This document provides an overview of the Indian coffee market including its history, production regions, consumption trends, major players, and challenges. Some key points include:
- India is the 6th largest global producer of coffee with the states of Karnataka, Kerala, and Tamil Nadu accounting for over 90% of production.
- Domestic consumption has risen to 1.9 million bags in 2013 with urban areas and southern states dominating consumption.
- Major retail chains include Café Coffee Day with over 1500 outlets, Barista Lavazza with 160 outlets, and Costa Coffee with 100 Indian locations.
- Challenges to growth include coffee's bitter taste, high price compared to tea, and low awareness in some regions
3. Introduction
Retail trends in coffee market
Indian Retail Coffee Market: Advantage and Disadvantage
Major International Cafe chain
Top coffee brand and players
Coffee sector in India
Attitude coffee in India
Key player coffee market in India
Challenges Indian coffee industry
Conclusion 3
5. COFFEE - HISTORY
Introduction of seven seeds by the holy saint Baba budan
during 16 Century.
when the legendary saint Bababudan brought seven magical
beans from distant Yemen and planted them in the Chandragiri
hills of Karnatak
It spread to other areas of Wynad in kerala, Shevaroys and
Nilgiris in Tamilnadu.
Commercial cultivation by British entrepreneurs in South India
during 1820s.
Setting up of Coffee Board in 1942.
5Source :Coffee Board in India
6. Traditionally, India has been a tea loving country.
India has now become one of the fastest growing coffee
markets in the world.
A coffee ‘boom’ in consuming countries with rising sales and
profits for coffee retailers and roasters.
Organized coffee retail business in India at over Rs 8 billion
with the potential space for nearly 3,000 coffee retail outlets in
India.
According to industry sources, coffee consumption has shot up
from 55,000 tones to 80,000 tones since the Liberalization of
the economy in 1991.
The Retail coffee trade is largely dominated by branded
players, with Nestlé and Hindustan Unilever being the
category’s leaders accounting for approximately 60-70 per cent
of the retail market (by value) in 2012. (Coffee Board of India)
6
7. Factors Arabica Robusta
Soil Deep, friable, rich in organic matter,
well drained and slightly acidic.
Same as Arabia
Slopes Gentle to moderate slopes Gentle slopes to fairly level fields
Elevation 1000 to 1500 m 500 to 1000 m
Aspect North, East Same as Arabia
Temperature 15 C- 25 C, cool, equable 25 C- 30 C, hot, humid
Relative
humidity
70-80% 80-90%
Annual
rainfall
1600-2500 mm 1000-2000mm
Blossom
showers
March-April(25-40 mm) Feb-March(25-40 mm)
Backing
showers
April-May (50-75 mm); Well
distributed
March- April (50-75 mm); Well
distributed
Table : Agronomical condition needed for coffee plantation
Source: Pandy and Trivedi, 2010 7
8. Map of India showing the various regions
Source: Coffee Board in India 8
9. Retailing is a distribution channel function, where one
organization buys products from supplying firms or
manufactures products themselves, and then sells these directly
to consumers.
or
The sale of good individually or small quantities to consumer.
9
10. Specialist coffee shops continues to grow at the fastest rate of
nearly 25% in current value terms in 2011.
Cafés/bars is likely to grow at a constant value Compound annual
growth rate (CAGR) of 3% to reach Rs 725.6 billion by 2016.
Coffee shops continued to have drinks as their major offering,
accounting for nearly 60% of the value sales in 2011.
Most of the cafés continued to have a stronger focus on coffee than
tea in 2011.
Independent cafes accounted for nearly 96% of the total value
sales of cafés/bars in 2011.
Source: India Agribusiness Report - Coffee Outlook , 2013
10
14. Advantage
Expansion drive
Increasing disposable income and expansion of consumption
culture
Different formats to catch every consumer segment
Disadvantage
The struggle
Two player battle
The economic impact
Source: www.businessinsider.in
14
16. 1. Diedrich in the US,
2. Costa coffee in the UK
3. Doutor, founded in Japan in 1962
4. Tchibo, founded in Germany in 1949
5. Second Cup, founded in Canada in 1975
6. Doutours and Nestle chain of cafes in Japan
7. Douve Egberts chain of coffee shops in the Netherlands
8. Caribou coffee tim hortons in the US
9. Coffee bean & Tea leaf in the US
10. Coffee Beaney in the US
11. Seattles best
12. Peets coffee in the US
13. Tullys in the US
14. Dunn bros. coffee in the US
15. Port city java in the US
16Source: Pandy and Triwari, 2010
20. 20
No Name Current No. of outlets
1 Café Coffee Day 1270
2 Barista Lavazza 160
3 Starbucks 50
4 Total outlets 3000
Source: Coffee Machine Industry, 2013
21. India is the world’s sixth largest producer of coffee ,with about
4% share in global production (304 thousand MT in 2013).
Robusta and Arabica coffee from India is also well received in
international market.
Most coffee in India is grown in three states: Karnataka, Kerala, and
Tamil Nadu.
These states accounted for over 92 percent of India's coffee
production in the 2011-2012 growing season.
Coffee is an important export commodity from India with a share of
around 5% of world’s exports.
India’s domestic coffee consumption is estimated to have risen to
about 1.9 million bags in the year 2013.
21Source: Anonymous, 2013
22. 22Source: Venkatesh, 2010-11 Karnataka, India
Table 4: Top Indian coffee exporters for financial year 2009-10
No Exporter
Quantity
exported(MT)
% to total
quantity
% Cumulated
1
NKG Jayanti Coffee
PVT. LTD.
27756.7 14.2 14.2
2
CCL Products (INDIA)
LTD.,
20454.8 10.5 24.7
3 Allanasons LTD 19538.6 10.0 34.8
4 Nestle India LTD 182151.1 9.3 44.1
5 Tata Coffee LTD. 12740.7 6.5 50.7
6
Amalgamated Bean
Coffee Trading Company
11910.5 6.1 56.8
7
Ned Commodities India Pvt.
LTD.,
11811.2 6.1 62.8
8 Olam Agro India LTD., 9913.1 5.1 67.9
9 S.L.N. Coffee Pvt. LTD 8616.6 4.4 72.3
10 Narasu' Exports 6764.8 3.5 75.8
11 Others 47121.7 24.2 100.0
12 Total 194843.8
24. The total pure coffee volume in India is 304 thousand metric tons
in 2013, of Which 125 thousand MT is the domestic consumption
with the per capita consumption being ~90 gm per year.
Urban consumption dominates with about 73 per cent of total
volumes and the remaining 27% accounts for rural consumption.
In the North, East and West zones, consumption of instant coffee
is more predominant than filter coffee.
South alone consumes nearly 80,538 MT (78%) of total coffee
consumed in India. Among the south Indian states Tamil Nadu
accounts for 36 per cent of consumption while Karnataka,
Andhra Pradesh and Kerala account for 31%, 18% and 15%
respectively.
24CONT..
25. There is more potential in the non-south, where the occasional
consumers are high in number.
Occasional drinkers contribute to 52% of total, this essentially
means that people have started experiencing this beverage,
which should be advantageously used to increase in
consumption. Converting them to regular coffee drinkers is an
opportunity for growth.
Between 2003 and 2009, there is a large reduction of non-
drinkers but the proportion of occasional drinkers have
increased.
The potential for growth lies with occasional drinkers and more
so in East zone: 80% , North zone: 75% and Western zone:
63%
25Source: Coffee Board of India
27. 27
Nature of the product
Self life, seasonal crop, , Bitter test, Quality parameter
Availability of the substitute
Substitute Like Tea Which is easily available of lower price
Price level of coffee
Price of coffee is very high compare to other beverage
products i.e. Rs 60-250 for a cup of coffee.
Income of the consumer
Mostly higher income level consumer only preferred to
consume coffee.
Taste and preference
More bitterness in taste camper other beverage like tea
Price of the related goods
Price of other beverages product like tea is very less than
coffee price
Source: Anonymous, 2012
28. Coffee at home is significantly different to coffee outside.
It is interesting to observe that rating for coffee outside home is
better than tea outside home, specifically in the North and the east.
Restaurant coffee is rated better on quality in the West and South,
particularly when compared with the East.
In the weak coffee markets defined as the markets in the North,
East and West because of its bitter taste (East) as well as its
inconsistent taste.
High price of coffee is also felt as a barrier in the South and the
North.
28
29. Consumer in the North also believe that making filter coffee is
time-consuming.
The knowledge levels on coffee appear to be relatively weak in
the North and East where consumers
1. Do not know how to make filter coffee
2. Do not know what chicory.
Respondents in the North, followed by East, appear to be most
positively inclined to consume more coffee at home if
1. The price was less.
2. They were reassured on health.
3. They could try new/ different recipes.
29Source: Pandy and trivedi, 2012
30. Indian domestic market is protected by importation taxes and
almost reduced to the consumption of Indian coffee.
It is fast-growing and in mutation.
From 30% of the national production consumed today, the
Indian coffee board expects more than 50% to be consumed by
2017.
The coffee consumed out of home is mainly consumed in
restaurants 40% and in “hot-tea shops” 35% that are usually
found on the road sides.
The broad majority of coffee is consumed at home 80%, mainly
in the shape of instant coffee 65% and filter coffee 35%.
30
Cont…
31. Instant coffee industry
Instant coffee industry is a highly concentrated sector in India (5
current players) and only 2 players share a broad part of the market
(Nestle and Hindustan Unilever) with one brand each.
The main motive in this segment is the recognition of the brand.
There is a huge entry barrier due to the investment in advertising
required to compete with current market leaders.
The instant coffee industry is still at a stage for brand recognition
and has not really diversified its supply strategies.
31
Cont…
32. FILTER COFFEE INDUSTRY
Filter coffee industry is not a homogenous segment.
There is an important number of small roasters (more than 100)
It provide coffee in small shops or in supermarkets in small
packages (50 to 250g).
This coffee is mainly a mix of coffee and chicory, with supply
strategies depending on the industry location.
Industries located in cities supply themselves from curing
works through agents or at the ICTA auction.
32Source: Vignault, 2008
34. Major coffee retailer Description
Barista lavazza
The Barista Lavazza is a chain of espresso coffee bars that
operates around 160 outlets across India. Barista offers menu
items like , lattes, cappuccino and various pastries, in addition
to basic coffee.
Cafe Coffee Day
the opening of the first store in Bangalore in 1996, Café
Coffee Day has grown to become India's largest coffee retailer
and is now exporting coffee to Europe and the Middle East.
Café Coffee Day currently has over 1500 outlets in 200 cities.
Costa Coffee:
The British franchise has been in India since 2005 and has 100
locations
Cafe Pascucci
Italian coffee brand Café Pascucci opened its first outlet in
Bangalore in 2013. The master franchisee reportedly has plans
to set up 60 outlets
Di Bella Coffee India
The chain is currently operating three outlets with reported plans
to open 10 outlets in Mumbai by end of 2014.
34Cont…
35. The Coffee Bean & Tea
Leaf
The franchise has 17 outlets across major cities.
Java green
Java green is an Indian chain of in-store cafes started by the
Reliance Group in 2003. It is now operational across eight cities
with 40 locations in India.
Mocha
Café Mocha started in Mumbai in December 2001 and now has
20 outlets.
Brewberrys Cafe
Opened in 2008 in Vadodara, Gujarat and presently has 37
stores across India.
Coffee N U
The first Coffee N U outlet opened in 2008 in Bangalore, they
now have a presence in 35 locations all over India
BRU World Café
Hindustan Unilever has extended its only coffee brand BRU to a
café chain, the BRU World Café. The chain currently has six
outlets across Mumbai.
35Cont…
36. Starbucks
The American coffee chain entered the Indian market in
October 2012 in a joint venture with Tata Global Beverages.
Currently the chain has 40 outlets in New Delhi, Mumbai,
Pune, and Bangalore.
Mc Cafe
McDonalds India has announced to implement its Mc Cafe brand
in certain existing restaurants.
Qwiky’s Coffee
Qwiky’s Coffee has 22 company-owned outlets concentrated in
southern India
Coffee World This chain currently has seven outlets across India
Reliance Time Out and
Desi Cafe
Retail players like Reliance Retail and Shoppers Stop are also
retailing coffee from their multi-products outlets like Reliance
TimeOut and Desi Cafe respectively
Source : Global Agricultural Information Network 36
38. Small Growers Large Growers
Hulling stations Purchasing
agents
Curing Works
Instant coffee
manufacturers
for Export Exporters
ICTA
Auction
Domestic Roasters
and instant coffee
manufacturer
Forwarding
agents
International
market
Domestic
Market
Cherry only
Dry Cherry
30%70%
38Source: Vignault, 2008
39. Figure 3 :Trade channels of Estate-branded
coffee
Consumer
Small or medium
roaster
Blend
Specialty trade
house
Estate – branded
producer
39Source: Vignault, 2008
43. Price Spread and Value Addition
For the analysis of price spread, two marketing channels have
been considered.
i) Farmers ► Agents ► Curers ►Local Roasters
ii) Farmers ► Curers ► Exporters
43
44. 44
Source: Venkatesh, 2010-11 Karnataka, India
Table 6: Price spread of marketing in channel-1(Domestic market)
Sl.No. Particulars Rs./tonne Percentage
1 Farmers cost 1528 1.79
2
Price received by
producer
50000 58.58
3 Agents purchase price 50000 58.58
4 Cost of Agents 934 1.09
5 Net margin to the agent 2850 3.34
6 Curers purchase price 53784 63.02
7 Cost incurred by curers 3525 4.13
8 Net margin to the curers 5446.05 6.38
9 roaster purchase price 62755.05 73.53
10 roaster cost 9580 11.22
11 net margin of roaster 13014.95 15.25
12 roaster selling price 85350 100.00
13 price spread 35350 41.42
45. 45Source:Venkatesh, 2010-11 Karnataka, India
Table 7: Price spread of marketing in channel-2(Domestic market)
No. Particulars Rs./tonne Percentage
1 Farmers cost 3200 4.07
2
Price received by
producer
50000 63.52
7 Curers purchase price 53784 68.32
8 Cost incurred by curers 3825 4.86
9
Net margin to the
curers
4891 6.21
10 Exporter purchase price 62500 79.39
11 Exporters cost 5250 6.67
12 Net margin of exporter 10970.5 13.94
13 Exporters selling price 78720.5 100.00
14 Price Spread 28720.5 36.48
46. TESTING OF HYPOTHESIS
Dr. s. Murugan and Dr. A. Peer khan in there paper “Marketing
of Coffee is in a Difficult Path An Analysis under Global
Environment” tested the hypothesis – Domestic Consumption
for Coffee is not Elastic by applying Chi-Square test.
Degrees of freedom = n-1
10-1 = 9
X – 0.05 with degree of freedom = 16.919
The calculated value of X2 =1.130. Here the calculated
value of Chi-Square is less than the table value at 0.05
levels, Hence the hypothesis is accepted.
46
48. Figure 6: Global Retail coffee value Sales 2005-2010
48
Source : Coffee Trends in the OCS Channel
49. 49
Source: Euro monitor International from official statistics, trade associations, trade press,
company research, trade interviews, trade sources
Table 9:Global Brand Owner Shares of Chained Cafés/Bars 2007-2011
% value Company 2007 2008 2009 2010 2011
Amalgamated
Bean Coffee Trading
Co. Ltd
29.1 34.7 36.1 37.1 38.0
Lavazza Spa,Luigi 10.5 11.3 13.0 13.2 14.1
Whitbread Plc 2.2 2.7 2.2 3.3 3.1
Others 58.3 51.3 48.5 46.6 45
Total 100.0 100.0 100.0 100.0 100.0
50. 50
Source: Euro monitor International from official statistics, trade associations,
trade press, company research, trade interviews, trade sources
Table 10: Brand Shares of Chained Cafés/Bars 2008-2011
% Brand
value
Global Brand Owner 2008 2009 2010 2011
Cafe Coffee
Day
Amalgamated Bean Coffee
Trading Co Ltd
30.2 31.2 32.4 32.6
Barista
Coffee Co
Lavazza Spa, Luigi 11.3 13 13.2 14.1
Costa Coffee Whitbread Plc 2.7 2.2 3.3 3.1
Others 55.8 53.4 51.4 50.4
Total 100 100 100 100
51. 51Source: Coffee Board of India
Table 11: Retail Prices of Coffee Beans in Major Coffee Consuming Centers,
Rs. Per Kg.
Year
Bangalore Chennai Hyderabad
Arabica Robusta Arabica Robusta Arabica Robusta
2007 137 87 170 91 150 89
2008 150 114 157 118 164 127
2009 210 105 215 109 229 119
2010 217 98 225 104 233 110
2011 297 131 300 134 314 141
2012 247 156 298 148 309 170
2013 199 157 229 182 250 190
2014 228 148 258 196 253 NA
52. 52Source: Foreign Agricultural Service, Office of Global Analysis
TABLE 12: MAJOR COFFEE PRODUCING COUNTRIES IN 2014-15
Production 2010-11 2011-12 2012-13 2013-14 2014-15
Brazil 54,500 49,200 57,600 56,000 51,200
Vietnam 19,415 26,000 26,500 29,833 28,167
Colombia 8,525 7,655 9,927 12,075 12,500
Indonesia 9,325 8,300 10,500 9,500 8,800
Ethiopia 6,125 6,320 6,500 6,345 6,475
Honduras 3,975 5,600 4,725 4,400 5,200
India 5,035 5,230 5,303 5,075 5,100
Uganda 3,212 3,075 3,600 3,850 3,550
53. 53
Sources : Directorate of Economics and Statistics ,Ministry of Agriculture , Coffee Board of India , Food and Agriculture
Organization of United Nation (FAO),
Table 13: Changes In Area Under Coffee Plantation During Pre And Post Liberalization Periods.
Area : 000 Ha
YEAR Pre-Liberalization YEAR Post-Liberalization
Coffee Coffee
1970-71 140.00 1990-91 223.50
1971-72 140.00 1991-92 223.50
1972-73 150.00 1992-93 223.50
1973-74 160.00 1993-94 226.50
1974-75 160.00 1994-95 228.50
1975-76 170.00 1995-96 242.00
1976-77 140.00 1996-97 251.28
1977-78 150.00 1997-98 285.65
1978-79 160.00 1998-99 302.23
1979-80 170.00 1999-2000 308.43
1980-81 190.00 2000-01 313.43
1981-82 190.00 2001-02 320.73
1982-83 210.00 2002-03 320.61
1983-84 210.00 2003-04 325.12
1984-85 210.00 2004-05 333.33
1985-86 214.47 2005-06 341.35
1986-87 215.50 2006-07 343.04
1987-88 218.00 2007-08 344.50
1988-89 221.00 2008-09 350.50
1989-90 221.00 2009-10 355.50
MEAN 181.9 MEAN 293.16
S.D 30.84 S.D 49.79
C.V 16.94 C.V 16.98
C.G.R 0.023 C.G.R 0.023
54. 54Sources : Directorate of Economics and Statistics ,Ministry of Agriculture , Coffee Board of India , Food and Agriculture
Organization of United Nation (FAO),
TABLE 14: CHANGES IN PRODUCTIVITY UNDER COFFEE PLANTATION DURING PRE AND
POST LIBERALIZATION PERIODS. AREA : 000 HA
YEAR Pre-Liberalization YEAR Post-Liberalization
Coffee Coffee
1970-71 814 1990-91 759
1971-72 498 1991-92 805
1972-73 620 1992-93 758
1973-74 555 1993-94 936
1974-75 592 1994-95 788
1975-76 490 1995-96 921
1976-77 712 1996-97 816
1977-78 840 1997-98 799
1978-79 706 1998-99 877
1979-80 889 1999-00 947
1980-81 624 2000-01 959
1981-82 785 2001-02 937
1982-83 646 2002-03 839
1983-84 507 2003-04 831
1984-85 936 2004-05 826
1985-86 571 2005-06 803
1986-87 891 2006-07 840
1987-88 563 2007-08 761
1988-89 972 2008-09 748
1989-90 534 2009-10 826
MEAN 687.25 MEAN 838.80
S.D 157.53 S.D 68.11
C.V 22.92 C.V 8.12
C.G.R -0.021 C.G.R 0.004
55. 55
Source: World Bank and Coffee Board of India , 2003
TABLE 15:RISKS FACED BY COFFEE PRODUCING HOUSEHOLDS IN INDIA
(N=498)
Type of Risk Number Percent
Rainfall/weather 183 36.7
Fall in price 194 39
Unstable prices 88 17.7
Crop pest/disease 6 1.2
Changes in government policy 13
2.6
Withdrawal of credit 8 1.6
Fall in other crop income 1 0.2
Illness 5 1
Loss of off-farm income 0 0
56. TABLE 16: COFFEE PRODUCTION BY STATES - 2013 / 2014
Source : coffee Board in India
Sl.
No. State
Area (ha.) Production (MT) Productivity (kg/ha)
Arabica Robust
a Total Arabica Robust
a Total Arabi
ca
Robust
a Total
1 Karnataka 100323 113063 213386 78440 132660 211100 782 1,173 989
2 Kerala 3865 80548 84413 2000 64675 66675 517 803 790
3 Tamil Nadu 24461 5535 29996 13950 4825 18775 570 872 626
Traditional
Areas 128649 199146 327795 94390 202160 296550 734 1,015 905
4
Andhra
Pradesh
47099 268 47367 7250 70 7320 154 261 155
5 Odisha 3317 0 3317 440 0 440 133 0 133
NTAs Total 50416 268 50684 7690 70 7760 153 261 153
6
North Eastern
Region
2064 761 2825 120 70 190 58 92 67
Grand Total 181129 200175 381304 102200 202300 304500 564 1,011 799
56
58. Lack of infrastructure, Loan facilities and lack of re-plantation
and harvesting facilities.
There is a definite need of fostering awareness of coffee quality
among the coffee growers, curers and exporters.
There is a definite need to improve working condition in coffee
plantation. As well as use the latest technology to increased
production in the existing are itself.
How to bring coffee consumption close to tea consumption is a
major challenge.
The consumer view remains the coffee is an expensive
beverage to partake.
58
59. The transport facilities as like container trucks, automated
warehousing is yet to take root in India. The result:
significant losses and damages during shipping.
Indian Robusta is the best in the world. However, We face
stiff competition from a low-cost Robusta producer like
Vietnam
Our Arabica which are classified in the ‘other milds’
category have to compete on the quality front with central
American producer like Costa Rica, Mexico and Guatemala.
59
Source: The Agribusiness Book: A marketing and value chain perspective
61. Strengths
Taste & Quality of their products.
Grow their own coffee beans
Projected as an "affordable" brand.
Strengths
Strong Brand Image
Excellent Human Resource
Ambience and Decor
Strong base for expansion and growth
Weakness
Lacks the power and strength expected to
maintain brand loyalty.
Average rating for their behavior and
service.
No tie ups with big international brands
Weakness
Average taste and quality of products
An expensive brand.
Inconvenient Delivery Process.
Cafe Coffee Day Barista
61
62. Opportunities
Over 40% of the population is under the age
of 20, hence untapped market share and
potential for growth.
The use of clever collaborations
(bookstore,etc)
Opportunities
Strong Brand recall
Presence of large number of outlets
Pricing
Large number of untapped market
Threats
The brand doesn't project a clear image to
customers about what Cafe Coffee Day is all
about.
Brand Loyalty is not so strong.
Threats
Coffee substitute
Rise in the cost of coffee products and
substitute
Competition from national and international
products
Source : CCD: A case analysis 62
63. FUTUR POLICY FOR COFFEE
Production subsidy
Rainfall Insurance Scheme- Coffee (RISC)
Processing Subsidy
Export Incentive Scheme
Support for Mechanization of Farm Operations
Coffee Development Programmer in North Eastern Region
63
64. CONCLUSION
64
India is sixth largest producer of coffee in the world with about 4 %
share in global production (304 thousand MT in 2013).
Coffee shops in India continue to grow at the faster rate mean while
coffee would option both in rural and urban area.
The major coffee player in India are Café coffee day(1500 outlets),
Barista lavazza(160 outlets), Costa Coffee(100 outlets), star bucks(40
outlets), Brewberrys café(37 outlets).
Price level of coffee and Income of consumers are the main factor
affecting demand of coffee. High price of coffee is also felt as a
barrier in south and north.
Lack of infrastructure, loan facilities and lack of re-plantation and
harvesting facilities are challenges faced by Indian coffee industry.
From 30% of the national production consumed today, the India
coffee board expects more than 50% to be consumed by 2017.
