Government must reduce GST and improve farming processes to boost demand for coffee: Praveen Jaipuriar, CEO of Continental Coffee

The government must identify areas such as availability, product costs and purchasing barriers that directly impact coffee Consumers want to increase demand for the drink in India, says Praveen Jaipuriar, CEO, Continental coffee Limited. In addition, the Goods and services tax Taxes on coffee products should be reduced across the entire range of coffee drinks from 18% to 5%, he says.

In an interaction with ET Digital, Jaipuriar explains how advancements in biotechnology, including genetic engineering and selective breeding, are enabling the development of Varieties of coffee which are more resistant to diseases, pests and extreme weather conditions. Edited excerpts:

The Economic Times (ET): How are things looking globally? coffee consumption Are patterns changing? What are the new global trends?
Praveen Jaipuriar (PR): Coffee consumption can be understood by dividing markets into mature or evolved markets and emerging markets. Given the nature of mature markets and their consumers, their demands have largely evolved beyond basic coffee needs such as availability and affordability to nuances such as coffee types, formats and flavours, health impact, social and environmental consequences of their coffee, etc. Evolved markets are seeing trends such as the third wave coffee movement, which emphasises the artisanal aspect of coffee production and preparation, focusing on coffee bean species, coffee bean origins, roast profile and preparation methods. There is also a rise in sustainable coffee and carbon neutral coffee as consumers are increasingly concerned about the environmental and social impact of their coffee consumption.

As more people consume coffee, newer consumption formats are gaining prominence, such as capsules, coffee sachets and decoctions. Finally, the rise of Specialty coffee The growth of coffee shops is most visible in cities where coffee culture is booming. On the other hand, emerging markets such as China and India are experiencing significant growth due to the introduction of coffee varieties such as cold brew and ready-made beverages and improved at-home and out-of-home consumption. The market for ready-to-drink (RTD) coffee beverages is expanding rapidly. There is also a rise in flavoured coffees and coffee premixes.

ET: What is the role of technology in addressing challenges related to climate change and sustainability in coffee cultivation?
Public relations: Technology plays a critical role in the supply chain and, even more so, in agriculture and production. Some of the ways agritech is already integrated into coffee farming and may play a significant role in the future include climate adaptation and precision farming techniques, such as the use of drones, sensors, and satellite imagery. Technology helps predict weather patterns and understand soil health, track flowering and ripening, and enables farmers to make informed decisions about irrigation, fertilization, and harvesting. Data analytics platforms aggregate data from multiple sources, helping farmers analyze trends and predict challenges such as pest infestations or drought. Advances in biotechnology, including genetic engineering and selective breeding, are enabling the development of coffee varieties that are more resilient to disease, pests, and extreme weather conditions.

These climate-resilient varieties can help maintain coffee production even as climate change alters growing conditions. Technologies that incorporate renewable energy sources, such as solar-powered dryers and energy-efficient processing equipment, are reducing the carbon footprint of coffee production.

ET: How can the government support the Indian coffee industry to meet the demands of the domestic and international market?
Public relations: To boost domestic demand for this growing beverage, it is essential that the government identifies areas that directly impact the consumer (such as availability, product costs, purchase barriers and purchase drivers) and takes measures to promote demand.

GST on coffee products has a direct impact on costs and purchasing decisions. Therefore, instead of imposing 18% GST on instant coffee, it can be significantly reduced to 5%.

Given the nature of this agricultural commodity, its prevalence and frequency of consumption, coffee can be given commodity status, thereby reducing taxes on it and making its cultivation eligible for government programs. By reducing barriers to coffee imports, the government can not only improve Indian consumers’ access to international coffee products, but can also reduce prices and stimulate consumption.

The government can promote Indian coffee at global forums. By training farmers, it can improve yield per hectare and would also give them better returns. The government can negotiate favorable trade agreements that reduce tariffs and barriers for coffee exports. Offering incentives for exports, such as tax exemptions or subsidies, can encourage producers to focus on quality improvements that meet international standards.

ET: Despite growing interest, India still lags behind markets like the US or the UK in terms of coffee consumption. What are the key factors contributing to this disparity and how can the Indian coffee industry bridge this gap?
Public relations: The disparity is largely a result of a greater preference for tea, price sensitivity to relatively more expensive coffee, the perception of coffee as an “occasional or luxury” drink, and its availability everywhere. India has a long-standing tradition of drinking tea, which is generally considered more affordable and accessible than coffee.

In rural areas, where a significant portion of the population resides, tea remains the dominant beverage. Coffee consumption is more concentrated in urban centers, but even there it competes strongly with tea. Coffee, especially in the form of specialty or premium beverages, is almost always more expensive than tea, which affects its appeal in a price-sensitive market like India. Many Indian consumers are not fully aware of different types of coffee and brewing methods, which limits their willingness to explore beyond instant coffee. While coffee chains and cafes have increased in large cities, these are still limited to smaller towns and rural areas where coffee is not readily available.

To overcome this gap, the Indian coffee industry can invest in marketing campaigns and educate consumers about the variety and benefits of coffee. Linking coffee to modern Indian culture, through targeted campaigns, can help change perceptions. The rise in coffee consumption in South India can be leveraged to showcase the “indigenousness” of coffee and bring it closer to the general public. Introducing more affordable coffee options and offering smaller, more accessible packs or single servings can appeal to mass markets and cost-conscious consumers.

ET: Which regions in India show the highest demand for coffee? How does CCL plan to explore and expand in areas where demand has been growing more slowly?
Public relations: The southern region contributes 60% of the coffee consumption. Of this, Tamil Nadu contributes 50%. Continental Malgudi is our largest brand in the south. It has contributed positively and has grown at a healthy pace across the region.

However, we see Tamil Nadu as a huge opportunity and have planned a good marketing mix for the season. To explore and expand in areas where demand has been growing more slowly, we are looking at premiumisation, introduction of new variants, enhancing and increasing at-home and out-of-home consumption opportunities and exploring coffee-adjacent areas.

ET: What are the marketing plans and strategies of CCL Products (India) Limited?
Public relations: We take a multi-faceted approach in our marketing strategies to develop and grow our presence. We seek to expand into regions where our presence is relatively low through enhanced distribution networks and by onboarding retailers. We have begun expanding into international markets through branded business by leveraging our B2B business and understanding of consumer preferences.

We have a focused approach to enhance online and offline presence through distribution excellence, portfolio enhancement and offerings. By focusing on trial generation through dry and wet sampling, we seek to enhance the touchpoints that our brands generate. We actively engage in sampling of our products, enabling the generation of meaningful trial.

We have entered the coffee retail segment through our in-house coffee shops. Improved integration by expanding our coffee machine business and increasing its reach and ease of use across all touchpoints enables better brand image and better service to consumers.