What are the most obvious ways that coffee culture is changing in India in terms of big picture trends?
India is a fairly important player in the global coffee market, providing approximately three-and-a-half percent of the world’s coffee. During this coffee season of 2015/2016, the post-monsoon production estimate of the Coffee Board of India is approx. 350,000 tons of coffee comprising 107,800 tons of Arabica and 242,200 tons of Robusta.
The main coffee-producing region in India is the state of Karnataka, which produces approximately 69 to 70 percent of Indian coffee. The coffee culture in India is changing to such an extent that India could become a net importer of coffee in the next decade.
When I was growing up, which was in the 1950s and ‘60s, coffee was considered a drink to be consumed mainly at home, with South India being the main coffee-drinking region. It was not only considered a home drink, but also a drink for the elderly. In the North, East, and West of India and in some states in the South of India, tea was mainly consumed and coffee (the instant variety), was only offered when a guest visited. Overall, coffee was viewed as dull, boring, mundane, meant for the elderly, very difficult to prepare, and expensive. The youth hardly looked at coffee, as it was considered not a hip and youthful drink. This picture changed from the year 1996, when the first cafe opened its doors in Bangalore, the coffee capital of India. Opened by a coffee grower, who dabbled in many other businesses apart from coffee, this was Cafe Coffee Day, set up on a busy thoroughfare in Bangalore at a time when computers made their first forays into the country. The slogan of this cafe was, and continues to be, “A lot can happen over coffee.” For every hour of surfing on the net, a free cup of coffee was served to the consumer. This attracted the youth to the brightly-lit cafe, which sported a warm and youthful ambience. The synergy between computers and coffee took off in 1996, and the concept of coffee being a dull, boring and mundane drink to be drunk at home changed, with the youth flocking to the cafes not only to surf and drink a free cup of coffee, but also to meet and hang out with their friends.
There was no turning back from the opening of the first cafe in Bangalore. Cafe Coffee Day, based on the success of the first cafe, started opening cafes all over the country. The coffee beans were sourced from their own coffee plantations and were roasted in their own roaster located in the coffee growing region of Karnataka State. Espresso machines were imported from Italy, and the training department of the company was set up, to train young baristas in the art and science of making a good cup of coffee.
Today, domestic consumption is about 120,000 tons of coffee, which is increasing annually by about five percent. While it may be stated that against the production figure in India, the quantum consumed domestically is only around 30 percent, the salient feature to be noted is that India is a tea-drinking nation, with the cost of a cup of tea being much less than that of coffee. In the 1970s and ‘80s, the consumption of coffee was barely 55,000 tons, and remained stagnant at this figure for many years. It is only over the past 10 years that consumption has risen dramatically from 55,000 tons to about 120,000 tons, thanks to the cafe culture, which commenced in the late ‘90s.
At present in the Indian retail space, coffee demand has spiraled upwards due to an increase in consumption culture, Westernization, and most importantly, an increase in disposable income. Over the past 10 years, Indian consumers have shifted from being savings-oriented to being consumption-oriented. The young, the middle-aged and the old, especially families, no longer have a mental barrier to spending and eating out. Spending 200 to 400 rupees on a cup of coffee with food is no longer a hindrance or barrier for today’s Indian consumers.
Cafe chains such as the indigenous Cafe Coffee Day and the global coffee retailers Starbucks, Costa Coffee, Coffee Bean and Tea Leaf etc., have been substantial growth drivers for the coffee retail market. At present, Cafe Coffee Day has more than 1900 outlets located in every nook and cranny of India, and should be credited for the fact that even in the North, East and West of India coffee has caught on and is no longer considered a drink which should be served only to guests. The overseas cafe chains provide not only the ambience to attract the youth and the executive segment and the comfort of a good cup of coffee, but also serve Indian-ized food. Some of the stores, such as Starbucks, have Indian-ized the store ambience as well as the menu. This Indian-ization of the menu has ensured repeat visits. Besides Indian-ized food, standard global offerings such as sandwiches, biscuits, quiche etc., are also served in the cafes catering to young and corporate consumers. Cafe competition is very intense in India and as such, the cafe chains are constantly working on their coffee and food menus to cater to different palates and to be attractive to all segments of the population.
The key challenges for cafe culture in India have been high real estate costs, manpower attrition, and difficulties in managing the supply chain. Sourcing of coffee beans may not be a barrier for the cafe, as coffee beans account for an insignificant proportion of the total cost of a cup of coffee. A Rabobank study carried out in 2014 has shown that the cost of coffee beans in a cappuccino is only about eight percent of the sale price. The study also states that, in India, cafes and coffee shops should be large enough to accommodate a large number of people, as around 95 percent of consumers in India prefer to drink on site rather than to take away, as compared to around 60 percent in the U.S., necessitating large cafe areas and thus high rents.
Staff attrition and the sourcing of other beverages, food and merchandising are also challenging. Cafe owners have been finding it difficult to establish quality, reliability, strong relationships with suppliers.
The economic slowdown of 2009 affected the coffee retail sector in a large way, with income and job security declining. The average consumer started becoming very cautious in nature. However, today, with incomes looking up, cafe culture has been growing steadily, with both local and overseas cafe chains springing up all over India. With the Indian middle class consumer willing to spend and be a part of global lifestyle and culture, cafe chains are on an expansion drive from small coffee parlors to classy coffee lounges. These cafe chains also strive for diversification, to enable every consumer in India to walk into a cafe of their choice. Cafe Coffee Day follows a mix of various formats such as malls, highways, lounge (premium upscale format), and square (which is a single-origin coffee destination) to catch every consumer segment whatever their spending power and preferences. A few small coffee retailers are also looking at e-commerce to see if it will afford them better inroads into the market.
With more than 3100 stores across the country the size of the Indian retail coffee market was approximately U.S. $26 million (Indian Rs.1700 crores) at the end of 2014, and is expected to grow at a fast pace—over 20 percent. While present domestic consumption is growing at the rate of five to six percent a year, production seems to be stagnating. In such a scenario, even though the present per-capita consumption of coffee is at 90 to 100 gms a year, increase in population and the growing cafe culture could result in the country turning into a net importer in the next decade.
What are the more subtle ways that you’ve observed the culture evolve (brewing methods, cafe trends)?
Coffee culture has evolved in India in many subtle ways. Today, young entrepreneurs who have just completed their college education are looking to set up small roasteries, cafes, and e-commerce platforms for marketing coffee. Setting up cafes with an in-cafe roaster is also in vogue and is helping to educate the Indian consumer. Various well-known overseas manufacturers of roasting equipment have set up in India. An interesting methodology that has been adopted by a distributor of roasting machines is to demonstrate to entrepreneurs the concept of roast profiles and at the same time, educate them on the nuances in the cup, to help them understand the correlation of the roast profile with the cup quality.
The concept of valve-packed freshly roasted coffee, drinking pure coffee and buying coffee just on-time are also recent changes that have been driving the coffee culture in India. Even the middle-aged, elderly, and families, are beginning to flock to these cafes, thanks to the Indian-ization of the food and the different brewing methods that are providing the choice to these consumers to select a cup which suits their palate.
The Indian filter method of brewing coffee, cappuccino, iced coffee, stovetop, French press, and even pourovers are becoming popular. Bulletproof coffee and cold brew are yet to make their presence known in India, but I am sure the day is not far away when even these will take their position on cafe menus.
Various workshops and courses on the art and science of coffee, including that of roasting, brewing, cupping, and coffee quality are being carried out by the Coffee Board of India, by my lab Coffeelab, and occasionally by roasters. This goes a long way in changing not only the mindset of Indians about coffee, but also in ensuring that a good cup of coffee is served and they are able to understand the aromatic taste nuances present in the cup.
Are these trends consistent through the country, or are there unique variations worth noting that you’ve observed in different regions?
Yes, the trends are consistent throughout the country and this is the most fascinating feature that we have observed in India. As I mentioned earlier, India is a tea-drinking nation, but even so, coffee is making an inroad as a youthful, aromatic and romantic beverage.
The take-away culture has made very little impact in the cafe culture in India. On the other hand, the young, middle-aged, and families are visiting cafes and are not only spending time together, but also enjoying coffee and the food paired with it.
Where do people enjoy coffee primarily, in the home or out of the home?
The youth enjoy their coffee primarily out of home, as they find the cafes to be a great place to hang out with friends and spend time together, which is not being provided by any other agricultural produce. Additionally, the price of coffee and food at the cafes is reasonable. With the encouragement of parents, pub culture, which was the hangout for youth in the ‘80s, has now been replaced to a large extent with coffee culture.
Has this changed in recent years or has the coffee drinking culture remained fairly traditional?
Coffee-drinking culture has undergone changes since 1996 and over the years, while the traditional method of drinking coffee continues to prevail in the homes, especially in the South of India. Cappuccino, latte, iced coffees with various added flavors and ingredients are popular. Brewing coffee at the customer’s table with the French press or the Aeropress, latte art, and siphon brewing at the table are proving to be enticing to customers.
Favorable demographics, increasing income levels, coffee being viewed as a youthful drink, the rise of midsize cities, and the availability of varied coffee drinks at a reasonable price have helped in changing the dynamics of coffee culture in India, from being just a traditional drink to be drunk at home, to a hip-hop and happening beverage, enticing the youth to spend their time drinking a cup of coffee in a warm and comfortable ambience, with pub culture receding into the background.
What is your favorite way to enjoy coffee?
My favorite way to enjoy coffee is black, with the beans roasted to a medium roast and brewed on the traditional Indian filter, ensuring that there are froth and bubbles floating in my cup of coffee. The froth and bubbles encapsulate the volatile aromas, which are released as I sip my coffee, making the experience tasty and aromatic. How do I get my froth and bubbles in the cup? It’s a special Indian method of “coffee by the meter.”
Sunalini Menon has spent more than 40 years in coffee and has worked as a quality evaluator, trainer, coffee blender, developer of green coffee brands, judge in coffee competitions, writer of coffee articles, and even a coffee guide to new coffee entrepreneurs. Sunalini is the “Quality Ombudsman” of the Speciality Coffee Association of India and has served as a judge in many domestic and international coffee competitions. A past winner of SCAA’s Alfred Peet Passionate Cup Award, she is an independent director of M/s. Tata Coffee Limited, one of India’s leading producers and exporters of coffee. Sunalini is a Licensed Q and R grader of the Coffee Quality Institute.