Rabobank Report: "Raj-accino"- The Rise Of Coffee Culture In India
"The impressive growth expected of specialist coffee chains in India offers numerous opportunities for both local and international players, provided that they can overcome inherent obstacles," says Nitin Kalani, Rabobank beverage analyst and author of the report.
Sourcing coffee beans is not the key barrier for specialist coffee chains, with coffee beans accounting for an insignificant proportion of the total cost of a cup of coffee. For example, the cost of coffee beans in a cappuccino is about 8 percent of the sale price. To be successful, operational efficiency (e.g., managing rent and labor costs) is more important than focusing solely on raw material costs.
Real estate overheads are a major concern, with coffee chains facing strong competition for acquiring prime premises. Furthermore, coffee shops must be big enough to accommodate a large number of people, with around 95 percent of consumers in India preferring to drink on-site rather than to take away (compared to around 60 per cent in the U.S.). Competition for industry manpower is likely to continue to be a challenge due to high rates of staff attrition. On top of this, the sourcing of other beverages, food and merchandising – all an essential part of the coffee shop experience – continues to be a problem as players struggle to establish quality, reliable supplier relationships.
India remains a tea drinking country, with sales of the traditional beverage still outperforming that of coffee. With growth in coffee consumption outpacing that of tea however, coffee culture is expected to continue to flourish for the foreseeable future.The Rabobank report on the growing Indian coffee culture is available to media upon request. Rabobank Group is a global financial services leader providing wholesale and retail banking, asset management, leasing, real estate services, and renewable energy project financing. Founded over a century ago, Rabobank is one of the largest banks in the world, with nearly $1 trillion in assets and operations in more than 40 countries. In North America, Rabobank is a premier bank to the food, beverage and agribusiness industry. Rabobank's Food & Agribusiness Research and Advisory team is comprised of more than 80 analysts around the world who provide expert analysis, insight and counsel to Rabobank clients about trends, issues and developments in all sectors of agriculture. www.Rabobank.com SOURCE Rabobank
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