Cafes see good sales in the north

The morning cuppa is breaking demographic barriers in the country. Although predominantly a south Indian beverage, more and more coffee connoisseurs are sipping their favourite brew in non-southern regions.

According to industry estimates, coffee consumption in north India has gone up by 0.84% during 2005-2008, followed by a 0.72% increase in the west and a marginal 0.17% rise in the east.

However, consumption in south India, considered the cradle of Indian coffee, decreased 1.73% in the same period. Coffee, in non-traditional areas, is more of a social beverage consumed outside of home.

Alok Gupta, CEO of Café Coffee Day (CCD), said the chain is expecting a 30% growth in sales from non-traditional zones next year. CCD also plans to take its domestic outlet tally to 1,000 by FY10-end, from 821 now.

With a rise in disposable income, cafes have turned out to be networking hotspots in the national capital region (NCR), Gujarat, Uttaranchal among others. Sanjay Coutinho, COO of Italian coffee chain Barista Lavazza, said “It is difficult to experiment with drinking patterns in the south. But other areas hold great potential and a sizeable market.”

He added that 80% of Barista Lavazza’s new rollout will be in non-traditional areas.

Though demand for coffee is picking up in the north, high-courier charges coupled with a 12.5% VAT in most states make it difficult for roasters to enter new markets, feels C P Chandan, partner at Cothas Coffee.

Industry experts said that non-south regions have a great potential to be exposed to pure coffee, espressos and other varieties.