Home ／ Insights on entering the Indian market
2026.03.24
In India, where the average person drinks around 800 cups of chai (milk tea) a year, a tectonic shift is underway in coffee culture. India's coffee market is projected to reach around 9.53 billion dollars (roughly 1.4 trillion yen) in 2025 and grow to around 17.31 billion dollars by 2034 (a CAGR of 6.86%, IMARC Group). The branded coffee shop market in particular grew 12.7% over the past 12 months, reaching 5,339 outlets as of 2025 and on pace to surpass 10,000 by 2030 (Comunicaffe).
At the center of this growth is “specialty coffee.” Third-wave coffee culture is rapidly taking hold in urban India, and coffee is being elevated from a mere beverage into an “experience” and a “lifestyle.” The process by which chai-loving India transforms into a specialty coffee powerhouse holds major business opportunity for Japanese companies.
Founded in Gurugram in 2013, Blue Tokai is a pioneer of specialty coffee in India. It now operates more than 130 outlets nationwide and runs four commercial roasteries. Built around single-origin coffee from Chikmagalur in Karnataka and Wayanad in Kerala, it emphasizes “farm-to-cup” traceability. Its D2C (direct-to-consumer) online subscription model has also succeeded, making it a model example of building a digital-native brand.
Bengaluru-based Third Wave Coffee reached its FY2025 target of 150 outlets ahead of schedule, expanding to 172 outlets across 12 cities as of July 2025. Opening 56 new outlets a year, one of the fastest paces in the industry, it is driving the mainstreaming of specialty coffee. At 200 to 400 rupees (roughly 360 to 720 yen) a cup, its positioning as more affordable than Starbucks without compromising on quality has won it strong support.
Cafe Buddy’s Espressoも出店を重ね、145店舗まで急成長しています。このほか、Subko Coffee (Mumbai), Corridor Seven Coffee Roasters (Nagpur), and Araku Coffee (Andhra Pradesh) — distinctive specialty coffee brands are emerging city by city.
Starbucks entered the Indian market through a joint venture with Tata Consumer Products and entered the Indian market, running about 450 stores as of 2025. Cafe Coffee Day (CCD) has kept shrinking from its FY19 peak of 1,752 stores and was down to about 435 in FY25. It is in the middle of a restructuring, and its shift toward specialty coffee has been limited.
India's middle class is expanding rapidly and is projected to reach around 61% of the population by 2047. For young, higher-income urban residents, specialty coffee shops function both as a “status symbol” and as a “third place” — a space beyond home and work.
India is the world's seventh-largest coffee producer (around 350,000 tons a year), growing high-quality Arabica and Robusta beans mainly in Karnataka, Kerala, and Tamil Nadu. Indian coffee is exported to Europe and Japan, but in recent years there has been growing momentum around the idea of “consuming India's best beans within India.”
With remote and hybrid work becoming established since the pandemic, cafés have also come to function as a “workplace.” Specialty coffee shops offering Wi-Fi, power outlets, and a comfortable space have become indispensable for freelancers and IT workers. In particular, Bengaluru, café density has risen to a level comparable with Tokyo.
As specialty coffee spreads, the market for coffee equipment and gear is also expanding rapidly (Coffee Intelligence). Specialty equipment such as Japan's Hario drippers and kettles, Kalita's wave drippers, and Comandante grinders enjoy a strong reputation among coffee enthusiasts in India. This is an area, spanning home and commercial use alike, where Japan's precision equipment manufacturing can be put to good use.
Japan's kissaten (coffee shop) culture, siphon coffee, and the meticulous extraction style of hand drip are the “next frontier” for specialty coffee enthusiasts in India. There is significant room for differentiation in cafés built around the concept of a Japanese-style coffee experience, or in roastery brands built on Japanese roasting technique.
India's Matcha Market is taking off rapidly, and the “matcha latte” is becoming a fixture on specialty coffee shop menus. Developing and licensing original menus that fuse matcha and coffee is a unique business model that plays to Japan's strengths.
Specialty-grade beans from India — such as Monsoon Malabar and Chikmagalur AA — are also well regarded in Japan's specialty coffee market. A trading business connecting Indian producers with Japanese roasters can be a win-win model for both sides.
Understanding Chai Culture: Most people in India still prefer to drink chai, and coffee consumption is concentrated in urban areas. Site selection for a coffee business needs to be done carefully.
Designing the Price Range: The standard price range for specialty coffee in India is 200 to 500 rupees (roughly 360 to 900 yen) a cup. Bringing in Japan's price range of 600 to 1,000 yen a cup as-is will fail to reach most of the market.
FSSAI approval: As a food-service establishment, FSSAI approval is required. For a café, obtaining a state license is common, which takes two to three months.
The Importance of a Local Partner: Carrying out practical tasks on the ground — real estate contracts, interior construction, staff hiring, building a supply chain — requires Local partners to be in place. Causes of failure should be understood in advance.
India's specialty coffee market is still in the early stages of growth. The number of branded coffee shops is expected to double over the next five years, and consumption of specialty coffee for home use is also set to expand rapidly. At this historic turning point, as a chai-loving nation transforms into a coffee-loving one, entering the market with Japan's coffee culture and technology is a chance to build a significant first-mover advantage.
Pros and Cons of Entering the Indian Market and, having weighed it, Market research and using it to develop a strategy for entering this fast-growing market.
Because coffee is being embraced as an experience and a lifestyle, especially among young, higher-income urban residents. With remote and hybrid work now established, cafés have also come to serve as a workplace, driving demand for them as a third place. India itself being one of the world's leading coffee producers is also part of the background.
Blue Tokai Coffee Roasters, founded in Gurugram, has expanded nationwide as a pioneer, emphasizing farm-to-cup traceability. Third Wave Coffee, founded in Bengaluru, is also opening outlets quickly and has won support with its affordable pricing. Distinctive brands are emerging from cities across the country.
Precision coffee equipment such as Japanese drippers and grinders enjoys a strong reputation among local enthusiasts. Kissaten culture and the meticulous extraction style of hand drip can also be a point of differentiation. Developing menus that fuse matcha and coffee is another angle worth considering that is distinctly Japanese.
Specialty coffee in India has a certain standard price range. Bringing in domestic Japanese prices as-is will fail to reach most of the market, so pricing needs to be designed around local purchasing power. Positioning that balances a premium feel with affordability is required.
As a food-service establishment, FSSAI approval is required, and for a café obtaining a state license is common. It's best to plan for the process to take a few months. Preparation in partnership with a local partner, covering the real estate contract, interior work, and hiring, is the realistic approach.
Because site selection determines success or failure, it's effective to start with market research that grasps the characteristics of the urban markets where coffee consumption is concentrated. What's needed differs depending on the mode of entry — exporting equipment, opening a café, trading beans, and so on. After weighing the pros and cons of entering, proceed with strategy development, including securing a local partner.
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