Coffee battle heats up in India

2 January 2013

NEW DELHI: Companies like Cafe Coffee Day, Philips and Panasonic are tapping rising demand for coffee among consumers in India, a category serving as a bellwether for changing tastes in the country.

Cafe Coffee Day, the biggest coffee chain in India, has introduced branded coffee machines and capsules offering buyers the chance to replicate the experience available in its stores.

"Sales of the machines is triggered by consumers who want to satiate their cafe experience at home as an extension of the cafe," Vejay Anand, the firm's president, told the Economic Times.

The core target audience for these appliances are urban shoppers in their thirties, with sales surging in smaller cities from Nagpur to Kochi and Baroda. Education also plays a key role, experience suggests.

"We are organising festivals in the cafes on how to brew coffee since one of the major roadblock has been the fact that consumers in most parts do not know how to brew coffee,” said Anand.

The Coffee Board of India estimated that consumption increased by 6% a year from 2000 onwards in volume terms, compared with a typical annual expansion of 2% per year in the previous decade.

At present, southern parts of the country – where tea has long been the dominant drink – have witnessed the greatest demand for coffee, but interest is hardening in other areas, including the north.

Philips, the electronics group, has rolled out three coffee machines, with an entry level appliance available for Rs13,995, rising to 74,995 at the premium end. Affluent customers in major cities are seen as providing the best prospects.

"Some consumers in upwardly mobile pockets like South Delhi, Gurgaon and South Mumbai are keeping the coffee machines in their living room and drawing room," said ADA Ratnam, president, consumer lifestyle, at Philips.

Fresh & Honest Café, a coffee house network owned by Lavazza, also sells coffee machines such as Swiss Egro, Nuova Simonelli and Delonghi. Prices vary from Rs12,000 to Rs60,000.

Manish Sharma, managing director, consumer products, at Panasonic, the electronics firm, suggested annual sales of coffee makers are likely to come in at 25,000 per year, and anticipated that future growth should be rapid.

Data sourced from Economic Times; additional content by Warc staff