Final Report

On
Study of Coffee Chains in India

Submitted to: Submitted By:

Prof. Partha sarathi Pal Prateek Kapoor
08BS0002304
Batch: 2010

0|Page
 Abstract

The consumer in India is extremely heterogeneous. The urban consumer contrasts with the rural
and the South Indian consumer with the North Indian. Further still, the consumer in the metros
militates with his usage and habit patterns. The Indian consumer, is therefore very difficult to
understand and very difficult to predict. At the same time the consumer is a evolving, with
constant change in their choices.

Tea and Coffee are the favourite drinks in India. Though tea has ruled the roost for quite some
time, but a quiet café revolution is sweeping urban India with the explosion of coffee bars. That
is bad news for tea - still the favourite brew for a majority of Indians -, which has been losing out
to coffee in recent years.

Coffee bars, an unheard of concept until a few of years ago, are suddenly big business. There is
also rise in the consumption of coffee. The specialty coffee movement has gained much of its
momentum through the efforts of Indian companies like Barista, Café Coffee Day, Café Mocha,
JavaGreen etc. and also a whole range of foreign brands like Georgia Coffee, Costa Coffee and
Quicky‟s.

In India CAFÉ COFFEE DAY and BARISTA are the most popular and well-known cafés.
The college crowd rates them as one of the coolest hangouts. These companies sell similar
product but their positioning and target audience are very different from each other. These
players not only sell coffee and tea but also food and other merchandise items.

Despite of serving to different audience, these players compete with themselves. Each
player fights for its own share of market. They try to differentiate themselves by the way of
product or price or promotion. However, they are also facing the competition from the foreign
players like Georgia, Costa etc.

There has been a constant shift in strategies of the various players and it is intereting to see as to
how each of them would sustain themselves in a sunrise industry with ever growing competition
both from domestic and foreign players.

1|Page
 CONTENT

Particulars Page No.

1. Abstract 1

2. Introduction to Coffee Industry 3

3. Coffee Chains In India:

Café Coffee Day 5

Barista 16

Café Mocha 26

Java Green 28

4. Sustainability Advantage:

Barista 30

Café Coffee Day 32

Java Green 34

Café Mocha 35

5. Effects of Foreign Players 36

6. Suggestions & Recommendations 38

7. References 39

2|Page
Introduction to Coffee Industry:
Coffee has been around in India since the 17th century. However, coffee drinking has
traditionally been largely restricted to domestic consumption, and mostly in the South Indian
states of Tamil Nadu, Karnataka, Kerala and Andhra Pradesh. Coffee as a drink largely faces
competition from substitutes like tea which had been the traditional beverage for households for
centuries and carbonated drinks. This trend changed after the arrival of non-traditional coffee
distribution channels like coffee bar chains, vending machines and specialty coffee powder
chains hit the market. They now constitute nearly 50% of the Indian coffee industry. This change
is attributed to demographic, economic and cultural changes. The new millennium saw the
advent of a young, upwardly mobile consumer class, which increasingly demanded innovative,
sophisticated products and specialty cuisines and beverages. Coffee consumption at retail outlets
created a place for customers to „hang-out‟ and enjoy their coffee just like in the western world
(as they saw in the popular sitcom “Friends”). Coffee lovers also got exposed to a variety of new
blends and flavours. Thus, coffee drinking became more of conspicuous consumption to
demonstrate one‟s lifestyle and status. Café Coffee Day saw this opportunity and since setting
up its first outlet in Bangalore in 1996, now has a national footprint of 401 outlets.

Analysis of the Coffee bar Industry:

1) Threat of new entrants: Given the growing interest in coffee in India, it is only
reasonable that many new players are trying to venture into this market. The heavy initial
investment and difficulties in sourcing sufficient quantities and quality of coffee might
prompt most new entrants to restrict themselves to small, regional chains. These
companies could evolve strategies for maximizing operational efficiencies in their
regions. This, coupled with very low switching costs for consumers, will upset existing
café chains.

Meanwhile, international coffee giants including Starbucks and Illy are also evaluating
prospects in India. Although capable of investing substantial capital, government
regulation makes it mandatory for them to use the tie-up or mergers and acquisitions
route to enter the Indian market. Unlike typical new entrants, these companies will arrive
with considerable past experience in the industry, putting considerable pressure on
existing chains.

A third possibility is that of suppliers starting to integrate downwards in the value chain,
to take advantage of economies of scope. Such a move would result in considerable cost
savings and thus yield better margins for such cafés.

3|Page
 2) Substitutes: A unique, novel experience and the opportunity to socialize are the main
attractions of café culture. In the Indian context, restaurants, fast food joints and ice
cream parlours could be viewed as viable substitutes. Cafés have managed to differentiate
themselves as more of a lifestyle oriented industry compared to the others which satisfy
basic needs. A bigger threat of substitution would be from pubs and tea bars. While the
concept of a tea bar is yet to catch on, most Indians‟ preference for tea over coffee gives
them a natural advantage. A perceived international appeal of coffee could come to its
rescue in this case.

Though pub culture has taken strong roots and competes heavily with cafes in the metros
and the larger cities, it is yet to gain acceptance among young people in most tier II cities.
Moving into these cities early is bound to give cafes an advantage.

3) Customers: Coffee-consumption in India has remained fairly constant in the past since it
was restricted primarily to the Southern states. Ever since the advent of cafes there has
been a marked difference in consumption patterns. Growth in annual coffee consumption
has averaged 6.5% over the last seven years. Overall consumption in India grew from
68000 tonne in 2002 to 80200 tonne in 20051 .The rising percentage of population In the
age group twenty to thirty years has been crucial to the success of the café culture. Higher
disposable incomes and large number of jobs in the IT and BPO sectors have also
contributed to this growth. According to a recent study by Harish Bijoor Consults, by
December 2008 the country would have 1,135 organized cafes, growing at 63% per
annum in terms of number of outlets. India has eight big cities, 53 towns with a one
million population and 3,410 urban agglomerations with population below one million. It
has potential to accommodate 5,000 coffee retail outlets (Young India to drive coffee
business, 2007).

The biggest source of worry for the cafes is customer loyalty. While some customers
have a clear preference for one brand over another based on quality of coffee and
experience, many would base their preference merely on factors like easier accessibility
and price. Enhancement of customer experience, to achieve clear differentiation is
crucial.

4) Suppliers: Most Indian cafes source their beans from suppliers in India. The biggest
threat from suppliers takes the form of establishment of independent chains. Tata Coffee,
suppliers to Barista has set up its own chain coffee vending machines and is likely to
enter the café scene in the future. While CCD is safe from such a threat due to vertical
integration with its parent company ABCTCL, all the other players are likely to suffer
from increasing supplier power. International chains entering the Indian market however
would be able to source coffee from foreign suppliers without serious effects on quality
and costs.

4|Page
Coffee Chains in India:

India is one of the fastest growing coffee markets in world. Coffee drinking has
become a statement of the young and upwardly mobile Indians. The major players
in coffee retail are Barista, Café coffee day, Mocha, Java Green and Costa Coffee.

CAFÉ COFFEE DAY:

A traditional family owned a few acres of coffee estates, which yielded the rich coffee beans in
the soil of Chikmagalur, However they soon amalgamated with Bean Coffee Trading Company
Limited, now popularly known as Coffee Day. The coffee growing tradition was since 1875, but
the opportunity after the deregulation of the coffee board in the early nineties. Coffee Day began
exporting coffee to the connoisseurs across USA, Europe & Japan. In the calendar year 2000,
Coffee Day exported more than 27000 tonnes of coffee valued at US$ 60 m to these countries
and, for the second time in its short career of 7 years retained the position as the largest coffee
exporter of India.

Coffee Day has a wide and professional network in the major coffee growing areas of the
country comprising over 50 agents and 50 collecting depots. Coffee Day's two curing works at
Chikmagalur and Hassan cure over 70,000 tonnes of coffee per annum, the largest in the country.
Coffee Day has a well-equipped roasting unit catering to the specific requirement of the
consumers. The most modern technology available is used to maintain consistency and roast the
coffee beans to the demanding specifications of the discerning coffee consumers.

Key Features:

125 years of coffee growing history

A fully equipped ISO certified roasting plant with a 70000 tonnes per
annum capacity at Hassan
5000 acres of self owned Coffee Plantations
A ready and enviable base of more than 10000 suppliers

Coffee Day Comprises of the following Sub Brands:

Coffee Day - Fresh & Ground (350 Coffee bean and powder retail outlets)
Café Coffee Day
Coffee Day – Take Away (7000 Vending Machines)
Coffee Day – Xpress (341 Coffee Day kiosks)
Coffee Day – Exports
Coffee Day – Perfect (FMCG Packaged Coffee division)

5|Page
Café Coffee Day currently owns and operates 169 cafes in all major cities in India. It is a part of
India's largest coffee company named Coffee Day, ISO 9002 certified company. Coffee Day's
most unique aspect is that it grows the coffee it serves in its cafes. Cafe Coffee Day's vending
machines have a special niche in the market compared to competitors because Cafe Coffee Day
machines offer filter coffee unlike the instant coffee offered by competitors' brands. Growing
from a coffee exporter to a coffee parlour, café coffee day has certainly come a long way in this
segment.

Key Features:

Pioneers of the Café Concept in India with its first Café at Brigade Road, Bangalore
in 1996. This Café was opened as a Cyber Café (first of its kind) but later, with the burst
of cyber cafes it reverted to its core competency….Coffee
Essentially a youth oriented brand with majority of its customers falling in the 15-29 year
age bracket
Each café, depending upon its size attracts between 400 and 800 customers daily
At present it operates 169 cafes across 43 cities
Plans to operate 200 cafes by December 2004
It is a place where customers come to rejuvenate themselves and be themselves

Marketing Mix

Every company goes through different phases in the business. The phase is very similar to that of
the product lifecycle. In order to sustain in the market and to maintain its market share it is
essential for the company to have a right marketing mix. The company has to have a mix of
proper product that is relevant to the target audience, proper price, proper reach i.e. the place and
relevant promotion that keeps the target audience interested in the company.

Product

Café Coffee Day‟s menu ranges from hot and cold coffees to several other items. However, the
core product is the coffee. The management believes that trend is changing towards coffee. So
taking this opportunity, the company also sells coffee powder. Café Coffee Day also believes in
selling other merchandised products.

Description of various Food and Beverages:

Hot Coffees

Espresso : Strong black coffee extracted at high pressure and optimum temperature.

Espresso Americano : A shot of lightened Espresso diluted with hot water.

Macchiato : A shot of Espresso topped up with milk foam.

6|Page
Cappuccino : Strong milk based coffee with a shot of Espresso, milk and milk foam. It is one of
the most popular hot coffees at Cafe Coffee Day.

Café Latte : Milkier hot coffee, mild and goes best with coffee flavoring syrups. It has a very
thin layer of milk foam.

Chocochino : A blend of Chocolate ice cream and Espresso garnished with a dollop of milk
foam. It is neither a hot coffee nor a cold coffee. It is a warm coffee.

Irish coffee: A light Espresso flavored with a choice of Irish Cream/ Hazelnut/ Caramel
and topped with Whipped Cream.

Caffeine Kick: Double shot of espresso diluted with hot water.

Black Velvet: A'ristretto'strong coffee served around 5-20 ml.

Kenyan Safari : An international coffee with the hidden flavor of Blueberry.

Colombian Juan Valdez: Rich, mild international hot coffee with fruity flavour.

Ethiopian Qahwah : International hot coffee with a hidden mocha flavour.

Hot chocolate : Lots and lots and lots of chocolate.

Cold Coffees

Tropical Iceberg : Ice blended cold coffee with notes of chocolate. It is the most popular cold
coffee across the country.

Tropical Temptation : A Tropical Iceberg topped with whipped

cream and a shot of chocolate sauce.

Cold Sparkle: Ice blended cold coffee with a sparkling taste of

coconut, it is among the earliest cold coffees introduced in their
menu.

Iced Eskimo : Ice blended cold coffee with notes of coffee and
cream
balanced in right proportions.

Arabian Heights : Ice blended cold coffee with a distinct flavour of cardamom.

Vegan Shake : It is made of 100 % pure vegetable fat and does not contain any
animal fat & dairy product. It is unique and is being launched for the first time in
the country by CCD.

7|Page
Cappachillo : Coffee with sweetened creamy milk served on the rocks.

Mochachillo : Chocolate flavored coffee with sweetened creamy milk

served on the rocks.

Cafe Frappe : A judicious blend of ice cream and coffee that gives a smooth and creamy effect.

Almond frappe : Almond flavored rich, creamy cold coffee with whipped cream, garnished with
almond flakes.

Choco Frappe: A Cafe Frappe with an extra scoop of Vanilla ice cream and a shot of chocolate
sauce, garnished with cocoa powder.

Devils Own : A smooth blend of cream and coffee drenched with chocolate sauce and
topped up with a shot of whipped cream.

Kaapi Nirvana : It is their ultimate signature blend, very Indian with hidden Caribbean taste,
won the silver medal in the in the world barista championship held in Oslo 2002. Rich coffee
taste, heavy body with creamy texture and does not require any additional flavors.

Fruit Frappe : A judicious blend of ice cream and fruits having different fruity flavors and thick
cool texture. (Mango Frappe, Strawberry Frappe, Pineapple Frappe, Lichi Frappe, Cold
Chocolate).

Teas

Assam Tea : A strong Tea grown in the best tea estates of Assam.

Masala Chai : High grade Assam tea in combination with a Masala bag
which is meticulously prepared with pepper, cardamom and cinnamon to
give an ethnic feel.

Ice Tea : A flavoured cold tea served with lemon juice on the rocks,
garnished with a slice of lime.

Granitas / Cremosas

Granitas : A cool slush drink in different flavour variants

Pineapple Crush : Pineapple flavour.

Cool Blue : Orange & hidden flavour of mint.

Blood Orange : Orange flavour.

8|Page
Smoothies : Ice-drinks blended with ice cream to give it a creamy
texture, which gives a smooth creamy after taste

Strawberry/Mango Colada : A smoothie, flavoured with strawberry/mango garnished with

whipped cream.
Cremosa : A fizz drink served with fruit concentrate, soda and Ice
Cubes Served on the Rocks. (Flavor options: Litchi, Ginger Spice and Pina Colada)

Desserts

Mousse Au chocolate : A double layered Chocolate mousse with a combination of milk a dark
chocolate & subtle coffee flavor for all the chocolate lovers.

Mocha Pastry : A fresh coffee sponge cake flavored with Coffee cream and syrup.

Chocolate Fantasy Cake : Rich Chocolate Pastry pampered with a rich garnish with chocolate
truffle swirl.

Pineapple Gateaux : Delicious cream and pineapple-flavoured cake, very light and refreshing.

Chocolate Mousse : Creamy, Fluffy, Smooth, chocolate flavored dessert, ideal with coffee.

Black forest Cake : The all time favorite Choco pastry with cherries suited to our Indian palate.

Sugar/chocolate Doughnut : A deep-fried dumpling doused with cinnamon flavoured top

dipped in sugar or chocolate truffle.

Date & Walnut cake : Rich butter base Cake made of delicious combination Dates & Walnut.

Chocolate Brownie : A rich dessert made with the combination of chocolate, butter, walnuts
best with coffee. [TIP: Tastes best with a scoop of Vanilla Ice Cream.]

Banana walnut cake : Delicious teacake flavored with bananas and walnuts

Marble cake : A delicious combination of chocolate and vanilla butter sponge best with tea or
coffee, topped with pure chocolate. Try with a scoop of choc ice cream, vanilla ice cream, nuts &
chocolate sauce.

Cookies : A crisp sweet snack accompanying all coffee and teas with choco chips, chocolate
ginger, peanut butter and coconut macaroon flavour options.

9|Page
Product Sources: Coffee Day's most unique aspect is that it grows the coffee it serves in its
cafes. Coffee Day has a well-equipped roasting unit catering to the specific requirement of the
consumers. The process is carried out under the control of experienced personnel to meet highest
quality standards. The most modern technology available is used to maintain consistency and
roast the coffee beans to the demanding specifications of the discerning coffee consumers. The
coffee beans are supplied to all the cafés from Chikmagalur. The eatables at Café Coffee Day are
catered by different vendors: example: ice creams are catered by Cream Bell, Milk by Amul and
samosa‟s by Patsiers Gallery. Café Coffee Day also sells merchandise through its stores. 5 per
cent of the revenue comes from sale of merchandise.

Quality Standards: Café Coffee Day has a check on quality all the time and in several aspects.
The operational in-charge will go around checking business, record keeping, and service and
check the feedback forms. The food in-charge will look at the way food is being stored, coffee is
being made, what is the time take to extract the coffee and so on. Marketing person will go about
checking displays, how the merchandise is displayed.

Price
Café Coffee Day has positioned as “Value for Money”. The major target customers are the
youngsters. Pricing is a very sensitive issue for the Indian consumers.
Café Coffee Day believes in mass marketing. The average spent by the customer is 100-125.
Their coffee starts from as long as Rs 15. However there are some outlets where the students are
given special discounts. CCD even set up their outlets in the college campus. For e.g. Café
Coffee Day has opened an outlet at the NMIMS campus where they are providing additional
10% discount to the students.
CCD is looking for expansion to more interior places. Here prices become more complex as the
consumer are very conservative in spending. A cup of coffee at Rs. 35 is accepted in metro cities
but not in small towns. The decor, ambience and the experience will play a major role in pulling
the crowds in small cities. The price of the product has to be kept uniform in order to maintain
the uniformity in all the outlets.
CCD target audience is youngsters. Majority of them are dependent on their family for their
expense. This is one of the most important reasons for low pricing compared to other cafes. They
believe it in making their product at an affordable price. Pricing is one of the important weapons
for them to fight against their competitor.

Place
Café Coffee Day outlets are spread across India. However, there are more number of outlets in
the metros and towns. Café Coffee Day has also been on an aggressive drive to expand the

10 | P a g e
number of cafés in the smaller towns across the country based on research and invitations
received from these places to open more such cafes there. However, the focus has not been on
just opening more cafés wherever there has been an opportunity. Café Coffee Day is already
the largest and most wide spread retail chain of cafes in India with a current count of 620
cafés in 102 cites.

Promotion
Café Coffee Day outlets are spread across India. However, there are more number of outlets in
the metros and towns. Café Coffee Day has also been on an aggressive drive to expand the
number of cafés in the smaller towns across the country based on research and invitations
received from these places to open more such cafes there. However, the focus has not been on
just opening more cafés wherever there has been an opportunity. Café Coffee Day is already
the largest and most wide spread retail chain of cafes in India with a current count of 620
cafés in 102 cites.
Customer Loyalty Programme:
Coffee shops have a high loyalty factor i.e. 60-70% of customers come in at least once a week.
The Cafe Citizens Programmed launched along with Net Carrots Loyalty Services would reward
regular customers of Cafe Coffee Day. Any customer who bills a minimum of Rs 100 on a single
bill is automatically eligible for membership to the Cafe Citizens Programmed. The programmed
entitles members to a 10 percent discount on all food and beverage bills for a year from the
month of membership. Members will also receive surprise gifts from India times Shopping when
they reach a total billing amount of Rs 2,000, Rs 5,000, and Rs 10,000. Members can track their
total bills spend at any Cafe Coffee Day outlet across the country. The programme was very
successful and they attracted 1, 35,000 citizens.
Smart Card Programme: Started from 1st Aug, 04; one can enroll into the program by paying
Rs.100/- at any Café Coffee Day Outlet and get a TEMPORARY CARD immediately after
filling in the enrolment form. With the Card, one can accumulate Value Points Equivalent To
Cash on net purchases at every transaction made at any of CCD outlets, provided the card is
submitted to the café staff at the time of placing each order.
The personalized permanent SMART CARD would reach at ones place in 7 days from the day of
enrolment and the points would be transferred from temporary card to the PERMANENT
SMART CARD. The points accumulated on the card would be printed on the bottom of the bill.
So it is very easy to keep track of the points. As soon as 100 points have been accumulated on
the card, one can start redeeming the points. Points can be redeemed on food, beverage and now
even merchandise like coffee powder, T-shirts, mugs etc except Jukebox coupons.

Current Promotion:

Oyester Bay: The current promotion is done with the Oyester Bay Jewellery for the woman‟s
day. CCD has arranged the contest, which is arranged for the woman‟s day event. This type of
contest attracts the young crowd especially girls.

11 | P a g e
Fame Adlabs: CCD is also involved in the promotion with Fame Adlabs. The pamphlets are
being distributed indicating the current movie shown and the movies to follow. Also it shows the
special offer for some lucky customer to get the coffee free. Magazine CCD also has private
magazine “Café Beat” distributed free to their customers. It includes ads and advertises about the
promotions to follow.

Tie-Ups
CCD jointly organizes large number of promotions with the other companies serving the similar
target audience.

EBD Book Café:

EBD is book café has joint ventures with CCD. EBD Book Café believes that by selling books
from within the espresso bars like CCD and other such co-locations that have a footfall of over
100 plus customers in a day will help them to achieve growth in book sales. One can find one‟s
favorite books at such cafes starting from fiction, non-fiction, religion, cookery, management,
lifestyle, art & craft, children books and much more. EBD Book Café are in collaboration with
Café Coffee Day have existing outlets in Ludhiana, Jaipur, New Delhi and Kanpur and are in
discussion to open more such outlets in, Mumbai and Ahmedabad. The CCD bookshops are in
the same premises though not necessarily inside the outlet.

Levi’s:
CCD has also tied-up with Levis where CCD will promote Levis product in their cafes.
Levi‟s recently launched their latest range of apparel, Levi‟s 501, through CCD as part of their
annual laterals like Wall visuals, Tent cards, Posters and Door stickers. There is also a special
Levi‟s Drink.

12 | P a g e
The Channel V- Get Gorgeous Hunt:

CCD was the exclusive on ground partner for the national hunt for the most gorgeous female
models by Channel V, wherein candidates could drop their entry forms with portfolio at any
CCD outlet. The event was heavily promoted by CCD through in café branding and on air by
Channel V. CCD also launched a new range of „Get Gorgeous drinks‟ as part of the promotion.
Innovative collaterals like branded stirrers etc. were used to add that extra element of surprise.
So much so was the success of the campaign that Channel V has chosen CCD to be the on
ground partner for „Get Gorgeous- Part.

The Himalaya Honey Campaign:

The Himalaya Drug Company had recently entered into a tie up with Café Coffee Day to
promote their honey. This honey was made available through over 100 Café Coffee Day outlets
across 7 cities, in a 3-month promotion where Coffee Day customers experienced the taste of
pure of honey in innovative ways. Honey Cappuccino, Honey milk shake, rich chocolate cake
and ice cream topped with honey and nuts! Four unique dishes were conceptualized by Café
Coffee Day, each enriched with the goodness of pure Himalaya Honey. These were an instant hit
with the customers. In addition to honey-based items, bottles of Himalaya Forest Honey were
also available in all Coffee Day outlets

Movie launches:

Apart form product launches, the company also does a number of tie-ups with the movie industry
in the same manner. For instance, there was Damdaar coffee that was sold during the launch of
the movie DUM. There was also the Damdaar contest wherein the prizes were movie tickets,
posters, CDs, and cassettes. In addition, the winners get a chance to meet and have a coffee
with the stars of the movie.

13 | P a g e
Ambience and Surrounding
“First Impression is the Last Impression”. This is true in this business. The first thing that the
customers come across is the surrounding and the ambience of the store.
To further brighten the vibrant atmosphere of the cafés, there has been a greater thrust on
providing more value added services such as video juke boxes, cosy sofa seating, and exciting
round the year promotions. Trading Co. Ltd had gone in for an image change and revamping of
interiors in the last quarter of 2001.
Café interiors at the company's 169 outlets are being given a whole, new look. In a change from
the largely wood and granite based interiors, there is more of steel and lots more colour. The
young colours of today, lime green, yellow, orange, and purple will predominate. The crockery
will also sport these colours. The larger cafes will also have lounge areas and a few beanbags.

International Presence
Café Coffee Day, the premier retail chain of cafés in India announced major developments
within the company including its dynamic plan to expand the chain into the overseas markets.
After having established itself firmly in the domestic market offering a world-class food and
coffee experience to over 25 million customers annually across the country, the chain has already
started setting up the infrastructure at 10 cities where it has targeted to open at least 50 cafes by
December 2004. The entire international offering will be based on the successful Indian
brand/model in which Café Coffee Day has gathered a lot of rich experience in coffee café
retailing. As with the domestic cafés, the international cafés will also be trendy, offering
attractive prices, and the coffees served will be made from the premium quality coffee beans.

14 | P a g e
Future Strategy
Spreading Wide:
CCD is planning to increase its reach by going to the small towns. To achieve the mission of
being a number 1 player in coffee category they cannot ignore these small towns. The Company
is focusing on the southern states of the country such as Tamil Nadu, Karnataka, Andhra Pradesh
and Kerala, and the western region, starting with various markets in the state of Maharashtra.

To widen the scope of target audience, CCD is planning to open some special cafés. These cafes
would serve to the different target audience. However, they have aggressive competition from
the Barista and other cafes. According to the management, they have a greater threat from the
foreign players.

Expensive Cafes: The major target group of CCD is the youngsters. However, the company
wants to widen its target group. Café Coffee Day is planning to come up with a different type of
café, which will be having different environment all together. Even the merchandise will be
different from that of the original CCD cafes. The coffees and the merchandise would be much
more expensive and of a better quality. These cafes are mainly targeted to people with high-
income group and status oriented people.

International Coffee Flavours:

CCD is planning to start soon with the international coffee at all the outlets. They have already
done the test marketing in certain outlet of Bangalore. Adding the new flavour would increase
the choice for the customer.

Positioning In the Mind of the Customers

CCD holds a distinct position in the minds of the target customer. Most of the customers are
loyal and visit the same outlet. CCD is very aggressive in terms of the marketing activity in order
to maintain the market share. Major customers are youths. Focusing on the target group, tie-ups
are done with other companies in order to keep the audience interested. They have entered into
tie-ups with the cinema theaters, shopping malls.
Coffee Café Day is the most popular hangout place for the youngsters. CCD is perceived as
energetic and trendy organization. The crowd is very lively. Most of the consumers are frequent
visitors. It‟s a good place to hang out with friends. CCD has the wide variety of coffee that suit
to the consumers needs. The ambience is very clean, well-lighted and airy. Most of the outlets
also have large parking space and good seating arrangements. There is a young feel to it. The
prices are very reasonable (compared to Barista, not our local Udipi) too and an average coffee
would cost about Rs. 40. They also have attractive T-shirts sporting Coffee day labels, cups, etc
for sale, which are manufactured by Coffee day. The food at CCD is at the affordable price.
Customers coming out there also find the food interesting especially veg. wraps and the chicken
ciabatta (Italian sandwich). The deserts are the most preferred by the youngster‟s especially
chocolaty cakes and apple pie. The employees are very friendly. They maintain a good
relation with their customers. At CCD employees are very helpful and serve the customers,
which differentiate them from other cafes. CCD coffees are much cheaper than that of cafes.
This is one of the main reasons for attracting the young college crowd.

15 | P a g e
BARISTA
“Barista” (which means “bartender‟‟ in English) is an Italian coffee chain shop. Barista traces
its roots back to the old coffee houses in Italy- the hotbeds of poetry, love, music, writing,
revolution, and of course, fine coffee.
Barista Coffee was established with the aim of identifying growth opportunities in the coffee
business. Increasing disposable incomes and global trends in coffee indicate immense growth
potential in this particular segment.
More significantly, they have been quick to spot a latent need waiting to be tapped: Coffee lovers
seek a complete experience. It combines intelligent positioning with the right product mix and
carefully designed cafes. In other words, they seek an "Experiential lifestyle brand".
As one might imagine, tapping into this need requires a company that can not only deliver great
coffee and espresso bars, but one with the ability to scale up operations quickly. At Barista, they
have gone to great lengths to establish this.
Barista started its operations with its first outlet at New Delhi in Feb 2000. The Company was
promoted by Amit Judges Turner Morrison Group BARISTA Coffee Company Ltd - in which
Tata Coffee Ltd holds 34.3 per cent stake Ventured into India.
Barista Coffee Company Limited has been recently listed among the top 100 brands in India by
Super Brands India; the Indian Division of the globally renowned Super brands ltd. Barista was
selected out of 711 leading Indian brands across 98 categories. Barista has its operations spread
over 153 outlets across India. At present, Barista had, he said, over 120 espresso bars and corners
in the four metros and 14 cities of India, with 35 being added over the last 12 months, out of
which 10 had been relocated.

Marketing Mix
Barista continued to maintain its focus on quality by sourcing only Arabica beans and using the
best international espresso machines, supplied by the Italy-based LaCimbali.

Barista was, working towards becoming the number one in terms of parameters likes brand-
imagery, brand-dominance, customer-loyalty and turnover. The strategy for fulfilling its mission
over the next decade would be by leveraging its strong position in the Indian market to grow
further in an Asian context.

Product

Barista cafes also have a good number of product mixes. The menu ranges from variety of coffees
and pastries. Barista also sells other items like mugs, Coffee beans, T-Shirts, Coffee Kettles.

16 | P a g e
Products at Barista:

Grande hot coffees

Cappuccino Grande: Cappuccino with a double shot of espresso served in an extra large grande
cup.
Mocha Grande: The all time favourite caffe mocha, with a double espresso shot and a generous
helping of chocolate fudge, served in our extra large grande cup

Indulgent Hot Coffees: Sinful hot coffees with strong flavours that will leave a lasting aftertaste
in your mouth.

Cappuccino Cookie n Cream: Cappuccino served with a sinful shot of chocolate fudge
combined with whipped cream and crunchy chocolate chip cookies. Scoop into delicious cookie
n cream dip as you savour a freshly brewed cappuccino

Flavoured Cappuccino: Be your own brewmaster! Your favourite cappuccino now

deconstructed – frothy steamed milk served with a shot of espresso and a choice of Amaretto (an
Italian non alcoholic liqueur with a strong almond flavour) or French Hazelnut flavour.

Hazelnut Mocha: Freshly brewed cappuccino further refined with the flavour of toasted French
hazelnuts and premium chocolate.

Mocha Tease: An irresistible and stimulating combination of cappuccino loaded with whipped
cream and chocolate fudge.

Ice cream sundaes

Mocha: A Barista favourite – freshly brewed espresso and chocolate fudge with vanilla ice
cream and whipped cream.

17 | P a g e
Black Currant: This sumptuous feast is made of layers of vanilla ice cream with whipped cream
and purple black currant.

Strawberry: A delectable concoction. Layers of vanilla ice cream, whipped cream and pink
strawberry pulp.

Dessert combos

Dark Temptation: Warm Chocolate Excess partnered with a delectable trio – whipped cream,
ice cream and chocolate fudge.

Wicked Brownie: A hot brownie dished up with sinfully delicious ice cream and whipped
cream, topped with chocolate fudge.

Steamers

Amazingly Almond: A nutty delight with real ground almonds, steamed milk and a hint of
toasted hazelnuts.

18 | P a g e
Melted Malt: Steamed milk with energizing malt and delicious chocolate.

Dark Fudge Delight: Delicious premium dark chocolate fudge topped with steamed milk for a
rich, layered taste.

Freshly brewed natural ice teas

Natural Ice Tea- Lemon/Peach: A classic ice tea- freshly brewed Assam tea with a shot of
lime/natural peach extract.

Natural Ice Tea – Black Berry: Freshly brewed Assam ice tea with 100% natural blackberry
extract

Natural Ice Tea - Ginger Fling: The sing of ginger is sure to refresh you in freshly brewed ice
tea cocktail flavoured with ginger extract.

Shakes and smoothies

Almond Hazel Frappe: A superb, smooth and rich shake with real ground almonds and a hint of
toasted French hazelnuts.

Black Currant Smoothie: A rich smoothie made with real black currants blended with a double
scoop of ice cream

Amaretto Chocolate Shake: Our thick chocolate ice cream shake enhanced with Amaretto
flavour. Chocolate lovers just can‟t pass this up! Also available – regular Chocolate and Coffee
shakes.

19 | P a g e
Premium hot teas

Lemon Ginger: Premium Assam tea flavoured with fresh lemon and ginger extract, served
without milk.

Cardamom Tea: Premium tea flavoured with refreshing green cardamom, served with milk.

Chai Latte: A full bodied, frothy mug of cardamom flavoured tea and steamed milk.

Sinful cold coffees

Brrrista Cookie Crunch: Cold coffee with fudge, generously topped with cream and loads of
choco chip cookies.

Hazelnut Frappe: Delicious cold coffee blended with rich ice cream and an exotic flavour of
toasted French hazelnuts.

Swiss Mocha Frappe: Thick cold coffee blended with delightful Swiss chocolate and ice cream,
served in a glass laced with chocolate fudge.

Brrrista Blast: Our signature indulgent cold coffee with scoops of ice cream, whipped cream
and chocolate fudge.

Product Sources: Barista sources its coffee beans from around the world, but a major supplier is
TATA Coffee, part of the TATA Group that owns a large stake- holding in Barista. These coffee
beans are then sent to Venice, Italy where they are roasted into a blend exclusively for Barista.
The food and desserts at Barista is exclusively catered to by the Taj, who ensures a high standard
of quality with all its products. Barista also sells merchandise through its store, all of which is
imported. The merchandise accounts for nearly 1/6th of Barista‟s overall sales.

20 | P a g e
Quality Sources: Barista has a check on the quality of its products every 14 days. Barista also
incorporates TQM at its headquarters in Delhi. Since Delhi is the base for all its distribution,
quality control measures are adopted there to avoid any poor quality products being distributed.

Price
Barista holds the perception of being an expensive cafe. However, Barista was the first
organization to start the concept of the organized cafes in India. Initially Barista started with
Skimmed pricing policy. Barista segmented the market according to the income and age.

Due to the entrance of new players, Barista was finding difficult to maintain the market share.
First and foremost, Barista re-defined the target market customer. They even planned to change
their tagline. "Where the world meets” And so when company looked at this positioning and they
looked at the pricing - the strategy being that if we lower the pricing.

Apart from this, Barista has also introduced new low-priced beverages. The officials say these
price cuts have resulted in 15-per cent walk-ins at Barista's outlets during the last few months.
Barista decided to alter their strategy in order to retain their market. After studying the market,
Barista found that competitors were fighting against them against the pricing. They decided to
reduce their pricing. It was not done from a perspective of acquisition. With reduction in the
prices, there had been a 47 per cent increase in footfalls over the subsequent three months.

Place
Barista started its first outlet at Bangalore and from there it has started spreading its wings
especially after price reduction. Now they are even planning to focus on raising the bar of coffee
experience. Barista already has presence in all the metros and has a presence in all the highly
populated regions like Mumbai, Delhi, Bangalore and many more places. Barista is seeking to
expand through the franchisee route model and plans to enter B-class towns in the country and
middle-class localities in the metros such as North and East Delhi.

Promotion
Barista did not initially believed in any kind of promotion but in order to keep their customers
interested they started building the brand by communication both within the store as well as
outside the store through mass media. It under takes various promotion activities during the
festival or during occasions like Valentines Day. Barista has done advertising in almost all
national newspapers. Barista has launched summer campaign through summer chillers, and was
advertised through different channels.

Barista Coffee has tied up with Sony Music. Under this association, Sony Music would endorse
CDs and music cassettes of their recent acts, which will be used as the lucky draw prizes for the
participants. Consumers buying food, beverage and merchandise for Rs 110/-and above during
specified hours of the performance, will be entitled to participate in the lucky draw. The prizes
will be given away in a couple of draws during the performance.

Barista also takes part in various sales promotion activities to help increase sales at their outlets.

21 | P a g e
A) Sponsorships: Barista sponsors various events and festivals, which provides them valuable
promotion directed at strategic markets. The sponsorships are mainly in kind, although major
events are sponsored in cash also.

B) Collaborations: Barista has entered into special collaborations and alliances with various
partners for co- marketing brands. For example, Barista entered into a deal with Leo Mattel toys
to provide the popular board game Scrabble at every Barista outlet across the country. This is an
ideal alliance for both the organizations, because it provides Leo Mattel with an important
avenue for promoting their product, and it provides Barista‟s customers an added attraction for
spending more time at Barista outlets. Barista has also entered into partnerships with various
movies, for promotions through Barista, and recently, they tied up with Star World for its
“Absolutely Everybody” campaign.

C) Sales Promotion: Barista uses a special “Barista Coffee Card” for its sales promotion
activities. The Barista Coffee Card entitles you to one complimentary hot beverage when you are
done sipping seven. It is available to all Barista coffee regulars. No membership fees, no
references required. Fill out the card and you are a member. As a Coffee Card holder, you earn
one stamp on the card every time you purchase a beverage. Simply present the card to the cashier
when you place your order at any of their outlets. Once you have collected seven stamps, you
can hand over the card to receive your complimentary hot beverage. Barista hopes this card can
help drive sales growth, and increase customer retention.

Tie-Ups

Barista with Taj Group: Barista Coffee, a leading coffee bar chain, has tied up with Taj group
of Hotels for setting up exclusive Barista expresso bars at the Taj hotels in metro cities. The first
such bar would be at the Emperor Lounge at the Taj Mahal hotel in New Delhi followed by a
Barista Bar at the Sea Lounge at the Taj Mahal Hotel in Mumbai. This would be followed by
similar bars at Taj Mahal hotels in Calcutta, Chennai and Bangalore. Barista also will be housed
at the coffee shops of all major Taj Hotels in the country.

Barista with Tata Teleservice:

Barista has also tied up with Tata Teleservice. This tie-up was primarily done in order to provide
consumers' access to the Internet. The objective being, today if you look at Barista consumers, a
fair number of them come to Barista to discuss business over a cup of coffee. Moreover, it is
easier for them to meet at Barista, discuss business and send the information across. It is going to
be focused primarily on work, towards the busy executive who is traveling and has dropped by
for coffee or the small office segment who might just want to work out of Barista.

Lacoste with Barista: Lacoste India has decided to tie-up with coffee outlet chain Barista in all
the major metros and some mini-metros. The strategy is to target younger audiences, which have
a penchant for the "finer things in life". The customer segment of Barista is very different from
the ones who visit a regular coffee shop.

Elle-18: Barista is jointly tied up with Elle 18 to promote their product. Elle-18 is launching a
collection of coffee colored lipsticks and has named it after Barista‟s beverages! Therefore, they

22 | P a g e
are working with Elle 18, which is a youthful brand. Moreover, they both will grow with this
association. For Elle 18, the objective is to build a platform for their range of coffee colored
lipsticks and for them, the objective is to associate with the brand and have their consumers
coming in to Barista.

CBC Book shop: Barista has tie-up with CBC bookshop, which has book corner at eight Barista
outlets in six cities. Barista‟s bookshops are right inside the café. Barista prefers best sellers and
classic, besides books on management, lifestyle, sports, health, religion, children and even
cookery. Some of the outlets also stock activity books, comics, CD-ROMs and crayons.

Other tie-ups: Barista has tie-ups with Planet M, Crossword and the Taj group of hotels for
setting up Espresso corners within their premises. Moreover, along with ABN Amro, Barista has
introduced a concept called Ban café - a café in the bank premises

Ambience And Surrounding

The colour shades that they have used are terracotta; it is warm - it is orange. The background
has a dark Orange colour. Orange colour signifies of a style and friendly ambience of its own.
In order to match the colour combination of the surrounding even the uniform of employees are
orange in colour. The place invites the customers to spend time.

However, the focus would, continue to be to recreate the ambience of the typical Italian
neighbourhood espresso bars in India so as to provide a comfortable place for people to relax and
experience “the joy of coffee”. The ambience of the location and the quality of coffee would,
continue to be the key factors while growing the chain.

It has lots of board games for any one to indulge in, like chess, word scramblers, and a guitar to
pluck some chords.

23 | P a g e
Music:
The music is not too loud and encourages conversation, and the person behind the counter is
non-intrusive and friendly.
Barista is also planning to organize live music. Listening to live music, while sipping a warm cup
of coffee, next to your beloved can make an evening a perfect memory to cherish. In order to gift
its customers with this tranquilizing experience, Barista is buzzing with live music this winter
spate. Barista presents 'Oceans', the music band that will perform live at various Barista outlets.

Sitting Arrangement: Barista is a place for relaxes. Even in a crowded espresso bar, at Barista,
one will have his share of privacy. The seats are arranged at a certain distance to have a privacy
of talks as their major customers come there to discuss the business or to relax and chat.

International Presence:
The company operates over 130 coffee joints including four in Dubai and Colombo. Barista had
chalked out aggressive strategies for expansions into Europe and West Asia. Barista has already
started its operation in both Sri Lanka and Dubai and doing very well. They are talking terms
with a few potential partners in Kuwait. Barista owns and manages all its outlets in India but
operates through franchisees in other countries.

24 | P a g e
Future Strategy

The management at the Barista outlets thinks that their positioning is very different from that of
CCD. They think that the people going to CCD are young college students. The target audience
for the Barista are young managers and middle level mangers and also family. However there is
a treat to them in terms of the share of the young college going crowd, which forms a main target
audience for the CCD and comparatively small part for Barista.

Increase in outlet: As part of its marketing strategy, the company is planning to promote
international coffee blends first through 40 Barista stores in Mumbai, Delhi and Bangalore. With
the move, the company also hopes to expand the number of Barista Espresso Bars on an average
rate of two to three per month as well.

International expansion: Barista is also looking for the international expansion. They are
planning to expand in the Kuwait market. Barista is also planning to expand its presence in the
other Asian countries like Sri Lanka, Dubai.

Promotional Activity: As part of its marketing strategy, Barista Coffee Company Ltd is
planning to launch a host of consumer promotions at its outlets. For the purpose, the company is
currently in talks with many entertainment, consumer goods and music companies, which
include the US-based Bose Corporation, Swatch and International Travel House.

Positioning In The Mind of the Customers

Barista is a place where the world meets. People come to Barista to have a meet or to relax. A lot
of them actually come alone as well. This is actually one of those places with people coming in
alone because they are comfortable with themselves. It is a place where people are meeting each
other in an environment, which is fulfilling social and intellectual needs.
The employees at the Barista are also energetic. They help the customer in making decisions for
their purchase.

25 | P a g e
Café Mocha

Café Mocha was established in December 2001, with its first store in Churchgate Mumbai, by a
Mumbai based entrepreneur Riyaz Amlani, who has a long experience in the hotels and
restaurants business. The café boasted of an eclectic Indo-Tibetan theme and fresh worldly
coffee.

It soon spread to other parts of Mumbai and adjoining areas with 3 more outlets. From there it
moved to other tier one and tier two cities in India like Pune, Delhi, Chennai, Ahmedabad,
Hyderabad, Jaipur and Chandigarh. As off now the coffee chain has 13 outlets in the various
cities.

The thing about Mocha was the coffee shop itself. It was never designed to be a cut-and-paste
format where every outlet would look the same. Every outlet would have a flavour and look of
its own and would look completely different from any of its other outlets.

“Mocha stands for the coolest coffee shop in the country with its own sense of style. It has
proven that a coffee shop chain doesn‟t need to look like the cubicles in an office. 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”

Marketing Mix

Product

Café Mocha has a wide range of products form Arabica Coffee, flavoured Tea, shakes, and also a
wide range of food beverages like sandwiches, complete breakfast, etc. Also it features a whole
range of flavoured „Sheeshas‟.

Price

Mocha follows a premium pricing strategy for is range of products. Almost all of its products are
priced almost 15-20% extra as compared to other coffee retails. It believes in positioning its
products not just as simple drink or food beverage, but believes in providing the customer an
experience to spend time, relax while savouring the best there is to eat and drink.

Place

“Mocha has never seen itself as a conventional cut and paste model chain of coffee bars – each
one like the other. With each new Mocha, something new evolves in its décor, its menu and
ambience. Mocha does not replicate itself but follows a continuity of design through all its
outlets. Each Mocha is as individual as you are.”

26 | P a g e
Mocha lays as much as stress on its interiors as its physical locations. Both play a significant role
in the place strategy of café mocha. The location is significant as they portray themselves as a
premium brand and hence it is essential that they are located in a city with their required
customer base and where it would be visible and accessible to them.

Promotion

Café Mocha does not indulge into direct promotion via conventional means like advertisements,
tv promotions etc. It primarily uses user communities to spread word of mouth. Communities
like Mocha Bike Club, Mocha Film Club, and Mocha Music Mania etc are promoted. Members
are of these communities ac t like brand ambassadors of the café chain. Members are offered
discounts and are exclusive offers; this is done primarily to promote memberships. Also at times
Mocha showcases itself using outdoor activities and events like music concerts etc.

Positioning

“It‟s a place to meet and suspend reality for a few moments. It‟s about taking time to savor the
finer things in life”, these are some of the extracts from its vision statement. It clearly suggests
that the café is not just about coffee but a place to spend time and enjoy.
The product differentiation reflects in all their activities. Even the way their cafes are laid out
reflects their virtue to deliver something different and more than just a mere coffee.

Growth strategy

The growth pattern of Café Mocha is a steady one. In about 7 years they have been able to open
13 café. They have not got into frenzy to open random stores. They are taking a careful path so
that keep their identity of differentiation. They don‟t want to be part commodity coffees retail,
but rather grow as a place to savor coffee and the ambience.

27 | P a g e
Java Green
Javagreen was started in 2003 as a chain of In-Store Cafés within Reliance WebWorlds. After
the formation of ADAG it has expanded into other locations outside Reliance and operates

over 100 cafes operating within a host of retailers, food courts and corporate campuses.
Javagreen has been designed as a neighbourhood gourmet coffee shop that is fast, friendly and
fun. They offer a wide, international range of hot and cold coffees, made with their exclusive
specialty coffee blend. This unique blend has been created in house, to suit our range of hot and
cold coffees, the style of preparation in their stores and the type of equipment used to brew
coffee. Green coffee is sourced and roasted to their specifications with traceability maintained all
the way from the plantation to the outlet.

Their beverages menu includes teas, granitas, milk smoothies and soups in a variety of
international and popular regional flavours. An innovative range of wraps, paninis, sandwiches
and pastries provide a wholesome choice for those looking for a quick but filling bite. Their food
menu has been developed in house with proprietary recipes and ingredients. The menu is
standardized across India so that the products are uniform and consistent across all outlets.

Marketing Mix

Product

The following menu items of JavaGreen suggest the kind of products line the café is having, and
if look deep into it we find that they are primarily trying to provide value for money products.
They vouch to provide an international taste.

28 | P a g e
They make a point to provide to quick service and have more conventional drinks and beverages
rather than the exotic ones, but at the same time providing quality and consistency. According to
javaGreens, they will serve you same taste in any of their 90 outlets.

Price

The products at JavaGreens are prices moderately, i.e. „provide international taste at marginal
cost. They believe attracting customers on the base of their taste and availability, and hence are
not driven by margins but rather volume. To make this possible they incur less in developing
ambience etc. and this cost advantage is passed onto the customer.

Basically they practice a mix of penetration and competition pricing whereby increasing market
share and be competitive to other players.

Place

JavaGreen café are largely located in Reliance Web World internet café. Apart from that they
find place in many malls in South India namely, Bangalore, Kochi, Chennai and Hyderabad. In
other parts of India they are located in Delhi, Kolkata, Ahmedabad.

JavaGreen doesn‟t have many stand alone coffee outlets but like its mission suggests, it caters
to the need of a quick cup of coffee. Many of its 90 outlets are kiosks in mall lobbies.

Promotion

JavaGreen doesn‟t indulge in nay kind of promotion on its own. It has become an integral part of
the Reliance Web Worlds, and are self advertised as a part of Web Worlds. They believe in quick
coffee, quick munch and are placed in locations which ebnable them to deliver the same.

Growth Strategy

The growth of JavaGreen has been rather stagnant. By the consumers it is not considered a
popular brand and it acts as an add-on product of Reliance Internet café.

There has been a lack in an attempt to provide the coffee chain a pan India presence and are
mainly confined to southern parts of India.

29 | P a g e
 Sustainability Advantage
Retail coffee chain industry is becoming more and more competitive as international players are
trying their foray in Indian market. Now the big question is “whether the home grown coffee
chains will be able to sustain themselves”.

Barista
Barista has the following competitive advantage over others which it can leverage in future. The
advantages can help Barista to tap the opportunities coming its way and fight the competition.

Strong Brand Image: Barista has a strong and clear brand image. Their customers can easily
identify and relate to the Barista brand. This helps foster brand loyalty.

Excellent Human Resource: Barista is perceived as excellent for the service and behaviour of
their staff by their customers. It has also opened training facility to nurture more talent. This is a
huge advantage, especially in a service organization. Barista must strive to keep this advantage.

Ambience & Décor: Another significant area of excellence is the kind of ambience and décor
Barista cafés have. It has been able to recreate the Italian ambience in the neighbourhood store
which liked by customers.

Strong base for expansion & growth: Barista have worked hard on their brand, image and
human resources and have a strong base for future expansion and growth- whether nationally or
internationally.

Linkages: It has worked hard on tie ups and have pre-empted a number of linkages which can be
leveraged for growth.

The company initially had a model to expand by owning stores but it later shifted to a franchisee,
which has paid rich dividends but it carries a risk of brand dilution, so it must have a strict HR
policy and see to it that all staff in the franchisee are recruited from its own training institute. The
company need to shatter its image as a costly brand by aggressive promotions. It also need to
build on its coffee resources as it is dependent on TATA coffee foe its supplies.

However Barista lack in few areas where immediate attention is required:

1. Average taste & quality of products suited for Indian consumer: Barista has a strong
brand image of being the coffee- lovers traditional café, but the taste of food products served is
not upto the mark for traditional Indian consumer. They need to come up with food suited for
Indian taste.

30 | P a g e
2. Perceived as an expensive brand: Barista need to engage in some promotional strategy
which would shatter its image as an expensive brand among the middle class Indian consumer
because they will be the real volume driver in coming times

3. Inconvenient delivery process: Although started as a new concept and to recreate the
image of Italian café`, the concept of self service is not mingling with the Indian consumer,
Indian consumer find it inconvenient to go back to the counter just to receive their order.

4. Supplier power: Since the USP of Barista is the taste and quality of the coffee that it serves,
it must look to ensure supply of good quality coffee beans. Presently it is locked in with TATA
coffee for supplies and thus lacks the bargaining power when it comes to quality or price.

The acquisition of Barista by Lavvaza has brought in the much needed financial chest to expand.
Lavvaza plans to invest 650 crores to open 400 stores in the coming 2-3 years.It will also give
Barista opportunity to exploit synergies of distribution, sourcing, better staff training, product
quality and variety (We get the global, 2007).

The challenge for Lavvaza now is to enter the mass market without diluting the „Barista
experience‟ , they need to pre-empt competitors by buying property in tier II cities at prime
locations where prices are still under control. They are dependent on their supplies on TATA
coffee which varies prices according to the market condition. The company can integrate
backward to hedge against these variations.

31 | P a g e
 Café Coffee Day
"The third most frequented place after home and workplace or college"

The Café coffee day has got the maximum number of coffee stores in India. Café coffee day

is amongst the big guns in coffee industry.

1. Highly rated Taste & Quality of products: Café Coffee Day is perceived better by their
customers for the Taste & Quality of their products. There lies a great potential to attract the
customers who give emphasis on “money for value”. This is also helped by the fact that they
grow their own coffee beans, and this provides an important base for future expansion and
growth.

2. Value for money proposition: Café Coffee Day is projected as an “affordable” brand.

This strategy has worked extremely well so far, and Café Coffee Day is seen as a value for
money brand.

3. Strong youth orientation: The Café Coffee Day brand is, and always has been, extremely
youth- oriented. In a country where over 40% of the population is under the age of 20, there is
huge potential for Café Coffee Day to become one of the country‟ s largest youth brands.

The untapped market share and potential for growth is enormous.

4. Capacity to expand easily and appeal to the mass market: CCD has advantage in easily
replicating its earlier opened stores and expand quickly compared to its competitors. It has a
undeterred focus on the mass market which will be the drivers of all volume growth in coming
times.

CCD has a distinct brand identity of its own in the mind of youth. It is the largest organized retail
café chain in India. The main strategy of CCD is cost leadership, and it takes pride in being
affordable despite its good quality. The future goal of CCD is primarily rapid growth by
establishing affordable omnipresent cafés, and thus it has opened up outlets at such a scorching
pace. CCD has an advantage in giving good service at an affordable price, CCD has been
targeted the student community and mainly the middle class and its focus on this segment has
been unwavering. This segment is fast becoming the largest chunk of customers for these coffee
chains. Barista broadened its focus with a price cut in 2003 to capture this segment which did not
have pockets as deep.

32 | P a g e
The primary strength of CCD is its large number of outlets nationwide (401 against Barista‟ s

130), lower capital requirements for setting up stores (Rs 25 lakhs for 1000- 1500 square meters
versus Rs 35-40 lakhs for 800-1000 square meters in case of Barista), vertically integrated
supply chain and franchisees. As CCD sources its coffee from its own plants it hedges risks
which arise due to fluctuations in the price and supply of coffee beans. Barista on the other hand
is entirely dependent on Tata Coffee for its supplies. CCD also has larger volumes of sales per
outlet, with each CCD cafe, on average, attracting around 500 and 600 customers per store
everyday as against Barista‟ s 350-400 per store per day.5

The primary weaknesses of CCD lie in their lack of strategic tie-ups (unlike Barista),
inconsistent quality across outlets and weak image. For food items, CCD uses multiple suppliers
whose products vary from region to region6. This reduces standardization in taste and quality.
Barista on the other hand enjoys the expertise of the Taj chefs ensuring standardized quality
products at all its outlets. Café coffee day has less brand loyalty, and many of its patrons aspire
to move up to Barista due to its better coffee and premium image. Due to its target of college
students, CCD tends to alienate some of the higher age group who prefer a more sober
atmosphere.

To sustain in the highly competitive coffee café companies need to pre-empt the middle class
mass market which will be the key drivers of all volume growth in the coming years. Café
Coffee Day has done well in entering the mass market by rapidly penetrating into 72 cities. But
this has brought about a deterioration in the brand image of it, which is needed to sustain
between brand conscious urban youth. Another factor needed to sustain is a upper hand on the
supply side of coffee beans, the company has a safe and secured supply of coffee beans via the
coffee garden in owns in south India. This also insulates the company from any future variation
in the price of coffee beans which is a commodity and hence volatile in price and supply

33 | P a g e
Java Green
Java green raison d'etre was to provide an additional service to customers of Reliance web world.
Java green was designed to add on a basic product in already existing offering. The Branding,
interiors and the marketing strategy of Java Green reflects very clearly that Java Green believes
in adding on value and they are not competing with any chain.

Java green which was started as a chain of In-Store Cafés within Reliance Web Worlds has
expanded into other locations outside Reliance and operates over 100 cafes operating within a
host of retailers, food courts and corporate campuses.

Reliance wishes to opens Reliance infocom at the rate of 200 per annum, that‟ s a
whopping

number. Reliance petroleum and gases, starting June 2010, will have their fuel outlets all over
India. That will help Java green to grow further. The sustainability advantage for java green lies
in the fact that it can leverage on reliance fuel and webworld outlets. Moreover since the services
at reliance webworld are increasing like it is offering conference, ticket booking, gaming portals
etc, the consumer will tend to spend more time which will give java green

more opportunity to sell their products to customers. Reliance is positioning “Java green as a

neighbourhood cafe, that is, fast, friendly and fun,”

In addition to coffee, consumers get to surf net, play games, view movies and video chat with
people across the globe through their broad band services. This makes Java green a truly
connected café and java green enjoys an edge over others.

Javagreen aims to be a business focused on continual value to its customers on the backbone of
an efficient business operation.

34 | P a g e
Mocha

Mocha provides wide range of products including a whole range of flavoured sheeshas which
sets it apart from the other existing coffee players like CCD and Barista.

Mocha sells experience rather than simple drink or food beverage. Each Mocha is as individual
as you are.” with each new Mocha, something new evolves in its décor, its menu and ambience.
Mocha does not replicate itself but follows a continuity of design through all its outlets.

The location of each mocha is of prime importance in its sustainability as they portray
themselves as a premium brand and hence it is essential that they are located in a city with their
required customer base and where it would be visible and accessible to them.

They have not got into frenzy to open random stores. They are taking a careful path so that they
keep their identity of differentiation.

35 | P a g e
Effects of foreign Players

The potential of growth in liquid coffee retailing is huge as coffee consumption in the country is
considerably low. In the North, coffee consumption is eight grams per persons as compared to 40
gm in the South.

After attempts by Barista, Coffee Day and Qwicky's to provide Indian consumers the foreign
players have finally decide to enter Indian markets. Café Coffee Day and Barista dominate
Indian café market. The entry of foreign player is a treat for these players to maintain their
market share. The foreign player would also target the similar segment of target market thus
causing the problem for the local players. There is a tendency of Indian customers to visit once
and if they get satisfied than they turn to be loyal customers.

I) StarBucks

Starbucks is one of the fastest growing brands in the world, after entrepreneur Howard Schultz
bought the chain 15 years ago. Starbucks Coffee - with its 5,689 outlets in 28 countries - has
grown in sales at an average of 20% annually to $2.6bn in '02.

The Starbucks Corporation is reviving its plans for entering India. The company is expected to
actively scout for prime real estate in metro markets in the next few months, and plans to open its
first store in the next 12-14 months. Starbucks has identified Delhi, Mumbai, and Chennai as the
potential entry points for the chain in India. Starbucks is presently working on the franchisee
model.

The Starbucks target audience is the hip, urban, on-the-go caffeine addict, and the chain that
originated in Seattle has got mega-plans for India. Starbucks has pinpointed high-potential
localities like a few in South Mumbai and Bandra. In keeping with its international strategy,
Starbucks will only open shop in the best of prime locations. The company's practice is to
acquire real estate at a premium over market price, in order to squeeze out competition, and it is
planning to do the same in India.

II) Georgia

Coca-Cola India found a good market for the hot beverages. They announced the launch of low-
price ready-to-drink coffee and tea in a bid to capture a larger share of the domestic beverages
market.

The drinks will be marketed under the brand name Georgia and sold through a large number of
retail outlets all over India. According to them, it is time to take the product from the class
market to the mass market. Hot tea and coffee form the biggest combination in India's
burgeoning beverage market. Georgia has launched two types of cafes, one where normal tea and
coffees will be sold and would be priced at 3 –4 Rs per cup; the other is Georgia Gold, which is

36 | P a g e
for the premium segment. Georgia Gold has also merged with Mc-Donald‟ s.

More and More foreign players would enter into this segment. The company will have to
differentiate their product from the others in terms of price, flavour, and ambience and also target
audience.

37 | P a g e
Suggestions and Recommendation

Pricing:

Indian consumers are highly price sensitive. Pricing will play very important role. In
order to sustain the competition it will be very important to have a proper pricing strategy
in place. Over pricing the products would actually limit the scope of target audience.
While under pricing would actually degrade their brand value. In either of the cases there
will be a loss for the company, as they will loose their customers.

Promotion and Advertising:

Promotions have a deep impact on the Indian consumers. The consumers would also
increase their consumption to take the advantage of the promotion schemes. Promotion
should be design properly to keep the target customer interested. The promotion should
not degrade the value of brand. The company also needs to tie up with other companies
whose target audience match with theirs Like CCD with Levis, Barista with Archies etc.

Merchandising:

Indian consumers likes having more choice of before they actually make their selection
of buying. Different type of coffees and food items need to be introduced in order to
provide customers with more choice. Even new flavors of coffee beans should be
introduced.

Expansion:

Each and every player wants to have a wider expansion in order to have more reached.
The companies should open the outlets only where they find the potential. They should
conduct detail study before taking a decision for opening an outlet. For e.g. CCD follows
the strategy of following the competition. They open the outlet wherever Barista opens it.
This has proved successful. This is a big risk as opening an outlet requires huge
investment and it may result in a huge loss.

38 | P a g e
 References

1. http://www.mocha.co.in

2. http://www.java-green.com

3. www.barista.co.in/

4. www.cafecoffeeday.com

5. http://indiacoffee.org

6. http://retailrise.com

7. Sustainability Competitive Advantage – Pankaj Khemawat

8. www.marketingpractice.com

39 | P a g e