CoffeeNetwork (New York) – We have long heard the claims that coffee consumption in the more “traditional” markets, such as the US and EU, is slowing, while the real growth is seen in newer, developing markets. Tea hotspots like China, Japan and Korea have topped the charts for countries where coffee consumption is growing the most per capita. An explosion of coffee shops and evolving coffee culture have led to increased imports and higher sales for retail outlets. But, there is a dark horse in the midst…India. With an already massive, and ever-growing population, the ability to both consume their own production and import, and an impressive roster of homegrown coffee outlets, India could be the next coffee hotspot.
Earlier this year, the USDA estimated that the country’s domestic consumption will be around 1.4 million 60-kilogram bags (81,600 MT), rising 55% in just five years. The jump has been mostly attributed to a rise in sales of soluble coffee. Post expects household consumption of soluble coffee to constitute a much larger share (70 percent) of domestic consumption next year. Domestic soluble manufacturers experienced double-digit growth last year and remain optimistic about the future, as India’s per capita coffee consumption of 0.07 kilograms remains well below the global average of 1.3 kilograms.
The USDA also forecast MY 2025/26 imports at 1.3 million 60-kilogram bags (80,000 MT). Soluble coffee exporters import green beans for processing, value addition, and re-exports. MY 2024 year-to-date (Oct/Jan) shipments are up by three percent in volume compared to the same period last year, as exporters are covering near-term requirements and compensating for lower domestic supplies with higher imports. Most imports are green beans-95 percent share- intended for processing and re-export, primarily from Indonesia, Vietnam, Kenya, and Uganda.
Last year alone, Reliance Retail launched the premium Armani/Caffe in Mumbai at Jio World Plaza, marking its entry into India's luxury café market. abCoffee expanded to Bengaluru by opening seven new stores in just two days. Coffee Bean & Tea Leaf (CBTL) signed a master franchise agreement to open 250 new cafes in India over the next five years. This expansion follows their plans to boost their presence in the country, with over 1,200 locations globally. This move supports their efforts to strengthen the brand’s footprint in India.
And so far this year, Coffee Island, the largest food service chain from Greece, launched its first outlet in India in Gurugram. Partnering with Vita Nova, the brand aims to expand to 20 locations by March 2026 and 250 outlets by 2029. The country’s own Nothing But Coffee announced expansion to 100 stores. And of course Starbucks, after entering the country more than a decade ago, announced plans to triple its store count in the country to over 1,000 by 2028 and export an Indian blend to US stores.
In 2023, the Coffee Board of India commissioned a coffee consumption survey to better understand the trends and patterns of this exploding market. Of the sample set of consumers, as many as 84% prefer tea and coffee as beverage, with the remaining split between milk-based products and fruit juices. Based on persona categorization, 44% of the sample consumers drink coffee regularly. Among the regions, the south dominates Indian coffee consumption landscape, with 75-80% of the total consumption being concentrated in the region. However, with increased awareness and penetration by retail coffee brands in diverse geographies, other regions have shown increased coffee penetration compared with a decade ago. As for the urban-rural split, the urban areas still have majority share of coffee consumption, driven by increased regular coffee intake as well as café chains expanding their reach in metros, Tier-1 and Tier-2 cities. In terms of key coffee consumption habits, there has been a shift from traditional roast and ground (R&G) coffee to instant coffee, with close to 65% of total consumption being instant coffee. This is mainly due to affordability and hassle-free making associated with instant coffee. Another emerging trend is increased use of chicory-mixed coffee, which accounts for 75% of the coffee consumed in India.
India’s middle class is expected to double to about 61% of its population by 2047. This, coupled with higher disposable incomes in higher areas and the younger generation’s preference for coffee over tea could see a wider cultural shift towards premium coffee and overall higher coffee consumption per capita, leaving India a market to certainly watch.
Alexis Rubinstein
