Bangalore: Coffee growers, who export three-quarters of their produce, are starting to look to the domestic market to ensure their future as the beverage wins fans in a nation of largely tea-drinkers.
The potential for domestic consumption, not exports, took centre stage at the three-day Indian Coffee Festival in the city.
About 100 delegates from 15 nations including growers, roasters, brewers, tasters, retailers and cafe owners took part.
India’s coffee plantations are recovering from a five-year crisis sparked by a price slump and pest damage.
“If the health of the plantation industry is to be revived by the domestic market, so be it,” minister of state for commerce Jairam Ramesh said.
“I have always believed the biggest market for Indian coffee, tea, rubber and spices should be India.”
Domestic consumption increased last year by a third to about 80,000 tonnes, helped by the rapid expansion of speciality chains such as Cafe Coffee Day and Barista, whose outlets have become popular among young people.
US giant Starbucks is also eyeing India as the booming economy has left consumers with more disposable income.
“It is possible to develop the market for coffee in producing countries—Brazil has shown the way—and we have a huge opportunity,” said G. Krishna Rau, who heads the Indian Coffee Board.
“Continued excessive dependence on other markets for green beans does not help in building a coffee economy in this country,” he added.
The vulnerability of Indian growers and their reliance on foreign consumers was exposed during the world coffee crisis that began in 2000, when excess supply led prices to fall below production cost.
Further ruin was brought by damage to plantations caused by pests, and some growers, faced with mounting debt, committed suicide.
A recovery took hold over the past two years, although prices are still at half their peak level seen in the 1990s.
“The last two years have been relatively comfortable, yet all the extra earnings have gone towards paying back loans and replanting,” said Sahadev Balakrishna, a coffee grower from Karnataka.
Developing a domestic market for coffee is tough in a nation addicted to tea, Balakrishna said. “It’s very difficult to change people’s habits,” he said. “The younger generation is taking to coffee, but it will take time.”
India has traditionally been a nation of tea drinkers. Per-capita consumption of coffee is a tenth of that of tea here.
The coffee habit has been mainly confined to southern India, but coffee cafes have now reached even Guwahati, the heart of tea country, said Ramesh.
He cited the example of Japan, where he said coffee-drinkers were few and far between 35 years ago. Today, Japan is one of its biggest importers of the commodity.
Retailers are confident that coffee will become the beverage of choice in India, where half the population is estimated to be less than 25 years old, and growers won’t have to look overseas any more.