The Soaring Demand for Indian Coffee: Exports Surge by 55% in FY25

Indian coffee has seen a remarkable surge in demand globally, leading to significant growth in the country’s coffee exports. In the first half of the current fiscal year (FY25), India exported coffee worth Rs 7,771.88 crore, which represents a staggering 55% increase from Rs 4,956 crore during the same period last year. This surge not only highlights the increasing international appetite for Indian coffee but also reflects the country’s strengthening position in the global coffee market.

According to the latest data released by the Coffee Board of India, the volume of coffee exports also increased, with 2.2 lakh tonnes exported during the April-September period of FY25, compared to 1.91 lakh tonnes in the same period last year. This represents a 15% rise in the volume of exports, underscoring both increased production and rising global demand for Indian coffee.

The Impact of Rising Coffee Prices

A significant factor driving the surge in export revenue is the increase in global coffee prices. International markets have seen a substantial rise in the price of coffee, influenced by multiple factors including anticipated European export regulations, which are pushing up demand for premium coffee. Indian coffee is now being sold at an average price of Rs 352 per kg, up from Rs 259 per kg last year. This 36% increase in prices has been a major contributor to the overall revenue growth from exports.

For India’s coffee growers and exporters, this price rise has provided a significant windfall, helping them gain more revenue per kilogram of coffee sold. It has also allowed Indian coffee to remain competitive on the global stage, especially as demand for high-quality coffee continues to grow in key markets.

Key Markets Driving Indian Coffee Exports

Among the nations importing Indian coffee, Italy remains the top destination, accounting for 20% of the total exports. Other major importers include Germany, Russia, the United Arab Emirates (UAE), and Belgium, which collectively account for 45% of India’s coffee exports. The strong demand from European countries and Russia reflects the global recognition of Indian coffee for its quality, flavor, and consistency.

The high demand from Italy, a nation with a deep coffee culture, emphasizes the quality and versatility of Indian coffee, which is used in various blends for espresso and other coffee-based beverages. German and Russian markets have also been key in sustaining this upward trend, while the UAE serves as an important hub for coffee distribution across the Middle East.

India’s Coffee Production and Leading States

India’s coffee production remains robust, with the country producing nearly 3.6 lakh metric tonnes of coffee during the 2023-24 crop year. The majority of this coffee comes from the southern state of Karnataka, which accounts for 70% of India’s total coffee production. The state’s favorable climate and topography make it an ideal region for coffee cultivation, particularly for Arabica and Robusta varieties that are highly prized in international markets.

Kerala is the second-largest coffee-producing state in India, contributing 20% of the total production. Tamil Nadu follows as the third-largest producer, with a 5.7% share of India’s coffee output. These three states form the backbone of India’s coffee industry, and their contributions are critical to meeting both domestic and international demand.

A Look at India’s Historical Coffee Export Growth

The recent surge in coffee exports is part of a broader trend that has seen Indian coffee exports grow steadily in recent years. In the fiscal year 2021-22, India’s coffee exports stood at $1.016 billion, marking a 38% increase from the previous year. This growth positioned India as the fifth-largest coffee exporter in the world, accounting for approximately 6% of global coffee exports.

The country’s reputation as a reliable and high-quality coffee producer has been solidified over the years, with Indian coffee becoming a staple in global markets. The export market has played a crucial role in driving the overall growth of India’s coffee industry, enabling farmers to increase their production capacity while also adopting more sustainable and efficient farming practices.

Challenges and Opportunities in the Coffee Sector

While the growth in exports is certainly encouraging, India’s coffee industry faces several challenges that could impact future growth. The international market is becoming increasingly competitive, with other coffee-producing nations such as Brazil, Vietnam, and Colombia also vying for market share. In addition, climate change poses a long-term threat to coffee production, as changing weather patterns and extreme events like droughts and heavy rains can adversely affect yields.

However, the surge in global demand for Indian coffee also presents numerous opportunities. The increasing interest in specialty coffee, along with the growing demand for sustainable and ethically sourced products, provides Indian coffee growers with the chance to diversify their offerings and appeal to niche markets. Additionally, the rise of direct-to-consumer sales models, fueled by e-commerce, enables Indian coffee brands to reach international consumers more easily than ever before.

The Road Ahead for Indian Coffee Exports

Looking ahead, India’s coffee industry is poised to continue its upward trajectory, thanks to strong demand from global markets and increasing recognition of Indian coffee’s quality. The combination of higher export volumes and rising international prices creates a favorable environment for both producers and exporters.

To sustain this growth, it will be crucial for India to continue investing in its coffee production infrastructure, ensuring that growers have access to the resources and technology they need to improve yields and maintain quality. Additionally, efforts to promote Indian coffee in new and emerging markets will be key to maintaining momentum and expanding the country’s share of the global coffee trade.

In conclusion, the surge in Indian coffee exports during the first half of FY25 marks a significant milestone for the country’s agricultural sector. As demand continues to rise and prices remain favorable, India’s coffee industry is well-positioned to thrive in the years to come. With the right investments and strategies, India could further solidify its status as one of the world’s leading coffee exporters.