Hot Drinks in India

Strong platform for hot drinks growth in the Indian market

The Indian hot drinks market is seeing growth driven by a wide range of factors, including increasing consumer purchasing power, the positive impact of the new tax regime, developing distribution systems, and the rapidly evolving lifestyles of young urban consumers. Moreover, demand is being driven upmarket by the emergence of high-end specialist foodservice outlets and the influence of an information-rich, highly digitalised urban environment.

Rise of foodservice specialists laying ground for premiumisation trend in coffee and tea

Trends in foodservice exerted a growing influence on the development of hot drinks in India in 2019. Specialist coffee shops have played a key role in the upmarket shift in demand in coffee, exposing consumers to a growing range of artisanal and gourmet products and associating coffee with a sophisticated urban lifestyle.

Evolving demand trends providing opportunities for smaller players

Evolving trends in hot drinks are favouring the emergence and expansion of smaller players. Both coffee and tea are experiencing an upmarket shift in demand, supported in both cases by increased exposure to premium products due to the expansion of high-end specialist outlets in foodservice.

NPD targeting premiumisation, health and convenience

New product developments in hot drinks focused primarily on the premiumisation trend, rising consumer health-consciousness and demand for convenience at the end of the review period. The range of gourmet and artisanal products is expanding in coffee and tea in both retail and foodservice.

Multiple factors set to drive forecast period growth

The Indian hot drinks market is expected to see lower prices resulting from the introduction of the Goods and Services Tax (GST) boost volumes and encourage a growing number of consumers to move upmarket during the forecast period. The continued expansion of specialist tea and coffee foodservice outlets is also set to play a role in driving an ongoing premiumisation trend, particularly amongst younger consumers.

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