Kochi: The Indian Coffee Board is working on a novel proposal for distributing coffee through milk co-operatives in an attempt to try and boost domestic coffee consumption.
With no growth in domestic consumption in recent years and global supply overstripping demand by 2.4 lakh tonnes, India hopes new ideas will help replicate Brazil’s success in boosting domestic consumption: Brazil tripled domestic coffee consumption from 300 million kg to 900 million kg between 1998 and 2006.
The pilot project will be tried out in a couple of cities in Karnataka by June.
The idea of distributing liquid coffee alongside milk satchets through the National Dairy Development Board (NDDB) and the state milk co-operatives was mooted by Coffee Board member A. K. Bhandari, who is himself a leading planter.
The ministry of commerce is also supporting the plan. At a later stage, the Coffee Board is likely to enter into a pact with NDDB and its affiliates that would earn a royalty for distributing coffee.
Coffee Board chairman G.V. Krishna Rau says India consumes just 20% of its annual coffee production of three lakh tonnes. Some 80% of Indian production is exported at average prices that have been hovering in the range of Rs85-95 a kg. There is not much difference between the price at which coffee is exported and that at which it is sold in the domestic market.
“The programme does not aim at substituting export. We want to increase the domestic production. Like China, India has the capability of absorbing a good part of its produce,” says one Coffee Board member who didn’t want to be named.
Early indications are that global production this year will be around 73.2 lakh tonnes and optimistic projections on the global demand front indicate consumption can reach 70.8 lakh tonnes. India accounts for less than 5% of global coffee production.
Initially, the sachets will be distributed free along with the milk for a limited period in the pilot project. If the project succeeds in attracting more consumers to buy coffee, it will be replicated across the country. Bangalore-based Ashok Kurian, who has been into specialty coffee business, says it is imperative for the board and the industry to boost the domestic consumption.
“With the growth in production, there has to be a matching growth in consumption too as otherwise prices will crash. Arrangements with milk suppliers hold great promise and could make things different for the coffee industry,” he says.
About 300 entrepreneurs are now into the business of coffee roasting. According to the plan, each of them could be allotted areas to have their own roasting or grinding or brewing business, based on logistics. The Coffee Board may issue licences to the roasters.