Narasu’s Coffee is combining its century-old legacy with premium products, ecommerce, quick commerce and new formats as it seeks to expand beyond its stronghold in Tamil Nadu
Narasu’s Coffee, the historic South Indian coffee brand headquartered in Salem, Tamil Nadu, is looking to balance its century-old legacy with the changing preferences of younger Indian consumers. From roast and ground and filter coffee to instant, decoction, drip and dip bags and premium offerings, the company is expanding its portfolio while using e-commerce and digital channels to reach consumers beyond its traditional market.
In a conversation with BW Retail World, Srudheep Sivanantham, Managing Director, Narasu’s Coffee, discusses the evolution of the Indian coffee market, the rise of premium and single-origin offerings, sourcing challenges, digital and quick-commerce opportunities, and the company’s ambition to reach Rs 1,000 crore in revenue over the next five years.
Narasu’s Coffee has a legacy spanning more than a century. How are you taking this heritage forward while appealing to younger consumers?
A. We are a century-old brand, and our products have been consumed by generations. We started with roast and ground coffee and Pure Coffee, including roast and ground chicory blends. Our Pure Blend PB itself has a 100-year legacy.
Over the years, we have expanded into instant coffee, decoction coffee, drip and dip bags, black coffee, cold coffee and premium products. We are now also looking at how we can make the brand more relevant to younger consumers.
We have launched a new brand called Only Arabica, which is targeted towards younger consumers, particularly those who are increasingly consuming black coffee. At the same time, we continue to build on the trust and heritage associated with the Narasu’s name.
The Indian coffee market is seeing growing interest in premium and single-origin coffee. How do you see this trend developing?
A. Single-origin coffee is still a niche segment, but it is growing. Consumers are becoming more aware of where their coffee comes from and are willing to explore different varieties and premium offerings.
At the same time, we are seeing an interesting development with filter coffee. Traditionally, filter coffee has been strongly associated with South India, but its consumption is growing in North India as well. People are becoming more open to different food and beverage cultures, and coffee is benefiting from that shift.
How is the café culture influencing coffee consumption in India?
A. Café culture has certainly contributed to the growth of coffee consumption. People are experimenting with different formats, and cold coffee is also becoming popular.
However, traditional filter coffee remains strong. There is still a large consumer base that prefers making filter coffee at home, while others are experiencing it outside the home. We see opportunities across both these consumption occasions.
Coffee prices have been volatile globally. How is Narasu managing sourcing and supply challenges?
A. We use both Arabica and Robusta. Brazil is the largest producer of Arabica, while Vietnam is the largest producer of Robusta, followed by countries such as Indonesia and those in Africa. India is also an important coffee-producing country.
Historically, we sourced a significant amount of instant coffee from Vietnam. Today, we have diversified our sourcing across Africa, Indonesia, Brazil and other markets.
We have also built a strong sourcing network in India over generations and have relationships with farmers. Because of geopolitical and wartime issues, we have been stocking ahead, which has helped us manage supply requirements.
Narasu’s has traditionally been strongest in Tamil Nadu. How important are ecommerce and quick commerce in taking the brand to other markets?
A. Tamil Nadu continues to be our strongest market, and we are also well known among Tamil communities outside the state. Ecommerce is helping us reach consumers beyond these traditional markets.
We have a separate online team and the backend capabilities required for online packing and fulfilment. We are also looking at campaigns and other digital initiatives to build awareness.
Ecommerce will play a significant role in our growth as we expand our presence across India.
What are the company’s key priorities over the next three to five years?
A. We want to grow the business significantly, and our ambition is to reach Rs 1,000 crore in revenue in the next five years.
Exports will be an important part of this journey. We currently export to 45 countries, and we see further opportunities in international markets.
We are also looking at cafés and coffee shops, while continuing to expand our premium portfolio. We believe there is considerable potential across premium coffee and newer formats.
How extensive is your current coffee portfolio?
A. We have more than 15 coffee products across different formats.
The portfolio includes roast and ground coffee, instant coffee, decoction coffee, drip and dip bags, black coffee, cold coffee and premium offerings.
We will continue to add products based on evolving consumer preferences and market opportunities.
Are you also looking at flavoured coffees?
A. We are exploring the category, but our approach is different. We do not want to use artificial or nature-identical flavours. We would prefer to work with natural flavours.
For instance, natural vanilla is expensive, so there are challenges around making such products commercially viable. Our R&D team is working on this, and we may launch flavoured coffee in the coming year.
Our focus will remain on natural ingredients and products without preservatives.
Black coffee has been gaining popularity, particularly among younger consumers. How do you see this segment?
A. Black coffee is definitely a market that is picking up, and we are looking at it closely. That is also one of the reasons we launched Only Arabica.
Freeze-dried coffee is another format that we are looking at, particularly as consumers become more interested in convenience and different coffee experiences.
What is the current size of the business, and where do you see it going?
A. We are currently at around Rs 640 crore in revenue, and our target is to reach Rs 1,000 crore over the next five years.
Ecommerce will be an important contributor to this growth, along with exports, premium products, new formats and our plans around cafés and coffee shops.
