By Thomas Kutty Abraham April 29 (Bloomberg) -- India, Asia’s third-largest coffee supplier, may become a net buyer in a decade as companies open cafes to tap rising demand for the beverage, according to the state-owned Coffee Board. Consumption may climb 18 percent to 120,000 metric tons by 2012 from 102,000 tons last year, Chairman G.V. Krishna Rau said in an interview yesterday from Bangalore. Cafe Coffee Day, India’s biggest coffee-bar chain, Barista Lavazza, a unit of Italy’s Lavazza SpA, and rivals have opened 1,200 shops in the past decade as members of a growing middle class in the world’s largest tea-growing nation develop a taste for cappuccinos, Rau said. Starbucks Corp. is yet to enter the market where demand is forecast to expand at 10 percent a year by 2012, double the pace of the past five years. “I’m even more robust in my prognosis than the board and one can expect a growth of 12 percent from 2013-2014,” Harish Bijoor, a consultant and former vice president of marketing at Tata Coffee Ltd., India’s biggest publicly traded grower, said in e-mailed comments. The nation’s consumption of 75 grams per person, compared with 13.5 kilograms in the U.S., will “take- off” beginning 2016, he said. Starbucks hasn’t selected sites or announced a partner to enter India, Deb Trevino, director of corporate communications, said in an e-mail. The Seattle-based company, with sales of $9.7 billion in 2009, plans to enter Vietnam and India, said Chief Executive Officer Howard Schultz in an April 13 interview. He didn’t provide a timeline. The company entered China in 1999. “Starbucks spoke about entering India about four years ago and hasn’t done anything yet,” said Rau. “I don’t think their entry makes any difference to India’s growth story.” Invigorate Demand Coffee-bar chains consume just 6,000 tons to 7,000 tons a year, with households and restaurants accounting for more than 90 percent of the demand, he said. Even so, cafes have “helped enhance the outdoor image of coffee and are potent invigorators of in-home consumption,” said Bijoor. While the World Bank estimates that three-fourths of the 1.2 billion people live on less than $2 a day, the increasing number of Indians with cash to spend on everything from cars to mobile phones is luring Wal-Mart Stores Inc. and other foreign retailers to start outlets in Asia’s third-largest economy. Salaries in India will grow at the fastest pace in the Asia Pacific this year, Hewitt Associates Inc. said March 4. Car sales rose 25 percent to a record 1.53 million in the fiscal year ended March, the fastest pace in six years, according to the Society of Indian Automobile Manufacturers. Arabica Imports Rising demand may force India to import the arabica coffee favored by Starbucks and other specialty roasters as the share of the milder variety in total production drops, said Bijoor. Arabica accounts for 33 percent of output, down from 82 percent in 1950, with robusta, used in instant coffee, making up the remainder, according to the Coffee Board. “A key issue with Indian coffee is that our robustas are growing in volume and arabicas are shrinking,” he said. “We will first start importing arabicas, even as we keep exporting our robustas.” India’s instant-coffee makers import 25,000 to 30,000 tons a year to blend with local varieties and re-sell to buyers in Italy, Russia and Germany. To contact the reporter on this story: Thomas Kutty Abraham in Mumbai at tabraham4@bloomberg.net

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