Ready-to-drink tea, coffee market to soar

Last Updated: Wed, Feb 20, 2013 05:00 hrs

Mumbai, Feb 20 (IANS) The humble cup that cheers is now set for huge growth in the ready-to-drink (RTD) tea and coffee sectors, thanks to the proliferation of cafe culture among urban youth, and is expected to double to a whopping Rs.2,250 crore ($410 million) by 2017, an official said.

The domestic RTD tea and coffee market, which currently stands at an estimated Rs.1,100 crore, is dominated by fashionable outlets like Cafe Coffee Day, Baristas, Costa Coffee, Coffee World, Lavasa, Coffee Bean & Tea Leaf and the newcomer Starbucks, with many more in the pipeline.

"A thriving independent upscale cafe culture attracting youth will ensure huge growth in the domestic ready-to-drink tea and coffee sectors, aided by the health benefits of the beverages," Suresh Kotak, chairman of Kotak Commodities Ltd, told IANS at the just-concluded World Tea & Coffee Expo-2013 here.

Around 50 Indian and a couple of foreign exhibitors participated in the expo, which attracted over 3,000 people from all over the world, said Priti Kapadia, director of Sentinel Exhibitions Pvt. Ltd.

"For international brands, India - a market of over a billion people - is almost impossible to ignore. The total branded tea segment in India, currently valued at Rs. 6,000 crore, is expected to double in the next five years. The domestic coffee consumption too has been continuously growing annually at six percent," Kapadia added.

The success of coffee chains in India - estimated to be over 4,000 - has spurred tea makers to launch similar cafes selling a variety of teas, with the added advantage of being considered healthy.

A majority of these retail chains of cafes, combining tea and coffee, are spread across the northern states, Maharashtra, Gujarat and Kerala besides all the metros.

And, to lure customers, many of these small-sized parlours, designed to provide a "hang-out" atmosphere, also offer snacks and accompaniments to keep the patrons busy - and drinking ever more!

In places like Mumbai, such cafes, virtually one on every street, are fast becoming meeting points for youngsters, especially in the 15-20 age group, starved of open spaces.

"The clean, good ambience, comfortable air-conditioned surroundings, the wide array of coffees on offer make us come here regularly. It's become virtually our main hang-out after college lectures," said Priya Ghanekar, 19, a student from the northern suburb of Kandivli.

According to some studies, teenagers comprise around 25 percent of the customers at these cafes. Around 40 percent comprise youth aged 20-25 years and rest fall in the "senior youth" category of 25-plus but under 30 age group, including young executives, BPO workers and the like.

There are many who however remain unimpressed by these flashy cafes and prefer to stick to the friendly neighbourhood "chai-wala".

For instance, Harish Shah, a realtor from the northern suburb of Borivli, thinks nothing of sipping over a dozen "cutting chais" at a nearby roadside tea stall daily with clients and associates.

"See, it's fresh, made right in front of you; you can even make it to order as per your taste. The quantity is just right and it's very refreshing," Shah justified, inviting one to join him.

While the wide varieties of coffee or tea are available in the cafes, Shah shrugged and pointed to the large crowds at the various tea stalls that practically work from 5 a.m. to 10 p.m.

The outlook for tea and coffee is equally bright internationally, according to Priti Kapadia.

The worldwide market for RTD tea and coffee, pegged at $69 billion in 2011, is likely to touch $125 billion by 2017, signalling an anticipated annual growth of nearly 11 percent between 2012-2017.

A recent study by the Assocham found that the Indian tea industry is growing at a compound annual growth rate (CAGR) of around 15 percent, accounting for 30 pecent of the global tea output and consuming nearly 25 percent of the total tea produced worldwide.

This makes India the world's largest consumer, second largest producer and fourth largest exporter of tea, the study says.

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