India Coffee Market Outlook to 2028

India Coffee Market Overview

The India coffee market is valued at USD 558 million based on a five-year historical analysis, driven by a rising preference for coffee among millennials and an expanding middle class in urban areas. Coffee consumption is also boosted by the growing coffee shop culture, especially in major metropolitan areas like Bangalore, Chennai, and Mumbai. Additionally, the increased demand for premium and specialty coffee has also played a role in driving the market forward, supported by the expansion of domestic coffee chains.

Southern states, including Karnataka, Kerala, and Tamil Nadu, dominate the coffee market in India due to favorable climatic conditions, which make them ideal for coffee cultivation. These regions also benefit from well-established coffee estates and a strong processing infrastructure, positioning them as the hub for coffee production. Karnataka alone accounts for the majority of the coffee produced in India, further emphasizing its dominance in the market.

The Indian government offers various subsidies and tax exemptions to boost coffee exports. In 2023, the Ministry of Commerce extended export subsidies under the Merchandise Exports from India Scheme (MEIS), benefiting coffee exporters by reducing their operational costs. Additionally, tax exemptions on income derived from coffee plantations have provided a significant boost to the profitability of coffee growers. These policies aim to enhance the competitiveness of Indian coffee in international markets.

India Coffee Market Segmentation

By Type: India's coffee market is segmented by type into Arabica and Robusta coffee. Arabica coffee holds a larger share in the market due to its mild flavor and premium status, making it more popular among high-end consumers and specialty coffee brands. Additionally, Indias favorable climatic conditions, particularly in Karnataka, have made it a key region for growing high-quality Arabica beans, further boosting its market dominance. Robusta, though significant in production, is more popular in instant coffee and commercial coffee segments, but lacks the premium appeal of Arabica.

By Distribution Channel: The coffee market in India is segmented by distribution channels into Supermarkets/Hypermarkets, Specialty Coffee Shops, E-commerce, and Ho Re Ca (Hotels, Restaurants, Cafes). Specialty coffee shops dominate this segment due to the growing trend of caf culture, especially in urban centers. Brands like Caf Coffee Day and Starbucks have established significant market share by creating a customer experience that appeals to millennials and working professionals. The caf culture offers both convenience and social engagement, making this channel a preferred option for coffee consumption outside homes.

India Coffee Market Competitive Landscape

The India coffee market is dominated by several key players, both domestic and international. Major competitors include brands like Tata Coffee Ltd., Hindustan Unilever (Bru), and Nestl India (Nescaf), which have established a strong market presence through a combination of extensive distribution networks, branding, and product innovation. These companies compete not only in instant and filter coffee but also in the growing premium and specialty coffee segments. The market also sees competition from new-age roasters like Blue Tokai and The Flying Squirrel, who cater to the niche premium market.

Company Name

Establishment Year

Headquarters

Production Capacity

Global Presence

Distribution Channels

Product Range

Sustainability Initiatives

Tata Coffee Ltd.

1922

Bangalore, India

Hindustan Unilever (Bru)

1933

Mumbai, India

Nestl India (Nescaf)

1961

Gurugram, India

Coffee Day Enterprises (CCD)

1996

Bangalore, India

Blue Tokai Coffee Roasters

2013

New Delhi, India

India Coffee Industry Analysis

Market Growth Drivers

Increasing Coffee Consumption (Domestic Demand, Specialty Coffee): India's coffee consumption has seen a significant increase, particularly driven by urbanization and rising middle-class incomes. According to the Coffee Board of India, domestic consumption rose to approximately 1.2 lakh metric tonnes by 2023. Specialty coffee consumption is on the rise, with cafs and coffee chains expanding rapidly in cities like Bengaluru, Mumbai, and Delhi. Indian coffee shops like Caf Coffee Day, alongside global brands like Starbucks, cater to evolving urban consumer preferences for premium, artisanal coffees.

Expansion of Coffee Cultivation (Arabica vs Robusta Production): Indias coffee cultivation is primarily divided between Arabica and Robusta varieties. In 2023, the production of coffee reached 3.42 lakh metric tonnes, according to the Coffee Board of India, with Robusta accounting for nearly 70% of the total output. Key coffee-producing regions like Karnataka, Kerala, and Tamil Nadu have expanded cultivation, contributing to this output. While Arabica remains more sensitive to weather changes, Robusta has been more resilient, accounting for higher production levels.

Rising Exports (Key Export Markets, Coffee Trade Agreements): India's coffee export market is robust, with approximately 70% of its total coffee production being exported. In 2023, coffee exports amounted to over 2 lakh metric tonnes, primarily directed toward countries like Italy, Germany, Belgium, and Russia, according to the Coffee Board of India. Trade agreements like the India-EU Free Trade Agreement have facilitated smoother export processes, helping India become one of the largest global exporters of Robusta coffee.

Market Restraints

Impact of Climate Change (Yield Fluctuations, Crop Diseases): Climate change poses a significant challenge to Indias coffee production, with frequent droughts and erratic rainfall affecting yields. According to a report by the Coffee Board of India, Karnataka, the largest coffee-producing state, saw yield declines in 2022-2023, with Arabica yields dropping by nearly 5%. Diseases like coffee rust and white stem borer have further impacted the yield, particularly in regions where temperatures have risen consistently.

Price Volatility (International Coffee Prices, Exchange Rate Risks): Indian coffee farmers face significant risks due to price volatility in the global coffee market. According to the International Coffee Organization (ICO), coffee prices in 2023 fluctuated due to supply chain disruptions and adverse weather conditions in major producing countries. Indian producers, who rely heavily on exports, face additional risks due to fluctuations in the Indian Rupee, especially when trading with key markets like the EU

India Coffee Market Future Outlook

The India coffee market is expected to witness strong growth driven by increasing coffee consumption, rising caf culture, and expanding e-commerce platforms. The premium and specialty coffee segments are anticipated to grow rapidly, fueled by consumer demand for unique flavors and high-quality coffee beans. Additionally, the coffee processing industry will see technological advancements that could improve yield and sustainability practices in coffee farming, further boosting production.

Market Opportunities

Growing Domestic Coffee Chains: The rapid expansion of domestic coffee chains represents a considerable opportunity for the Indian coffee market. Brands like Caf Coffee Day and Blue Tokai have expanded their footprints, opening new outlets in both urban and semi-urban regions. As of 2023, Caf Coffee Day alone operated more than 1,500 stores across India. This growing chain culture is driving coffee consumption, especially among younger demographics. The Coffee Board of India also supports local roasters to enter the retail market, providing incentives and grants.

Expansion of Premium Coffee Segment: The premium coffee segment, which includes artisanal, organic, and single-origin coffees, is expanding rapidly in India. In 2023, premium coffee brands like Araku Coffee and Black Baza saw increased demand in metropolitan areas. According to Coffee Board data, more than 50% of premium coffee sales now come from direct-to-consumer models via e-commerce platforms. With the rising disposable income of Indias urban middle class, the demand for higher-quality coffee experiences is set to sustain current growth
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