The Expansion of Specialty Coffee Across India’s Smaller Urban Centers

“It’s not just about brewing a good cup of coffee but connecting with customers on a deeper level.” This guiding principle motivated Harmanpreet Singh to leave his family bakery and establish a specialty coffee shop in Jalandhar, a city located in northern India. This decision was noteworthy, as coffee has traditionally been popular in the southern states, where it is typically served strong and frothy in a steel tumbler. However, in the extensive regions of north India, tea remains the primary beverage, being an intrinsic part of the local culture. For Mr. Singh, this venture commenced in 2021 during the Covid-19 pandemic, when he observed an increasing consumer appetite for specialty coffee, particularly among the city’s youth and international residents who had returned to the country at that time. Recognising this evolving market, he relocated to Bengaluru, a southern city, to master brewing techniques. He recounted, “I studied everything – from the way coffee is served to the role things like decor, cutlery, music and even packaging played in the overall experience.” Three months later, Mr. Singh applied his acquired knowledge by opening Buland Café in Jalandhar. Currently, the cafe operates 40 outlets throughout the city and has become a preferred destination for the city’s young demographic, who visit to relax or work while enjoying hot cups of coffee. The beans, roasted in various blends, are sourced from the renowned coffee estates of Karnataka. Mr. Singh states that he personally instructed his staff on how to prepare the ideal cup and maintain the coffee machinery. “It’s a thriving scene,” he comments. Mr. Singh is among a group of young entrepreneurs who are benefiting from a surge in specialty coffee consumption in smaller towns and cities across north India. India has long possessed a dynamic cafe culture, but this has largely been confined to major cities where indigenous specialty and international coffee chains dominate the market. However, in the post-Covid era, several tier-two cities are also experiencing a boom in demand for such establishments, as people adopt practices like remote working and seek out new venues for social gatherings with friends and families. Cafe proprietors report that more Indian consumers are now willing to pay a higher price for coffee that is roasted in smaller batches and customized according to their preferences. Bharat Singhal, the founder of Billi Hu roasteries, notes, “Clients have become more knowledgeable about the roasts and are interested in the origins of their coffee.” In fact, a 2023 report by CRISIL, a marketing analytical company, indicates that over 44% of the Indian population now consumes coffee. While a significant portion of this consumption originates from home use, the increasing demand for specialty coffee in smaller cities plays a substantial role, according to Bhavi Patel, a coffee consultant and dairy technologist. Roastery owners confirm that this growth is also reflected in numerical data. Sharang Sharma, the founder of Bloom Coffee Roasters, states, “Subscription based orders have surged by 50% in one year.” He adds, “Customers have moved from French presses to pour-over or espresso machines, adopting more sophisticated brewing methods.” Although India is frequently associated with tea, it also has a long history of coffee consumption. This culture began to take shape in the 1900s when Indian Coffee Houses emerged as a gathering place for the intellectual and elite classes. Housed in colonial-styled buildings, these cafes served English breakfasts with steaming hot coffee and provided a space for discussing politics and mobilizing support during critical historical periods. A transformation occurred in the 1990s when economic reforms opened India to global influences, enabling entrepreneurs to establish private coffee shops frequented by young people, who viewed the experience as fashionable. Café Coffee Day (CCD), which launched in 1996, quickly became one of India’s most popular and widespread coffee chains. At its peak, CCD boasted over 1,700 outlets, serving as a favored meeting spot for students and young adults. However, mounting debt, management issues, and the untimely death of its founder led to the closure of most of its outlets across India. In 2012, the entry of international giant Starbucks stimulated the rise of homegrown specialty coffee brands such as Blue Tokai Roasters, Third Wave Coffee, and Subko Coffee. Mr. Singhal observes that while major cities like Delhi, Jaipur, Mumbai, and Bengaluru still dominate the market, smaller cities are rapidly catching up. However, consumption is not solely driven by changing tastes. Mr. Singh explains, “Often it’s social media.” He elaborates, “People want good coffee but they also want to be in a space that’s trendy and which they can post online.” Nishant Sinha from Lucknow city was among those who identified this trend early on. His Roastery Coffee House offers a trendy ambience, free Wi-Fi, and comfortable seating options, alongside an assortment of coffee roasts. While the beans are sourced from coffee estates in the south, the food menu is distinctly north Indian. Others, like Jatin Khurana in the northern city of Ludhiana, are experimenting with flavors. At his Urban Buhkkad cafe, Mr. Khurana serves the “Shadi Wali Coffee [the wedding coffee]” – a wedding favorite from the 1990s, which became renowned for its blend of instant coffee, milk, sugar, and a sprinkle of chocolate powder. But instead of coffee powder, Mr. Khurana uses freshly ground beans, available in different roasts and varieties, to enhance its flavors. He states, “The idea is to capture the essence of the beverage that many Indians grew up drinking.” This period presents an exciting opportunity for the business, yet growth is accompanied by its own set of challenges. Mr. Singhal cautions, “Demand is growing, but a smaller coffee shop owners tend to cut corners, whether it’s by opting for substandard machines, serving weaker coffee shots, or hiring inexperienced baristas.” Furthermore, operating such businesses is not consistently profitable given the high price of coffee and the infrastructural costs involved in running these spaces. When Neha Das and Nishant Ashish opened The Eden’s café in Ranchi in 2021, their intention was to create a safe and relaxed environment for young students to gather in the city. Today, their hazelnut coffee and cold brews have become a favorite for many. Ms. Das comments, “It took some time but longevity requires more than profit.” She adds, “It’s about dedication, crafting local flavours, and understanding customers, even if it means working with slim profit margins for the long haul.”