the dawn of premium instant coffee in India
Opinion

The dawn of premium instant coffee in India

Instant coffee is a lazy man’s beverage. Throw in a spoon of instant coffee powder and sugar into a glass of milk and microwave it for a minute and you get a glass of hot coffee. No wonder the younger generation is drawn towards instant coffee.

I am no exception. Even though I am a tea person, I can’t start my day if i did not have my dose of morning coffee.

Our love for coffee

Coffee is still a staple among several Indian households. India as a country plays a significant role in coffee production and consumption. India produces 4.5% of the World’s coffee and 78% of the coffee produced in the country is exported as coffee grown in India is considered one of the finest coffees in the world.

We also rank high on coffee consumption, especially the South Indians. India consumes 1,20,000 tonnes of coffee every year of which 80,000 tonnes is consumed by the Southern states (Tamilnadu, Kerala, Andhra, Telangana, and Karnataka). The country also boasts 2,50,000 coffee growers, of which 98% are small vendors.

From a commercial and a business point of view, coffee hasn’t changed much for several years. It was either filter coffee, which is still the preferred way of coffee for the previous generation, and instant coffee which is quite popular among young people who live alone or with roommates as it is easy to make. And, if an industry hasn’t changed in a long time, it is normal for businesses to get into that space and try something new. The Indian coffee market entered that phase last year.

The new-age coffee companies, which we’ll see about in some time, came into the market with the hopes of bringing something new to the instant coffee market. With new flavors and bold marketing campaigns, a new segment of instant coffee started getting visibility – premium instant coffee.

The target customer base

The target persona of these coffee brands are youngsters who enjoy coffee and are inclined to try something new like dark chocolate coffee, hazelnut coffee, and so on. And, they should also be willing to pay a premium price. So, it narrows down to a niche of people who are working in IT jobs and startup companies who wouldn’t mind paying 2 – 2.5x more for their coffee. (Note that a large part of middle-class families still buys coffee powder on a daily basis in the form of Rs.2 sachets.)

If you think ‘who would pay so much for coffee?’, you’re wrong. There was a significant boom in the instant coffee market this year. This reminds me of the arrival of cafes in India. When cafes started in India, people thought it will never take off. Their argument was ‘why to pay a hundred rupees for a coffee if you can get it for ten rupees in a normal shop?’. But, cafes stayed and has become a huge thing now. Every Starbucks outlet is crowded these days.

We’re seeing similar growth in the instant coffee space. Thanks to marketing and powerful storytelling by new-age coffee brands.

The story behind every cup of coffee

The marketing around premium instant coffee revolves around creating a story behind a cup of coffee. Every pack contains information about the type of coffee it is (100% Arabica), where it was grown (something like ‘along the slopes of Chikmagalur’), and at what elevation it was grown (3124m above sea level) by a family that is into the coffee business for several generations, the flavor note in each blend, and so on.

The details and the story behind a cup of coffee make it more of a conversation starter among friends. I can see people discussing coffee flavors, about where it comes from, etc. With subtle storytelling, the new-age coffee companies made coffee a cool thing among the younger generation.

If you think about it, it doesn’t matter at which elevation your coffee was grown or whether it is 100% Arabica or not. In fact, we don’t even know the other types of coffee! But, we still believe in the story. We feel exclusive and special when we open a box of premium instant coffee.

This reminds me so much of Indian youngsters talking about cars. They talk about how long does it take for the car to go from 0-60 km/h, despite knowing about our traffic and driving conditions and the fact that we can’t drive past 40 km/h in city conditions.

But, it is good to see that the storytelling pays off. There are over 30+ coffee companies selling premium instant coffee in India. And, the competition among them has brought an alarming trend in how coffee is being marketed.

Coffee brands are marketing coffee as a supplement to working around the clock.

The alarming trend

The ads and marketing campaigns I came across were normalizing the concept of overworking. Being a workaholic is portrayed as a cool thing. I saw one particular coffee brand running campaigns with slogans like “Drink this coffee before pulling an all-nighter” and “new perk of drinking coffee: faster promotions”. I was surprised to see it because, for several decades, coffee was always portrayed as a morning drink – something that prepares you for the day. But, I never thought it would be used to normalize sacrificing sleep for a faster promotion (as if that happens!).

But, people love it. And, they spend 2.5 – 4x more than what they spend for a regular instant coffee. A 50g bottle of a premium instant coffee is sold for Rs.350 – Rs.500, whereas the normal instant coffee cost Rs.90 – Rs.100. This happened with chai a couple of years back, and now is happening in the coffee space.

There are also other trends that are becoming popular. This includes code brew coffee, drinking black coffee, making coffee in a French press, and so on.

Love it? Hate it?

Is this a healthy trend? Honestly, I am not worried. A huge portion of coffee consumers in India are still middle-class families who resort to conventional filters and instant coffee brands. The trend I see might attract only a very small portion of these consumer base to try a premium instant coffee. And, I personally don’t think people are looking for flavored coffees. A lot of them (like me) want their coffee the normal way. But, the one thing I am worried about, is the normalization of working around the clock and pushing coffee as fuel to stay awake.

Coffee brands who are working on their marketing campaigns should also think about the long terms effects of what they stand for.

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