NEW YORK, Nov. 20, 2012 /PRNewswire/ -- Rabobank has published a new research report on the rise of the coffee culture in India, due to the efforts of a few specialist coffee chains and instant coffee players.
In a new report titled "Raj-accino," Rabobank's Food & Agribusiness Research and Advisory group says that coffee drinking has spread across the country and consumption has doubled. Specialist coffee shop chains, which have established themselves as a 'hangout' for urban youth, are projected to reach 4,000 in numbers by 2015 (21% CAGR). This growth is a result of favorable demographics, rising income levels, rise of mid-sized cities and high population density. High real estate costs, manpower attrition and difficulties in managing the supply chain will continue to be the key challenges.
Although specialist coffee chains' contribution to India's total coffee consumption by volume may not be significant, these coffee shops have added more visibility to the coffee culture. The first specialist coffee shop by Cafe Coffee Day opened up in 1996, and the company has since grown to a market leading position, with 1,350 coffee shops spread across India. At present, there are around 2,100 specialist coffee shops in India, and given that there are multiple international coffee shop chains trying to expand their base in this important market, consumers are likely to have even more options within the next three years.
For a burgeoning segment of the Indian population, coffee chains are also offering a new snacking/leisure experience. These coffee chains offer an experience similar to that in developed markets. The opportunities for coffee chain growth arise from the favorable demographics – low per capita consumption and increasing income levels, the rise of mid-sized cities, and a high population density with its associated potential for expansion of the coffee shop network.