Inflationary Concerns in US, Europe Boost Demand for Low-Cost Indian Instant Coffee

Concerns about inflation in Western countries like Europe and the US have increased demand for inexpensive Indian instant coffee. With nations like Germany, Italy, Belgium, and the US increasing their purchases of the beverage from India, shipments of instant coffees have seen a volume gain of 13% over the same period last year.

The demand for Indian instant coffees is rising in traditional locations like Italy, Germany, and Belgium where the roast and ground (R&G) is a popular beverage. For instance, shipments of the instant variety increased by more than twice as much to 993 tonnes in the April–June quarter of this year compared to 487 tonnes during the same period last year in Italy, the country's main market for Indian coffee beans.

Similar to how shipments of instant coffee to Belgium increased by over twofold to 537.81 tonnes, while those to Germany nearly tripled to 992.97 tonnes (from 94.31 tonnes) (273 tonnes).

The low-cost robusta cherry varieties are used to make instant coffees or value-added coffees. Manufacturers of instant coffee in India, including CCL Products and Tata Coffee, import low-cost robusta beans from countries such as Vietnam, process them as value-added coffee, and re-export to markets such as Russia, Europe, and the United States.

K G Jagadeesha, CEO and Secretary of the Coffee Board, attributed the increase in Indian instant coffee shipments to growing inflationary concerns in the Western world. "Also, our value-added coffee exports to Russia are doing well, and they are looking to import more from India now that they have stopped importing from other countries," he added.

During the first quarter, instant coffee shipments to Russia increased 36% to 7,882.28 tonnes compared with 5,785 tonnes in the year-ago period.

According to Ramesh Rajah, President of the Coffee Exporters Association, with rising inflationary concerns around the world, people everywhere are looking for lower-priced alternatives and better-value products. Because coffee is a popular beverage, the demand for instant coffees is increasing. Rajah also attributed the increase in shipments to last year's order backlog, while shipments of instant coffees to European countries increased on a lower base.

During the fiscal year 2021, India exported a record 1.21 lakh tonnes of instant coffee. According to the current trend, shipments will likely exceed last year's levels. Shipments of instant coffee in the first half of calendar 2022 are up around 6% to 62,902 tonnes, compared to 59,430 tonnes in the same period last year.