Coffee is becoming a significant cultural shift in Pakistan, particularly among the younger population. Cities like Lahore, Karachi, and Islamabad are witnessing an increasing preference for coffee over traditional tea. From cafes to homes and offices, coffee has carved its place as the drink of choice for the youth, symbolizing productivity and modernity.
However, despite the rising demand, the regulatory environment for coffee production and assembly in Pakistan remains underdeveloped. This gap in infrastructure, compounded by outdated policies, threatens to hinder the potential growth of the coffee industry in the country.
Currently, Pakistan lacks a robust domestic framework for coffee manufacturing. While the tea industry has long been established and benefits from favorable policies, coffee remains a victim of regulatory neglect. Tea imports are taxed at a mere 13 percent, offering a distinct advantage, whereas coffee imports face much higher duties, ranging from 42 to 53 percent on finished products and 28 percent on bulk raw materials such as instant coffee. These high tariffs significantly increase the price of coffee for consumers, limiting its accessibility. The policy framework continues to view coffee as a luxury item, overlooking the widespread demand for affordable, everyday coffee in homes and offices across the country.
This regulatory imbalance is a missed opportunity, as coffee is not a luxury but a staple drink for many. The real growth is in mass-market coffee consumption, particularly among the youth, who are highly price-sensitive. High duties on coffee imports create a barrier that prevents this market from reaching its full potential. In contrast, the tea industry enjoys a level of government support that allows it to remain competitive, even as consumer preferences shift toward coffee. The imbalance in duty rates creates an unfair playing field and stifles the growth of the coffee sector, which could otherwise contribute significantly to both the economy and employment.
A simple and effective solution to this issue would be to remove the regulatory duties and additional customs duties on bulk instant coffee imports. Such a policy shift would reduce the cost of coffee for consumers and open the door for local coffee assembly and manufacturing. Aligning coffee imports with the lower duties placed on tea would encourage investment from both local businesses and international players, creating a more competitive environment. This approach would also align with the objectives outlined in the National Tariff Policy for 2019–2024, which seeks to promote fair and rationalized tariff structures.
On the global stage, the coffee market is expanding rapidly. Research from Precedence Research suggests that the global coffee market will reach $256 billion by 2025 and could grow to $381 billion by 2034. As climate change disrupts coffee production in traditional regions such as Brazil and Vietnam, opportunities for new entrants to the market are increasing. Pakistan, with its favorable climate conditions in areas such as the Pothohar region, could capitalize on this shift. The hilly terrain and moderate rainfall in this region are ideal for coffee cultivation, and interest from both local agribusinesses and international investors is growing.
To realize this potential, it is essential that Pakistan’s policymakers create a favorable environment for coffee cultivation and production. By eliminating the unnecessary import duties on bulk coffee, the government can stimulate local coffee manufacturing, reduce costs for consumers, and attract both local and foreign investments in the coffee sector. This shift would not only increase the availability of affordable coffee but would also create jobs, promote local entrepreneurship, and boost the economy. With a young population, 65 percent of Pakistan’s population is under 35 years old, the demand for coffee is expected to rise steadily.
Formalizing the coffee market would lead to more efficient supply chains, greater access to affordable coffee, and a shift from informal to formal market channels. As coffee consumption continues to grow, the local industry will have the chance to thrive, contributing to economic development and job creation.
By addressing the regulatory imbalance and supporting the coffee sector, Pakistan has the opportunity to transform coffee from an imported luxury into a locally cultivated and produced commodity. Such a move would provide long-term economic benefits, create new opportunities for local businesses, and improve the accessibility of coffee for all Pakistanis. The time to act is now
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