By Dipak Kurmi
India has long worn its identity as a chai nation with quiet confidence. Across the north, east, and west, tea dominates the streets, offices, railway platforms, and living rooms, offered instinctively to guests and ordered reflexively at roadside stalls. Only in the southern states has coffee enjoyed a parallel culture, and even there it has largely meant filter coffee, brewed patiently and consumed as a daily ritual rather than a lifestyle statement. Yet, beneath this enduring loyalty to tea, something has begun to shift. Over the past few years, the entry of foreign coffee chains such as Starbucks, the rapid expansion of Indian brands like Blue Tokai, and the mushrooming of both premium and affordable coffee franchises across cities large and small have hinted at a slow but consequential transformation in India’s hot beverage preferences.
This change is not merely visible on high streets and in malls, but increasingly audible and aromatic inside Indian homes. The sound of coffee machines whirring to life and the aroma of freshly ground beans are finding space alongside the whistle of the pressure cooker. From single-serve pod systems to fully automatic espresso machines, a new class of consumers is beginning to treat coffee not just as a source of caffeine but as an experience shaped by taste, ritual, and personal choice. This raises a larger question about whether India is genuinely ready for the premium end of the coffee market, and what this evolving behaviour means for both Indian and foreign brands that are betting heavily on this transformation. Brands like Starbucks and Blue Tokai, after all, depend on the expanding middle class and upper middle class to fill their cafés and justify their rapid growth.
In purely numerical terms, India still remains far from being a coffee nation. Coffee consumption has grown modestly in volume over the past decade, but far more dramatically in aspiration. According to the Coffee Board of India, per capita coffee consumption in the country stands at a mere 0.07 kilograms per year, a negligible figure when compared to the global average of over one kilogram. These numbers underline how marginal coffee remains in everyday consumption. Yet focusing only on volume misses the deeper shift underway. Urban households are experimenting with pour-overs, French presses, and cold brews. Cafés have expanded well beyond metropolitan centres into Tier-2 and even Tier-3 cities. Online sales of coffee beans, grinders, and capsule systems are rising at a pace that would have seemed improbable a decade ago, suggesting that curiosity and willingness to spend are growing even if absolute consumption remains low.
Market data reinforces this narrative of aspiration-led growth. According to the IMARC Group, India’s coffee pods and capsules market was valued at $967 million in 2024 and is projected to reach $1.69 billion by 2033, growing at an annual rate of 6.4 per cent. This growth trajectory has encouraged both Indian and global firms to test the limits of India’s evolving palate. One of the clearest signals of confidence came in early 2025, when Nestlé’s Nespresso, a pioneer of single-serve coffee systems worldwide, entered India with its first boutique at Select Citywalk in Delhi. The company priced its machines starting at ₹16,500, while sleeves of ten capsules were set at ₹950, a clear indication that it was targeting a niche but growing segment of affluent urban consumers.
Nespresso’s entry is best understood as a bet on the in-home coffee experience rather than mass consumption. At the launch, Nestlé India’s chairman and managing director Suresh Narayanan observed that coffee consumption in India had witnessed a surge in recent years, particularly in home settings, and described the country as one of Nestlé’s fastest-growing coffee markets. Nespresso’s global chief executive, Guillaume Le Cunff, echoed this sentiment, framing the Indian foray as an attempt to bring the brand’s signature experience into Indian homes and deepen appreciation for quality coffee. Even outside homes, Indian consumers are increasingly willing to experiment with international coffee flavours, origins, and roasts, a behavioural shift that would have been rare not long ago.
The economics of premium coffee, however, are both straightforward and demanding. A single cup brewed from a Nespresso capsule works out to roughly ₹95. This places it cheaper than a café latte at a decent outlet, yet significantly more expensive than instant coffee. The capsules are thus positioned as affordable luxury, acceptable to consumers who value convenience and status without fully embracing café pricing. Like most premium coffee brands, Nespresso relies on the classic razor-and-blades model, where initial machine sales pave the way for recurring capsule purchases. If the brand manages to capture even 10 to 20 per cent of the Indian pods market, it could generate annual revenues of $100 to $200 million within a few years, excluding additional income from machine sales and business-to-business placements in hotels and offices.
To support this ambition, Nespresso has partnered with Thakral Innovations for distribution across retail and professional channels. The Delhi boutique serves not only as a store but as a curated sensory space where customers can sample blends, learn about brewing methods, and receive personalised guidance. Industry observers expect the brand to follow a metro-first expansion strategy, with Mumbai, Bengaluru, and Hyderabad likely to see boutiques over the next two years. Yet scaling this model will require more than retail presence. Building reliable after-sales service, ensuring consistent availability of capsules, and creating infrastructure for capsule collection and recycling remain significant challenges in a market where sustainability systems are still evolving.
Nespresso’s arrival has also had ripple effects across the broader coffee ecosystem. Starbucks, which operates nearly 500 stores in India, has experienced fluctuating footfalls as consumers reassess the balance between café visits and home brewing. Indian specialty coffee players such as Blue Tokai, Third Wave Coffee Roasters, and Sleepy Owl are expanding aggressively, investing heavily in educating consumers about brewing techniques, flavour profiles, and bean origins. Their success at the retail level is gradually creating a customer base that appreciates quality and may eventually upgrade to home machines, creating a virtuous cycle that benefits both cafés and equipment suppliers. While these categories may initially compete for market share, over time they are more likely to expand the overall market and grow together.
Competition, however, will inevitably produce winners and losers. Smaller and mid-sized café chains may struggle to survive as larger players scale faster and consumers become more discerning. Tea-focused brands such as Chaayos and Chai Point will continue to dominate the mass beverage market, reflecting the enduring cultural centrality of chai. Coffee’s growth, for the foreseeable future, will remain largely urban and premium. There are also clear risks ahead. Import duties and exchange rate fluctuations could make foreign capsules more expensive. Compatible pods and premium Indian roasts may erode brand loyalty. Economic slowdowns could dampen discretionary spending on what remains, for many, a luxury indulgence.
Despite these uncertainties, the underlying consumer trends appear resilient. Coffee in India is gradually evolving from an occasional café outing into a ritual associated with lifestyle, convenience, and status. The country may still be a tea-drinking nation by volume, where chai and snacks like samosas and bread pakodas dominate office breaks. Yet attitudes are changing, particularly among younger consumers for whom cafés represent social spaces and coffee a marker of modernity. As more homes invest in machines and more consumers choose to brew rather than buy, the grinding of coffee beans in the early morning or late evening may soon become as familiar as the whistle of a pressure cooker, signalling not a replacement of chai, but the quiet arrival of a parallel habit.
(the writer can be reached at dipakkurmiglpltd@gmail.com)
