One steam-filled cup of filter coffee in the morning, a quick coffee break amidst work pressure to recharge, and a cold coffee to beat the afternoon heat – for many Bengalureans, this is what a typical day looks like. For them, this isn’t a mere habit, but a ritual that gets them through the marathon of life. But recently, global challenges, particularly in major coffee-growing nations like Brazil and Vietnam, have left Bruhat Bangalore Hotels Association (BBHA) to decide on a hike on coffee prices by 10-15 per cent, leaving Bengaluru’s coffee enthusiasts and coffee houses on edge.
Why the hike?
Brazil’s coffee production is a major determinant of the prices. In Hatti Kaapi’s owner, US Mahendar’s words, “In the last three years, we have seen a steep increase. As far as Indian coffee is concerned, we grow around four lakh tonne of coffee; still, we have to follow the price lens which Brazil defines.” Mahendar, who is involved in both retail and farming, looks at this situation from multiple angles. “As a grower, it’s good news but we have a diverse crowd – those who come in rickshaws as well as those who come in luxury cars, and we cater to all.”
The dilemma
Prashanth Raj, one of the managing directors of IDC, shares his concern, stating, “The first price hike was `100 per kg. Now it’s another `100. Also, prices for dairy products are going to be increased and Bengalureans usually prefer milk coffee. Currently, we are absorbing all the extra expenses, but we might have to raise prices by April if costs continue to rise.” This concern is echoed across many coffee shop businesses, as they face similar pressures, leaving them in a dilemma. Nandan Thogarihunkal, owner of Hunkal, a single-estate coffee company, looks at the 10-20 per cent increase as not a major concern, but if this continues, he believes it will fall heavily on the customers’ pocket. “Not many companies have increased the prices yet. Only when we do that, will we get to know how exactly the consumers behave on this front. But right now, there will be a little loss in business, no doubt, because of the sudden price rise,” he says. Another main impact Raj foresees is a reduction in customer visits to coffee shops. Keeping the budget-sensitive customers in mind, he notes, “Every time people come out to have a cup of coffee, they have a budget in mind that they don’t want to cross. With coffee, they might want to have snacks. But now they might cut the snacks but not the coffee, as their day is incomplete without it.”
A silver lining?
On the brighter side, Mahendar notes how this can be seen as a great opportunity for India to grow in terms of coffee. “Gen Zs and millennials are buying coffee as a statement today. For the coffee industry it’s good news,” he says. However, NR Vinayanand, owner of Bhavani Koffee, hopes for customers to choose alternative options. “An 80:20 ratio of coffee and chicory or similar ratios like 70:30, 60:40 and 53:47, respectively, could act as replacements, and will have prices a bit lesser compared to pure coffee. I don’t see them switching to other drinks,” says Vinayanand, adding, “They may try other drinks for a couple of days but eventually they will return to coffee.”