Post-Covid perk-up: As the coffee industry grows, cafés get a makeover
When brands like Starbucks entered India, coffee was termed the social lubricant, with cafes becoming hotspots for meetings and conversations. Then Covid happened and the coffee went cold. As the pandemic waned and life returned to normal in 2022, cafes in India reopened with a new vigour, and also faced competition from international majors like Tim Hortons and Pret a Manger.
Barista Coffee Company, for one, is majorly into expanding its diners, which offer a comprehensive food menu beside the coffee. The brand recently opened its fifth diner in Gurugram, with CEO Rajat Agrawal optimistic about business.
Speaking on the post-Covid revival, Agrawal said business has jumped over pre-pandemic levels and is witnessing good momentum. “We are at double-digit growth compared to pre-pandemic years. We have opened 100-plus stores in the past three years, taking our count to 350 stores,” he said. “In business, you have to take the long-term view,” Agrawal said on the decision to open outlets during the pandemic. “At that time, real estate got very attractive for long-term value creation, which is why there was a spur in the opening. Further, there was the opportunity to consolidate in the market with lot many stores shutting down, which we capitalised well,” he said.
The coffee market in India is expected to grow annually by 2.06% (CAGR 2023-2025), as per Statista. Evidently, everyone wants a share in a market that includes homegrown and international coffee brands, along with local manufacturers and companies selling instant coffee.
Canadian multinational coffee house Tim Hortons is among the newest ones in the market. Reportedly, its CEO and former Starbucks India CEO Navin Gurnaney said that the Indian coffee market is expected to reach over $4.2 billion in size by 2025. Out-of-home consumption is set to account for 20% of it.
Blending cozy and inclusive is how one can describe the Barista Diner’s feel, as well as the menu. From simple yet widely-consumed types of pastas and pizzas to salads, desserts and appetisers that most Indians are familiar with, it caters to people across ages. “We did not want to be very niche in our offerings which are more suited to fine dining formats and keep changing our menu periodically with the introduction of seasonal flavours and festivities. A few hot sellers from our menu are Mexican bowls, 3 chicken pizza, Hawaiian chicken burger, cream of parmesan soup, and a wide range of pastas,” Agrawal said.
Being a beverage-centric brand, coffee’s contribution to Barista’s total revenue is considerably higher than diners’. “Beverage-to-food ratio is around 65:35,” Agrawal said. Since the focus is on food in the diner format, the contribution of food is higher than that of beverage. Speaking of expansion, he said, “Now that we are more sure about the business, the focus is to open a few more diners in the near future.”
Despite witnessing good momentum, Agrawal admits that coffee consumption in India is minuscule compared to mature markets. “India’s coffee consumption is still around 100 gm per capita annually compared to about 12 kg per annum in Western markets,” he said, highlighting the still nascent coffee-drinking culture in India. India produced 342,000 metric tonne (34.2 million kg) of coffee in 2021-2022, as per the Coffee Board of India, but only a third of it was consumed domestically, it estimated.
Compare this with tea consumption in the country. Of the 1,344.4 million kg of tea India produced in 2021-22, a whopping 85% was consumed domestically, as per figures by the Tea Board of India.
Coffee giant Starbucks too expanded in 14 new cities last year, marking its largest store expansion in a single year in India. In September, it topped the milestone of 300 outlets in India. Reliance, too, has entered the food and beverages space through a strategic partnership, signed last year, with UK-based food and organic coffee chain Pret A Manger.