Despite a single-digit growth rate for Coffee demand in the domestic market in the past few years, prices are consistently falling due to oversupply.
Five years ago, the price of a 50-kg bag of raw Coffee was around Rs 9,000. Now, it is selling 30 per cent cheaper at Rs 6,000-6,500, which is much below the cost of production.
In the export market, prices dropped to around $1,500 per tonne from $1,800-2000 last year. Coffee growers in India export 80 per cent of their output.
Global prices were dropping mainly due to higher exports from Brazil, as its production was high and a weak currency made exports lucrative.
As far as domestic market is concerned, demand is growing in high single digits. It is decent growth but underwhelming relative to the size of India's population.
Coffee consumption has increased from 60,000-65,000 tonnes in the 1990s to 80,000-85,000 tonnes in the past two years, but the industry doesn't regard this as a significant jump.