The coffee category is growing in traditionally tea-drinking India, as brands move into a space of younger consumers finding their beverage of choice.

Young Indians’ interest in coffee has been steadily growing, as evidenced by the arrival of the Indonesian coffee chain Wake Cup Coffee and eatery, which has chosen the 1.3 billion-strong nation as its first international market, Quartz reported.

It follows global brand entries such as Starbuck’s 50:50 joint venture with Tata in 2012, and the home-grown coffeehouse brand, Café Coffee Day (CCD), which launched in 1996.

The seven-year old Indonesian brand, which runs 13 outlets in its home market, will launch in Mumbai in partnership with the food and beverage franchise Gobble Me Good.

Coffee has taken some time to grow in prominence in the world’s largest democracy. According to a Nescafé (by Nestlé) case study from 2017, McCann Worldgroup India estimated that for every 16 cups of tea, just one cup of coffee is consumed. For the freeze-dried coffee brand, its strategy typifies the route to India for global brands: recruit young people who are yet to be set in their ways and provide them a “daily cup of resolve”.

Though the category is slightly different, coffee retail chains are pursuing a similar audience and seeing success. According to Euromonitor, via the Economic Times, coffee retail is one of the fastest growing categories in the consumer food service industry, and is estimated to grow 6.9% a year to reach Rs 4,540 crore (around US$664m) in value by 2023.

The report highlights the impact of young people on the category: “Consumers frequenting cafes in India are primarily 18-35 years old which comprises the country’s primary working force with higher disposable income and fast-paced lives.” It is particularly prevalent in large cities.  

“In the last few years, consumer preferences have shifted towards non-sugary healthier alternatives,” Amulya Pandit, a senior research analyst at Euromonitor International told the ET. “PepsiCo gets more than 50% of its global revenue from foods, while Coca-Cola doesn’t have that leverage. Therefore, it is looking to diversify its business in non-alcoholic drinks categories other than carbonated drinks.” According to some reports, Coca-Cola is looking to acquire a stake in Café Coffee Day, though any deal remains as yet unconfirmed.

Sourced from Quartz, WARC, Economic Times