores here every year.
"It is one of the fastest growing markets, with a compound annual growth rate of 11 per cent as compared to a global market CAGR of 5 per cent," Philippe Schaillee, Global CEO, Costa Coffee had said during his visit to India in October last year.
Home front
Home grown Blue Tokai and Third Wave Coffee Roasters are giving the multinationals a run for their customers.
"With enough people with rising disposable incomes, coffee is starting to take off and gain more mindshare. There is a growing middle class that is interested in spending time in cafes. Coffee also has a coolness factor associated with it, which is driving the boom," says Matt Chitharanjan, Co-founder and CEO at Blue Tokai.
Blue Tokai, which currently has 101 outlets across the country, is on an expansion spree, with plans of entering new geographies like Ahmedabad in Gujarat and Chennai in Tamil Nadu.
"We have opened close to 50 locations in the last calendar year... We plan to open five to seven locations a month and see this growth continuing for the next several years at this pace.
"Over the next year, we are focused more on going deeper into the existing markets we have, apart from expanding into a few new cities," says Chitharanjan.
Home grown specialty coffee brands are raising funds to expand their footprint.
In April, Mumbai-based Subko coffee raised Rs 85 crore (Rs 850 million) in Series B funding.
Starting out from Bandra in Mumbai on March 15, 2020 -- three days before the COVID-19 lockdown was announced -- it has grown to three flagship stores in the city, alongside pop-up experiences in select retail stores.
"On the back of the funding we have raised, we are looking to build more 'experience centres' in markets that have a strong presence in the premium segment," says Rahul Reddy, CEO and Creative Director at Subko Coffee. These would include Bengaluru and Delhi.
It is not just coffee, but also related accessories are now finding a place in the homes of coffee aficionados.
Blue Tokai, which started as a B2B company, has seen growth in its non-café business as well, selling coffee and related accessories.
"Our non-café business has nearly doubled over the last year," Chitharanjan adds.
Nestlé's Nespresso line of coffee makers will be competing with the likes of De'Longhi and Versuni.
"We have to understand that the base is very small. A small market that is growing on the back of two factors: Concentration of demand in certain cities and clusters and the retreat of Café Coffee Day," says Ankur Bisen, Senior Partner and Head, Retail, Consumer Products and Food at Technopak Advisors, a management consulting firm.
True that. It is also true that a chain of outlets whose name is derived from the Hindi word for tea -- chai -- also sells coffee.
Feature Presentation: Ashish Narsale/Rediff.com
