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They say 60% of sensory experience of drinking espresso (coffee) comes from the retail environment. Nespresso, a subsidiary of Nestle, was faced with a situation resulting from this quirk of sensory experience. It had build an espresso-making system that could be used at home and that produced espresso as good as the kind available at any coffee shop. To the company’s chagrin, consumers didn’t quite like the idea, forcing the Vevey, Switzerland-based food company to modify the home espresso system to release more aroma.

Nestle was perhaps luckier than the contestants in the Rs 600-crore organised coffee parlour business in India. The problems are many and not easy to pinpoint. While domestic coffee consumption is increasing, per capita consumption of coffee in India is abysmally low. Against a per capita consumption of 4.09 kg in the US, 3.03 kg in the UK and 3.41 kg in Japan, India figures stand at a paltry 80 gm. The good news is that while the overall coffee consumption in the country is growing at 7-8%, the out-of-home consumption is growing faster—at 15%.

So as product developers and marketing hands scratch their heads to figure out new ways of luring customers and generating higher store traffic, competition in the form of tea and mocktail parlours—and even milk bars—keep on chipping at their heels. To top it all, the prospect of global competition looms larger than ever before.

Take this. Last month, US-based coffee retail giant Gloria Jeans Coffees joined hospitality company Citymax India to launch its chain in the country. Citymax India, part of the

Dubai-based Landmark Group, plans to invest Rs 40 crore to roll out 90 outlets across India in the next four years. The company will open its first outlet in Mumbai next month and follow it up with parlours in New Delhi and Bengalooru.

Recent reports also suggest that PVR will sell Starbucks products at its multiplexes in Delhi and Mumbai. A PVR executive told The Financial Express that the company has a tie-up with a local partner, which, in turn, will supply products of the US beverage major to the multiplex operator in India. This, by all indications, may be a precursor to a full-fledged entry when the time is right.