RESEARCH PROJECT REPORT ON

EVALUATION & CHANGING TRENDS IN INDIAN COFFEE

INDUSTRY

COMPILED BY:MALVIKA PURANIK

3 RD B.Sc in H&HA IHM-Goa

2009-2010

EVALUATION AND CHANGING TRENDS IN INDIAN COFFEE INDUSTRY

A research project submitted to the Institute of Hotel Management, Catering Technology and Applied Nutrition, in partial fulfillment of the requirement for the 3 year B.Sc. course in Hospitality and Hotel Administration

_______ __________ ________ Mr. Abhishek Bhosle Mr. Kamlesh Dange Miss Malvika Puranik (Research Guide) (Research Co-ordinator) (Student)

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CERTIFICATE

This is to certify that Ms. Malvika Puranik, a third year B.Sc. Student of Institute of Hotel Management Catering Technology and Applied Nutrition, GOA, has successfully completed his Research Project titled “Psychology In Eaten Trends,” as a part of the three year B.Sc. in Hospitality and Hotel Administration.

______________ _________________ ______________ Mr. Roque D’Cruz Mr. Abhishek Bhosle Mr. Kamlesh Dange (principal) (Research Guide) (Research Co-ordinator)

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TABLE OF CONTENTS

1. ACKNOWLEDGEMENT

2. LIST OF TABLES

3. LIST OF FIGURES

4. ABSTRACT

5. CHAPTER

i. INTRODUCTION

ii. REVIEW OF LITERATURE

iii. AIMS, OBJECTIVES & HYPOTHESIS

iv. METHODOLOGY

v. RESULTS & DISCUSSION

vi. SUMMARY & CONCLUSION

6. LIMITATIONS & RECOMMENDATIONS

7. BIBLIOGRAPHY

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ACKNOWLEDGEMENT

With deep sense of gratitude, I acknowledge my indebtedness to all the people who have helped me in the preparation of this report.

I am very delighted to express my kind regards to our faculty coordinator of the research project- Mr. Kamlesh Dange and my respected guide- Mr. Abhishek Bhosle who provided me with valuable guidance to complete my project.

Special thanks to Mrs. Sakina who also guided me and supplied me with information regarding my project and also for solving my technical difficulties that I came across during the course of my project.

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LIST OF TABLES1. Estimated Domestic Consumption in India (1995 - 2008)2. Exports of Coffee from India by Countries FY 2008/2009 * (Quantity, Percentage

and Unit Value)3. Production of coffee in major states/ districts of India.

LIST OF CHARTS

1. Fig 1- Favorite hangout places

2. Fig2 -factors influencing your above decision

3. Fig3 –preference in hangout places for drinking coffee

4. Fig 4- factors influencing your above decision

5. Fig 5- preferences in choosing your company

6. Fig 6-one’s favourite coffee bar

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AIM

To analyse the changes taking place in the coffee industry in the recent past.

OBJECTIVE OF THE STUDY

To study the behaviour and preferences of coffee drinkers in Goa.

Coffee Industry in India.

Changing Trends of coffee Industry in India.

THE METHODOLOGY

The study has been divided into two distinct phases: the preliminary phase and the second

phase.

The preliminary phase,

This consisted of exploratory research. For this, questions were made based on the above

assumptions. These were then tried on 5 to 6 consumers which helped me add or delete

choice and hence prepare the final questionnaire. This also helped me to properly

delineate the scope and modus operandi for the successive steps.

The second phase

Questionnaires were administered to samples from the target age group as identified

through exploratory research, as well as existing employees of such coffee-bars/outlets.

20 consumers were asked to fill the questionnaire.

This data thus collected has been supplemented with secondary data sourced from various

printed matter and the Internet. Following this, the data was put to frequency analysis and

presented in the form of a report. The report presents a consolidated list of attributes that

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are contributing to the success of coffee bars. Also, recommendations for enhancement of

the overall experience of the customer have been put forth. The intention has been to

explore similarities and dissimilarities in the perceptions of consumers and the coffee bar

owners, and to help bridge this gap.

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INTRODUCTION

Somewhere on the world right now, a person is waking up feeling a bit groggy.  Perhaps

they're getting ready to go to work or maybe even to school.  Regardless of their

situation, this person isn't feeling that great.  They just need one thing to put them in the

proper frame of mind to have a good day.  That thing: coffee.

Coffee is one of the most popular drinks in the world.  Its popularity is evident by the fact

that it is among the three largest traded commodities in the world.  Originally just a

simple drink, coffee has spawned numerous other coffee-based beverages from espresso

to cappuccino. 

Java and mocha have become a part of the English lexicon.  As have the terms grande

and venti and short to describe different sizes of coffee.  Jim Jarmusch made a critically

acclaimed movie called Coffee and Cigarettes, in which every scene was based around

characters drinking coffee or a coffee-related drink like tea.  Coffee has become

ubiquitous in our world and has become the domain for activists, who protest the

conditions of coffee planters and promote fair trade coffee.  It has become a major seller

for large corporations that sell countless varieties of specialty coffee and flavored coffee. 

Additionally, coffee has created a mini rivalry between true coffee lovers and posers. 

The true coffee lover prefers the smooth blend of an Ethopian Harar blend above

anything else.  Of course, individuals that drink instant coffee are instantly shunned from

the coffee loving community.

So, now that we have determined that coffee creates a lot of passion among its drinkers,

we have to look at exactly what is the appeal of coffee?  Perhaps it's in the lovely, strong

smell of a fresh cup of coffee that tickles your sense of smell, which creates a sense of

anticipation in your taste buds.  It can also be the taste, the sudden jolt that you get when

you sip a nice, strongly brewed cup of coffee.  It can also be in the flavor and considering

how many types of flavored coffee is available, it is now possible to have a specific type

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of flavored coffee blend for every one of your moods.  It can also just be the social factor,

as there are very few things as relaxing with friends having a cup of coffee and just

talking nonsense.

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REVIEW OF LITERATURE

COFFEE HISTORY

The word “coffee” comes from the Arabic quwah. Coffee originated in Ethiopia, where

Coffea arabuca, one of the three main species, grow wild. The others, Coffea robusta and

liberica respectively. The coffee tree requires a hot, moist climate and a rich soil.

Arabica was cultivated about 575 AD but it was not until the fifteenth century in

Southern Arabia that the plant was extensively cultivated. From there it spread to

countries bordering the Indian Ocean and the Mediterranean. According to the Kaldi

Coffee Legend, coffee is said to have been first discovered when a goatherd in Abyssinia

observed his goats dancing on their hind legs after eating some red berries. This

prompted him to taste the berries, and his eyes opened. He took some of the berries to the

village, where everyone took a fancy to the discovery, as it helped them stay awake

during their prayers. Since then coffee became so popular that the world’s first coffee

shop was opened in Constantinople in 1475.

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Coffee is today the largest traded commodity in the world, second only to crude oil.

Brazil and Columbia are the top two coffee producers in the world, accounting for more

than 40% of the total world produce. India's contribution is a paltry 4.1%.

In India coffee cultivation is largely confined to the hilly regions of the southern states of

Karnataka, Tamil Nadu and Kerala. Karnataka accounts for 53 percent of the planted.

c 850

First known discovery of coffee berries. Legend of goat herder Kaldi of Ethiopia who

notices goats are friskier after eating red berries of a local shrub. Experiments with the

berries himself and begins to feel happier.

c 1100

The coffee first trees are cultivated on the Arabian peninsula.  Coffee is first roasted and

boiled by Arabs making "qahwa" --- a beverage made from plants.

1475

The worlds first coffee shop opens in Constantinople. It is followed by the establishment

of two coffee houses in 1554.

c 1600

Coffee enters Europe through the port of Venice. The first coffeehouse opens in Italy in

1654.

1607

Coffee is introduced to the New World by Captain John Smith, founder of Virginia at

Jamestown... Some Canadian historians claim it arrived in previously settled Canada.

1652

The first coffeehouse opens in England. Coffeehouses are called "penny universities" (a

penny is charged for admission and a cup of coffee). Edward Lloyd's coffeehouse opens

in 1688. It eventually becomes Lloyd's of London, the world's best known insurance

company.  The word “TIPS” is coined in an English coffee house:  A sign reading “To

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Insure Prompt Service” (TIPS) was place by a cup.  Those desiring prompt service and

better seating threw a coin into a tin.

1672

The opening of the first Parisian cafe dedicated to serving coffee. In 1713, King Louis

XIV is presented with a coffee tree. It is believed that sugar was first used as an additive

in his court.

1683

The first coffeehouse opens in Vienna. The Turks, defeated in battle, leave sacks of

coffee behind.

1690

The Dutch become the first to transport and cultivate coffee commercially. Coffee is

smuggled out of the Arab port of Mocha and transported to Ceylon and East Indies for

cultivation.

1721

The first coffeehouse opens in Berlin.

1723

Coffee Plants are introduced in the Americas for cultivation. Gabriel de Clieu, a French

naval officer, transports a seedling to Martinique. By 1777, 1920 million coffee plants are

cultivated on the island.

1727

The Brazilian coffee industry gets its start from seedlings smuggled out of Paris.

1750

One of Europe's first coffeehouses, Cafe Greco, opens in Rome. By 1763, Venice has

over 2,000 coffee shops.

1822

The prototype of the first espresso machine is created in France.

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1885

A process of using natural gas and hot air becomes the most popular method of roasting

coffee.

c 1900

Kaffeeklatsch, afternoon coffee, becomes popular in Germany.

1905

The first commercial espresso machine is manufactured in Italy.

1908

The invention of the worlds first drip coffeemaker. Melitta Bentz makes a filter using

blotting paper.

1933

Dr. Ernest Illy develops the first automatic espresso machine.

1938

Nescafé instant coffee is invented by the Nestlé company as it assists the Brazilian

government in solving its coffee surplus problem.

1945

Achilles Gaggia perfects the espresso machine with a piston that creates a high pressure

extraction to produce a thick layer of crema.

1991

Caffè Carissimi Canada, a network of espresso service providers is formed in Canada,

modeled after a visit to Franco Carissimi (roaster and equipment manufacturer) in

Bergamo Italy.  It becomes the fastest growing network of private and independant super

automatic machines providers in Canada.

1995

Coffee is the worlds most popular beverage. More than 400 billion cups are consumed

each year. It is a world commodity that is second only to oil

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CHANGING CONSUMER TRENDS IN INDIA

CONSUMER TASTES AND HABITS ARE CHANGING IN INDIA AS COFEE

BAR/CAFES SPRING ONTO THE SCENE. ESPRESSO, LATTES, AND

CAPPUCCINOS ARE FAST BECOMING POPULAR BEVERAGES IN THIS TEA

CONSUMING NATION.

India, the country with a rich tradition and cultural past, has a history of coffee

cultivation.

It dates back a few centuries to when a Muslim divine who was returning from a

pilgrimage to Mecca brought back seven coffee seeds from Yemen and germinated them

in his backyard in the Nananudan Hills. Ever since, there has been no looking back for

Indian coffee, and today our coffee industry is one of the country's biggest foreign

exchange earners. We have changed not only in size, but also in the ways we consume

coffee. The traditional method of drinking coffee entailed roasting the coffee beans at

home and then hand-pounding them into a powder and mixing the powder with hot water.

The decoction could then be mixed with milk and sugar and was served hot. This mixture

evolved from a combination of coffee and chicory (root extract), which was also brewed

in the same method.

Ever since the multinationals such as Nestle and Unilever entered our country, instant

coffee's popularity has also begun to rise. Due to the influence of western culture through

cable television channels and the liberalization of our economy, a large number of

multinationals have set up shop in our country, causing people to be exposed to a variety

other cultures. A large number of entrepreneurs have cashed in on this ongoing change

and have started offering the Indian consumer a variety of coffees which were previously

unavailable.

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The espresso culture has already started in India; however, it is limited to four cities and

eight odd suburbs. This in itself is a large market, given that around 26% of our

population (about 846 million) constitutes a huge market. Additionally, the people living

here are quickly adapting to these new changes. Given this golden opportunity, many

espresso bars have sprung up in these places and are providing the consumer with an

opportunity to choose from a variety of coffee beverages. All the big hotel chains - Viz.,

Le Meredian, The Oberoi, Taj Group of Hotels, etc. - have exclusive coffee shops with a

wide choice of coffees to offer their clients and corporate visitors. A more amazing fact is

the way in which people have readily accepted these new varieties of coffees. The

majority of the market for these coffees lies between the age groups of 18-45 years old.

Even though not many people have thought of this idea, some coffee exporters, ABC Ltd.

for example, have opened espresso bars and are doing quite well. And while the country's

EXIM policy does not allow the import of coffee beans in any form for home

consumption, India itself produces a wide variety of specialty coffee such as the Mysore

Nuggets (grown at an elevation of over 4,000 ft.), the Kaapi Royale, the high grown

Girls, the Robusta Parchment AB's, and the Monsooned Malabar AA. These coffees have

been used in various blends to produce a fine cup of espresso. India is a bird-friendly

country; our coffee is grown under natural shade, which makes for a bolder, more

uniform bean than coffee grown under open conditions.

Even though the per capita consumption of coffee in India is very low at 54 grams, the

government of India has chalked out an ambitious plan (as declared in the National

Coffee Conference held at Bangalore on December 11, 1998) to improve this low per

capita consumption through generic promotion.

It is a well accepted fact that, given these changing trends, there is great potential for

setting up these espresso coffee bars in India. I don't see any reason why potential

investors such as Starbucks and machine manufacturers such as La Marzocco, Rancilio,

or Brasilia should not set their eyes on our country.

If we can change the coffee drinking habits of the Indian consumer and at the same time

increase domestic consumption, then we will probably be looking at a huge potential

market for specialty coffee.

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INDIA'S COFFEE INDUSTRY

Significant increase both in production and exports notwithstanding, the international

coffee market has been experiencing continuous fall in the commodity since the

beginning of the current year (2007). The composite indicator prices, according to the

Internatioal Coffee Organization's market report, has dropped to US cents 99.30 per

LB in April, 2007 from US cents 105.81 per LB in January 2008. Production of

coffee during first six months of the coffee year 2006-07 stood at  9.29 million bags

in March 2007 signifying an increase of 15 percent from 8.07 million bags recorded

during comparable period of CY 2005-06. Exports in the first 6 months of coffee year

2006/07 (Oct-06 to Mar-07) were up over 18 percent from the same period last year -

totalling 48.49 million bags compared to 40.98 million bags. Arabica exports in the 6-

month period went up by over 13 percent from 27.39 million bags to 31.07 million

bags, whereas Robusta exports increased by over 28% from 13.59 million bags

to 17.41 million bags. 

Volume wise, the permits issued for coffee exports in fiscal 2006-07 is the highest

ever (2,58,546 tonnes) surpassing the previous best of 2,46,908 tonne of actual

exports in 2000-01. Export earnings in fiscal 2006-07 is the highest for the past 8

years i.e. since 1999-2000.The total export earnings will cross Rs.2000 crore for

2006-07.  

According to ICO Executive Director Néstor Osorio,there are only a few measures

that could directly address the supply-demand balance. On the supply side – in view

of the political and technical difficulties of supply-management schemes – two

policies were possible:

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(a) to create awareness – best achieved through the ICO – in national and international

bodies of the danger of embarking on any projects or programmes which would further

increase supply; and

(b) working to increase the benefits accruing from value-added products rather than

traditional bulk commodity exports. The greatest potential for restoring balance, he

pointed out, lay in promoting market development measures to increase demand. These

should include: (a) support for the ICO Quality-Improvement Programme as a means of

improving consumer appreciation of coffee as well as having an associated effect of

removing some sub-standard coffees from the supply side of the world coffee equation;

(b) action to increase consumption in coffee-producing countries themselves, which

should have a number of positive effects such as providing an alternative market outlet,

increasing producer awareness of consumer preferences, stimulation of small and

medium enterprises, etc., as well as acting to increase demand; (c) action to enhance

knowledge and appreciation of coffee in large emerging markets, such as Russia and

China, following the successful ICO campaigns in the 1990s; and protecting

consumption levels in traditional markets through quality maintenance, development of

niche markets and dissemination of positive information on the health benefits of coffee

consumption.

According to latest ICO monthly report, world consumption in 2006 is estimated at

117.93 mn bags compared with 116.06 mn bags. While ICO member countries'

domestic consumption in 2006 is estimated at little over 31 mn bags, the importing

countries consumption is estimated at 86.84 mn bags. European Community's co

nsumption is higher at 38.97 mn bags compared with 85.75 mn bags in 2005. 

India accounts for about 4.5 percent of world coffee production and the industry

provides employment to 6 lakh people. Among the coffee growing states, Karnataka

accounts for 70 percent of country's total coffee production followed by Kerala (22

percent) and Tamil Nadu (7 percent). Europe accounts for about 70 percent of India's

total coffee exports. Of this again, 70 percent is shipped via Suez Canal. Major Indian

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coffee importing countries include Italy, Germany, Russian federation, Spain,

Belgium, Slovenia, US, Japan, Greece, Netherlands and France.

Estimated Domestic Consumption in India (1995 - 2008)

Calendar Year Quantity (in MT)

1995 50000

1996 50000

1997 50000

1998 50000

1999 55000

2000 60000

2001 64000

2002 68000

2003 70000

2004 75000

2005 80200

2006 85000

2007 90000

2008 94,400

 

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Exports of Coffee from India by Countries FY 2008/2009 * (Quantity, Percentage and Unit Value)

 Sl No Destination Quantity (In MT) % to Total Unit Value Rs/Tonne

1 ITALY 50802 25.85 108431

2 RUSSIAN FEDERATION 16123 8.20 122337

3 GERMANY 14649 7.45 123290

4 BELGIUM 9673 4.92 105832

5 SPAIN 8556 4.35 97231

6 UKRAINE 5445 2.77 139936

7 FINLAND 5292 2.69 130752

8 JORDAN 5187 2.64 112351

9 CROATIA 4819 2.45 96869

10 SLOVANIA 4715 2.40 95455

11 GREECE 4614 2.35 97514

12 SWITZERLAND 3813 1.94 130654

13 FRANCE 3784 1.93 111941

14 MALAYSIA 3730 1.90 103402

15 KUWAIT 3536 1.80 128257

16 AUSTRALIA 3140 1.60 117913

17 PORTUGAL 2898 1.47 97608

18 HUNGARY 2774 1.41 118054

19 ISRAEL 2745 1.40 102583

20 SINGAPORE 2566 1.31 117929

21 EGYPT 2566 1.31 93975

22 ALGERIA 2448 1.25 94367

23 NETHERLANDS 2106 1.07 115885

24 U.S.A. 1948 0.99 134985

25 LIBYA 1913 0.97 92029

26 SAUDI ARABIA 1738 0.88 138437

27 UNITED ARAB EMIRATES 1716 0.87 139997

28 JAPAN 1679 0.85 138062

29 TAIWAN 1361 0.69 109863

30 POLAND 1336 0.68 110802

31 UNITED KINGDOM 1285 0.65 131621

32 LATVIA 1241 0.63 137686

33 TURKEY 1206 0.61 125829

34 CANADA 1158 0.59 107599

35 SYRIA 1150 0.59 109718

36 ROMANIA 972 0.49 97644

37 AUSTRIA 870 0.44 93726

38 CHINA,PEOPLES R/O 821 0.42 107190

39 NORWAY 794 0.40 114097

40 TUNISIA 721 0.37 104177

41 VIETNAM 628 0.32 107241

42 SULTANATE OF OMAN 598 0.30 108954

43 INDONESIA 572 0.29 135188

44 MYANMAR 548 0.28 110628

45  OTHERS  6297 3.20 138695

  TOTAL 196531 100.00 114594

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PRODUCTION OF COFFEE IN MAJOR STATES/DISTRICTS OF INDIA

State/District

Post Blossom Estimation

2008-09

Post Monsoon Estimation

2007-08

Arabica Robusta Total Arabica Robusta Total

Karnataka            

Chikmagalur 38,850 32,900 71,750 36,300 27,400 63,700

Kodagu 24,370 90,000 114,370 24,750 83,950 108,700

Hassan 18,050 10,000 28,050 12,900 6,275 19,175

Sub total 81,270 132,900 214,170 73,950 117,625 191,575

             

Kerala            

Wyanad 10 47,500 47,510 25 40,300 40,325

Travancore 815 7,000 7,815 675 6,000 6,675

Nelliampathies 600 1275 1,875 600 1400 2,000

Sub total 1,425 55,775 57,200 1,300 47,700 49,000

             

Tamilnadu            

Pulneys 5,500 325 5,825 7,575 425 8,000

Nilgiris 1,875 3,325 5,200 1,675 3,175 4,850

Shevroys (Salem) 3,050 50 3,100 3,150 0 3,150

Anamalais

(Coimbatore)2,000 500 2,500 1,650 450 2,100

Sub total 12,425 4,200 16,625 14,050 4,050 18,100

             

Non Traditional

Areas            

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Andhra Pradesh

& Orissa4,800 80 4,880 3,110 65 3,175

North Eastern Region 80 45 125 90 60 150

Sub Total 4,880 125 5,005 3,200 125 3,525

             

Grand Total (India) 100,000 193,000 293,000 92,500 169,500 262,000

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THE COFFEE REGION IN INDIA

The coffee regions in India are in the three southern states of Karnataka, Kerala and

Tamilnadu, apart from a small quantity (approx. 8%) which is grown in the non-

traditional belts of Andhra Pradesh and the North Eastern States of India such as Assam,

Nagaland and Arunachal Pradesh.

Karnataka State, which constitutes 53% of the country’s production, produces both

Arabica and Robusta. While Kerala predominantly produces Robusta coffee [28% of the

total production in India is grown in this state], Tamilnadu produces both Arabica and

Robusta, growing 11% of the total coffee grown in India.

In the State of Karnataka, the top quality coffee regions are Chikmagalur, Bababudan,

Biligiris and Coorg. The altitude at which coffee is grown in Chikmagalur is between

2,000 and 3,500 ft, with Arabica production being approximately 20,000 T and Robusta

25,000 T. This district includes the famous Mysore coffee, which has a visual quality of

long wide beans, with bluish grey color and the cup is characterized by mild body, fair

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acidity and fine subtle flavor. The uniqueness of Mysore coffee is that it could be used as

the main component of a blend; as a fragrant aromatic topping for a drink or lending to

being blended with coffees from other origins.

The famous Bababudan Hills, where the first coffee seeds were planted by a pilgrim Saint

Bababudan, to result in the birth and establishment of the present Indian coffee industry,

is a top quality coffee region in India. This region is often referred to as the “Giri’s.”

Here, coffee has been planted at a high altitude of 3,500 to 5,500 ft, yielding excellent

quality dense coffee beans. This hill produces 35,000 T Arabica and 5,000T Robusta. The

washed Arabicas of the Giri’s have Good Body, Fine Acidity and an aromatic bouquet,

with distinct mocca flavor. The gourmet markets in the world, including Japan, purchase

this regional coffee, which has the distinction of not only highlighting exotic dark roast

espressos, but also providing the

base for an espresso. A dual role

is indeed the speciality of this

coffee from the Giri’s.

Biligiris is not a well-known

coffee region, but has the

potential to produce a small

quantity, yet exotic quality coffee

beans. The altitude is 3,500 to

4,500 ft and the quantity of Arabica produced is just 5,000 T. Small growers dominate

this growing district and produces some of the finest, large elongated coffee beans, with

discerning floral notes, laced with acidity.

Coorg, known as Kodagu, the home to the respected coffee growing community of the

Kodavas, produces both Arabica and Robusta coffees. The elevation ranges from 1,500 to

3,500 ft, with Arabica accounting for approx. 25,000 T and Robusta 60,000 T. The

Robustas produced are some of the best in the world, with the beans being compact, oval

to round in shape with pointed tips and golden brown colour. As for the Robusta

Parchment, the highest quality in India is obtained from this region. The beans have a

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Left: The famous Babaduban Hills, a top quality

coffee region also called the "Giri's"; Right:

Araku Valley, a non-traditional coffee area in

Andhra Pradesh.

bluish grey colour, with “soft” and “Neutral” tones in the cup and could provide the

buttery crema, which is a hallmark of quality in an espresso drink.

Kerala, with its wide expanse of backwater lagoons and coconut trees, produces mainly

quality Robusta, of approximately 55,000 T. Some of the excellent Robusta Cherry

coffees in India are from the regions of Wynaad and Travancore in Kerala State.

The Robusta Cherry beans from Wynaad are produced at an altitude of 1,000 to 2,000 ft,

accounting for around 40,000 T of Indian Robustas. The beans have the characteristics of

golden brown color, with strong body and bright neutrality in the cup.

Travancore Robustas, almost unheard of, are uniquely distinct, with the potential for

preparation of special and even specialty coffees!! The Travancore region, best known

for its beautiful topography, hilly terrain and above all the Maharajas and the Maharanis

of yesteryears, also produces Robusta coffees, which have unique cup quality. The

quantity produced in this region is approximately 10,000 T, at an altitude of 2,000 to

3,000 ft. The Robusta beans could be best described as golden bold beans, with sparkling

neutrality and hardly any bitterness.

Tamilnadu, the state remembered for its myriad temples and historic culture, produces

both Arabica and Robusta coffees, with Arabicas of approx.12,000 T and Robustas of

5000T.

Nilgiris, the number one region in the world market for fragrant teas, is also the home to

aromatic and distinguished coffees from India. The Nilgiri Hills also known as the Blue

Mountains of India, produces just 2500 T of quality Arabica. The beans are blue in color,

large and wide with tight white centre cuts. In the cup, the quality is best described as full

bodied with fine acidity and flavor akin to wild berries. These coffees could be compared

with some of the finest coffees from Ethiopia and are appreciated by German and

Japanese buyers, who find their flavor and acidity excellent components for canned

coffee.

Shevaroy Hills is a place of scenic beauty, centered around a lake, with coffee bushes and

forest trees adorning hills at an altitude of 3,500 to 5,000 ft and producing just 3000 T of

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quality Arabica. Oranges, peaches and apples playing truant with ripe red coffee cherries

is the trade mark of Shevaroy Hills. As for the coffee beans which are medium in size,

are dense, distinctly green in color and have good clear acidity and a fragrance with a hint

of Spice. Truly unique beans to be served as filter coffee.

Anamalais, as the name implies, is the home to numerous herds of elephants, producing

special Arabica coffees, which are still unknown to coffee connoisseurs around the world.

This region in India, produces approx. 2,000 T of Arabica coffee, at an altitude of 2,000

to 3,500 ft. The beans are large, greyish green in colour with a balanced cup, highlighted

by “fruit” notes. The beans also roast evenly and lend themselves to uniform and

effective blending - a coffee roasters’ delight!

From the traditional coffee areas to the non-traditional coffee areas of Araku valley in

Andhra Pradesh and Kohima in Nagaland, Indian coffee is certainly preserving not only

the natural forests in these areas by preventing shifting cultivation; providing

employment to the tribal force (90% of whom are women and uplifting their lives) but

also enabling the preparation of some fine distinct coffees from these areas. Special

strains of coffee with lineage to an Ethiopian strain are being processed with upgraded

processing technology and the marketing of these coffees with distinct brand identities

are being explored.

Distinct Preparation Techniques To Market Estate Branded and Specialty Coffees

India has entered the arena of Estate Branded preparations. Distinct plant strains and

unique processing techniques have helped in the preparation and marketing of coffee as

“Estate Brands.” It is an established fact that each plant strain has distinct quality

characteristics. Certain estates cultivating plant materials with unique acceptable cup

quality characteristics have taken to processing them with strict adherence to quality

norms and are now launching them in the market as Estate Brands.

Meerthi Mountains, Banangala Organic, Horseshoe Heights, Jamboor and Buttercup Bold

are some of the Estate Branded Coffees, which have been prepared from distinct plant

strains and with special care during processing..

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Meerthi Mountains, a delicious coffee prepared from an exotic Indian strain of Sln. 9, is

from Badnekhan estate located in the Bababudan hills at an altitude of 4000 ft. These fine

washed arabicas are the result of care from the seed to the cup. The processing is carried

out on state-of-the-art machinery and is sun dried. The beans exhibit sweet acidic notes

and distinct flavour of fruit nuances in a caramel dip.

Banangala Organic is from a well-maintained estate in the region of Coorg and belongs to

the progressive company of The Bombay Burmah Trading Company. The coffee is

organically grown and is prepared from a distinct plant strain of BBTC Selection,

comprising greenish grey, bold dense arabica beans with balanced body and acidity and

an aftertaste of fruit notes laced with smooth acidity. This coffee could certainly be

served “black” and is the first Indian organic coffee to be offered to the overseas market.

Horseshoe Heights, an excellent Estate Branded Special Coffee of M/s Bettadakhan

Estate, prepared from Sln.795 coffee beans, is from a high altitude estate (4250 ft.)

nestled in the lush emerald valley in the Inner ‘Giri’ Mountains. The purity of the plant

material has been ensured with the planting of uniform and homogenous plant material of

the Sln.795 in distinct blocks on the estate. The coffee is prepared by the washed method,

without any chemicals or machine attrition, utilizing only an aagard pulper to remove the

fruit skins, with the rest of the operations such as the breakdown and removal of mucilage

carried out by natural fermentation and manual washing and finally being sun dried.

Labor intensive indeed, but the intrinsic flavour notes have been preserved and

highlighted by the natural methodology of selective hand picking, processing with

biological degradation and drying with the help of cost effective natural sunshine!

Jamboor, is a special coffee from Jamboor estate, at an altitude of 3500ft. in Coorg and

owned by the well known Corporate company of the Tatas. The washed Arabica of this

estate, is harvested by selective picking and is carefully processed both on the estate and

at their modern curing factory, where the coffee is not only meticulously graded and

stringently sorted, but also cupped to ensure the quality of the produce. This premium

coffee finds favor with roasters, who follow a fast technique of roasting and the balanced

body and acidity enables fine blending.

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Buttercup Bold, is an exotic name for an exotic robusta coffee from a small farmer in

Coorg. This estate houses distinct plant material of Sln.CxR, producing bold, dense

beans, which when washed, possess a grey hue with clean, soft “buttery” after notes in

the cup. This coffee could, with ease and perfection, provide the froth and bubbles for the

much sought after espresso.

India also prepares speciality coffees for coffee connoisseurs around the globe. We have

the proud privilege of having launched the Specialty Coffees of Monsooned Malabar and

Monsooned Robustas as early as 1972, even before the world was awake to the concept

of Specialty in coffee. These delicious beans, which are of golden hue, are large in size

and possess mellowness with a hint of spice, making them unique in the cup. You could

use these beans in a variety of ways….a neat coffee as an after dinner drink, as a

highlighter in an espresso blend or as a smooth body builder in your regular filter coffee.

Added, washed arabica and robusta beans from selected coffee regions of growth and

subjected to special preparation techniques have resulted in the speciality coffees of

Mysore Nuggets EB and Robusta Kaapi Royale launched by the Indian Coffee Board in

the 1990s. The popularity of these coffees is growing with the overseas trade. The

recently introduced premium grades of Plantation AA and Robusta Cherry AA,

comprising bold beans, which have been enriched with stringent quality standards are

finding ready acceptance in the market.

WITHIN THE PAST YEAR, WHAT ARE THE MOST IMPORTANT CHANGES

THAT YOU HAVE WITNESSED IN YOUR SEGMENT OF THE INDUSTRY

In the past year, the most important change witnessed in the Darjeeling tea industry has

been the effect of the trade-related Intellectual Property Rights. Further, there has been a

consolidation within the industry with change of ownerships.

India has made considerable progress in promoting organic products in the international

market. After having achieved recognition by the United States Department of

Agriculture (USDA), we have also been able to achieve equivalence with the EU. An

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interim letter from Switzerland, agreeing to equivalence, has also been received and a

notification is pending. This would mean that the certification bodies accredited by India

will be able to issue the scope and transaction certificates to enable India’s organic

products to enter the respective markets. This will bring down the certification cost for all

our exporters, and lend visibility to the “India Organic” logo through the documents and

products. This will facilitate the growth in the export of organic tea from India.

Darjeeling tea has been registered under the Geographical Indications of Goods

(Registration & Protection) Act 1999, and now enjoys protection as a member of the

World Trade Organizations (WTO).

Geography indicates which goods, such as agricultural, natural or manufactured goods

originate, or are manufactured in the territory of a country, region or locality where a

given quality, reputation or other characteristic is essential and attributable to its

geographical origin.

Also, the effects of global warming have been felt, and unusual weather threw the normal

pattern of harvesting into jeopardy.

Sanjay Bansal - Chariman - Darjeeling Tea Association, Ambootia - Tea Group Exports,

India

Farmers are now able to sell their coffee directly to buyers overseas, as opposed to being

forced by regulation to send their coffee for sale at the weekly central auction. For the

last few years there have only been three interim marketing agents acting as sales agents

for the farmers, but now - more or less - anyone who applies and can fulfill the

application criteria is eligible to be licensed for this function. This will undoubtedly

change the coffee industry in Kenya significantly, as middlemen and exporters are now

able to go directly to the farmer to source clean coffee. There will be winners and losers,

and we predict a fair amount of chaos, before a new status quo is reached. Many farmers,

mistakenly, believe that they will achieve far higher prices if they make direct sales with

overseas buyers. Others are not really aware of how the changes in the system might

affect them, and what they can and can’t do when going forward. There is a great need

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for capacity building, and education at the farmer’s level, so that they are aware of

industry changes and are able to make informed business choices.

Jeremy Block - C. Dorman, Kenya

The demand for ethically and sustainably sourced coffee is increasing at a faster pace

than ever. There are many different ways a company can source ethically, such as

“outside the box,” which is being taken up by a number within the trade. This is

occurring in addition to the increase of fair trade, rainforest alliance and other certified

coffees. D.R.Wakefield, as a pioneer in the ethical and sustainable sector, are well placed

to source these coffees for the industry because we already have in place the direct

sourcing channel -- to the farmer -- for many of our coffees.

Simon Wakefield - D.R. Wakefield, UK

A change that has already been underway, picking up speed, and will be with us for the

next years as the ‘single portion revolution’ in the in-home market expands. This applies

to instant coffee, as well as filter and espresso. In the instant market we see an increasing

variety of single-portion instant coffee sachets, including recipes like Viennese coffee,

Cappuccino and Latte Macchiato. With the filter market, we see the coffee pads for

machines like the Senseo and others really taking off, especially in Northwest Europe. In

the espresso market, a variety of capsules and pads are available. What they have in

common is convenience of preparation, consistency of quality, and easy and mess-free

disposal of spent coffee grounds (filter and espresso pads). What they also achieve is to

increase the number of drinking moments that would otherwise be lost. For example, an

individual consumer at home may not want to brew an entire pot of filter coffee, but now

they can enjoy a cup of coffee whenever he or she feels like it. The single portion

packaging keeps coffee fresh and allows the consumer to have more taste varieties at

home to choose from, or to offer friends.

Roel Vaesssen - European Coffee Federation, Netherlands

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What stands out to me is the groundbreaking work of the International Coffee

Organization (ICO). Two historic developments are the active U.S. membership and

renegotiation of the expiring International Coffee Agreement, which dovetailed as a rare

opportunity to recreate the organization. It opened the door to breaking with the past and

crafting a modern, more efficient ICO -- a new organization that effectively and

efficiently serves its stakeholders with unsurpassed value. It is a chance to empower the

ICO and promote a free market environment, support sustained expansion of markets,

and leverage private/public sector cooperation for the betterment of the entire supply

chain

Robert F. Nelson - National Coffee Association of U.S.A, New York

The coffee industry has increased the demand in training and R&D services. Our training

facility and R&D are fully booked far into next year. Coffee roasters contract us to train

their staff about green coffee, roast coffee and coffee preparation. On the R&D side, the

coffee industry orders investigations on chemical and physical characteristics of green,

R&G coffee or coffee processing which we carry out in our pilot plant. Due to the rising

energy costs, potential savings in energy consumption are an important matter. The trade

asks for technical solutions to reduce the required amount of energy for roasting and

emission treeatment. Suitable solutions are recirculation of exhaust gases, green coffee

preheating and PROFORTE (flameless, regenerative, thermal) exhaust combustion

Robert Dous - Probat-Werke, Germany

2. What recent trends have had an effect on your industry, and what trends do you see

developing? How will your company meet these demands?

The EGCG (epigallocatechin-3-gallate [epi-gallo-cat-ekin-3-gal-ate]) is going to become

BIG NEWS, and we are going to see mass publicity about its benefits. We intend on

meeting the demand by providing EGCG-laden products.

Barry Cooper - Cooper Tea Co., Colorado

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Specialty coffee becomes more and more of interest for the mainstream coffee producers.

Roasting equipment needs to be highly flexible to meet the wide range of requirement in

terms of taste and frequencies of blend changes. therefore we developed a revised version

of our THERMA TWO roaster, which combines the roasterg systems of three different

roaster types.

Lot tracking is a focal point. The coffee packaging units need to traceable backwards up

to the green coffee lot. In Europe, this has already become standard.

Robert Dous- Probat-Werke, Germany

The trends of health, well being and a more conscious intake of food and beverages, have

also been prevalent this year. The consumer can choose from an ever-increasing number

of products and varieties targeted at different situations or consumer demands. Data

suggests that the consumer continues to make choices in order to achieve a healthier

lifestyle and chooses products dependent on time and place.

The tea industry is uniquely positioned to offer many varieties, and play an active role in

a healthy and good tasting diet. Plantextrakt is uniquely positioned to develop concepts

and products for the industry, which meet these trends. The company, which is aware of

the current trends, sources globally and has a strong R&D department to meet the

demands of the industry for today and tomorrow.

Oliver Hehn - Plantextrakt, Germany

The growth of the green tea/specialty sector, and despite talk about quality, most packers

remain very price sensitive.

Philip Miles - Van Rees Global Accounts, UK

Trend, away from the mainstream coffee to specialty coffee, means biggest variety of

coffee services (pods, pads, whole bean, etc.) and overall service. The effect on our

industry was that we had to adapt to smaller production capacity, which means smaller

badge sizes bit with sophisticated demands regarding quality.

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Gustav Luehrs - Neuhaus-Neotec, Germany

3. Have you witnessed changes in the consumer’s tastes? Do you see any new ones

developing?

We are going to see a lot of functional RTD appearing in the market. They will contain

EGCG and other functional ingredients.

Barry Cooper - Cooper Tea Co., Colorado

The American consumer’s love affair with tea is in a constant state of flux, moving from

black, green, white, Oolong, Pu-erh, RTD, Bubble, flavored and then back again.

Fickleness aside, a constant thread running throughout the search for the “perfect” tea is

the demand for a more natural, healthier, great tasting beverage to replace whatever they

are currently consuming. On the flavor front, there is a never-ending array of new options

coming into the market; areas that only a few years ago no one would have ever guessed

there was any kind of compatibility.

Joe Simrany - Tea Association of the USA, New York

I’d say consumer tastes have not merely changed, but have expanded and diversified.

Consumers are reacting vigorously to the growing menu of coffee options on store

shelves and in coffee shops. The more varieties there are, the more they seem to want.

The NCA’s market research shows an intriguing pattern of consumers that are now

looking into different coffees to fill different roles at different times of the day. Coffee

has become many things to many people -- a morning staple, an afternoon treat, a focus

for social interaction and more. These same consumers are choosing many of the

different options. In fact, they’ve become so accustomed to gourmet varieties that they

appear to regard them as “traditional coffee,” when asked to describe their consumption

and purchase habits. This trend is evident in the NCA’s National Coffee Drinking Trends

study -- virtually all of the growth in daily coffee consumption in 2005 and 2006 has been

in what survey respondents describe as “traditional” coffee.

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Robert F. Nelson - National Coffee Association of U.S.A., New York

We see an increasing interest in drip coffee. Despite the continuing trend to espresso-

based coffee beverages, consumers have rediscovered the classic drip filter coffee. Since

there is this huge hype around espresso, some consumers start t odesire a regular cup of

cofee.

Parallel to that, coffee drinkers demand a higher quality level for coffee consumed at

home or in the office. They are used to quality espresso drinks and want to keep that

level. This is a growing market for specialty coffee. Standards and rules for drip coffee

preparation such as the “Golden Cup” have to be communicated to the end consumer to

spark interest for appropriate drip filter preparation.

Robert Dous - Probat-Werke, Germany

4. How does the exploding interest in Fair Trade and sustainability affect your

industry?

Don’t exaggerate the ‘exploding interest’ in Fair Trade/Sustainable coffee. There is an

undeniable and positive increasing interests,. However, Fair Trade-labeled coffee still

only represents 1.2% of the West European market (I don’t have market shares for other

initiatives like Rainforest Alliance and Utz Kapeh readily available, but these as well as

company-individual initiatives should be added to arrive at an estimate of total

sustainable coffee market volumes). Having said that, the consumer does want to feel

generally comfortable with all products he or she consumes, be it sporting goods, textiles

or coffee. This provides the ‘raison d’être’ for a base-line standard like 4C, which will

become operational in the beginning of 2007. Its development and the benefits it provides

to the growers, in terms of market adaptation and resilience to changing market

conditions, will be one of the most exciting trends to watch in the coming years.

Roel Vaessen - European Coffee Federation, Netherlands

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The most striking thing that has happened in the past year is the increasing public

demand for Fair Trade and organic coffees. In fact, people seem to be saying “What the

heck, if I’m going for Fair Trade, I may as well go organic too.” So we see this trend of

consumers combining the two concepts in the same purchase.

Stuart Daw - Nationwide Gourmets, Florida, U.S.

Positively -- and to a large extent. The standards implemented try to improve the best

practices at the farm or smallholder level, whether economic, social or environmental.

However, they do raise the expectations of the farmers and create a certain amount of

confusion. The farmers are overwhelmed with the number of different possibilities, and

within the smallholder sector there is a great need for capacity building to help them

overcome the challenges of implementing a certification program. The farmer is also

disillusioned when, having gone the extra mile, his coffee is not bought and he does not

receive the promised premium.

Jeremy Block - C. Dorman, Kenya

Although the benefits that Fair Trade programs can bring to the environment and the

employees, through social programs, and the best management practices are

unquestionable, with some exceptions, they don’t address two crucial points:

The necessary long-term contract guaranteeing a premium over the market price

for the farmers involved, due to the investments that comes with the Fair Trade

principles.

Lack of better information towards the consumer, to motivate them to pay a better

price for Fair Trade products.

Joaquim Leite - Coop Guaxupe, Brazil

5. Do you think companies/organizations are succeeding in educating the consumer

about the different origins and blends?

I believe the entire tea industry is doing an excellent job in educating consumers about

the nuances of ‘specialty tea.’ That said, there is much more that needs to be done before

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American consumers will develop a deep appreciation for the variety and complexity of

the types of tea available from around the globe. The Specialty Tea Institute is also doing

its part by expanding its Certification Program to include an appreciation for single

origins, regionals, seasonals, and Estate teas.

Joe Simrany - Tea Association of the USA, New York

Definitely! When talking about education on coffee, different origins and blends, it would

be unfair not to mention Starbucks, as nowadays an increased number of people look for

specialty coffees and are trying to learn more about it.

As producers, we perceive the evolution when we have specialty requests from buyers,

such as larger screens and cup profile. Four years ago, for example, Daterra developed a

“Green Coffee Menu,” where the client would choose their coffee among 18 blends that

were all not only produced at Daterra, but were of single origin and under a brand. At the

beginning, the client would give the specifications and we would fit it in to the menu,

now 100% of Daterra’s clients already asks for one of the brands.

Educating consumers not only about quality, but also about sustainability, has been

paying off. There are some countries that simply don’t buy coffee without a certification.

Quality and sustainability are becoming a premise, not a differential.

Isabela Paschoal - Daterra, Brazil

6. What developments/changes do you feel need to be made in your segment? How will

this affect/improve the industry as whole?

We need to continue to strive for quality, and never rest on last year’s products. Innovate,

develop and prepare amazing beverages in new ways with new flavors and recipes. We

continue to look at the developments in the restaurant trade (from QSR and casual dining

to fine dining) to evaluate the trends and implications of specialty coffee beverages.

Spencer Turer - Kerry Food & Beverage

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7. In what direction do you see the role of ‘the barista’ going?

The Barista is the face, personality and sole representative of the specialty coffee supply

chain to the consumer. They not only can make drink suggestions or recommendations,

but their skill can be the difference between an everyday latte or an amazing specialty

coffee experience. The passion, skill and commitment of great baristas must be

recognized and rewarded. Today, with resources and contests, such as the Barista Guild

of America and the United States Barista Championship, there are opportunities for a

barista to learn and grow professionally.

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Questionnaire

1. Please select your preference of hangout places:

a. Pubs

b. Restaurants

c. Fast food joints

d. Coffee shops

e. Movie theatres

f. Others

2. Who/ what influences your above decision? (Please tick one)

a. Friends

b. Kids

c. Spouse

d. Advertisements

e. Happy hours / discounts

f. My own choice

3. Where do you prefer drinking coffee?

a. In-house

b. Outhouse

c. Both

d. Neither

4. What factor have you considered while answering the above question?

a. Cost

b. Accessibility

c. Taste

d. Lifestyle

e. Availability of time

f. Social needs

g. Variety

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5. Who generally accompanies you to the coffee shop?

a. Family

b. Business meetings

c. Friends

d. Date

6. Which is your favorite coffee bar?

a. Barista c. Café Coffee Day

b. Nescafe café

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Results

1. Favourite hangout places:

Most of the people i.e. 25% prefer restaurants and fast food joints.

2. Who/ what influences your above decision? (Please tick one)

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3. Where do you prefer drinking coffee?

Most of the people prefer to drink outhouse or both in-house & outhouse.

4. What factor have you considered while answering the above question?

FIG 4

Most of the employees think quality services, ambience, variety of services offered but

according to customers it’s the décor, ambience and the no restrictions of time.

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5. Who generally accompanies you to the coffee shop?

Most of the people’s decisions are influenced by their friends choices.

6. Which is your favorite coffee bar?

Factor

Barista

Café Coffee

Day Café Nescafe

Quality of Service 5 4 2

Speed of Service 5 4 1

Variety in Offerings 5 4 1

Price 1 5 2

Location 5 3 1

Décor 5 4 1

Free offers/ Promotional

Programs 4 5 1

FIG 6

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LIMITATIONS OF THE PROJECT

Although all care has been taken to free this study from any biases, there are certain

aspects that need to be noted for a more judicious use of the findings:

The initial variables used for analysis were identified through focus group

interviews. For the sake of convenience, the sample for this was restricted to the

inhabitants of the campus of IHM Goa. This might be seen as bringing about a

certain amount of selection bias in the subsequent findings;

The paucity of time has been a limitation

Due to busy schedule of staff, they were not able to give enough time and hence

not provide enough information.

Some information was kept confidential.

CONCLUSION

The coffee bar culture has till date been more or less restricted to the metros. Also, a

distinct trend can be seen in the clientele the various coffee bars have been attracting

over the years. The pricing, promotion and ambience of the outlets have been seen to be

targeting this very particular section of the society.

With time, the coffee bars will feel the need to spread to smaller towns and cities. This

will definitely necessitate a change of image for them. Advertising, promotions and

pricing will need to be altered to target a newer group of clientele.

At present, the campaigns seem to be successfully targeting the Type B clientele, as

identified in a preceding section; however, this has been at the expense of alienating

the other three groups. Type C & Type D consumers would need a far different

approach. These two customer segments are yet to be tapped into, and targeting them

would inevitably lead to an expansion of the market. In fact, any bar that re-orients its

processes to accommodate these two segments will enjoy a first-mover advantage, and

will definitely enjoy and advantage. The café coffee day chain has taken a move in this

direction, by pricing their offerings on the lower end of the price spectrum.

Type A: Regular Coffee Drinkers:

They look for good coffee, constant taste, where they can savour their coffee.

Location, Decor and Time are the factors that influence them so that they can

peacefully enjoy their coffee.

Type B: Outhouse Coffee Drinkers:

This is a group of people who perceive drinking coffee as a means of making a

statement. They would like a place that is trendy and can enjoy time with friends. A

place which has good seating capacity and ambience and they can enjoy the kind of

music played over there.

Type C: In house drinkers

These people are not the normal outgoing kind of people. They have a close circle of

friends with whom they like to spend their time. They will visit a coffee shop for the

quality of service and the various promos offered.

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Type D: No Coffee Drinkers

These people can be dragged to the coffee shop by various promos and promoting the

coffee bar as an experience.

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RECOMMENDATIONS

Considering the above factors for targeting the different customer segments will aid the

coffee bars in designing services and promotions that are much more effective. The

above factors attain an added relevance when seen with the backdrop of the findings of

our study. It is apparent there is a significant disparity in the perceptions of the

employees and the customers. In the absence of any viable way of measuring what a

customer seeks, the various coffee bars would do well to rely on market research

studies such as this to improve their services. Moreover, the preferences and needs of

consumers are subject to change with time. In order to remain competitive, one needs

to constantly gauge the pulse of the market. Timely market research studies such as this

can prove to be a vital tool in this regard.

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BIBLIOGRAPHY

Coffee Consumption in Urban India: © 2001, Coffee Board of India

The Book of Ingredients

www.cafecoffeeday.com

www.indiacoffee.org

www.koffeekorner.com

www.theshoppingplace.com

www.yellow-net.com

Hammer Food & Beverage Business Review (Dec-Jan ‘05)

Food & Beverage News (February 16-18 2005)

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