Coffee culture is steadily gaining momentum in Pakistan, particularly among the younger demographic. This growing interest\ reflects a global trend, with many now viewing coffee as a modern and more appealing alternative to traditional stimulants. However, despite the rising popularity of coffee, the country lacks a domestic coffee manufacturing or assembly ecosystem.
Tea, on the other hand, has long been a part of Pakistani life. Introduced during colonial times, it continues to receive strong policy support, including fiscal incentives that promote local packaging and blending. Coffee does not enjoy the same level of attention or encouragement from policymakers.
A key regulatory barrier is SRO 840(I), introduced in June 2021, which has placed coffee at a competitive disadvantage. While demand is rising, existing tariff structures are stifling the industry’s growth. The imposition of high import duties, ranging from 42 percent to 53 percent on finished coffee products and 28 percent on bulk raw imports such as instant coffee, makes coffee significantly more expensive. Meanwhile, tea imports are taxed at a far lower rate of just 13 percent.
This disparity hampers the growth of a formal coffee industry in Pakistan. Contrary to the common perception, bulk instant coffee is not a luxury item like cold brews or gourmet blends. It is a staple for the mass market, which is highly price-sensitive. Treating coffee as an elite commodity ignores the real shift occurring at the grassroots level especially among students, professionals, and urban youth.
To unlock the sector’s potential, a level playing field is essential. Eliminating the Regulatory Duty (RD) and Additional Customs Duty (ACD) on bulk instant coffee imports would lower costs for businesses and consumers alike. This policy shift would align with the government’s own National Tariff Policy (2019–24) and the IMF’s recommendations to simplify and rationalize the tariff structure.
Globally, coffee is on an upward trajectory. Market research from Precedence Research forecasts that the global coffee industry will reach $256 billion by 2025, growing to $381 billion by 2034. At the same time, climate-related disruptions in major coffee-producing countries like Brazil and Vietnam are impacting global supply and pushing up prices. This evolving dynamic presents an opportunity for new entrants, and Pakistan could be one of them. The Pothohar region, which stretches across Rawalpindi and Islamabad, is considered suitable for coffee cultivation due to its hilly terrain and moderate rainfall. Some agribusinesses have already begun exploring the potential for growing coffee locally, with international stakeholders showing growing interest.
Eliminating unnecessary duties would lower the cost of raw materials, making it easier for both multinational and local firms to set up production and build supply chains within Pakistan. This would allow the coffee market to grow and become more inclusive, reaching people across different income levels.
With a large youth population, making up about 65 percent of the country, coffee consumption is expected to increase significantly. Once local production is established, it will lead to more opportunities in packaging, branding, and marketing. Currently, a major share of the market is dominated by smuggled products that bypass legal regulations such as SRO 237. Developing a formal and regulated supply chain would help improve quality, reduce prices, create jobs, and contribute to tax revenue and overall economic growth.
In short, reducing duties on bulk instant coffee is not just a business imperative; it’s an opportunity to tap into a youthful, evolving market. It will bring coffee within reach for more people, create new business opportunities, and support the emergence of a homegrown coffee industry that reflects the changing tastes and preferences of the Pakistani population
