These are rough times for Indian coffee. For long,the coffee industry was a controlled one, with every grower being forced to sell his produce to the Coffee Board, which would then decide the modalities of any further sale. There was little that plantation companies like Tata Coffee could do to change these rules.
Tata Coffee has always, now and earlier, when it was called Consolidated Coffee Limited, championed the cause of the industry on several occasions and before several government fora. This has led to burdens on the industry as a whole being reduced and growth opportunities enhanced.
Says Harish Bijoor, vice-president, marketing, "Tata Coffee has always been aware of its position as the single-largest corporate house in the industry. It has used its dominant position to secure relief for the whole industry. It has, quite willingly, been this industry’s conscience-keeper."
Coffee is, after petroleum, the second-largest traded commodity in the world. Apart from the vagaries of nature, coffee is also subject to huge speculation by the non-plantation players who operate in this segment.
The global coffee world is polarised between the Arabica growers (largely from the West) and the Robusta growers. With the major coffee consumption markets being Arabica-centric, this lobby has been prevailing in international markets thus far.
With the industry being in the doldrums recently, Tata Coffee has taken the lead to form a cooperative movement among major players in the Asian region, like Thailand, Vietnam and Indonesia. It has propagated the formation of a regional plan for the coffee industry in this region that will dovetail into respective national plans that specific countries can follow. On the domestic front, Tata Coffee has actively worked with the government and the Coffee Board to promote Indian coffee, both internally and internationally. With domestic consumption of coffee standing at a woeful 55 grams per capita annually, Tata Coffee is actively spearheading efforts to increase this consumption level. This, by itself, will expand the coffee market to the benefit of all players.
The company is also playing a major role in reorienting the industry towards better practices that will enable it to weather the coming WTO norms storm. The government is presently protecting the industry by imposing high duties on imported coffee. But, when India has to conform to the WTO rules in three years, the industry is going to be exposed to cheap imports from Asian countries. Towards meeting this challenge, Tata Coffee is exhorting the industry to follow better growing practices and research that will help the industry lower production costs and improve productivity.
Since the gestation period for coffee is about six to seven years, Tata Coffee has been of immense help to the industry with its scientific and near-accurate scenario planning exercises. This enables the industry as a whole to avoid getting caught on the wrong foot.
Last but not the least, Tata Coffee has played a major role in getting the latest tenth plan document of the country to include an Arabica-centric movement for the coffee industry. It is this variety that commands the greatest premium in the world market and the company is trying to convince plantation owners to grow greater quantities of this variety than the Robusta kind, currently grown in much larger numbers in India.