India and China, long regarded as tea-drinking nations, are emerging as key growth markets for coffee, prompting Vintage Coffee and Beverages Ltd. to expand capacity and invest in premium products to capture rising demand.
Speaking to NDTV Profit, Chairman and Managing Director Balakrishna Tati said coffee consumption in India is growing at 10-12% annually, driven by urbanisation, changing lifestyles and younger consumers.
"India is now becoming one of the emerging markets for coffee consumption. China and India have traditionally been tea countries, but slowly they are expanding towards coffee because of urbanisation and the younger generation," Tati said.
The company, which derives nearly 70% of its revenue from exports, is expanding its presence across Southeast Asia, Africa, Europe, North America and Central America while also increasing its focus on India and China.
To meet rising demand, Vintage Coffee has increased its instant coffee capacity from 6,500 metric tonnes to 11,000 metric tonnes and expects 90-95% utilisation this year. Higher utilisation is expected to improve profitability as fixed costs remain largely unchanged, boosting operating leverage.
The bigger earnings driver is expected to come from premiumisation. Vintage Coffee is setting up a freeze-dried coffee plant, with commercial production scheduled to begin by the end of FY27. "People are moving from spray-dried coffee to freeze-dried coffee because it gives excellent aroma and a stronger coffee experience, much closer to roasted and ground coffee," Tati said.
Tati said consumer preferences are increasingly shifting towards premium coffee, making freeze-dried products one of the fastest-growing segments globally.
The company has already laid out a roadmap to double its total production capacity to 22,000 metric tonnes by FY30. The expansion includes adding another 5,500-tonne freeze-dried coffee line, taking total freeze-dried capacity to 11,000 metric tonnes, matching its spray and agglomerated coffee capacity.
While Vintage Coffee continues to operate largely as a private-label exporter, management said it remains open to acquiring a direct-to-consumer coffee brand in India if the right opportunity emerges. It has, however, ruled out overseas acquisitions for now.
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