The per capita consumption of coffee in India is just 55 grams every year (I’ve added the ‘per year’ part) and it’s declining. Compare this with the consumption rate of tea – 650 grams per year (the ‘per year’ part is my doing) – and you will begin to understand the envy and frustration of the country’s coffee companies. Add crashing prices and the threat of cheap imports under the World Trade Organisation (WTO) regime and their cup of woe seems ready to overflow.

But M. F. Ashraf isn’t ready to sit back and sip away the bad times. The managing director of Tata Coffee Limited, in an effort to turn the tide in favour of coffee, is helping focus the company’s attention on building brands and adopting scientific methods and techniques to increase yield and productivity. He should know how, considering that he spent over 20 years in the tea industry (at Tata Tea Limited) before moving to Tata Coffee in September 2000.

Besides being the largest grower of coffee in India, Tata Coffee is the country’s biggest producer of pepper (1,000 tonnes annually) and it also markets the Conswood brand of plywood. Speaking here to Christabelle Noronha, Mr Ashraf voices his concerns and explains his plans to take Tata Coffee from being merely a commodities company and turn it into a FMCG powerhouse.

What initiatives are Tata Coffee and the Indian Coffee Board taking to counter the impact of cheap imports under the WTO rules?

M. F. Ashraf: As far as the WTO impact is concerned, we took up the issue of free imports with the government and, consequently, the duty on the import of coffee was increased to 70 per cent. This move is protecting the Indian coffee industry to a small extent, but these are temporary measures. As long-term strategy the only solution is to become a low-cost producer of coffee and to make the best quality in order to be competitive.

At Tata Coffee we have taken several initiatives to reduce the cost of production. We are concentrating on increasing the productivity of our workers. The company is also focusing on producing speciality coffee. For this we are building a database to distinguish coffee by origin, cultivation practices, pre- and post-harvest techniques, branding and other aspects. These specifications will ultimately decide the colour, taste and flavour of the coffee. We are trying to give separate identities to our coffee from south Coorg, north Coorg and Chikmagalur. The government has also sanctioned Rs 30 crore to promote coffee through the Coffee Board.

Coffee drinking is still largely confined to south India. How do you propose to increase coffee consumption across the country?

MFA: A new phenomenon that is catching on is the emergence of coffee pubs. The image of coffee as a drink for the old and serious-minded, of it being a staid and south India-centric beverage is changing. The culture of these pubs is creating an image of coffee being a lifestyle drink. Vibrant youngsters dominate these pubs that have sprung up in the south; the trend will catch on in the rest of the country. Most of our brands are concentrated in the south but we have plans of launching ‘national’ brands over the next couple of years.

Recently, the international coffee board suggested that coffee growers in developing countries should destroy their produce of low-end coffee seeds to bolster coffee prices. What is Tata Coffee’s view on this?

MFA: I think it’s a good idea that low-standard coffee be destroyed. First of all, it will reduce overproduction and, more importantly, it isn’t good to market sub-standard products.

There are no significant brands in Tata Coffee’s portfolio. Why has this happened and what are your plans to introduce brand-based coffee products?

MFA: There are several reasons. When we started out in 1993 our brands did very well initially. However, because Nestle was such a major player, we could not sustain our brands. We realised that it was not possible to compete nationally, so we decided to concentrate on the south, where we are doing well. We have four brands there and we have no plans to introduce any more just yet. But we have got into the rapidly-expanding coffee-vending business in a big way. This year we recorded 400 per cent growth in this segment. Our plan is to have a vending machine in every city.

You have said that Tata Coffee lays emphasis on R&D. Can you expand on this?

MFA: Tata Coffee is possibly the only coffee company in the world to have its own R&D division. Our thrust is to develop new planting material which will deliver high-quality produce and high-end yield. More recently, we have also gone in for organic farming at our Deverakadi estate, where coffee is being grown without the use of fertilisers or chemicals. We have been able to achieve good yields because of better agricultural practices. We monitor soil quality and the balance of nutrients carefully. Our research deals mainly with how coffee cultivation can be made sustainable and environment-friendly.

Our R&D team focuses extensively on crop nutrition, soil testing and analysis. It recommends levels of fertilisation and irrigation, bio-control, coffee breeding and tissue culture. Our R&D focus is on customers, quality, cost and on being eco-friendly.

Any plans of forming a farmers’ cooperative?

MFA: As part of the Tata philosophy of welfare, we have adopted several small farms. We visit these farms regularly and our R&D department frequently holds seminars where farmers are updated on the best farming and harvesting practices. We also educate smaller planters on better planting techniques, irrigation and supply of seedlings. Most planters do not find it viable to have a nursery of their own, so we give them saplings. Similarly, we have also assisted planters through irrigation schemes by providing timely ‘blossom irrigation’ (what does this mean?) to enhance productivity.

At one point we seriously considered setting up a farmers’ cooperative based on the Amul model, where we could purchase the product from the farmers and market it. But the farmers were not interested in this kind of an arrangement then because there was a boom in the price of coffee at that point. Also, the growth of our brands then did not warrant a cooperative where we would purchase coffee from the farmer, add value to it, market it and pass on the benefits to the farmer. So, the idea hasn't taken off so far but we have not given up on the possibility.

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