India’s coffee ecosystem is undergoing a structural transformation, evolving from an instant-led category into a dynamic, experience-driven market shaped by younger consumers and rising out-of-home consumption. In this conversation with BW Businessworld, Saurabh Makhija, Director, Nestlé Professional, shares insights on the country’s low penetration but high-growth potential, and how Nestlé India is building an integrated, omnichannel coffee ecosystem to capture emerging opportunities.
Coffee has evolved beyond being just a beverage
Do you think India’s coffee market is an exciting space right now?
Absolutely. What makes it exciting is the sheer headroom for growth. If you look at per capita consumption, India stands at roughly 150–200 cups per year, compared to 1,500–2,000 cups in developed markets, which indicates nearly a 10x gap. Even more telling is the level of penetration—about 60 per cent of consumers in large parts of the country consume coffee only once a year. These figures underscore how nascent the market still is, and why the long-term growth prospects remain extremely strong.
With rising consumption among younger consumers, how is Nestlé positioning its coffee portfolio?
The coffee consumer today is far more discerning, experimental and informed than in the past. Coffee has evolved beyond being just a beverage; it is increasingly becoming a social and professional ritual across homes, workplaces and public spaces. One of the most notable shifts is that Gen Z consumers are starting their coffee journey much earlier, often in their early teens, which marks a significant cultural evolution.
At Nestlé India, our portfolio strategy reflects this shift. We have built a multi-tiered offering that caters to diverse preferences and consumption occasions. At the premium end, we offer Nespresso, which delivers a café-like experience at home. In the mainstream premium segment, brands like Nescafé Gold and newer offerings such as Nescafé Roastery cater to consumers seeking refined blends, while Nescafé Classic and Sunrise continue to serve as trusted choices for everyday consumption. This layered approach allows us to remain relevant across the consumer journey.
How does Nestlé Professional fit into this strategy?
Nestlé Professional plays a pivotal role in extending the coffee experience beyond homes into out-of-home environments. It enables access to high-quality coffee across workplaces, educational institutions, healthcare facilities and travel hubs. Our focus is on delivering consistent quality through a combination of machines, products and service. At the same time, we are responding to the growing consumer interest in freshly brewed and artisanal coffee through bean-to-cup solutions such as Nescafé Intenso, ensuring that evolving preferences are met across touchpoints.
Can you share insights on market share and growth trajectory?
The out-of-home coffee segment in India is highly fragmented, and unlike retail, there is no formalised system to measure market share across channels. However, what is evident is that this space is vast, diverse and expanding rapidly. Growth in the coming years will be driven by premiumisation, convenience and the proliferation of multiple formats, along with increasing digital and technological integration. Cold coffee, in particular, is emerging as a strong growth driver across vending, ready-to-drink and other formats.
What key innovations are driving adoption in the B2B coffee ecosystem?
Over the last four years, we have evolved into a comprehensive solutions provider. Earlier, our offerings were limited to a couple of vending platforms, but today we provide a wide range of solutions tailored to different operator needs. This transformation has been powered by innovation across three key areas.
First, we have significantly expanded our machine platforms, ranging from bean-to-cup systems to advanced solutions like Duo Gusto, which can serve both hot and cold beverages from a single unit. Second, we have invested in mixology capabilities, enabling our machines to deliver a wide variety of beverages—up to 80 options—using a limited set of inputs. Third, sustainability has become a core focus, with efforts directed towards improving energy efficiency, reducing carbon footprint and incorporating recyclable materials into our operations.
A key differentiator is that our machines are developed and manufactured locally in India, allowing us to respond quickly to market needs while maintaining cost efficiencies.
With increasing competition from café chains and global brands, how do you differentiate?
Competition is actually beneficial as it helps expand the overall category. However, our differentiation lies in our omnichannel approach. Unlike many players who focus primarily on cafés, we operate across a wide range of environments including workplaces, educational institutions, healthcare facilities, travel hubs and street formats.
Our strength comes from delivering an integrated solution that combines machines, products and service. Additionally, Nestlé Professional leverages the broader Nestlé portfolio to offer a comprehensive food and beverage solution, rather than focusing solely on coffee. This positions us as a one-stop partner for operators and enhances our value proposition.
Tell us more about the Nescafé kiosk model.
We currently operate close to 1,000 kiosks, making us one of the largest players in this segment. While the model has existed for several years, it has scaled significantly in the last three years as operator confidence and profitability have improved.
These kiosks are designed to be operator-led, with low entry barriers and strong unit economics. We are particularly focused on locations such as educational institutions and healthcare facilities, where demand is high and cost structures are more sustainable compared to high-rent environments like malls. This approach ensures scalability while maintaining profitability.
What opportunities do you see in scaling India’s coffee culture?
The opportunity to scale coffee culture in India rests on three key pillars. First, democratisation is essential, which means making coffee affordable and accessible beyond metro cities through formats like vending machines and kiosks. Second, there is a need to expand consumption occasions, moving beyond the traditional morning or café-centric consumption to include all-day and on-the-go formats. Third, success in India will depend on balancing global quality with local relevance, ensuring that offerings align with Indian taste preferences, price points and consumption habits.
Nestlé Professional is actively contributing to this evolution by building an ecosystem that combines brand strength, scalable formats and technology-driven solutions, thereby enabling wider access and deeper consumer engagement.
What will define the out-of-home coffee market in 2026?
The out-of-home coffee market will increasingly become an omnichannel ecosystem, expanding well beyond cafés into sectors such as education, healthcare and travel. At the same time, coffee consumption will become more democratised, with affordable formats driving higher penetration across diverse consumer segments.
Another defining trend will be the expansion into tier 2 and tier 3 cities, where demand is growing steadily. Alongside this, consumer behaviour will continue to evolve, with experimentation playing a key role. Many consumers are likely to try new formats and flavours in out-of-home settings before adopting them for in-home consumption, further reinforcing the importance of this channel. |
