Market Reports

India’s brewing revolution

Coffee in India may as well be synonymous with progress. Forward-thinking millennials and local entrepreneurs are latching on to modern coffee equipment and driving consumption in a tea-drinking nation to unprecedented levels. “Indians recognised that coffee is more than the ubiquitous filter coffee that was the staple drink of south India and the elderly intelligentsia,” says Ashwini Kumar, Research Chair at the Coffee Board of India. He believes the country is on the cusp of a coffee revolution, with consumption particularly growing in metros and large urban agglomerations. “It may be a reasonable expectation that coffee consumption in India would double during the next five to six years, with this growth being led by out-of-home consumption,” says Kumar. He believes at-home consumption could also see rapid growth, thanks to Coffee Board of India initiatives to be launched in early 2018. Coffee in India has traditionally been viewed as a slow and complex process partly due to the use of the two-jar south Indian stainless steel filter, or non-pressurised brewing. This involves pouring hot water into the top jar filled with ground coffee and letting it seep through in a 15- to 20-minute process. It is still the primary brewing equipment used in south India homes, with filters by various stainless steel manufacturers available for as low as US$2. Recognising the need for improved equipment, the Coffee Board of India developed a stainless steel filter that provides a better brew in less time. “This filter is now being sold through multiple channels and has caught the imagination of coffee drinkers,” says Kumar. Several local industry leaders have also helped contribute to coffee’s new image by improving the brewing process. Kumar says drip filter coffee makers are driving coffee preparation outside the home, particularly in quick-service restaurants, most of which are manufactured within the country. Chennai-based Eltex Marketing Services Private Limited introduced brass and stainless steel filter coffee makers for the home, while V.V. Enterprises has taken the lead in out-of-home locations with its Gemini brand. Other drip coffee makers of various capacities making headway in India include models by Preethi, Usha, Enliven, Tecnora, Black & Decker, Prestige, Philips and Havells. “These machines are robust, require less maintenance, are cost-effective and yield brew in quick time,” says Kumar. Thanks to local entrepreneurs, modern coffee brewing equipment for both at-home and out-of-home coffee drinkers is more widely available than ever. Consumers of all skill levels can choose from a range of electric drip filters, and espresso machines, as well as single-serve and craft coffee equipment. Kumar says availability is a true sign of progress. “Single serve and craft coffee equipment were unheard of by most Indians up to about two decades ago, but entrepreneurial activities have contributed to the growing popularity and use of such brewers.” Millennials may be inspiring niche coffee trends, but Kumar says Indians still love their milk and sugar and cappuccinos are more accessible than ever. Pre-mix machines have helped make espresso-based delicacies more affordable with prices as low as US0.15 cents per 75-millilitre cup, while bean-to-cup machines are most often used in public spaces such as offices and commercial and educations institutions. Powder-to-cup machines are evolving at a slower pace, even though many are manufactured and sold within the country. Kumar estimates almost a quarter of a million machines in these three categories combined that deliver ready-to-drink coffee are currently being used in out-of-home locations in India. “The innovative brewing machines that have evolved in the last 10 to 15 years have made the beverage accessible at various price levels to consumers across the country,” he says. Coffee Day Beverages, which many credit for triggering the café revolution in India, offers bean-to-cup machines for out-of-home locations including offices. Kumar says Lavazza’s Fresh and Honest brand was also an early leader in this space, while Unilever’s Hindustan Unilever Limited and Nestlé are aggressively moving in with coffee vending machines. Radiant Consumer Appliances’ Café Desire vending machines also have a strong foothold in the segment, while brands such as Godrej Vending, Franke Coffee Systems, Rancilio’s Egrod, Philips’ Saeco and Eversys are also gaining ground. Kumar says Astoria dominates the automatic and semi-automatic machine market, though Café Coffee Day has mainly featured its own Sienna brand machines in more than 1500 of its outlets across the country. Third wave coffee and coffee machinery are also on the rise. Kumar believes its popularity among youth is largely due to the internet, exposure during international travel and rising disposable incomes. More than ever, craft coffee drinkers can find brewers such as the French press, Aerobie Aeropress, Chemex, moka pot, vacuum pot and ibrik from local suppliers of premium coffee. The rise of modern coffee equipment isn’t the only reason for the country’s growing affinity for a fine brew. Another key factor driving consumption is the diverse range of roasting equipment available for roasters. “The availability of modern roasting and grinding equipment in India during the past two decades has supported the growth of consumption in the country,” says Kumar. As enthusiasts for traditional filter coffee, he says many Indians tend to prefer fresh-roasted coffee that is custom-blended for specific flavour profiles. Shop roasters have historically used locally designed drum roasters and traditional stone grinders to cater to the need, leading to a preference for peaberry grade beans which would attain a more uniform roast. Kumar says this trend was disrupted in the 1990s when various coffee businesses started offering packed ground coffee in retail spaces among the burgeoning middle class. “Traditionally, roasting machines were manufactured in India by south Indian firms, which also provided the grinders. Most of these manufacturers have now closed shop due to the relatively stagnant number of shop roasters and the preference of modern roasting units to procure roasting machines of global brands. “However, a few Indian manufacturers of roasting machines have been able to sustain and grow by upgrading their technological capabilities and by offering equipment which is more efficient than the conventional ones.” While most international brands of roasting machines and grinders are available in India, some have established subsidiaries to manufacture the machines locally. Two Indian firms, Sudarshan Industries and Bharath Mechanical Company, are leading manufacturers of coffee roasting machines and produce drum roasters. Kumar says Germany-based Probat changed the face of India’s roasting sector in the past decade with its wide range of machines. In 2012, the company established an Indian subsidiary, Probat Kaapi, which started producing shop roasters in India that cost up to a third less than similar imported machines. Local brands such as Mookambika and V-Mac roasters also remain competitive with multinationals by offering mainly drum roasters at lower prices. Kumar says roasting machine manufacturers are also sensing the growing demand for third wave coffee in India. Several companies have already diversified their product portfolios to include machines that can roast lower capacities of green beans. Roasters with capacity as low as one kilogram of green beans per batch are already available in the market. Kumar says the trend is inspiring even more gourmet roasters to set up shop, many of whom work with specialty cafés offering specialty and single estate coffees. GCR

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