Print

Mail

wiki links

Indian coffee growers look to domestic market

Indian coffee growers, who export three-quarters of their produce, are starting to look to the home market to ensure their future, as the beverage wins fans in the nation of tea drinkers.

The potential for domestic consumption, not exports, took center stage at the three-day Indian Coffee Festival in Bangalore, the capital of southern Karnataka state, which is the country's largest producer of the commodity.

About 100 delegates from 15 nations including growers, roasters, brewers, tasters, retailers and cafe owners took part in the event, which ended on Sunday.

India's coffee plantations are recovering from a five-year crisis sparked by a price slump and pest damage.

"If the health of the plantation industry is to be revived by the domestic market, so be it," junior trade minister Jairam Ramesh said.

"I have always believed the biggest market for Indian coffee, tea, rubber and spices should be India."

Domestic coffee consumption increased last year by a third to about 80,000 tonnes, helped by the rapid expansion of specialty chains such as Cafe Coffee Day and Barista, whose outlets have become popular among young people.

US giant Starbucks is also eyeing entry into India, with its 1.1 billion people, as the country's booming economy -- expanding at nine percent a year -- has left consumers with more discretionary income.

"It is possible to develop the market for coffee in producing countries -- Brazil has shown the way -- and we have a huge opportunity," said G. Krishna Rau, who heads the government-backed Indian Coffee Board.

"Continued excessive dependence on other markets for green beans does not help in building a coffee economy in this country," he added.

The vulnerability of Indian coffee growers and their reliance on foreign consumers was on display during the world coffee crisis that began in 2000, when excess supply led prices to fall below production cost.

Further ruin was brought by damage to plantations caused by pests, and some despairing growers killed themselves under the burden of mounting debt.

A recovery took hold over the past two years, although prices are still at half their peak level seen in the 1990s.

"The last two years have been relatively comfortable, yet all the extra earnings have gone towards paying back loans and replanting," said Sahadev Balakrishna, a coffee grower from Karnataka.

Developing a domestic market for coffee is tough in a nation addicted to tea, Balakrishna said.

India, one of the world's top five coffee producers led by Brazil, has traditionally been a nation of tea drinkers. Per-capita consumption of coffee is a tenth that of tea here.

The coffee habit has been mainly confined to southern India, but coffee cafes have now reached even Guwahati in the far northeast, the heart of tea country, and are cropping up all over north India, said Ramesh.

Retailers say they are confident coffee will become the hot beverage of choice.
This story has been viewed 1695 times.