The coffee life
The Indian palate is slowly growing a taste for fine coffee
Good morning! A big hello to readers who signed up this week. Welcome to The Intersection, The Signal's weekend edition. This weekend we talk about India’s growing love for coffee. Also in today’s edition: we have curated the best weekend reads for you.
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In a small village on the edge of the forest in the Kodaikanal hills of Tamil Nadu, Jacob Samuel is planting his first coffee trees on a tiny patch of land. It is the first step on the path to create the perfect cup of single-origin Indian coffee. It is hard work and the farm is often overrun by wild boar and bison.
“Specialty coffee requires a great deal of effort,” says Samuel, who was a busy corporate executive not so long ago.
On the other side of the Indian coffee universe, British organic coffee and fresh food chain Pret a Manger is planning to set up shop with Reliance Brands Ltd (RBL). “Food is the new fashion,” Darshan Mehta, managing director of the luxury and premium retailer RBL, was quoted as saying. Canada’s Tim Hortons is also making its way into India’s growing coffee market.
Samuel’s quest to grow the connoisseur’s brew and the forays of Pret a Manger and Tim Hortons into the premium coffee market bookend the 21st century story of a beverage introduced to the subcontinent by a 17th century Sufi pilgrim.
Legend has it that Baba Budan was returning from a pilgrimage to Mecca when he first tasted the dark, aromatic brew popular among Arabs. The smitten Sufi smuggled seven green beans from Yemen and planted them in his Chikmagalur home in Karnataka. The cultivation spread, although in the 19th century the best growing heights of the southern misty mountains were later colonised by tea, the favourite beverage of the British.
Coffee remained largely restricted to the South Indian states of Kerala, Tamil Nadu and Karnataka. While Kerala largely consumed its coffee black, Tamil Nadu and Karnataka liked their filter kaapi with milk. But good filter coffee took time to make and required skill. Tea was simpler. Easy availability, brewing process and low cost catapulted tea to the most consumed beverage in the country. Consumption increased even more with the introduction of tea bags. The quality of coffee depended on the freshness of the decoction and milk, a deterrent if you wanted to make a business out of it. So it was confined to south Indian homes and restaurants. A few traditional roasters such as Cothas and Leo catered to most of the big-city demand. The rest were supplied by unbranded coffee or small local brands.
Coffee cooperative Indian Coffee House was the first chain dedicated to the beverage. Although it served a filter coffee with a distinct taste, the experience ended there. The beverage got a modern tweak and national attention when Cafe Coffee Day launched a chain of quick service outlets across the country in 1996. It was the first time that a single coffee shop offered different kinds of coffee such as cappuccino, latte, mocha and Americano. At its peak in 2019, CCD had 1,752 coffee shops. It also introduced the coffee machine, including one with freshly ground beans, to offices.
CCD got competition from Amit Judge and Tata Group’s Barista Coffee in 2000. Five years later, Costa Coffee became the first international chain to enter India. Coffee Bean and Tea Leaf was the second in 2008 and the global pioneer of WiFi-with-coffee culture, Starbucks, followed in 2012 via a partnership with the Tata Group.
Industry estimates suggest that India currently has about 8,000-10,000 cafes, adding about 1,000-1200 every year across large coffee chains and specialty brands. This is typically pegged by the number of coffee-making machines that are sold in a year.
Startup fuel
“In the 1990s, coffee was the desirable outsider,” says Santosh Desai, managing director and CEO of Future Brands. “Now it is the manifestation of an outdoor culture,” Desai tells The Intersection. In his earlier avatar as president of advertising agency McCann Erickson, he had helped create the Nescafe advertisement with the punchline “Taste that gets you started up”.
“It was an early reading of a culture to come,” Desai says of the vibe they were trying to capture in the ad. That culture has now arrived with cafes often doubling up as workspaces for young people. Desai says the sophistication of coffee sits well with the startup culture and young successful professionals.
“India has just started its coffee journey,” Barista Coffee CEO Rajat Agrawal tells The Intersection. “We are seeing a shift in the market.”
India is the seventh largest coffee producer in the world. And one small region—Coorg—accounts for about a third of its entire production. It exports more than two-thirds of its production. Yet it doesn’t have the kind of geographical brand value that African or Latin American coffees command. That is because planters usually focus on increasing yields, not quality.
“For many years, the Coffee Board discouraged local consumption of coffee because it earned foreign exchange,” says Ballupete Jagannath, a coffee planter and former board member. There was no effort to promote Indian coffee as distinct or creating a brand. That means Indian coffee ends up as a base in blends, unlike Kenyan or Ethiopian coffee that are prized for their taste. India exported coffee worth more than $1 billion in FY22.
But the expansion of e-commerce infrastructure, including online payments, spurred a boom in D2C brands. While some plantations and roasters have launched their own D2C brands, improvements in packaging helped some companies sell ready-to-use decoctions. Especially during Covid-19.
“Coffee’s moment arrived during the pandemic, courtesy a demographic whose cultural impact is slowly beginning to take effect: Gen Z,” says Abhinav Mathur, the CEO of Bengaluru-based Kaapi Machines.
Mathur identifies two trends that emerged during the pandemic.
One, home brewing took off. It was more economical to purchase equipment than spend ₹200 a day on a cup of coffee at a cafe, and for those obsessed with social media, it gave them a sense of community.
Second, some consumers turned their love for coffee into an entrepreneurial venture. Mathur told The Intersection that going by the number of roasters sold, Kaapi Machines alone would have created at least 20-25 DTC brands. More entrepreneurs are entering the small-batch coffee market.
“Earlier, estates were just growing coffee, but now, there’s emphasis on good coffee. Specialty brands such as Blue Tokai send people to these estates and spend time to focus on quality control,” he says.
Coffee hermits
Jacob Samuel’s motorcycle diaries are filled with details of the different kinds of coffee grown in the Nilgiri mountains, the cradle of coffee in India. Before deciding to grow coffee himself, Samuel scoured small farms in the hills searching for the best beans for the Curious Life Coffee, a Jaipur roaster. Curious Life has acquired as much reputation for its high-end roasts as its founder, Neeraj Sheoran’s refusal to bend to customer’s tastes.
“I won’t tweak my roast for anyone,” Sheoran tells The Intersection. “Every coffee has a particular roast that brings out its flavours,” he says. Sheoran imports beans from around the world and creates his own roasts. He believes every single-origin bean’s unique characteristics are revealed at a particular level of roast that genuine coffee lovers appreciate.
Sheoran says he is spoilt for choice when it comes to Kenyan or Rwandan beans. “The uniqueness of coffee comes from where and how it is grown,” Sheoran says. The location of the farm, the soil, elevation and climate decide the quality of the bean. Africa is naturally blessed.
Perhaps Indian terrain was blessed too, but the vagaries of the market changed its characteristics. Indian farmers are under pressure to boost yields because the market demands volume over quality. There is no incentive, financial or otherwise, to invest in the processes and work required to produce single-origin coffee.
High-quality coffee grows in shade, but direct sunlight boosts yields. The Indian farmer is increasingly choosing sun over shade. “More than a third of the native shade trees have disappeared from Coorg,” says Arshiya Bose, founder of Black Baza coffee. It struck Bose, who holds a doctorate in geography from Cambridge, that coffee could be used as a means for preserving biodiversity and social equity. “Coffee farmers (83% of whom are small farmers) do not have access to the boom (in specialty coffee),'' she tells The Intersection. Black Baza, named after the eponymous bird of prey, sources coffee from 650 small growers.
As the tribe of people who appreciate high-quality coffee expands, the niche market will likely be able to support high-cost best practices on farms as well.
A market grows
Curious Life has spawned a dedicated clientele of coffee lovers in an unlikely place like Jaipur, which has no legacy except an old Indian Coffee House. It now ships its roasts to aficionados across the country.
A regular buyer is Meraki, a cafe in Surat– another city that had no coffee culture but now probably has the fastest-growing demographic of coffee drinkers. Founder Brijesh Bachkaniwala says Meraki was the only specialty coffee shop in the city when he started out six years ago. Post-pandemic, a dozen opened up. “Each one of the founders is an old customer of mine,” Bachkaniwala tells The Intersection.
He adds there is huge demand for home-brewing equipment and cost is no issue. People are buying ₹12,000 kettles for their home-brewing setup. “Our retail sales shot up when the summer vacation started. Clients were buying coffee to carry with them because they did not want to have anything else,” Bachkaniwala says.
Metro-focused chains, on the other hand, are looking beyond the brew itself. Westbridge Capital-backed Third Wave Coffee Roasters—headquartered in Bengaluru—is not only expanding to Hyderabad and Pune in coming months, but giving food serious thought. This makes sense, considering the time patrons spend in their outlets.
Third Wave founder Sushant Goel is also looking to ride the D2C coffee equipment wave. Take the pour-over coffee bags Third Wave launched last year. “But I think offline QSR will still be the dominant way to distribute our products,” he says, adding that he hopes to touch different retail touch points such as kirana stores someday.
The success of such niche players is not lost on the big guys. Tim Hortons is planning to open 300 outlets in the next five years. Pret a Manger is planning 100 in the same period. Barista, which had scaled down operations in cities such as Bengaluru, switched focus to Tier II and Tier III cities in north India.
This change of tack, says CEO Rajat Agrawal, helped Barista emerge as the leading coffee chain in Delhi/NCR, Punjab, Himachal Pradesh and J&K. It has added 85 stores in the past two years.
“Earlier, if you went to these Tier 2 markets, there were only two types of coffee: hot coffee and cold coffee. Today, there’s greater awareness about cappuccino, latte, mocha, etc.,” he says.
“Think of it like alcohol,” says Kaapi Machines’ Mathur. “The rise of single origin is similar to the rise of single malt.”
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