A strong coffee culture is brewing in India, bit by bit

Something big is brewing in India’s coffee market. Not only are new coffee chains coming up and expanding their footprint, direct-to-consumer artisanal coffee brands are claiming brisk sales as young urban Indians switch to coffee as their preferred drink.

Last week, the Allana group, an exporter of coffee from India for the last 40 years, announced its entry into the domestic market to meet the burgeoning demand for the brewed beverage. The company said it will supply its premium coffees to hotels, Quick Service Restaurants, cafes, and coffee startups.

“We already have tie-ups in place with 7-8 coffee chains,” said young Asim Allana, part of the promoter family, who is spearheading the coffee business and its entry into India. So far, Allana group was exporting coffee to Nordic countries, the US, and the Middle East.

The trigger for entering the Indian market was the evident rise of coffee culture here, Allana said. The market has been brimming with new packaged coffee brands and cafés for some years, more so with the arrival of Starbucks in India.

The pandemic fuelled growth further. Indian students who were studying abroad came back during the pandemic. They had exposure to cafés and craved for the brews, said Allana, who believes that “coffee culture”, is a Western import. “Cafes abroad are designed specifically for a generation to sit there and use free WiFi, use it as a place to meet socially,” he said.

Bharat Sethi, founder and chief executive officer (CEO) of Internet-first coffee brand Rage Coffee agreed. Café culture has come up very significantly and people now know what a good cup of coffee really means, he said. However, he takes credit for building scale in getting people to upgrade to good coffee through his packaged craft brew which balances quality, convenience, and affordability. Cafés are expensive, he said.

For a brand that launched in 2019, the pandemic lifted sales for Rage Coffee as offices and cafes were shut and coffee drinkers were looking for alternatives, Sethi said. “We have grown 500% year-on-year since the launch, with significant demand—nearly 60%—coming from smaller towns,” he said.

Allana agreed that work-from-home culture also drove coffee consumption at home. Plus, the boom in domestic tourism on account of the pandemic is opening up tourist destinations for coffee. “Tourism and coffee go hand in hand. Coffee demand is now coming from travel destinations like Jaipur and Udaipur,” he said.

Allana attributes the growing coffee craze to the availability and affordability of a variety of coffees. “Tea was for our parents and grandparents. Massive growth in coffee is coming from consumers aged 20 to 40 years. It is the future business drink,” he said.

Coffee chain Barista may have been ahead of its time when it launched more than 20 years ago—as tea was still the popular drink and a habit that expensive coffee couldn’t break. But Café Coffee Day and other cafes popped up and lay the ground for building a coffee culture in India.

Currently, the market is swamped with new-age coffee chains as well as packaged artisanal brands such as Blue Tokai, Third Wave Coffee, Dope Coffee, and Sleepy Owl, ready to expand. Dope packaged coffee is opening experience centres in Mumbai and Delhi. Blue Tokai is eyeing markets beyond Delhi-NCR. Canadian QSR chain Tim Hortons too is opening its first outlet in India.

Sales of coffee machines, too, have improved. Speaking to Mint last week, Ravi Saxena, founder and managing director of Wonderchef Home Appliances, said his newly launched coffee machines priced between ₹3,000 and ₹15,000 have sold like hot cakes. Asim Allana agreed that cheaper coffee machines are aiding market growth.

Meanwhile, Rage Coffee, which signed up cricketer Virat Kohli as its brand ambassador last month, has been selling complex flavours such as Butterscotch Delight, Vanilla Bubblegum, and Citrus, which Sethi said are game-changers as they give café experience at an affordable price.

The attractiveness of Indian market has inspired Asim Allana to promise 50% of his coffee revenue to come from domestic operations in the next five years. “For the first 40 years we were in coffee exports; for the next 40, we will focus on domestic market,” said Allana.

Shuchi Bansal is Mint’s media, marketing and advertising editor. Ordinary Post will look at pre-ssing issues related to all three. Or just fun stuff.