The tie-up between Starbucks and Tata Coffee is good news for growers big and small as Starbucks is likely to source its coffee from a variety of growers as the domestic market expands. More coffee shops could lead to higher domestic consumption, particularly among the young, leading to stable prices in the long term. Besides, Indian coffee will be increasingly recognised worldwide for its quality, and its environmental and social attributes, just as Starbucks is known for these qualities.

However, Amit Pant, Business Manager, Olam Agro India Ltd, said: “Out-of-home consumption is unlikely to pick up in the absence of an increase in in-home consumption. There has to be a coffee drinking culture, to begin with.”

Sahadev Balakrishna, Chairman, the Karnataka Planters' Association, said the signing of the MoU would give India global visibility as a producer of quality coffees. “It also showcases India as a responsible producer, meeting environmental and social obligations, as Starbucks is particular about these aspects. The fact that we grow coffee in the shade is a unique advantage. Since the alliance amounts to a branding of Indian coffee as a whole, it could have a rub-off on exports.”

Although India has its own expertise in coffee production, Starbucks will bring in another vision of cupping, points out Sunalini Menon, CEO, Coffee Labs Pvt Ltd. “It is an exciting development. The presence of Starbucks would lead to improved information on practices in other parts of the world from where it sources its coffee.”

Ramesh Rajah, President of the Coffee Exporters' Association, is optimistic that the alliance could lead to an increase in domestic consumption, which could result in all growers getting a better price and premium. However, he sees no major impact on exports in the near future.

Starbucks' presence in India, not merely as a retail chain but also as a large buyer of Indian coffee, could boost India's coffee exports to other countries where the coffee chain has a presence. The industry is also of the opinion that no big roaster can depend on a single country for its blends. Import duties for coffee are set to fall over the next five years under the WTO regime, which would make it easier for Starbucks to expand operations in India. But that should not impact Indian growers, as domestic demand is growing at 5-6 per cent per annum.

Another opinion is that the growers who abide by the laws of the land and adopt fair trade practices have a chance of doing well, even if their coffees are not branded. In fact, buyers such as Starbucks are focused on the profile of the coffee rather than the supplier per se provided the growers have adopted best practices, says Ashok Kuriyan, Managing Director, Balanoor Plantations and Industries Ltd.

Anil Bhandari, Member, Coffee Board, termed this a great move, “If India's per capita coffee consumption were to rise from 75-80 gm a year to 200-250 gm a year, it would stabilise coffee prices. Even if the import duty protection were to go over the next five years, it will hit growers only if they have an unsaleable surplus.”

Related Topics