Rising at-home coffee consumption, café footfall and a premiumisation of the market present strong growth opportunities for Nestlé in India, according to the Head of the Swiss food and beverage giant’s Coffee Strategic Business Unit
Nestlé sells a range of retailed Nescafé products in India, including its Classic, Gold and Sunrise blends | Photo credit: Ravi Sharma
India is among the fastest-growing coffee markets for Nestlé globally, according to the Head of the Swiss food and beverage giant’s Coffee Strategic Business Unit.
Philipp Navratil said rising at-home coffee consumption and the growth of café culture across India present Nestlé with increasing opportunities for further growth.
Speaking at the Nestlé India headquarters in Gurugram, Navratil said the world’s most populated country was ‘one of the most fast-growing markets today’ and that Nestlé’s coffee division was ‘gaining household penetration’ as consumers seek more premium beverages.
“In India and in other Asian markets, there is a trend towards more sophistication, we call it authenticity; consumers want to know more about their coffee, what it’s made of, how it’s brewed, its origins, etc. That leads to a trend of premiumisation. There is another trend, which is the coffee shop inspired trend and that’s true in India as well where you see coffee shops coming up and specialty coffee brands coming up as well," he said.
Nestlé, which sells a range of retailed Nescafé products in India, including the Nescafé Classic, Gold and Sunrise blends, reported its coffee division contributing 12% revenues in the country last year. The group's full-year sales reached Rs 16,997.9 Cr ($2.05bn).
In September 2022, Nestlé said it would invest Rs 5,000 Cr ($613m) in India by 2025 to capitalise on growth opportunities for its products in the country, with half the investments focused on scaling the company’s coffee and confectionery portfolio.
However, while Navratil said premiumisation and a rising number of high-income households is changing the coffee landscape across India, Nestlé does not currently have plans to introduce its more premium portfolio of coffee machines and pods to the Indian market and will continue to focus on ‘core’ product sales.
“The speed of growth is faster in the premium segment at the moment. But I think the opportunity, or the size of the market, is still bigger in what we call the ‘core’ products, which is Nescafé classic, Nescafé Sunrise, and the pre-mixed products that we have," he said.
Nestlé faces competition in the Indian retail packaged coffee market from Tata Coffee, which said revenues and profits rebounded in its fourth quarter following a recovery in consumer footfall at hospitality venues across India.
The Bangalore-based Tata Group-subsidiary, which operates retail packaged coffee brands Eight O'Clock Coffee, Tata Coffee Grand and Sonnets by Tata Coffee, reported 20% year-on-year consolidated net profit growth to reach Rs 48.8 Cr ($5.9m) and a 10% rise in revenue to Rs 723 Cr ($87.9m).