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STORES | Staff Reporter, India

India's hot drinks sector gets caffeine boost

Coffee gains popularity in urban centers amidst a rise in café culture.

The growing social media exposure amongst Indian consumers is driving them to try and experiment international coffee blends, which are expected to boost the hot drinks sector growth in the country, according to analysis from GlobalData.

India's hot drinks sector is expected to grow from $9.1b (INR640.2b) in 2019 to $13.3b (INR1.03t) in 2024, at a compounded annual growth rate (CAGR) of 9.9%.

Hot tea is the largest category with value sales of $7b (INR493.2b) in 2019. The other hot drinks category is projected to register the fastest growth at a CAGR of 12.3% during 2019-2024, followed by hot coffee and hot tea categories with CAGRs of 11.4% and 9.4%, respectively.

GlobalData's consumer analyst Anchal Bisht commented that India is seeing an emergence of a consumer base that prefers novel vareties of coffee, attributed to the ever-rising popularity of café culture.

"Whilst conventional espressos, lattes and cappuccinos still remain the top choice among the frequenters, novel varieties also displaying healthy growth. Introduction of premium blends and authentic variants from coffee-growing nations in off-premise channels in parallel to growing awareness due to strong social media presence is driving retail sales,” Bisht added.

However, the dominance of hot tea in India is not going anywhere. "Manufacturers’ bid to capitalize on the growing health consciousness has been inundating the market with products incorporated with traditional ingredients with health claims which are finding growing audience," Bischt said.

At the same time, green tea, herbal tea and other specialty teas have found a new cult following due to their perceived health benefits which, Bischt said, could provide new lease of life to the category.

The value share of India in the global hot drinks sector is expected to climb from 4.4% in 2019 to 4.9% by 2024. At the same time, the country’s share at regional level is expected to grow from 11.3% to 11.4%.

Convenience stores held the largest value share of 43% in the Indian hot drinks distribution channel in 2019, whilst on-trade transactions held a share of 25.9% in the same year.

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