COFFEE INDUSTRY

Submitted By: Aayush Rastogi Roll No. 1101 Infinity Business School

INTRODUCTION
History of Coffee in India
Indias romance with coffee goes back nearly 400 years when a Moslem pilgrim, Baba Budan, is credited with secretly bringing back seven coffee seeds from a pilgrimage to the holy land. He is said to have planted these near his mountain cave in Chikmagalur, in the Mysore growing region, now considered the cradle of Indian coffee. Commercial cultivation of coffee in India began in 1840 when the British established Arabica coffee plantations throughout the mountains of Southern India. They found the tropical climate, high altitude, sunny slopes, ample rainfall, soil rich in humus content, and well drained sub soil ideal for Arabica coffee cultivation.

Coffee Production Today Today, India is the sixth largest producer of coffee in the world, behind Brazil, Vietnam, Colombia, Indonesia, and Mexico. India produces about 320,000 MT of coffee each year, of which 104,000 MT is Arabica and 216,000 MT is Robusta. Most of Indias coffee is grown in three southern states: Kerala, Karnataka, and Tamil Nadu, the first two account for nearly 90 percent of total production. Much of the coffee in Kerala and Karnataka is grown in the Western Ghats, a mountain chain that runs parallel to the coast line and about 100 miles inland from the Arabian Sea.

India exports nearly 70 percent of the coffee it produces. These exports consist mainly of high grade beans from both the Arabica and the Robusta growing regions. Most of Indias export goes to Europe, Japan and the Middle East where the balanced nature of Indian coffee is greatly valued. Italy, importing 50,000 MT each year, is the largest importer of coffees from India, because they perform particularly well in espresso blends.

There are over 1,71,000 coffee farms in India, cultivating nearly 9,00,000 acres of coffee trees. Most of coffee production in india is on small farms, with over 90 percent of all farms consisting of 10 acres or fewer. However, such farms account for just over half of all land used for coffee production and a minority of all coffee produced. Most coffee in India is grown in three states: Karnataka, Kerala & Tamil Nadu and these states accounts for one 90% of Indias coffee production in the 2011-12 growing season.

Coffee Market In India

Though India just contributes a mere 4% share in the worlds coffee contribution but still Indian coffee is considered to be one of the most stimulating coffee in the world. India is indulged in producing coffee that is mild in nature i.e. having a low acid content. Most of the coffee grown in India is cultivated under shade. Indias production stands at around 3 lakh tons annually and around 70% of the total production of coffee is exported i.e. around 210000 tons. The countries, which import coffee from India, are:

Italy Russia Germany Belgium Spain Slovenia France Finland Algeria

India produces some specialty types of coffee also namely: 1. Monsooned coffee This coffee is very much popular in the world. Earlier when there were less resources available for transportation, the coffee from India, in transit to Europe, faced humidity and that turned the color of the coffee to pale yellow and the taste also. This was the birth of a new variety i.e. the Monsooned coffee.Even today, through out the months of monsoon, the coffee is left in an open warehouse to make it monsooned. 2. Mysore nuggets extra bold This type of coffee have extra large beans, greenish in color and have quite strong fragrance. Unlike the other varieties produced in India, mysore nuggets has a good acid content. 3. Robusta Kaapi Royale - Robusta Kaapi Royale is a smooth, less acidic coffee made from Robusta Parchment AB class of coffee. The coffee beans are round in shape and grayish in color. The Indian consumption of coffee is also increasing with time. India consumes around 30% of the total quantity produced. Before liberalization, the Coffee Board controlled coffee marketing in

India but after liberalization that interference of the board was completely removed.

India's coffee exports decline 5.3% in crop year 2013

Indias coffee exports have declined by 5.34% to 2,99,266 tonnes in the coffee year ended September 30, 2013 as the demand from European Union and the US remained subdued through the year. The country had exported 3,16,164 tonnes in the previous coffee year (October 2011 to September 2012), the Coffee Board said. The decline in exports was mainly due to weak demand from European nations like Italy, Spain, Greece and Portugal as buyers were looking for cheaper coffees, coffee exporters said. The export realisation was down 1.3% at Rs 1,51,379 per tonne between October 2012 and September 26, 2013, as against Rs 1,49,459 per tonne in the previous coffee year. In value terms, total coffee exports were down by 4.1% at Rs 3,530 crore as against Rs 4,725 crore in the previous year, according to Coffee Board. A sharp drop in the prices of Arabica during the last fiscal also added to the decline in exports as large number of farmers have withdrawn their sales, exporters said. Arabica prices have declined as much as 20-25%. India mostly exports coffee to Italy, Germany, the Russian Federation, Belgium and Spain. Robusta variety coffee is mainly used in preparation of instant drinks and espressos worldwide. The outlook for Indias exports during 2013-14 is also not very promising. The Coffee

Board has said production in 2013-14 would be at least 10% lower than post-blossom estimates. The Board had said production would stand at 3,47,000 tonnes in its post-blossom estimates earlier this year. In 2012-13, India had recorded production of 3,18,200 tonnes. Based on the conditions that prevailed in February and March, when the growing regions received good blossom showers, we had estimated we would achieve 3,47,000 tonnes. However, due to a drought in the two subsequent months and the heavy rains in June, July and August, we anticipate a drop of about 10% drop, against the post-blossom estimates, Coffee Board Chairman Jawaid Akhtar had told Business Standard earlier this month. Italy Italy is buying 33.98%, India is having competition from Brazil and Vietnam even RCE Value is higher then both country . Germany India Export to Germany is 8.31% and major competitor is Vietnam however its a growing market and Germany carry 17.6%. India is having competitive advantage over brazil Vietnam. India should more focus on this country. Spain India export to Spain is 4.65%, major competitor are brazil and Vietnam. India is having better Relative competitive advantage over both countries. Belgium India Export to Belgium 6.83%, difference is very less. However India is in better position then both countries. USA India Export US is 1.42 %, however Brazil is having better position due to NAFTA agreement, India is only supplying very less qtys to US. India need to more focus on this country since world share is 21.9%. Jordan India Export to Jordan is 4.35% however total world import is 0.3% but as it seen that being very growing market at a growth rate of 54% in past 5 year.