Is Indian coffee the next big entrepreneurial opportunity?

Between Café Coffee Day and Blue Tokai, a new generation of Indian coffee connoisseurs took birth. For the unversed, the word coffee itself is derived from the Arabic word “quahweh”, a poetic reference to wine.

The Indian coffee market is estimated to grow at a CAGR of 19-2 percent until 2028, as per reports. After Brazil, Vietnam, Indonesia, Columbia, and Ethiopia – India is the sixth country to lead brewing.

In a LinkedIn post, Nikhil Kamath pointed out that Karnataka, Kerala and Tamil Nadu contribute to 97 percent of coffee’s production. Average annual coffee cup consumption is 30 cups as compared to global average which is 200 cups. There is a growing preference for specialty coffee shops especially amongst the youth.

There is an increasing demand for coffee tasting, brewing and artisanal methods. Growth is fueled by rising incomes, coffee culture and rising popularity. Coffee café franchise market estimated to be 550 million dollars.

Domestic Indian brands dominate the café chain industry in India with a share of 52-56 percent in fiscal 2023 which dropped from 72-77 percent in fiscal 2020 due to decline of market share of CCD.

There is a rising preference among Indians for the rich flavours and aromas of artisanal roasted coffee, moving away from instant coffee. However, global economic factors like inflation, and interest rates impact coffee production and demand with high inflation, and lower disposable incomes affecting consumer demand and production.

Also, issues such as labour shortages and high production costs can influence the output of coffee producing countries.