Cafes feel the heat of rising coffee prices, falling production

From an average of ₹8,913 per 50 kg of Arabica Parchment in Madikeri, Kodagu, in January, Arabica Parchment prices stood at ₹10,500-11,000 per 50 kg as of Tuesday, according data from Coffee Board.

Leaf rust, white stem borer (Xylotrechus quadripes--a small beetle that measures no more than a couple of centimetres), heavy rains, shortage of skilled labour to trace and remove infected plants are among the factors that have pulled down India's Arabica output to 9,04,00 tonne - the lowest since 2008-09 when production was at 7,95,00 tonne, according to data from Bengaluru-based Coffee Board of India.

Cafes, coffee shops and other popular joints, typically teaming with multitudes of people, not only have to contend with a decline in footfalls because of the pandemic but also struggle to keep prices under check lest they lose customers.

Smaller coffee chains, standalone cafes have been hit harder.

“Every year there are challenges of yields going down and prices going up," said Matt Chitharanjan, co-founder of Blue Tokai, a farm-to-cup coffee brand.

Though Blue Tokai buys directly from growers, Chitharanjan said they haven’t felt the price rise ‘just as much’ as those in commodity markets.

The brand, which procured around 150 tonnes of coffee, including around 200 kg of Robusta coffee, has raised its base price for 250 gram from ₹400 to ₹420- ₹450 after three years.

“Given Café Coffee Day’s experience in the plantation business, it knows the upcoming Arabica crop is likely to suffer innumerable issues ranging from multiple diseases including white stem borer and fruit drop due to unseasonal rains, which may drive up prices," said a person familiar with the development.

"CCD is unique in that we have our own plantations held by the group and hence procurement has not been as much of a challenge as it would be for any other chain / coffee retail format," said Vinay Bhopatkar, chief executive officer at Cafe Coffee Day, one of India’s biggest coffee producers and retailers.

A Coffee Board spokesperson said the Intercontinental Exchange (ICE) Arabica coffee futures have been under pressure because of concerns that fresh lockdown curbs imposed in some of Europe's biggest cities will hit coffee consumption and demand.

Globally, there is huge demand for Indian coffee that determines local prices.

Dr. Suryaprakash Rao. N. Director of Research, Central Coffee Research Institute (CCRI), points to a systemic shift away from the arduous, high-risk and low returns Arabica coffee plantations towards the more rewarding pepper.

He said facilitating pepper plants by chopping tree shade that gave Indian coffee its uniqueness, has heightened stem borers' activity since it is a “light loving pest".

As a traditional tea-drinking nation, domestic consumption of coffee remains low despite the potential, experts said.

Sunalini Menon, president of Coffeelab Ltd, and one of Asia's most eminent coffee cuppers said no plant material available today can withstand the stem borer and lack of remedial measures could wipe out the species completely.

The Coffee Board is experimenting with Selection 4595, a plant is said to be resistant to the stem borer but are yet to see conclusive results especially in traditional areas.

The share of Arabica production now stands at around 30% as against 70% of Robusta, a coffee that is often referred to as the ‘poor cousin’ of Arabica.

The Indian Robusta, considered one of the finest globally, could well become the replacement.

Menon, who also serves as an independent director on the board of Tata Coffee, said Robusta has its own signature flavour that needs to be explored and presented to consumers.

"Unfortunately, we have never presented robusta as a standalone...that is perhaps a little bit of a drawback in marketing," she added.

India is the only country which produces washed Robusta which is far superior to sun-dried cherry Robusta which is the norm in other countries.

This, experts say, could bring down prices of that good cup of coffee.

Suneera Tandon from New Delhi contributed to this story.