India has always been predominantly a Chai (Tea) drinking nation. Coffee has been only moderately popular in some southern states, other than that it has been Chai (Hindi term for Tea), Chahaa (Marathi term for Tea), cutting (Mumbai term for half tea cup), maramari (another popular term from western India for tea) all the way!
However, there has been a sudden change in this trend with coffee becoming more and more popular in recent times especially among the younger population. The roadside Chai (Tea) thelas (shops) outside colleges and offices have been replaced by hip coffee joints like Barista and Café Coffee Day. The Chai (tea) that used to cost couple of rupees (5 cents) is replaced by coffee costing something like Rs. 100 ($2.50).
The reason – Their proposal to enter India was rejected earlier by the Foreign Investment Promotion Board, a government body that approves foreign investment applications in India, on the ground that the equity structure was ambiguous.
However, Starbucks still remains very bullish on India and company has decided to file a new proposal as the government sought some clarifications in its equity structure.
According to Technopak Advisors, a global retail consultancy firm, the organized coffee retail business in India is over Rs.8 billion ($17 million), and the potential for coffee retail outlets are nearly 3,000.
With the Indian middle class consumer ready to spend more and be a part of global lifestyle and culture, coffee parlours in the country are on an expansion spree. From small-sized coffee parlours to classy coffee lounges leading coffee retailers such as Café Coffee Day, Barista, Costa Coffee and Coffee World have all been fighting hard to lure India’s growing middle class.