Market Analysis Report: Coffee Market in India

● Product Selection: Coffee

Coffee is a universal drink enjoyed by millions of people. It is a prominent aspect

nowadays in shaping social interaction and lifestyle choices. This report aims to
overview the coffee market in India, highlight market trends, competitive landscape
and opportunities business demographics.

● Market Research Plan:

To gather information about the coffee market, we will use the secondary research
method. Utilise the online data, market research publications and industry reports to
gather and analyse the coffee market in India. To extract the information regarding
market size, consumption pattern, leading players in the market and growth prospects.

● Market Size and Growth:

In the last two decades the market of coffee in India has been growing due to
Urbanization, increase in income, lifestyle changes, growing middle class and
exposure to global coffee culture. India is the seventh largest producer of coffee during
2022-23 producing 3.520 lakh tons of coffee with about 3% global output. India
produces two types of coffee: Robusta and Arabica. Robusta, used to make various
blends due to its strong flavour. It has the major market share of 72% of total
production of Indian Coffee. Arabica, known for its distinctive flavour and aroma. It is
considered to be of high quality and is in high demand globally. The coffee market
provides employment to more than 2 million.
The coffee production is estimated to increase by 3.74 lakh tons in 2023-24, marking
6.25% increase in production compared to last year. The highest production of coffee
happens in karnataka accounting for 71% of production, the second leading state is
kerala accounting for 20% of, the third leading state is Tamil-nadu which accounts for
5% of production.

According to reports by Statista, the Indian coffee market is valued at 1.81 US billion
dollars in 2023 and is projected to reach 2.43 US billion dollars in 2030 with a CAGR
of 4.3% during the forecast period. Globally the coffee market has been growing
steadily at the rate of 2.5 to 3 % every year, but the coffee market in India has been
growing at a much faster rate. The growth rate in India is growing by 10.15% year on
year.

Coffee is one of the most prominent commodities in the world, India is one of the
largest exporters of coffee. India majorly exports Robusta coffee. Apart from green
coffee beans, preparation of coffee (31% of which is instant coffee) holds a significant
share in exports. The Indian coffee export is valued at 1.25 US billion dollars in
financial year 2023 with around 18% growth from last year , among which almost one
third of the country’s coffee exports consists of instant coffee. According to food and
agriculture Organization (FAO) statistics, Indian coffee exports show seasonality, with
exports peaking in march-june with exporting almost 70% of its production. India
exports coffee in over 50 countries. Italy, Germany, Belgium and Russia being the
largest importers. Italy imports almost 20% indian coffee. Europe, where people prefer
more bitter and stronger flavour of Robusta accounts for 42% of exports.
● Competitor Analysis:

Key competitors in the coffee market in India include Bru, Nestlé, Narasu’s, Cafe
coffee day and Starbucks. Each competitor has its unique strengths and strategies, such
as Starbucks' focus on premium coffee experiences, Nestlé's product portfolio including
instant coffee and coffee capsules, cafe coffee day focuses on cafe

Company Revenue( USD) in India Product Category

Starbucks $140 million freshly brewed coffee, espresso-based

beverages

Cafe Coffee Day $59.1 million espresso, cappuccino, latte, and specialty
coffee blends, along with customizable
options.

Bru $1.81 billion packaged coffee products, including instant

coffee, ground coffee, and coffee beans

Nestle(coffee) $2.03 billion instant coffee, coffee capsules, and

ready-to-drink coffee beverages

Barista $12 million espresso, cappuccino, and specialty blends

By 2023, the number of smart cafeterias increased, allowing individuals to engage in

professional activities over a hot coffee. This led to some startups in the Indian coffee
market.

Competitive Landscape: Indian Coffee Start-ups

Company Revenue 2020 Product Categories

Blue Tokai $ 5.6 Mn Roasted and Ground Coffee, Cold Brew Bags,
Starter Kits, Coffee Mugs, Brewing
Equipment

Sleepy Owl Coffee $ 0.7 Mn Cold Brew, Hot Brew, Filter Coffee, RTD
Coffee, Latte, Merchandise

Rage Coffee $ 0.2 Mn Instant Coffee, Cold Brew Bags, Flavored

Coffee

Slay Coffee $ 0.3 Mn Coffee Ground and Beans, Coffee Pour Over,
Coffee Concentrate, DIY Coffee Brewing Kit

The Flying Squirrel $ 0.2 Mn Coffee Ground and beans, Cold Brew,
Brewing Equipment and Accessories
● Consumer Demographics:

The target audience for coffee is diverse in India, spanning various

demographics. However, there are some notable trends:

Age While coffee consumption was skewed towards the older

generation but in the recent years there has notable shift
increasing demand among younger generation( Genz and
millennials )

Income Coffee consumption in India is highly linked with the income,

higher the income more likely indulge in premium coffee
experience

Urbanisation In urban areas especially metropolitan cities are hotspots for

coffee. Cafe chains and trendy hangout spots has contributed to
its growing popularity

Cultural Shift Tradition tea has been preferred hot beverage in india but with
gradual shift lifestyle and increased global exposure led to shift
towards coffee consumption

Gender While coffee consumption has been associated to males but there
has been growing acceptance and participation females in coffee
culture

Geographic Coffee consumption differs among different region like in south

Preference india people have higher coffee consumption prefer filter coffees
but in rural region the coffee consumption relatively low, and
people prefer tea

● Consumer Behaviour:

Consumer behaviour patterns related to coffee are influenced by various factors:

Preferences and Taste: Indian customers value the taste and quality of the coffee .
Preference may vary based upon region, with south Indian customers preferring
traditional filter coffee and urban consumers may prefer espresso based beverages.

Occasions and rituals: Coffee in India is associated with relaxation, social rituals and
indulgence. Consumers may enjoy coffee as morning or evening rituals, in social
gatherings with friends and family or as a break between hectic work hours. Coffees
at cafes also play an important role in socialising and networking.
 Price sensitivity:While there has been growing segments of customers which are
willing to pay premium prices for an affluent experience, the price sensitivity remains
significant for many Indian consumers. Value for money, affordability and quality are
significant factors among Indian consumers.

Convenience and accessibility: Convenience plays a significant role on go-to

consumption particularly for instant coffee, home-brewing, coffee capsule and
ready-to-drink.

Brand loyalty :Indian customers exhibit brand loyalty towards the established coffee
brands known for consistency, authenticity and trustworthiness.

● SWOT Analysis:

Strengths Opportunities

Growing coffee culture Health and wellness trend

Diverse coffee offerings Premiumization
High coffee production Expansion in tier 2 and Tier 3 cities
Rising income digitalization

Weakness Threats

Preference for tea Competition from tea

Price sensitivity Global market dynamics
Infrastructure challenges Emerging Health concerns
Seasonal Variability

● Conclusion:

The coffee market in India has provided valuable insights into the dynamics and trends
within the industry. Through the comprehensive analysis of market size and trends,
consumer behaviour and competitor analysis. The coffee market presents significant
opportunities for growth and innovation, driven by consumer preferences and lifestyle
changes. By leveraging these insights and addressing the market needs efficiently,
coffee brands can position themselves in the dynamic and evolving Indian coffee
market.
Sources:

● Statista: Global coffee market size and growth trends.

● Euromonitor International: Coffee market analysis reports.
● IBISWorld: Competitor analysis and industry insights