Our Bureau

Bangalore, Oct. 1

ILLYCAFFE, the world's largest producer of gourmet `Espresso' coffee, wants a reduction in India's import duties on roasted varieties.

"Coffee consumption in India would perk up if the import duty is reduced," Mr Andrea Illy, Chairman and Chief Executive Officer of illycaffe, said on Saturday. Currently, the import duty on roasted coffee is about 108 per cent. This is mainly to protect domestic growers.

Mr Illy hinted that his company would take up the duty issue with the Government. "The fact that high import duty is impacting the consumption should be brought to the attention of the Government," he told newspersons on Saturday.

"The Indian Government should develop a strategy to improve the living conditions of growers instead of protecting the developing market," he suggested.

The gourmet coffee boom, Mr Illy said, which started from the US a few years ago, is coming to India as well and is set to trigger coffee consumption. "There is a strong potential to boost coffee consumption in India, which currently stands at around 70,000 tonnes per annum," he said. The increase in average disposable incomes due to high economic growth, coupled with the growing exposure of the middle class to the western culture and lifestyle, is driving the coffee consumption in India. A double-digit growth in coffee consumption for India is an accessible target, he said.

If roasted coffee consumption picks up in India, it can have a beneficial impact on green coffee pricing that would subsequently benefit the growers, Mr Illy said. "India and China are by far the biggest emerging markets that can impact the balance between the production and the market," he said.

illycafe, which uses Indian raw coffee for 20 per cent of its blends, currently sells about 30 tonnes of its Espresso coffee in country, accounting for close to 50 per cent of gourmet coffee sales of 70 tonnes. "Over the next five years, we expect to sell 500-1,000 tonnes per annum through partnership with Fresh and Honest of the Sterling Infotech Group," said the CEO of the Italy-based company.

"We are also trying to create awareness about coffee culture in India by offering training courses through the University of Coffee, Trieste," he said. illycaffe, which sources about 2,500 tonnes of Arabica coffee annually from India, is also trying to organise the small growers under an umbrella on the lines of co-operatives in Colombia, he said.

(This article was published in the Business Line print edition dated October 2, 2005)
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