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Mumbai: Understanding the strengths, weakness, opportunities and threats (SWOT) of an industry is paramount for its survival and growth. To understand the coffee market in India we must first analyse the industry environment. What may be perceived as a strength in one situation may turn out to be otherwise in another. Also, what must be considered is that the domestic coffee industry is going through a period of transition. It is metamorphosing from a controlled to a free market. Hence, there will be temporary travails which can be rectified in due course.
With this in mind, we can proceed to make a SWOT analysis.
Coffee production in India has risen from a meagre 17,000 tons at the time of Independence to the existing 270,000 tons. This proves that core infrastructure such as technology, finance, agricultural inputs, etc., are in place and growers have made use of them.
Harmonious labour relationship, particularly in Karnataka, the largest coffee producing state.
Widely dispersedownership of coffee farms which reduces the risk of industry crippling strikes. Over 98% of the farms are of an area of 10 acres or less.
Coffee is not a perishable commodity. Thus, the risk of crop wastage is non-existent.
Coffee crop is rotated with other crops, thus, supporting the grower during periods of low prices.
The price realisation of Indian coffee is low. This is because India, being a minor player in the global coffee market, is not in a position to influence prices.
Domestic coffee consumption is very low, making coffee produced in the country highly dependent (more than two third of domestic coffee produced is exported). This puts a heavy risk on growers as their revenues are highly dependent on global prices.
Historically, it has been proved that there are hardly any linkages between global and domestic coffee prices. Domestic prices have remained high despite a crash in global coffee prices.