Coffee in India: It’s Not All Starbucks—Part 2
By Perry Luckett, CoffeeMan1
Part 2 of a three-part series on India’s retail coffee industry. You can read Part 1 here.
In fact, it isn’t even mostly Starbucks, who didn’t enter the Indian market until 2011. India has emerged as a favored destination for coffee shops after robust market growth from 2012 to 2018. With Indian middle-class consumers ready to spend more and be part of global lifestyle and culture, coffee parlors in the country are expanding rapidly. Outlets are gaining popularity as coffee cozy “hangout zones” with friends, family, colleagues, and business associates—especially for people 16 to 45 years old. As in the United States, coffee cosy shops have become popular for reading, working, or just casual discussion. The shops’ free WIFI and music also attract Indian customers, who prefer to enjoy coffee while lingering rather than taking it away on the go.
Increasing disposable income and the influence of western culture on youth and others have helped produce a shift in habits, partly owing to the global exposure of foreign brands in the Indian market. The increasing acceptance across Indian states of premium coffee as a beverage has encouraged prominent chains to offer more varied drinks and food to the urban population.
Other than Starbucks, four main players are fueling the market:
Café Coffee Day
Indian House Coffee
Barista Coffee (now owned by New Delhi-based Carnation Hospitality)
Costa Coffee (acquired by The Coca-Cola Company in 2018)
I’ll cover the first two here and return in Part 3 to comment on the two smaller contenders: Barista Coffee and Costa Coffee.
Café Coffee Day, owned by the holding company Coffee Day Enterprises Ltd, presses ahead as the market leader when it comes to coffee in India. The self-proclaimed “pioneer of the cafe culture” in India has more than 1,700 cafes in 200 cities and towns across the country, including 191 in Bangalore and 185 in Delhi. Starbucks, meanwhile, has just 71.
The chain was started by V.G. Siddhartha, who is ranked on Forbes’s list of billionaires as the 73rd richest man in India. Raised on a 400-acre coffee plantation in southern India, he was called “the coffee king of modern India” by the Financial Times in 2011. Siddhartha played an important role in developing the country’s private coffee business sector, which the state-run Coffee Board had controlled until 1995. In 1996, he opened the first Café Coffee Day in Bangalore, using the internet to draw customers.
Now, in addition to the cafes, the company has about 600 kiosks across the country and 46,000 vending machines. Online it sells everything from ground coffee beans to espresso machines to cookbooks. Its brick-and-mortar operations are branded to target different demographics, including Café Coffee Day Lounges for families and Café Coffee Day Square for single-origin, higher-end coffees. It has also expanded internationally, to Austria and the Czech Republic.
CCD aims to have a network of about 2,500 stores as part of its expansion plans. When asked about the expansion, Café Coffee Day Chief Executive Officer Venu Madhav said, "We need to add about 800 stores. That’s the eventual target we are looking for." They plan to add about 100 stores every year while focusing on metropolitan markets. According to Madhav, some cafes would be closed and other stores would appear at new locations.
CCD also leads India’s coffee industry in technological innovation. They have about 300-plus wireless charging spots now across 100 outlets in leading metros like Mumbai, Delhi, Bengaluru and Chennai. But they’ve teamed up with India’s leading wireless provider to expand this network. It will support all smartphones enabled with wireless charging and will soon increase to 350 plus cafes with more than 2000 wireless charging spots in other metro cities. With mobile being an integral part of their young consumers’ lives, the café network is strengthening its digital technology to keep its customers connected at all times. After making free Wi-Fi available nationally at several cafes, it is launching wireless charging for the first time. CCD also is teaming up with Uber Eats to deliver its coffee and related products to online customers
Indian Coffee House (ICH), with more than 400 shops, is especially interesting because it’s run by a group of worker cooperative societies. In 1936 the Coffee Cess Committee opened its first outlet in Bombay. Eventually, Coffee Board workers compelled the Board to hand over shops to them, formed Indian Coffee Workers' Co-operatives, and renamed the network Indian Coffee House. In October 2018, Indian Coffee House opened its 9th branch in Jabalpur. These coffee houses often are popular hangouts for Indian college youth and intelligentsia.
The most famous Coffee House branch is in Kolkata and is known as the "Coffee House at College Street.” Its history links to Albert Hall, which was founded in April 1876. The Coffee Board decided to start a coffee shop from this hall in 1942, after which it began to host notable citizens and became a meeting place for poets, artists, and literati, as well as people from the world of art and culture. The coffee house is famous for its adda (intellectual conversation) sessions, and as the breeding place of several political and cultural personalities and movements.
Because they’ve been around so long, many of these coffee houses need updating to compete with more recently developed chains. Unlike modern coffee companies, no ICH outlet is a clone of the other in decor, menu and pricing. Most of them operate in old, decrepit buildings, immune to time and trends. That, and the ceiling fans are perhaps all they have in common. The institution is braving choppy waters today, drowning under debt and battling the continual threat of closure. The famous vadas (fritters or doughnuts) have lost their crunch, and the coffee is a diluted shadow of itself.
But the chain isn’t ready to give up yet. The Coffee Board has received bids from two major players, Cafe Coffee Day and Mumbai-based food company Afoozo Private Ltd., to revamp outlets within a budget established by the Board. Their plan is to have the successful bidder operate their outlets under an annual fee and a three-year license. Srivatsa Krishna, Coffee Board CEO, says the Board will fix the price of coffee and other items. Despite the overhaul, though, Krishna says: “We don’t want to make our Coffee Houses into luxurious cafes,” Krishna said. “We want to give the feeling of a casual lounge and cap the price of a cup of coffee at 30 rupees (about 40 cents).” As long as the price is low and the slightly shabby interiors remain familiar, the old-timers should keep Indian Coffee House plugging along.
We at Koffee Kompanions like to keep you informed about the coffee industry, so cozy up to our blog as often as you can. Meanwhile, please also explore our unique cup wraps, cup and mug lids, ice cream pint koozies, teapot cozies, and French press cozies—all with 3M Thinsulate™ insulation to keep your beverages hotter longer. Know something about coffee in India? Please share in the Comments below.