Coffee consumption in Pakistan is surging, particularly among the youth, who now favor it as their preferred hot beverage. However, high duties on coffee drive up its price, posing a significant challenge to the market’s growth. The increasing preference for coffee among students and professionals indicates a shift in tastes as the youth population expands.
Advertising professional and coffee enthusiast Faizan Tariq wishes coffee were as affordable as tea in Pakistan, especially given its popularity for late-night work sessions. Similarly, Amna Tariq, a student at Punjab University, turned to coffee during college to cope with demanding workloads and exam preparations but also hopes for more affordable pricing.
Globally, coffee consumption is a staggering 2.25 billion cups per day, with the market projected to reach $85 billion by 2025. For Pakistan, rationalizing its duty structure is crucial. Currently, finished coffee products face a 53% duty, while bulk imports have a 28% duty, compared to just 13% for tea. These high duties not only stifle market growth but also discourage formal business investments, leading to an illicit trade market where smuggled brands are sold at prices legitimate companies can’t compete with due to compliance with taxes and regulations.
This situation violates SRO 237 (2019), which mandates specific requirements for imported products, including minimum shelf life, ingredient labeling, and Halal certification. Compliance enforcement is the responsibility of federal and provincial governments.
Given the growing coffee consumption, there is an opportunity to localize, assemble, manufacture, and brand coffee in Pakistan, with potential for export. A leading multinational coffee producer already operating in Pakistan may capitalize on this. The government must create an enabling environment for such initiatives. Additionally, coffee cultivation is feasible in the Pothohar region, offering a chance to diversify agriculture, generate employment, and unlock growth potential. Rationalizing the duty structure for bulk coffee is essential to develop value chains, attract foreign investment, and foster market innovation.
Pakistan’s coffee market holds significant growth opportunities, but addressing the duty structure, promoting localization, and supporting coffee cultivation are crucial to realizing its full potential.
