How Rising Domestic Demand is Reshaping India's D2C Coffee Market As domestic consumption climbs past 30%, India's young coffee drinkers are pushing brands toward omnichannel strategies, easy-brew formats, and a new playbook built on accessibility and convenience
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Domestic coffee consumption in India has grown from less than 10 per cent of production to more than 30 per cent in recent years, supported by a young and curious consumer base. Indian homegrown coffee brands are pointing to a clear trend: demand is rising quickly, but consumers are choosing convenience and consistency. This shift is beginning to reshape how D2C coffee companies scale, where they invest, and what kinds of products find repeat users.
While India's per capita coffee consumption remains low compared to global standards, entrepreneurs are seeing a fundamental change in how new drinkers enter the category. "We're one of the fastest-growing coffee markets in the world. That single shift has unlocked a generational opportunity for brands that innovate early," said Samayesh Khanna, co-founder of Beanly.
Current data suggests that India's coffee market was valued at USD 478 million in 2022 and is projected to reach USD 1.227 billion by 2032, growing at a CAGR of 9.87 per cent.
Several homegrown brands have mirrored this momentum. Rage Coffee, for instance, grew its revenue from about INR 4.5 crore in FY21 to nearly INR 23.5 crore in FY22, more than a five-fold jump, before crossing INR 25 crore in annual revenue in FY24.
Changing Consumer Behaviour
Much of this momentum is being driven by first-time coffee drinkers whose entry point is no longer instant coffee at home. Khanna noted that "coffee today signals taste, youth, aspiration, and experience," and this cultural shift has widened the base of new consumers.
"Out-of-home has become the entry point and India skipped the usual D2C-first playbook," he explained, adding, "Globally, coffee discovery starts at home; in India, it starts at cafés." The result is that brands entering this space must build omnichannel presence far earlier than D2C categories in other markets.
Paritosh and Kanika Birla, founders of The Cohoma Coffee Company, see a similar pattern. "A wave of Indian and international coffee shops and hospitality chains has come in, driving up awareness and trial of coffee-based beverages," they said. As a result, domestic consumption has grown rapidly in just over a decade, moving from under 10 per cent of production in 2010 to more than 30 per cent today.
Why Accessibility Is Driving Growth
In India, most consumers still prefer milk-based beverages, and brewing anything beyond instant can feel intimidating. As the Birlas put it, "Barring the 1–2 per cent, consumers do not yet feel comfortable making the same effort for coffee as they would for tea."
This gap has pushed brands toward formats that are simple, familiar, and easy to adopt. The emphasis is less on premium positioning and more on premium-feeling convenience. Khanna underscored this shift, saying, "Premiumisation has never been about exclusivity or inflated pricing. It's about making genuinely great coffee accessible."
From pour-over bags and single-serve formats to flavoured roasted coffees and one-minute brews, the market is growing around products that reduce friction. The focus is on bringing café-like quality into homes without requiring equipment or extensive brewing knowledge.
Retention Over Acquisition
As more brands enter the category, competition is rising, but the real challenge is not acquisition. It's getting consumers to return. India's coffee drinkers are still in the habit-building stage, which makes familiarity and trust critical.
"Indian consumers don't just return for caffeine; they return for consistency and connection," Khanna said. He added that "taste familiarity, freshness, and brand trust play a bigger role in retention than deep discounts ever could."
Cohoma reports a monthly repeat rate of over 90 per cent, crediting it to their focus on ease, guidance and fresh-ground products.
Structural Risks Persist
Despite the positive trajectory, the category has real challenges. Coffee prices globally have been volatile due to supply disruptions and trade barriers. Khanna called this "the most real and immediate risk," noting how volatility affects margins and working capital.
Consumer switching is another concern in a young market where experimentation is high. But founders argue that differentiation through formats, freshness, and quality can anchor loyalty better than price-based competition.
There is also caution about online-only models. Birla pointed out that "Online is less than 10 per cent of the at-home coffee market," highlighting that brands relying solely on digital channels may struggle to scale sustainably. Physical presence, through cafes, retail shelves, or assisted-brewing counters, continues to be a major driver of credibility and long-term repeat use.
The Next Phase
The next 12–24 months are expected to bring deeper changes. Founders anticipate a rise in functional brews, low-sugar and natural-flavour coffees, and packaging innovations that respond to more health- and sustainability-conscious consumers. Khanna expects the industry to shift toward "functional brews, cold coffees with added benefits, and sustainable, guilt-free packaging, making coffee smarter, more intentional."
India's coffee market is transitioning from an occasional lifestyle indulgence to an everyday choice. Demand beyond major metros is also strengthening. With wider retail distribution and cafe-led discovery in Tier-2 and Tier-3 cities, the new coffee consumer is no longer limited to the urban upper middle class. Assisted formats in retail stores, wider flavour ranges, and omnichannel presence are making it easier for first-time drinkers to build confidence in brewing at home.
