Coffee
that bites
Rabo
finance insists that India, being amongst the top 10 coffee producing
countries, needs a concrete approach towards producing speciality
coffee to boost exports
There
is a buzz in the industry that the Indian coffee segment will undergo
significant changes with an increasing trend towards superior varieties
of coffee and a greater focus on quality. Given the growing tendency
of consumers to prefer specialty coffees in the key coffee markets
of the US and the European Union (EU), new markets for coffee producers
and marketers are bound to open up.
Similar
to the trends observed in other developed, as well as emerging coffee
markets, growth in coffee consumption in India will primarily be
driven by coffee bar chains, vending machines and specialty, fresh
R&G (roast and ground) coffee. This trend underlines the increasing
importance that domestic players must accord to establish their
presence in all these segments in order to capture a share of this
growing market. Players such as Nescafé and Tata Coffee have already
adopted strategies to expand their operations into coffee vending
and coffee bars.
Given
the exponential growth likely to be witnessed in the liquid coffee
retailing business, exciting opportunities exist for the entry of
new domestic and international players.
Positioning
Indian coffee globally
India,
with about 0.3 million tonnes of annual coffee production, accounts
for 3 per cent of the total world production. India is the world’s
fifth largest coffee producer and exports over 80 per cent of the
total coffee produced. Russia, Germany and Italy account for over
50 per cent of Indian exports.
Coffee
is cultivated in the three southern states of Karnataka, Kerala
and Tamil Nadu. The tropical climate, fertile soil and the scientific
methods of cultivation have helped develop both varieties of coffee
– Arabica and Robusta, the latter currently constituting and accounting
for about 65 per cent of the entire production .
Karnataka
is the largest coffee producing state, accounting for about 70 per
cent of the production (59 per cent of Arabica, 41 per cent of Robusto).
Robusto is dominant in Kerala (which accounts for 23 per cent of
production) and Arabica in Tamil Nadu (which accounts for 6 per
cent of production). Most coffee holdings are small, with over 65
per cent of the area comprising smallholders with individual holdings
of less than 10 hectares. Larger growers, with an individual holding
size of more than 10 hectares, account for 40 per cent of the output.
Regulating
Coffee
Until
1992-93 coffee marketing, both domestic and export, was wholly administered
and regulated by the Indian Coffee Board. Reflecting the government
policy and responding to the views of the growers, the Board initiated
a process of liberalisation during 1992-93. An Internal Sale Quota
(ISQ) was introduced, which allowed growers to sell 30 per cent
of their output directly to the domestic market. The ISQ was replaced
by a Free Sale Quota (FSQ) in 1993-94, which allowed growers to
sell 50 per cent to the domestic market or export directly. This
was subsequently increased to 100 per cent for all growers by 1995-1996.
The
fact that the coffee trade was controlled until 1995-96 translated
into limited efforts to promote Indian coffee, as distinctive and
superior, in the global market even though 35 per cent of the Indian
produce was of high-grade Arabica. A large proportion of Indian
coffee is used for preparing coffee blends, although there are several
varieties that qualify to be sold in their pure form.
With
the downturn in international coffee prices that began in 1997,
Indian exporters and the Indian Coffee Board started intensifying
efforts to position India as a quality coffee producer. Exporters
are increasingly promoting Indian specialty coffees in the world
market, with the aim of gaining higher value for their products.
There
is a greater focus on improving the quality of Indian plantations
through attention to the process adopted in harvesting, handling
and drying of coffee...
.....CONTD
TO
READ FURTHER... SUBSCRIBE
TO YOUR COPY TODAY!!!
