Coffee by any other name tastes just as good. That's why recession-hit Russians and East Europeans are buying cheap local brands rather than expensive global ones.
And guess who is raking it in? Indian coffee exporters, who are riding the recession wave to score an instant hit.
India's instant coffee exports have surged, almost doubling in the past three years. Besides Russia, the exports have grown to the South-East Asia and the US. Russia is the largest market and accounts for a third of Indian instant coffee exports. Indian coffee is sold in bulk mainly to private labellers in Russia and Eastern Europe.
“There is a lot of demand for the low priced instant varieties in Russia, East Europe and Asia,” said Mr Ramesh Rajah, President, Coffee Exporters Association. “Indian companies have been aggressive in pricing their products, which has helped them expand their reach in these markets,” he added
India's instant coffee exports to Russia have close to doubled in the past three years, whereas to the US they have more than trebled. However, in markets such as Ukraine and Finland, the Indian exports have come down in recent years.
Major exporters
Companies such as CCL Products (India) Ltd and Tata Coffee Ltd are major exporters of the instant variety to these countries. For January-December 2011, the export of instant coffees reached an all-time high, but fell marginally short of the 100,000-tonne mark.
Total coffee exports registered a 20 per cent growth in quantum to 3.46 lakh tonnes in calendar 2011 over 2010. In rupee value terms, the exports grew 63 per cent to Rs 4,859 crore for 2011 over the previous year, while in dollar terms the exports were up by 65 per cent at $1.05 billion.
Re-exports
Indian firms import a lot of low priced raw coffees, mainly the Robusta variety from Vietnam and East Africa to re-export them after converting them into instant coffees. The import of raw coffee for re-exports has shown a 18 per cent growth in 2011 at 53,440 tonnes over the previous year. Besides, recent capacity addition by NKG Jayanti and Vayhan Coffee has aided the exports, Mr Rajah added.