The price of coffee in India is on the rise due to unexpected rainfall, a labour shortage, and a surge in demand, particularly among urban youth post-Covid, according to industry experts. ND Jayaraman, a prominent coffee grower from Karnataka, highlighted the adverse effects of off-season torrential rains on coffee crops, coupled with a hindered harvest process due to labour shortages.
The Coffee Board of India projects a 10-15% decline in coffee production from earlier estimates of 367,000 tonnes, attributing the setback to unseasonal rainfall across coffee-producing states. In December 2023, coffee inflation reached 16%, marking 14 consecutive months of double-digit inflation. October saw the highest level since 2015, at 16.9%.
The proliferation of coffee chains has significantly contributed to the heightened demand, with industry executives emphasizing a noticeable uptick in coffee consumption post-Covid. KG Jagdeesha, CEO of the Coffee Board of India, noted the positive impact of increased disposable income among urban youth, who remain willing to spend on coffee despite escalating prices.
Traditional coffee-drinking communities in the southern part of the country have been affected by the price surge, prompting some to resort to mixing chicory, a caffeine-free coffee substitute with a similar flavor.
Surprisingly, despite the spike in prices, coffee consumption remains resilient, supported by India’s urban youth, who have experienced a rise in disposable income. Jagdeesha highlighted that the willingness to spend on coffee has not diminished.
India, as the world’s eighth-largest coffee grower, predominantly produces robusta beans for instant coffee and some of the pricier arabica varieties. In 2023, coffee exports from India reached a record $1.16 billion, representing a 4.5% increase in value. However, there was a dip in volume to 396,346 tonnes from the previous year’s 413,942 tonnes, attributed to higher global prices, according to the Coffee Board of India.