Coffee in India

PROSPECTS

Range of factors supporting coffee growth

A number of factors drove growth in coffee in India at the end of the review period. Rapid urbanisation contributed in several ways: eroding traditional consumption practices, creating new consumption opportunities through the development of retail and foodservice channels, and leading to hectic consumer lifestyles influenced by Western cultures.

Demand moving upmarket

Value growth in coffee is being bolstered by an upmarket trend in demand. Premiumisation is being driven by the increased availability of and growing demand for artisanal and gourmet coffees, and sustainable products, as well as increasing interest in monthly subscriptions supplying high-end coffees.

Targeting millennials with indulgent flavours

As well as introducing an expanding range of premium coffees, companies are targeting millennials with flavoured coffees aimed at the trend towards indulgence. Players to have introduced indulgence-orientated flavoured coffees include Sussegado Coffee, Hetal’s Homemade and Nutrus.

COMPETITIVE LANDSCAPE

Major multinationals dominate, but competition intensifying

Nestlé India overtook Hindustan Unilever to gain a narrow lead in coffee in 2019. The two companies dominated the category throughout the review period, with Hindustan Unilever briefly holding the lead in 2017 and 2018.

New players may further boost competition

With coffee continuing to offer significant potential, competition is expected to intensify further as new players look to take advantage of the category’s growth. Indeed, multinationals may be encouraged to enter the category due to the lower tax burden since the introduction of the GST.

Growing number of high-end players in foodservice

As coffee-drinking culture gains traction in urban environments, India is seeing a rise in new-age coffee shops that are not targeting the mass market. Blue Tokai, for example, is introducing Indian consumers to greater nuances in the appreciation of coffee, such as the differences between Arabica and Robusta varieties.

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