Hot Drinks in India

Hot drinks in 2024: The big picture

Hot drinks in India continued to thrive in 2024, propelled by dynamic young demographics, rapid urbanisation and a stabilising economic climate. Coffee posted further strong retail volume and value growth rates, as it was increasingly seen as a lifestyle beverage, with visibility boosted by the proliferation of cafés and vending machines. While over three quarters of the country's coffee volume sales still originated from southern states, urban areas remained the main consumers nationally. Instant coffee remained the dominant category within coffee in India at the end of the review period. India's young population (median age of below 30-years-old in 2024, with over 300 million millennials and close to 400 million Generation Z) and the rapidly growing number of consumers living in urban areas provided key drivers of changing consumer preferences. These included a growing interest in other caffeinated functional beverages.

2024 key trend

As tea and coffee are agricultural commodities and given that most hot drinks in India are consumed with milk (or contain milk solids), inflation in coffee, tea, and milk prices significantly impacts the retail volume growth potential of hot drinks across the country.

Competitive landscape

Hindustan Unilever, followed by Tata Consumer Products, remained the clear leading player in retail value terms in hot drinks in India in 2024. Both companies saw a small drop in overall share, with smaller players grouped under “others” gaining ground as many consumers looked for lower prices and value for money. Hindustan Unilever led other hot drinks, ranked a strong second to Nestlé India in coffee and closely followed Tata Consumer Products in tea. Both Hindustan Unilever and Tata Consumer Products actively targeted India's health-conscious consumers with new product launches. In early 2025, Hindustan Unilever introduced Pukka, herbal infusion tea brand, designed for consumers seeking novel flavours and formats. It also focused on maintaining company share and volume growth in tea throughout 2024, at the cost of its bottom line, by absorbing a significant portion of tea price inflation.

Retailing developments

Hot drinks players are bifurcating or segmenting SKUs across channels to offer relief to struggling small local grocers, the dominant channel for the distribution of hot drinks in India. Meanwhile, retail e-commerce was the fastest-growing channel in retail value sales and share terms at the end of the review period. Q-commerce platforms are rapidly becoming the preferred shopping choice for Generation Z and millennials in India’s major cities, driven by the appeal of convenience and instant delivery services. However, this development and growth is taking a toll on traditional kirana (small local grocers) stores. Deep discounts, aggressive pricing and rising property costs have contributed to the closure of nearly 200,000 kiranas, with metro cities accounting for 45% of losses in 2024, according to the All-India Consumer Products Distributors Federation (AICPDF).

Foodservice vs retail split

Retail continued to dominate volume sales of hot drinks in India across categories in 2024, although foodservice posted higher growth rates. Chained specialist coffee and tea shops are playing a key role in driving foodservice sales growth in India, buoyed by a young and dynamic consumer base. The surge in specialist coffee shop activity is particularly notable, with millennials and Generation Z fuelling a demand for personalised, experience-driven café offerings.

What next for hot drinks?

Hot drinks in India is projected to record strong retail volume and especially value (constant 2024 prices) growth over the forecast period, led by coffee. Favourable macroeconomic conditions are set to be key drivers of volume sales growth in hot drinks in India. While the inflation in tea and milk prices is stabilising, coffee prices continue to climb, constraining growth potential in volume terms. Major players will likely keep adjusting prices or shrinking product sizes to combat a potential dip in urban demand. Moreover, the fast-developing coffee drinking and café cultures in India are set to push fast retail and foodservice volume growth for coffee.