Coffee Culture in India (Industry Analysis)

This presentation was presented by me and my two friends for the subject Industrial Policy Planning.
It is about the indian coffee shop industry focusing on Cafe Coffee Day and the competition it faces

1. “Coffee day” Journey of Indian coffee Industry AADITYA NAGPAL BHAVUK SINGLA AAKASH SALUJA

2. COFFEE-HISTORY The Indian contest of coffee started with an Indian Muslim saint, Baba Budan in 1670 . He smuggled seven coffee beans from Yemen to mysore in India and planted them on the Chandragiri hills in karnataka . It spread to other areas of Mynad in kerala , Shevaroys and Nilgiris in Tamil Nadu In 1942, indian government decided to regulate the export of coffee under the COFFEE BOARD OF INDIA

3. COFFEE-STORY Previously only a South-Indian drink Confined to the Rich Brahmin class Places for lawyers and educated class to hold discussion. The drink has now become more of a concept

4. COFFEE-STORY Café bars have flocked like CCD, Barista, etc Became famous and even 5 star hotels started cashing on it. Coffee house started emerging at various places in the country.

5. COFFEE SECTOR IN INDIA The 6 th largest producer of the coffee in the world. Indian coffee has created a niche for itself in the international market. Arabica coffee from India is also well received in international market. Coffee production in India: Karnataka, Kerala and Tamilnadu . which contributes about 99% of total coffee production

6. INDIAN COFFEE Indian coffee has a good reputation in Europe for its less acidic and sweetness of character and thus widely used in Espresso Coffee, though Americans prefer African and South American coffee, which is a more acidic and brighter variety.

7. COFFEE CONSUMPTION

8. COFFEE CONSUMPTION Per capita consumption of coffee is just 85 grams in compare to other countries. In the annual output of 300,000 tons, domestic consumption is only a third(100,000 tons) India is predominantly a tea drinking nation. Coffee is a staple only in the southern part of the country

9. GLOBAL COFFEE GIANTS EYES ON INDIA Market expansion on a faster rate Urbanization is expanding Coffee drinking – Fashion Growth in the disposable income

10. MARKETING SITUATION Niche coffee retail formal is growing at 10 to 12 percent a year Organized coffee retail business-Rs 25 bn Coffee consumption in India has increased from 55,000 tones to 75,000 tones in the last three years 3 % of the world coffee production Export 80 % of the total produce.

11. “ I may be young, But please take me Seriously” Youth – between 15-35 years Students form a majority of customer base Likes to be in group Likes to sit, talk and relax Drinks a cup of Gourmet coffee with added flavours prefers snacks rather than meals

12. TOP COFFEE BRANDS IN INDIA Nescafe Tata Coffee BRU

13. COFFEE BOARD OF INDIA This is managed by the MINISTRY OF COMMERCE AND INDUSTRY. This board was setup by an act of Parliament in 1940. The coffee board duties include- Promotion, sale and consumption Conducting coffee research Financial assistance to small coffee growers

14. INDIAN COFFEE HOUSE The first Indian Coffee House was opened in New Delhi on 27 October 1957. They also serve dosa , sandwich, icecream,idly,etc at a very low price. This is an affordable place.

15. INDIAN COFFEE HOUSE T he Indian Coffee House chain expanded across the country, with branches in Pondicherry,  Lucknow , Nagpur, Jabalpur, Mumbai, Kolkata, and  Pune  by the end of 1958.   These coffee houses in the country are run by 13 cooperative societies, which are governed by managing committees elected from the employees.

16. It was in the golden soil of Chikmagalur that a traditional family owned a few acres of coffee estates, which yielded rich coffee beans. Soon Amalgamated Bean Coffee Trading Company Limited, popularly known as Coffee Day was formed.

17. CAFÉ COFFEE DAY Known as Amalgamated Bean Coffee Trading Company Limited(ABCTL) Started by V. G. Siddhartha in Brigade Road, Bangalore, 1996 1497 company owned outlets in 200 cities Largest organized retail coffee chain in India ISO -9002 certified company.

18. PRODUCT Grows the coffee it serves in its cafes Well-equipped roasting unit The eatables catered by different vendors -Ice creams- Cream Bell -Milk – Amul -Snacks from local vendors Sells merchandise through its stores . Enjoys trust for quality, hygiene and consistency of food.

19. PRICE Affordable prices. Price for a cup of coffee ranges from Rs 50 to Rs 200 Only minor changes in the pricing policy due to changes in Govt. taxes.

20. PHYSICAL EVIDENCE  Logo - Larger font- Emphasis on the word CAFÉ. - Red signifies leadership and passion. - Swirl for purity of purpose and the feel of coffee . Architecture and décor-uses bright colours and interiors according to the youth . Designing of pamphlets posters and menu to attract the youth.

21. PROCESS Ordering and delivery earlier was self service and now most of the coffee shops have waiters to take order and deliver at the table.

22. PEOPLE Emphasis on motivation and personal skills of the people. Friendly waiters and services . Employees follow international standards of hygiene, cleanliness and personal grooming . Reward Schemes like “Employee of the month”

23. PLACE Prime factor for success- Located at every possible location where business can be generated. Caters to target market with strategically placed outlet . Eg -Located in high street, gas station and near colleges.

24. PLACE  Metros Tier-I cities ( Jaipur , Kanpur, Surat ) Tier-II cities (Mysore, Guwahati , Jamnagar) Satellite cities and urban outgrowths ( NaviMumbai , Faridabad, Secunderabad ) To be expanded to Tier-III cities Tie-up with Ginger Hotels of the Taj Group

25. POSITIONING AND BRAND IMAGE Brought café culture to India For the youth: Young (AT HEART) customers, young and friendly staff Highest distribution network Target middle and upper middle class Age group 15-29

26. CONSUMER PROFILE Age group: 20-24 years- 37% 25-29 years- 27 % Gender : Male- 60% Female- 40% Occupation : Students- 52 % Frequency of visit : Daily- 18% Weekly- 44%

27. CAFÉ FORMATS Different café formats: - Music cafes -Books cafes -Highway cafes -lounge cafes -Garden cafes -Cyber cafes Latest addition: Lounge cafes

28. PROMOTION Through SMS Valentine’s day promotion, “Café Coffee Day Luv Zone” Through Television Held a contest around a very popular program on Zee English called Friends. They have tied up with Channel [V]’s “ Get Gorgeous contest”. Ticket sales: They were involved in WWE, Elton John, and Bryan Adams ticket sales

29. PROMOTION Tie-ups Liril , AirtelFriends . HDFC wanted to promote their debit card and they choose Café Coffee Day. So 21 cafes have debit card machines. Association with movies Bas YunHi Khakee Main HoonNaa Socha Na Tha MujhseShaadiKarogi SALES PROMOTION SPECIAL CAFÉ CITIZEN CARD

30. REBRANDING  Earlier perceived as a place where intellectual meet Positioned itself as a coffee bar and has maintained that position for a long time now . CCD saw a latent market in youngsters For youngsters- CCD a fun place where one can go anytime of the day and have fun with friends . In 2002 CCD underwent a rebranding exercise . CCD spent INR 1.5 billion to redesign existing cafes (2009).

31. REBRANDING OLD LOGO NEW LOGO

32. DO YOU KNOW WHAT THE MAIN STRENGTH OF CCD IS? “ Good Coffee at affordable price”

33. WEAKNESS Many of the CCD stores are incurring loses due to wrong site selection (national highways ) Product is not able to compete with international chains like Starbucks, Costa etc.

34. CRITIQUE ON OTHER COFFEE OPTIONS IN INDIA

35. CAFÉ NESCAFE Café Nescafe is a budget solution to the coffee demand. They use standard pre-mixes manufactured by NESTLE.

36. BRU WORLD CAFÉ Promoted by HUL Mostly present in Mumbai, as of now Most direct competition to CCD

37. MAJOR PLAYERS IN INDIAN COFFEE INDUSTRY Café Coffee Day Barista Lavazza Costa Coffee Coffee Bean & Tea Leaf Starbucks Coffee Gloria Jean’s Coffee Dunkin Donuts

38. NO OF STORES

39. I AM A COFFEE LOVER AND AN INDUSTRY OBSERVER…. CAFÉ COFFEE DAY MANAGEMENT SHOULD HAVE SLEEPLESS NIGHTS Average Quality of Coffee Store Ambience not U pmarket Hell lot of Serious Competition

40. BARISTA Biggest Competition to CCD Moderately Priced Higher than CCD ( But trust me, its worth it) It was established in 2000 but was taken over by Lavazza Barista has outlets in India, Bangladesh, Sri Lanka and the Middle East.

41. THE DIFFERENCE BETWEEN CAFÉ COFFEE DAY AND BARISTA CCD ambience has become more college (or even high school) canteen- ish . The service staff are hard put to tell the difference between capuccinos and lattes or grande and regular. Barista has remained constant in ambience, service and menu, since its inception. The coffee - particularly the lavazza - is incomparable which ever way you want to drink it. And the teas no less so.

42. COSTA COFFEE It is a UK based company and came to India in 2005

43. “ Very premium menu which is very European. The coffees and all other beverages taste very nice and are very high quality”

44. STARBUCKS COFFEE Most famous Coffee chain in the world with highest no. of outlets Entered India in 2013 in a JV with Tata Global Beverages Ltd. Catering to premium customers and prices are slightly higher than Costa Coffee The stores have got an Indian touch in them and the menu has Indian taste items too

45. STARBUCKS OUTLET At Connaught place, New Delhi

46. COFFEE BEAN AND TEA LEAF “ The Best Coffee I have ever had” Very Premium High Quality Products priced at the same price as Starbucks

47. MOCHA COFFEE CHAIN 19 outlets all over India mostly in Mumbai and NCR It stands for the coolest coffee shop in the country with its own sense of style They also serve liquor in their cafes Earlier used to serve Sheesha too They have wider food menu “Every shop can have its own wild and intense flavour . Everything from a wall to a cup can have its own sense of expression and identity. That diversity and variety in every outlet enriches rather than confuses. And makes it a coffee shop people love to visit once more.”

48. COFFEE CULTURE IN FIVE STAR HOTELS

49. SEA LOUNGE at HOTEL TAJ MAHAL PALACE, MUMBAI Sea lounge offers old colonial charm with art deco furniture and live Piano music enhanced by its spectacular view of the Arabian Sea.   It is considered to be a city institution for traditional Afternoon Tea featuring an elaborate buffet spread of classic English delicacies and Local Indian favourites complemented with a selection of the world’s finest teas and coffees.

50. Sea Lounge is a favourite for its light lunch and dinner fare and Mumbai street food including Bhel Puri , Sev Puri , Kheema Ghotala Toastie and Vada Pav . In the evenings, guests may choose to opt for a quiet glass of Champagne or a cocktail as they watch the lights from the moving ships on the harbour . 

51. KAFE FONTANA at HOTEL TAJ PALACE, NEW DELHI It overlooks the pool with its landscaped gardens, green palms, putting green and blue shimmering water, all of which can be viewed through the lovely Venetian blinds.

52. REVENUE COMPARISON CCD stores on an average do a sale of about 30 lakhs per annum form each of their outlets Costa is able to manage about 60 lakhs and even 1 crore from some stores Interestingly Starbucks has done on an average of 1 lakh per day sale from each of its outlets which is very high Coffee Bean & Tea Leaf does an annual sale of about 3.5 crores from each of its outlets

53. CONCLUSION… “In India… A lot does happen over coffee”