India's instant or soluble coffee exports have surged by about three-fourths in the past three years on rising demand from the Russian Federation, Eastern Europe, South East Asia and the US. This is mainly on account of consumers in recession-affected Russia and Eastern Europe switching over to cheaper varieties of instant coffee, mainly white or private labels from the branded ones, to cut costs.
The Russian Federation is the largest market and accounts for a third of Indian instant coffees exports. Indian coffee is sold in bulk mainly to private labels in Russia and Eastern Europe. Companies, such as CCL Products (India) Ltd and Tata Coffee Ltd, are major exporters of the instant variety to these countries.
EXPORT PERMITS
For calendar 2011, the export permits for instant coffee issued by the Coffee Board till December-end marginally fell short of the one lakh 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, exports grew 63 per cent to Rs 4,859 crore for 2011 over the previous year, while in dollar terms, they were up 65 per cent at $1.05 billion.
“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
Indian firms import a lot of low-priced raw coffee, mainly the Robusta variety from Vietnam and East Africa to re-export them after converting them into instant coffee. The import of raw coffee for re-exports has shown 18 per cent growth in 2011 at 53,440 tonnes over the previous year. Besides, capacity addition by NKG Jayanti and Vayhan Coffee in recent years has aided the exports, he added.
MARKET SHARE
However, the challenge for Indian firms is to retain their share in these markets as competition grows from Brazil and Ecquador. “With rising costs, the Indian companies will have to fight hard to maintain current level. If they manage to retain their market share, it will be a fantastic achievement,” Mr Rajah said.
India's instant coffee exports to Russia have close to doubled in the past three years, whereas these have more than trebled to the US.
However, in markets such as Ukraine and Finland, the Indian exports have come down in recent years.