India’s Out-of-Home Coffee Market Poised for Growth, Expected to Reach $3.2 Billion by 2028
Bengaluru: Coffee is rapidly becoming a lifestyle choice for millions of urban consumers in India, a country traditionally known for its tea-drinking culture. According to a recent report by Redseer Strategy Consultants, the country’s out-of-home coffee market is projected to reach between $2.6 billion and $3.2 billion by 2028, growing at a compound annual growth rate (CAGR) of 15-20 percent.
The premium coffee segment, priced above Rs 200, dominated the market in 2023, accounting for 46 percent of the total market share. This segment is expected to increase its share to 55-60 percent by 2028, growing at an impressive CAGR of 20-25 percent. The premium segment focuses on affluent consumers who seek artisanal brewing and a unique coffee experience, reflecting the growing preference for high-quality coffee among discerning customers.
The mass market, priced below Rs 100, held a 50 percent market share in 2023. However, its share is expected to decrease to 30-35 percent by 2028, with a relatively slower growth rate of 8-10 percent CAGR. While affordability remains its key advantage, the segment is limited in terms of premium differentiation.
Meanwhile, the mid-price range (Rs 100-Rs 200), which constituted just 4 percent of the market in 2023, is expected to grow significantly, accounting for 8-10 percent of the market by 2028. With a projected CAGR of 35-40 percent, this segment is seen as a critical driver of the coffee industry’s expansion, offering opportunities for introducing specialty brews and appealing to customers seeking both affordability and quality.
Rohan Agarwal, Partner at Redseer Strategy Consultants, noted, “Coffee has moved beyond instant and traditional brews to premium experiences. It is now a lifestyle product for Indian customers, with the mid-priced segment emerging as a whitespace to meet the growing demand for affordable options, offering both quality and enhanced experience.”
As the market grows, businesses face several challenges, particularly with supply chain complexities, which make it difficult to maintain consistent quality and ensure timely delivery across regions. Additionally, finding the right locations in high-traffic areas such as malls and tech parks remains a critical yet competitive hurdle for coffee brands.
Despite these challenges, India’s coffee market offers immense opportunities for companies to step in and deliver high-quality, accessible specialty coffee solutions, helping reshape the country’s beverage landscape.
