India's out-of-home coffee market expected to grow exponentially by 2028: Report

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As coffee emerges as a lifestyle choice for millions of urban consumers in a tea-loving nation, India's out-of-home coffee market is projected to reach $2.6-$3.2 billion by 2028, with a compound annual growth rate (CAGR) of 15-20 per cent, according to a report on Tuesday.

The premium coffee segment (above Rs 200), which represented 46 per cent of the market in 2023, is projected to grow to 55-60 per cent of the market at a CAGR of 20-25 per cent, underscoring its dominant role in shaping India's outside coffee landscape, according to the report by Redseer Strategy Consultants.

This segment targets affluent, discerning coffee enthusiasts with artisanal brewing and experiential consumption.

The mass market (below Rs 100) had 50 per cent market share in 2023 which is projected to shrink to 30-35 per cent by 2028, growing at a CAGR of 8-10 per cent. While affordability remains its hallmark, the segment offers limited avenues for premium differentiation, the report mentioned.

Meanwhile, the mid-price range (Rs 100-Rs 200) which constituted just 4 per cent of the market in 2023 is expected to grow to 8-10 per cent of the market by 2028 at an impressive CAGR of 35-40 per cent. This space offers immense potential for introducing specialty brews, making it a critical driver of industry expansion.

"Coffee has moved beyond instant and traditional brews to premium experiences. It is now a lifestyle product for Indian customers, with the mid-priced segment emerging as a whitespace to meet the growing demand for affordable options, offering both quality and enhanced experience," said Rohan Agarwal, Partner, Redseer Strategy Consultants.

This market is ripe for brands to step in and deliver high-quality, accessible specialty coffee solutions, redefining India's beverage landscape, he added.

While India's outside coffee market offers vast opportunities, businesses must overcome key challenges.

"Supply chain complexities make it difficult to maintain quality and timely delivery across regions. Finding the right locations in high-traffic areas like malls and tech parks is crucial but highly competitive," it added.

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