MAM
Coffee cafes to see huge growth in India
BANGALORE: At the Indian International Coffee Festival 2007 (IICF) in Bangalore, which is being touted as the largest coffee event in Asia, the mood was quite upbeat among the café chains, at least.
Café Coffee Day (CCD) CEO Naresh Malhotra says that there is room for 5,000 cafes in India over the next few years, a view that is endorsed by competitor Barista Coffee Company (BCC) CEO Partha Dattagupta. CCD, the largest coffee café chain, recently announced the opening of its 400th café in Kolkata. Malhotra plans to grow his chain by another 800 over the next two to three years. BCC plans to launch 25 of their lounge format coffee parlors this year.
Industry experts say that in most segments you have ‘the big three’ – In India besides the above incumbents there is room for a third one. Who that third player is going to be is anybody’s guess, what with the recent announcement of Starbucks to grow their chain globally by adding 2,500 cafes and their first one in India by December this year. Then there is Reliance Group’s ‘Java’, which currently has been limited to their stores and petrol bunks that could be another contender for the crown.
As already reported on Indiantelevision.com, illycaffe announced their plans to foray into India through the franchisee route with the opening of 5-10 ‘Perfect Italian Coffee Cafes’ – called ‘Espressamente’ this year and to double this number by the next.
With other existing players such as Coffee World, Mumbai’s Mochas, which is planning to expand to Bangalore according to rumors, other regional players such as the Chennai based ‘Quickies, Café Inch also trying to fight for a larger pie, and the Coffee board’s recent and other planned initiatives to popularize coffee, the potential for growth is huge.
So far café chains have generally built their brands by word of mouth rather than ad-spends. Maybe the entry of so many players could change the rules of the game, since most would be fighting for the pie that is largely limited to the urban areas (except in Karnataka where coffee consumption, even in the rural areas, is already quite high). The current brand building methods as well as products could well see a sea change with all the players vying for throat share.
Coffee, which has been fighting for the share of throat with tea, milk, carbonated drinks and other juices, is consumed mainly in the South, which once had a lion’s share of 92 per cent of the coffee consumers in India. The trend has been changing now, the ratio between the South and other areas has moved to 80:20. Coffee cafes contribute just 15 per cent of the market share, but have the maximum visibility. Malhotra, who revolutionized the industry by the fast paced growth of his chain, says that there is a tremendous shift in how anything is sold today.
Findings of a survey by Gallops for the Coffee Board “Recent trends in Coffee Consumption and Consumer Attitudes” show that the Indian per capita consumption is an abysmally low 75 grams as compared to 4 kgs in Germany, 4.1 kgs, 9 and 11 kgs for the US, Switzerland and Finland repectively, and hence there exists a huge opportunity when current Indian demographics and psychographics are considered. Coffee had a penetration of 62 per cent in 2005 as against tea which had a penetration of 95 per cent. Coffee came in third for throat share – tea with 89 per cent, followed by milk with 24 per cent and coffee a close third with 23 per cent.
The survey also threw interesting findings for the cafes and the marketing and advertising fraternity – Family drinking of coffee was a key to early adaptation and that most regular and occasional coffee drinkers started drinking coffee at an early age. The Coffee board was considering creatively promoting coffee to a younger audience so that early drinking habits are formed.
Among the factors that could be exploited, according to industry experts, are the wellness trends among the young, the growing middle class and the growth of the IT-ITES sector in India.
Brands
Jubilant FoodWorks faces Rs 47.5 crore GST demand, plans appeal
Tax authorities flag alleged misclassification of restaurant services
MUMBAI: Jubilant FoodWorks Limited has landed in a tax tussle after receiving a GST demand of Rs 47.5 crore from the office of the additional commissioner of CGST and central excise in Thane, Maharashtra.
The order, issued under the provisions of the Central Goods and Services Tax Act, 2017, relates to an alleged incorrect classification of certain services under the category of restaurant services. According to the tax authorities, this classification resulted in a short payment of goods and services tax for the period between the financial years 2019-20 and 2021-22.
The demand includes Rs 47.5 crore in GST along with an equal amount as penalty, in addition to applicable interest. The order was received by the company on March 13, 2026.
In a regulatory filing to the BSE Limited and the National Stock Exchange of India Limited, the company said it disagrees with the order and believes its arguments were not adequately considered.
The company is preparing to challenge the decision and plans to file an appeal. It added that once the redressal process is complete, the demand is likely to be dropped.
Despite the sizeable figure attached to the notice, the company said it does not expect any material impact on its financials, operations or other activities.
The disclosure was signed by Suman Hegde, EVP and chief financial officer, who confirmed that the company received the order at 19:06 IST on March 13 and has already initiated steps to contest it.
The development places the quick service restaurant major in the middle of a tax debate that could hinge on how certain restaurant-linked services are classified under GST rules. For now, the company appears ready to take the matter from the tax office to the appeals desk.
