New Delhi: David Rennie, the deputy executive vice-president and head of Nestlé Coffee Brands, is responsible for the company’s global coffee business, which includes renowned brands like Nescafe, Nespresso, and Starbucks. In an interview, Rennie discussed how India’s coffee market is evolving, with Nestlé making market share gains through product launches like ready-to-drink cold coffee and frappe mixes.
The coffee cafe culture in India is undergoing a transformation, with more consumers embracing specialty coffee and seeking exotic brews from various companies. Here are the edited highlights of the interview:
Could you provide more insight into the scope of Nestlé’s coffee business? Coffee is a strategically vital category for Nestlé. Last year, we achieved sales of 23 billion Swiss Francs in coffee, which accounts for approximately a quarter of Nestlé’s global revenue. We have a presence in all of Nestlé’s markets, with roughly one out of every seven cups of coffee consumed globally being Nescafe. In India, one out of every four cups of coffee consumed is Nescafe. We began selling our products in India in 1963, and our Nanjangud factory was established in 1989. We have been producing coffee directly in India ever since. The majority of our production is done in India, using Indian coffee for Indian consumers. Last year, we announced an additional investment of 110 million Swiss Francs in that factory to increase its capacity by 2025. By 2025, we will have that enhanced capacity, primarily dedicated to Nescafe and Nescafe Sunrise.
While 25% of your global revenue comes from coffee, it’s your smallest segment in India. Is India underdeveloped in terms of the coffee business? One way to gauge the development of a category is to look at the average annual coffee consumption per consumer. In India, the average is currently around 30 cups per year. To provide some context, the global average is 200 cups. The coffee business is strong for us in India and is growing rapidly, consistently posting double-digit growth. In terms of potential, we have only just begun. It’s evident that Indian consumers are developing a taste for coffee, and it’s a category generating significant interest.
Where does the Indian coffee business stand compared to other global markets? India is unquestionably one of our top 20 coffee markets globally, and it is rapidly climbing the ranks each year. We have achieved double-digit growth for many years, both in terms of absolute size and market share. We have solidified our market leadership, thanks to having the preferred brand in the market and our brand driving the category.
Do you foresee coffee becoming a more substantial business in India? Any projections? We certainly see substantial growth potential in India, which is why we are investing in doubling the factory’s capacity. I won’t speculate on where we’ll be in five or ten years, but we know that we will need more production capacity. With a young population, both in rural and urban areas, showing a keen interest in understanding coffee, the category is set for significant expansion. It’s the preferred beverage of the younger generation, not just in the form of hot coffee but also cold coffee. Coffee shops have played a role in this trend, offering a variety of cold and exotic coffee options. As a coffee-producing country, India has the potential to create more jobs and build infrastructure related to coffee cultivation. It’s truly exciting.
