COFFEE PARLOURS IN INDIA- HOTTING UP

PREPARED BY:Group 8

ABHISHEK.BANSALRAGHAVENDRA

MISKINKRITIKA PRABHAKAR

SURAJIT GOGOINIRAJ R

VAIBHAV MISRA

OVERVIEW OF THE INDIAN COFFEE INDUSTRY

5th largest coffee producer in the world (3%

of the world production)

Avg. coffee consumption in India is 10 cups

per person p.a.

People in North India prefer instant coffee in

contrast with people in south who prefer filter

coffee

Late 90s saw an emergence in coffee

chains

In 2002, café < 200 with sales of $10mn

Major players : Café Coffee Day, Barista,

Qwiky’s

Starbucks is trying to enter the Indian

market

GROWTH DRIVERS :

•Increased exposure to International Lifestyle

• Rise of the Demographic class

• Spending more time outside their homes

• Target segment is expected to be 300 mn

by 2010

Barista

Came to India as a late entrant.

With 105 branches in 18 cities and annual sales of Rs.

650 million.

Recreated typical Italian neighbourhood espresso

bars in India.

Rapid innovation of their product offerings and focus

on a particular product.

Strategic tie-ups.

Café Coffee Day

Started in 1996.

50 outlets in 9 cities by 2002, with an annual sales

of Rs. 100 million.

CCD provided a relaxing ambience with eye-

catching crockery and bright décor.

Mainly to attract teenagers, business meetings

etc.

promoted their paraphernalia such as caps, T-

shirts, and coffee mugs.

Paintings on the walls are a source of attraction.

QWIKY'S

Started in 1999.

With 21 outlets in 5 cities and an annual sales of

Rs. 43 million in the year 2002.

It positioned itself as a place to hang out and

spend time leisurely.

The staff at Qwiky’s was trained to understand

body language.

Their customers were offered different varieties of

coffee including frothy or intense, icy or piping hot,

and aromatic and exotic coffee.

SWOT analysis:-Strengths:- Quality products Claim to sell the best coffeeLarge Number of outletIn house sourcing of coffee beansEspresso-Highest selling coffeeLow set up costs.

Weaknesses:-

 Expensive coffeeSelf service for the customersQuality of food- Stale breads

Opportunities:-  Expanding coffee market Unrestricted operating hours (MVU) Other markets (domestic and coin vending) Scope for innovation in existing market.Large Untapped MarketTie-ups with other companies for promotion

Threats:-  Imitation products Entry of Foreign players like Georgia, Starbucks Large unorganized market

Café Coffee Day

Café Coffee Day

SWOT Analysis

STRENGTH:Quality Products.India's largest retail chain of cafes.In house sourcing of coffee beans.RS.300 crores ISO 9002 certified company.

WEAKNESS Price of Products. Presence is negligible in small cities.Limited Target Audience.Follow the competitor strategy

Café Coffee Day

OPPORTUNITIES:Market is growing very fast.Most of Indian market is untargeted.Indian culture is changing.

THREATS:Barista.Foreign competitors are ready to launch.Local coffee vendors.

SWOT ANALYSISStrengths● Product diversification● Company operated retail stores,International stores (no franchise)● Good relationships with suppliers● Industry market leader● Product is the last socially acceptedaddiction● Widespread and consistent● Strong financial foundation

Weaknesses● Size● Lack of internal focus (too much focus onexpansion)● Ever increasing number of competitors in agrowing market● Self cannibalization● Cross functional management● Product pricing (expensive)

Opportunities● Expansion into retail operations● Technological advances● New distribution channels (delivery)● New products● Distribution agreements● Brand extension● Emerging international markets● Continued domestic expansion/dominationof segment

Threats● Competition (restaurants, street carts,supermarkets, other coffee shops, othercaffeine based products)● Coffee price volatility in developingcountries● Consumer trends toward more healthy waysand away from caffeine● Alienation of younger, domestic marketsegments

SWOT OF QWIKY’S

Strengths – Positioned as a “fun” brandPerceived as a premium brandHigh quality

WeaknessReal-estate based pricingLow availabilityLow marketing communicationPlace advantage of existing players

OppurtunitiesExpand into other territoriesSell Qwiky’s merchandiseOffer more food items

ThreatsInternational playersOther established players

QUESTION NO 1

Barista’s Stratergies

Lifestyle brand with Italian neighborhood

Brew masters from Italy to create blend

Alliance with Tata

Make customer’s occasional indulgence into a

habit

Store-in-store concept with specific themes

Branded merchandising

Home brew segment – fresh coffee

Tie ups with ABN Amro and BPCL

CCD’S STRATEGIES

Informal ambienceCool hang out for college crowd and teenagersRevamp in 2001“A lot can happen over coffee”Café jockey Main target – commercial and residential clusters in metrosAlso targeted corporate houses, mall, airportPrice 20% lower than competitorsMass market brand

QWIKY’S STRATEGIES

Make customers feel comfortable & have fun

Staff trained to understand body language

Targets “young at heart” customers

Customers were given choice of drink not

common in India

Strategic point frequented by youth

Prices based on real-estate prices of the area

Ready to drink coffee sachets

Strategy suitable for Indian market

Barista’s strategy suitableUniqueness in interiors with Indian neighborhoodServed international varieties of coffeeIndian coffee with Italian brew mastersAlso serves “good” foodBarista – a status symbolInternational expansion plansCo-branding with banks for credit cardsNew and different

QUESTION NO 2

Barista’s segmentation strategy

Targeted the elite class

High potential

Spending capacity high

MDs, doctors, SW engineers, Managers

Prefer being in luxurious and classy places like

Barista

High potential segment

CCD’s segmentation strategy

Positioned for the mass market

Targeted middle class, students and

house wives

Prices are much lesser than competitors

The segment has great market share

Qwiky’s segmentation strategy

Targeted “young at heart” people

Positioned as a place to relax and have

fun

Friendly staff ensured that customers are

comfortable

Place to hang out

QUESTION NO 3

Starbucks v\s barista

Barista is competitively better placed to face the

competition from star bucks.

Barista is the leader in the coffee retailing business.

The value added services and ambience offered in

Barista helps it, maintain its growth.

Star bucks are an international player and it may

give tough competition to the local players.

But Barista with its ambience and services would

maintain its growth.

QUESTION NO 4

Intense competence in coffee business may cause consolidation

The coffee retailing business in India is highly

growing. It may cause intense competition between the

players.

Consolidation may take place to create their strong

presence in the Indian market and expand their chain

globally and become an international player.

Many international players are lining up big

expansion plans in India.

So to give the international players a tough

competition, local players may merge to create their

impact

thanlyou