mrp final report by prateek kapoor

8/7/2019 MRP Final Report by Prateek Kapoor

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Final Report

On

Study of Coffee Chains in India

Submitted to: Submitted By:

Prof. Partha sarathi Pal Prateek Kapoor

08BS0002304

Batch: 2010
http://210.18.104.232/sedona/facultyreport.asp?emp_code=202858IBShttp://210.18.104.232/sedona/facultyreport.asp?emp_code=202858IBS


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Abstract

The consumer in India is extremely heterogeneous. The urban consumer contrasts with the ruraland 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 caf 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, Caf Coffee Day, Caf Mocha,

JavaGreen etc. and also a whole range of foreign brands like Georgia Coffee, Costa Coffee and

Quickys.

In India CAF COFFEE DAY and BARISTA are the most popular and well-known cafs.The college crowd rates them as one of the coolest hangouts. These companies sell similarproduct 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. Eachplayer fights for its own share of market. They try to differentiate themselves by the way ofproduct 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.


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CONTENT

Particulars Page No.

1. Abstract 1

2. Introduction to Coffee Industry 3

3. Coffee Chains In India:Caf Coffee Day 5

Barista 16

Caf Mocha 26

Java Green 28

4. Sustainability Advantage:Barista 30

Caf Coffee Day 32

Java Green 34

Caf Mocha 35

5. Effects of Foreign Players 36

6. Suggestions & Recommendations 38

7. References 39


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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 todemonstrate ones lifestyle and status. Caf 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 onlyreasonable that many new players are trying to venture into this market . The heavy initialinvestment and difficulties in sourcing sufficient quantities and quality of coffee might

prompt most new entrants to restrict themselves to small, regional chains. Thesecompanies could evolve strategies for maximizing operational efficiencies in theirregions. This, coupled with very low switching costsfor consumers, will upset existingcaf chains.

Meanwhile, international coffee giants including Starbucks and Illy are also evaluatingprospects in India. Although capable of investing substantial capital, governmentregulation makes it mandatory for them to use the tie-up or mergers and acquisitionsroute to enter the Indian market. Unlike typical new entrants, these companies will arrivewith considerable past experience in the industry, putting considerable pressure onexisting 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 costsavings and thus yield better margins for such cafs.


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2) Substitutes: A unique, novel experience and the opportunity to socialize are the mainattractions of caf culture. In the Indian context, restaurants, fast food joints and icecream parlours could be viewed as viable substitutes. Cafs have managed to differentiatethemselves as more of a lifestyle oriented industry compared to the others which satisfybasic 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 givesthem a natural advantage. A perceived international appeal of coffee could come to itsrescue in this case.

Though pub culture has taken strong roots and competes heavily with cafes in the metrosand 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 itwas restricted primarily to the Southern states. Ever since the advent of cafes there hasbeen 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 from68000 tonne in 2002 to 80200 tonne in 20051 .The rising percentage of population In theage group twenty to thirty years has been crucial to the success of the caf culture. Higherdisposable incomes and large number of jobs in the IT and BPO sectors have alsocontributed to this growth. According to a recent study by Harish Bijoor Consults, byDecember 2008 the country would have 1,135 organized cafes, growing at 63% perannum in terms of number of outlets. India has eight big cities, 53 towns with a onemillion population and 3,410 urban agglomerations with population below one million. Ithas potential to accommodate 5,000 coffee retail outlets (Young India to drive coffeebusiness, 2007).

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

4) Suppliers:Most Indian cafes source their beans from suppliers in India. The biggestthreat 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 toenter the caf scene in the future. While CCD is safe from such a threat due to verticalintegration with its parent company ABCTCL, all the other players are likely to sufferfrom increasing supplier power. International chains entering the Indian market howeverwould be able to source coffee from foreign suppliers without serious effects on qualityand costs.


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Coffee Chains in India:

India is one of the fastest growing coffee markets in world. Coffee drinking hasbecome a statement of the young and upwardly mobile Indians. The major players

in coffee retail are Barista, Caf coffee day, Mocha, Java Green and Costa Coffee.

CAF COFFEE DAY:

A traditional family owned a few acres of coffee estates, which yielded the rich coffee beans inthe soil of Chikmagalur, However they soon amalgamated with Bean Coffee Trading CompanyLimited, now popularly known as Coffee Day. The coffee growing tradition was since 1875, butthe opportunity after the deregulation of the coffee board in the early nineties. Coffee Day beganexporting 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 coffeeexporter of India.

Coffee Day has a wide and professional network in the major coffee growing areas of thecountry comprising over 50 agents and 50 collecting depots. Coffee Day's two curing works atChikmagalur 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 theconsumers. The most modern technology available is used to maintain consistency and roast thecoffee 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 perannum capacity at Hassan

5000 acres of self owned Coffee PlantationsA 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)Caf Coffee Day

Coffee DayTake Away (7000 Vending Machines)

Coffee DayXpress (341 Coffee Day kiosks)

Coffee DayExportsCoffee DayPerfect (FMCG Packaged Coffee division)


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Caf Coffee Day currently owns and operates 169 cafes in all major cities in India. It is a part ofIndia's largest coffee company named Coffee Day, ISO 9002 certified company. Coffee Day'smost unique aspect is that it grows the coffee it serves in its cafes. Cafe Coffee Day's vendingmachines have a special niche in the market compared to competitors because Cafe Coffee Daymachines offer filter coffee unlike the instant coffee offered by competitors' brands. Growing

from a coffee exporter to a coffee parlour, caf coffee day has certainly come a long way in thissegment.

Key Features:

Pioneers of the Caf Concept in India with its first Caf at Brigade Road, Bangalorein 1996. This Caf was opened as a Cyber Caf (first of its kind) but later, with the burstof cyber cafes it reverted to its core competency.Coffee

Essentially a youth oriented brand with majority of its customers falling in the 15-29 yearage bracket

Each caf, depending upon its size attracts between 400 and 800 customers daily

At present it operates 169 cafes across 43 citiesPlans to operate 200 cafes by December 2004It 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 ofthe product lifecycle. In order to sustain in the market and to maintain its market share it isessential for the company to have a right marketing mix. The company has to have a mix ofproper product that is relevant to the target audience, proper price, proper reach i.e. the place andrelevant promotion that keeps the target audience interested in the company.

Product

Caf Coffee Days 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. Sotaking this opportunity, the company also sells coffee powder. Caf Coffee Day also believes inselling 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.


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

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

Chocochino : A blend of Chocolate ice cream and Espresso garnished with a dollop of milkfoam. 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/ Carameland 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 coldcoffee across the country.

Tropical Temptation : A Tropical Iceberg topped with whippedcream and a shot of chocolate sauce.

Cold Sparkle: Ice blended cold coffee with a sparkling taste ofcoconut, it is among the earliest cold coffees introduced in theirmenu.

Iced Eskimo : Ice blended cold coffee with notes of coffee andcreambalanced 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 anyanimal fat & dairy product. It is unique and is being launched for the first time inthe country by CCD.


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

Mochachillo : Chocolate flavored coffee with sweetened creamy milkserved 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 withalmond flakes.

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

Devils Own : A smooth blend of cream and coffee drenched with chocolate sauce andtopped 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 coffeetaste, 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 thickcool texture. (Mango Frappe, Strawberry Frappe, Pineapple Frappe, Lichi Frappe, ColdChocolate).

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 bagwhich is meticulously prepared with pepper, cardamom and cinnamon togive 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.


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Smoothies : Ice-drinks blended with ice cream to give it a creamytexture, 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 IceCubes 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 adarkchocolate & 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 chocolatetruffle 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 topdipped 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, walnutsbest 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 orcoffee, 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, chocolateginger, peanut butter and coconut macaroon flavour options.


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Product Sources: Coffee Day's most unique aspect is that it grows the coffee it serves in itscafes. Coffee Day has a well-equipped roasting unit catering to the specific requirement of theconsumers. The process is carried out under the control of experienced personnel to meet highestquality standards. The most modern technology available is used to maintain consistency androast the coffee beans to the demanding specifications of the discerning coffee consumers. The

coffee beans are supplied to all the cafs from Chikmagalur. The eatables at Caf Coffee Day arecatered by different vendors: example: ice creams are catered by Cream Bell, Milk by Amul and

samosas by Patsiers Gallery. Caf Coffee Day also sells merchandise through its stores. 5 per

cent of the revenue comes from sale of merchandise.

Quality Standards: Caf 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

Caf 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.

Caf 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 aregiven special discounts. CCD even set up their outlets in the college campus. For e.g. Caf

Coffee Day has opened an outlet at the NMIMS campus where they are providing additional10% discount to the students.

CCD is looking for expansion to more interior places. Here prices become more complex as theconsumer are very conservative in spending. A cup of coffee at Rs. 35 is accepted in metro citiesbut not in small towns. The decor, ambience and the experience will play a major role in pullingthe crowds in small cities. The price of the product has to be kept uniform in order to maintainthe uniformity in all the outlets.

CCD target audience is youngsters. Majority of them are dependent on their family for theirexpense. This is one of the most important reasons for low pricing compared to other cafes. Theybelieve it in making their product at an affordable price. Pricing is one of the important weapons

for them to fight against their competitor.

Place

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


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number of cafs in the smaller towns across the country based on research and invitationsreceived from these places to open more such cafes there. However, the focus has not been onjust opening more cafs wherever there has been an opportunity. Caf Coffee Day is alreadythe largest and most wide spread retail chain of cafes in India with a current count of 620cafs in 102 cites.

Promotion

Caf Coffee Day outlets are spread across India. However, there are more number of outlets inthe metros and towns. Caf Coffee Day has also been on an aggressive drive to expand thenumber of cafs in the smaller towns across the country based on research and invitationsreceived from these places to open more such cafes there. However, the focus has not been onjust opening more cafs wherever there has been an opportunity. Caf Coffee Day is alreadythe largest and most wide spread retail chain of cafes in India with a current count of 620cafs 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 rewardregular customers of Cafe Coffee Day. Any customer who bills a minimum of Rs 100 on a singlebill is automatically eligible for membership to the Cafe Citizens Programmed. The programmedentitles members to a 10 percent discount on all food and beverage bills for a year from themonth of membership. Members will also receive surprise gifts from India times Shopping whenthey reach a total billing amount of Rs 2,000, Rs 5,000, and Rs 10,000. Members can track theirtotal bills spend at any Cafe Coffee Day outlet across the country. The programme was verysuccessful and they attracted 1, 35,000 citizens.

Smart Card Programme: Started from 1st Aug, 04; one can enroll into the program by payingRs.100/- at any Caf Coffee Day Outlet and get a TEMPORARY CARD immediately afterfilling in the enrolment form. With the Card, one can accumulate Value Points Equivalent ToCash on net purchases at every transaction made at any of CCD outlets, provided the card issubmitted to the caf staff at the time of placing each order.

The personalized permanent SMART CARD would reach at ones place in 7 days from the day ofenrolment and the points would be transferred from temporary card to the PERMANENTSMART 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 noweven 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 womansday. CCD has arranged the contest, which is arranged for the womans day event. This type of

contest attracts the young crowd especially girls.


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Fame Adlabs: CCD is also involved in the promotion with Fame Adlabs. The pamphlets arebeing distributed indicating the current movie shown and the movies to follow. Also it shows thespecial offer for some lucky customer to get the coffee free. Magazine CCD also has privatemagazine Caf Beat distributed free to their customers. It includes ads and advertises about thepromotions to follow.

Tie-UpsCCD jointly organizes large number of promotions with the other companies serving the similartarget audience.

EBD Book Caf:EBD is book caf has joint ventures with CCD. EBD Book Caf believes that by selling booksfrom 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 ones

favorite books at such cafes starting from fiction, non-fiction, religion, cookery, management,

lifestyle, art & craft, children books and much more. EBD Book Caf are in collaboration withCaf Coffee Day have existing outlets in Ludhiana, Jaipur, New Delhi and Kanpur and are indiscussion to open more such outlets in, Mumbai and Ahmedabad. The CCD bookshops are inthe same premises though not necessarily inside the outlet.

Levis:

CCD has also tied-up with Levis where CCD will promote Levis product in their cafes.Levis recently launched their latest range of apparel, Levis 501, through CCD as part of their

annual laterals like Wall visuals, Tent cards, Posters and Door stickers. There is also a special

Levis Drink.


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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 caf 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 Caf Coffee Day topromote their honey. This honey was made available through over 100 Caf Coffee Day outlets

across 7 cities, in a 3-month promotion where Coffee Day customers experienced the taste ofpure of honey in innovative ways. Honey Cappuccino, Honey milk shake, rich chocolate cakeand ice cream topped with honey and nuts! Four unique dishes were conceptualized by CafCoffee Day, each enriched with the goodness of pure Himalaya Honey. These were an instant hitwith the customers. In addition to honey-based items, bottles of Himalaya Forest Honey werealso 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 ofthe 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 coffeewith the stars of the movie.


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Ambience and Surrounding

First Impression is the Last Impression. This is true in this business. The first thing that thecustomers come across is the surrounding and the ambience of the store.To further brighten the vibrant atmosphere of the cafs, there has been a greater thrust on

providing more value added services such as video juke boxes, cosy sofa seating, and excitinground the year promotions. Trading Co. Ltd had gone in for an image change and revamping ofinteriors in the last quarter of 2001.Caf interiors at the company's 169 outlets are being given a whole, new look. In a change fromthe largely wood and granite based interiors, there is more of steel and lots more colour. Theyoung colours of today, lime green, yellow, orange, and purple will predominate. The crockerywill also sport these colours. The larger cafes will also have lounge areas and a few beanbags.

International PresenceCaf Coffee Day, the premier retail chain of cafs in India announced major developmentswithin 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 andcoffee experience to over 25 million customers annually across the country, the chain has alreadystarted setting up the infrastructure at 10 cities where it has targeted to open at least 50 cafes byDecember 2004. The entire international offering will be based on the successful Indianbrand/model in which Caf Coffee Day has gathered a lot of rich experience in coffee cafretailing. As with the domestic cafs, the international cafs will also be trendy, offeringattractive prices, and the coffees served will be made from the premium quality coffee beans.


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Future Strategy

Spreading Wide:CCD is planning to increase its reach by going to the small towns. To achieve the mission ofbeing 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 Pradeshand 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 cafs. These cafeswould serve to the different target audience. However, they have aggressive competition fromthe Barista and other cafes. According to the management, they have a greater threat from theforeign players.

Expensive Cafes: The major target group of CCD is the youngsters. However, the companywants to widen its target group. Caf Coffee Day is planning to come up with a different type ofcaf, 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 muchmore 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 alreadydone the test marketing in certain outlet of Bangalore. Adding the new flavour would increasethe choice for the customer.

Positioning In the Mind of the CustomersCCD 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 orderto maintain the market share. Major customers are youths. Focusing on the target group, tie-upsare done with other companies in order to keep the audience interested. They have entered intotie-ups with the cinema theaters, shopping malls.

Coffee Caf Day is the most popular hangout place for the youngsters. CCD is perceived asenergetic and trendy organization. The crowd is very lively. Most of the consumers are frequentvisitors. Its a good place to hang out with friends. CCD has the wide variety of coffee that suitto the consumers needs. The ambience is very clean, well-lighted and airy. Most of the outletsalso have large parking space and good seating arrangements. There is a young feel to it. Theprices are very reasonable (compared to Barista, not our local Udipi) too and an average coffeewould 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 youngsters especially

chocolaty cakes and apple pie. The employees are very friendly. They maintain a goodrelation 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.


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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 coffeebusiness. Increasing disposable incomes and global trends in coffee indicate immense growthpotential in this particular segment.

More significantly, they have been quick to spot a latent need waiting to be tapped: Coffee loversseek a complete experience. It combines intelligent positioning with the right product mix andcarefully 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 greatcoffee and espresso bars, but one with the ability to scale up operations quickly. At Barista, theyhave gone to great lengths to establish this.

Barista started its operations with its first outlet at New Delhi in Feb 2000. The Company waspromoted by Amit Judges Turner Morrison Group BARISTA Coffee Company Ltd - in whichTata 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 bySuper Brands India; the Indian Division of the globally renowned Super brands ltd. Barista wasselected out of 711 leading Indian brands across 98 categories. Barista has its operations spreadover 153 outlets across India. At present, Barista had, he said, over 120 espresso bars and cornersin the four metros and 14 cities of India, with 35 being added over the last 12 months, out ofwhich 10 had been relocated.

Marketing Mix

Barista continued to maintain its focus on quality by sourcing only Arabica beans and using thebest 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 missionover the next decade would be by leveraging its strong position in the Indian market to growfurther in an Asian context.

Product

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


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Products at Barista:

Grande hot coffees

Cappuccino Grande: Cappuccino with a double shot of espresso served in an extra large grandecup.

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

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

Cappuccino Cookie n Cream: Cappuccino served with a sinful shot of chocolate fudgecombined 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 nowdeconstructedfrothy 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 Frenchhazelnuts and premium chocolate.

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

Ice cream sundaes

Mocha: A Barista favouritefreshly brewed espresso and chocolate fudge with vanilla icecream and whipped cream.


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Black Currant: This sumptuous feast is made of layers of vanilla ice cream with whipped creamand purple black currant.

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

Dessert combos

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

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

Steamers

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


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Melted Malt: Steamed milk with energizing malt and delicious chocolate.

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

Freshly brewed natural ice teas

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

Natural Ice TeaBlack Berry: Freshly brewed Assam ice tea with 100% natural blackberryextract

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

Shakes and smoothies

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

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

Amaretto Chocolate Shake: Our thick chocolate ice cream shake enhanced with Amarettoflavour. Chocolate lovers just cant pass this up! Also available regular Chocolate and Coffee

shakes.


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Premium hot teas

Lemon Ginger: Premium Assam tea flavoured with fresh lemon and ginger extract, servedwithout 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 ofchoco chip cookies.

Hazelnut Frappe: Delicious cold coffee blended with rich ice cream and an exotic flavour oftoasted 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 creamand chocolate fudge.

Product Sources:Barista sources its coffee beans from around the world, but a major supplier isTATA Coffee, part of the TATA Group that owns a large stake- holding in Barista. These coffeebeans 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 standardof 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 Baristas overall sales.


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Quality Sources: Barista has a check on the quality of its products every 14 days. Barista alsoincorporates 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 firstorganization to start the concept of the organized cafes in India. Initially Barista started withSkimmed 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 changetheir 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 theseprice 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 toreduce their pricing. It was not done from a perspective of acquisition. With reduction in theprices, there had been a 47 per cent increase in footfalls over the subsequent three months.

PlaceBarista started its first outlet at Bangalore and from there it has started spreading its wingsespecially after price reduction. Now they are even planning to focus on raising the bar of coffeeexperience. Barista already has presence in all the metros and has a presence in all the highlypopulated regions like Mumbai, Delhi, Bangalore and many more places. Barista is seeking toexpand 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.

PromotionBarista did not initially believed in any kind of promotion but in order to keep their customersinterested they started building the brand by communication both within the store as well asoutside the store through mass media. It under takes various promotion activities during thefestival or during occasions like Valentines Day. Barista has done advertising in almost allnational newspapers. Barista has launched summer campaign through summer chillers, and wasadvertised through different channels.

Barista Coffee has tied up with Sony Music. Under this association, Sony Music would endorseCDs and music cassettes of their recent acts, which will be used as the lucky draw prizes for theparticipants. Consumers buying food, beverage and merchandise for Rs 110/-and above duringspecified hours of the performance, will be entitled to participate in the lucky draw. The prizeswill 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.


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A) Sponsorships: Barista sponsors various events and festivals, which provides them valuablepromotion directed at strategic markets. The sponsorships are mainly in kind, although majorevents 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 toysto provide the popular board game Scrabble at every Barista outlet across the country. This is anideal alliance for both the organizations, because it provides Leo Mattel with an important

avenue for promoting their product, and it provides Baristas customers an added attraction for

spending more time at Barista outlets. Barista has also entered into partnerships with variousmovies, for promotions through Barista, and recently, they tied up with Star World for itsAbsolutely Everybody campaign.

C) Sales Promotion: Barista uses a special Barista Coffee Card for its sales promotionactivities. The Barista Coffee Card entitles you to one complimentary hot beverage when you aredone 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 earnone stamp on the card every time you purchase a beverage. Simply present the card to the cashierwhen you place your order at any of their outlets. Once you have collected seven stamps, youcan hand over the card to receive your complimentary hot beverage. Barista hopes this card canhelp 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 groupof Hotels for setting up exclusive Barista expresso bars at the Taj hotels in metro cities. The firstsuch 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 bysimilar bars at Taj Mahal hotels in Calcutta, Chennai and Bangalore. Barista also will be housedat 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 provideconsumers' access to the Internet. The objective being, today if you look at Barista consumers, afair number of them come to Barista to discuss business over a cup of coffee. Moreover, it iseasier for them to meet at Barista, discuss business and send the information across. It is going tobe focused primarily on work, towards the busy executive who is traveling and has dropped byfor 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 allthe major metros and some mini-metros. The strategy is to target younger audiences, which havea penchant for the "finer things in life". The customer segment of Barista is very different fromthe 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 acollection of coffee colored lipsticks and has named it after Baristas beverages! Therefore, they


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are working with Elle 18, which is a youthful brand. Moreover, they both will grow with thisassociation. For Elle 18, the objective is to build a platform for their range of coffee coloredlipsticks and for them, the objective is to associate with the brand and have their consumerscoming in to Barista.

CBC Book shop: Barista has tie-up with CBC bookshop, which has book corner at eight Baristaoutlets in six cities. Baristas bookshops are right inside the caf. Barista prefers best sellers andclassic, besides books on management, lifestyle, sports, health, religion, children and evencookery. 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 forsetting up Espresso corners within their premises. Moreover, along with ABN Amro, Barista hasintroduced a concept called Ban caf - a caf in the bank premises

Ambience And Surrounding

The colour shades that they have used are terracotta; it is warm - it is orange. The backgroundhas 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 areorange in colour. The place invites the customers to spend time.

However, the focus would, continue to be to recreate the ambience of the typical Italianneighbourhood espresso bars in India so as to provide a comfortable place for people to relax andexperience 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 topluck some chords.


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Music:

The music is not too loud and encourages conversation, and the person behind the counter isnon-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 privacyof 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 hadchalked out aggressive strategies for expansions into Europe and West Asia. Barista has alreadystarted its operation in both Sri Lanka and Dubai and doing very well. They are talking termswith a few potential partners in Kuwait. Barista owns and manages all its outlets in India butoperates through franchisees in other countries.


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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 promoteinternational 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 areplanning 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 isplanning to launch a host of consumer promotions at its outlets. For the purpose, the company iscurrently in talks with many entertainment, consumer goods and music companies, whichinclude 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 inalone because they are comfortable with themselves. It is a place where people are meeting eachother 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.


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Caf Mocha

Caf Mocha was established in December 2001, with its first store in Churchgate Mumbai, by aMumbai based entrepreneur Riyaz Amlani, who has a long experience in the hotels and

restaurants business. The caf boasted of an eclectic Indo-Tibetan theme and fresh worldlycoffee.

It soon spread to other parts of Mumbai and adjoining areas with 3 more outlets. From there itmoved 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 variouscities.

The thing about Mocha was the coffee shop itself. It was never designed to be a cut-and-pasteformat where every outlet would look the same. Every outlet would have a flavour and look ofits 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 doesnt 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 ownsense of expression and identity. That diversity and variety in every outlet enriches rather thanconfuses. And makes it a coffee shop people love to visit once more

Marketing Mix

Product

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

Price

Mocha follows a premium pricing strategy for is range of products. Almost all of its products arepriced almost 15-20% extra as compared to other coffee retails. It believes in positioning itsproducts not just as simple drink or food beverage, but believes in providing the customer anexperience 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 eachone like the other. With each new Mocha, something new evolves in its dcor, its menu andambience. Mocha does not replicate itself but follows a continuity of design through all itsoutlets. Each Mocha is as individual as you are.


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Mocha lays as much as stress on its interiors as its physical locations. Both play a significant rolein the place strategy of caf mocha. The location is significant as they portray themselves as apremium brand and hence it is essential that they are located in a city with their requiredcustomer base and where it would be visible and accessible to them.

PromotionCaf 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. Communitieslike Mocha Bike Club, Mocha Film Club, and Mocha Music Mania etc are promoted. Membersare of these communities ac t like brand ambassadors of the caf chain. Members are offereddiscounts and are exclusive offers; this is done primarily to promote memberships. Also at timesMocha showcases itself using outdoor activities and events like music concerts etc.

Positioning

Its a place to meet and suspend reality for a few moments. Its about taking time to savor thefiner things in life, these are some of the extracts from its vision statement. It clearly suggeststhat the caf 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 outreflects their virtue to deliver something different and more than just a mere coffee.

Growth strategy

The growth pattern of Caf Mocha is a steady one. In about 7 years they have been able to open13 caf. They have not got into frenzy to open random stores. They are taking a careful path sothat keep their identity of differentiation. They dont want to be part commodity coffees retail,but rather grow as a place to savor coffee and the ambience.


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Java Green

Javagreen was started in 2003 as a chain of In-Store Cafs within Reliance WebWorlds. Afterthe 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 andfun. They offer a wide, international range of hot and cold coffees, made with their exclusivespecialty coffee blend. This unique blend has been created in house, to suit our range of hot andcold 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 allthe way from the plantation to the outlet.

Their beverages menu includes teas, granitas, milk smoothies and soups in a variety ofinternational and popular regional flavours. An innovative range of wraps, paninis, sandwichesand pastries provide a wholesome choice for those looking for a quick but filling bite. Their foodmenu has been developed in house with proprietary recipes and ingredients. The menu isstandardized 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 caf is having, andif look deep into it we find that they are primarily trying to provide value for money products.They vouch to provide an international taste.


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They make a point to provide to quick service and have more conventional drinks and beveragesrather than the exotic ones, but at the same time providing quality and consistency. According tojavaGreens, 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 arenot driven by margins but rather volume. To make this possible they incur less in developingambience etc. and this cost advantage is passed onto the customer.

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

Place

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

JavaGreen doesnt 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 doesnt 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 quickcoffee, 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 apopular brand and it acts as an add-on product of Reliance Internet caf.

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


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Sustainability Advantage

Retail coffee chain industry is becoming more and more competitive as international players aretrying their foray in Indian market. Now the big question is whether the home grown coffeechains will be able to sustain themselves.

Barista

Barista has the following competitive advantage over others which it can leverage in future. Theadvantages 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 easilyidentify and relate to the Barista brand. This helps foster brand loyalty.

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

Ambience & Dcor: Another significant area of excellence is the kind of ambience and dcorBarista cafs have. It has been able to recreate the Italian ambience in the neighbourhood storewhich 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 orinternationally.

Linkages: It has worked hard on tie ups and have pre-empted a number of linkages which can beleveraged 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 HRpolicy and see to it that all staff in the franchisee are recruited from its own training institute. Thecompany 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 strongbrand image of being the coffee- lovers traditional caf, but the taste of food products served isnot upto the mark for traditional Indian consumer. They need to come up with food suited forIndian taste.


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2.Perceived as an expensive brand: Barista need to engage in some promotional strategywhich 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 theimage of Italian caf`, 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 itserves,it must look to ensure supply of good quality coffee beans. Presently it is locked in with TATAcoffee 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 giveBarista opportunity to exploit synergies of distribution, sourcing, better staff training, productquality and variety (We get the global, 2007).

The challenge for Lavvaza now is to enter the mass market without diluting the Baristaexperience , they need to pre-empt competitors by buying property in tier II cities at primelocations where prices are still under control. They are dependent on their supplies on TATAcoffee which varies prices according to the market condition. The company can integratebackward to hedge against these variations.


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Caf Coffee Day

"The third most frequented place after home and workplace or college"

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

is amongst the big guns in coffee industry.

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

2. Value for money proposition: Caf Coffee Day is projected as an affordable brand. This strategy has worked extremely well so far, and Caf Coffee Day is seen as a value formoney brand.

3.Strong youth orientation: The Caf Coffee Day brand is, and always has been, extremelyyouth- oriented. In a country where over 40% of the population is under the age of 20, there ishuge potential for Caf 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 easilyreplicating its earlier opened stores and expand quickly compared to its competitors. It has aundeterred focus on the mass market which will be the drivers of all volume growth in comingtimes.

CCD has a distinct brand identity of its own in the mind of youth. It is the largest organized retail

caf chain in India. The main strategy of CCD is cost leadership, and it takes pride in beingaffordable despite its good quality. The future goal of CCD is primarily rapid growth byestablishing affordable omnipresent cafs, and thus it has opened up outlets at such a scorchingpace. CCD has an advantage in giving good service at an affordable price, CCD has beentargeted the student community and mainly the middle class and its focus on this segment hasbeen unwavering. This segment is fast becoming the largest chunk of customers for these coffeechains. Barista broadened its focus with a price cut in 2003 to capture this segment which did nothave pockets as deep.


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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 integratedsupply chain and franchisees. As CCD sources its coffee from its own plants it hedges riskswhich arise due to fluctuations in the price and supply of coffee beans. Barista on the other handis entirely dependent on Tata Coffee for its supplies. CCD also has larger volumes of sales peroutlet, with each CCD cafe, on average, attracting around 500 and 600 customers per storeeveryday 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 supplierswhose 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 qualityproducts at all its outlets. Caf coffee day has less brand loyalty, and many of its patrons aspireto move up to Barista due to its better coffee and premium image. Due to its target of collegestudents, CCD tends to alienate some of the higher age group who prefer a more soberatmosphere.

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


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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 Cafs within Reliance Web Worlds hasexpanded into other locations outside Reliance and operates over 100 cafes operating within ahost of retailers, food courts and corporate campuses.

Reliance wishes to opens Reliance infocom at the rate of 200 per annum, that s awhopping

number. Reliance petroleum and gases, starting June 2010, will have their fuel outlets all overIndia. 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 servicesat reliance webworld are increasing like it is offering conference, ticket booking, gaming portalsetc, 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 withpeople across the globe through their broad band services. This makes Java green a trulyconnected caf and java green enjoys an edge over others.

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


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Mocha

Mocha provides wide range of products including a whole range of flavoured sheeshas whichsets 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 individualas you are. with each new Mocha, something new evolves in its dcor, 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 portraythemselves as a premium brand and hence it is essential that they are located in a city with theirrequired 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 theykeep their identity of differentiation.


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Effects of foreign Players

The potential of growth in liquid coffee retailing is huge as coffee consumption in the country isconsiderably 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 foreignplayers have finally decide to enter Indian markets. Caf Coffee Day and Barista dominateIndian caf market. The entry of foreign player is a treat for these players to maintain theirmarket share. The foreign player would also target the similar segment of target market thuscausing the problem for the local players. There is a tendency of Indian customers to visit onceand 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 Schultzbought the chain 15 years ago. Starbucks Coffee - with its 5,689 outlets in 28 countries - hasgrown 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 toactively scout for prime real estate in metro markets in the next few months, and plans to open itsfirst store in the next 12-14 months. Starbucks has identified Delhi, Mumbai, and Chennai as thepotential entry points for the chain in India. Starbucks is presently working on the franchiseemodel.

The Starbucks target audience is the hip, urban, on-the-go caffeine addict, and the chain thatoriginated in Seattle has got mega-plans for India. Starbucks has pinpointed high-potentiallocalities 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 toacquire real estate at a premium over market price, in order to squeeze out competition, and it isplanning 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 beveragesmarket.

The drinks will be marketed under the brand name Georgia and sold through a large number ofretail outlets all over India. According to them, it is time to take the product from the classmarket to the mass market. Hot tea and coffee form the biggest combination in India'sburgeoning beverage market. Georgia has launched two types of cafes, one where normal tea andcoffees will be sold and would be priced at 34 Rs per cup; the other is Georgia Gold, which is


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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 todifferentiate their product from the others in terms of price, flavour, and ambience and also target

audience.


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Suggestions and Recommendation

Pricing:

Indian consumers are highly price sensitive. Pricing will play very important role. Inorder to sustain the competition it will be very important to have a proper pricing strategyin 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 therewill 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 alsoincrease their consumption to take the advantage of the promotion schemes. Promotionshould be design properly to keep the target customer interested. The promotion shouldnot degrade the value of brand. The company also needs to tie up with other companieswhose 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 toprovide customers with more choice. Even new flavors of coffee beans should beintroduced.

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 shouldconduct detail study before taking a decision for opening an outlet. For e.g. CCD followsthe 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 hugeinvestment and it may result in a huge loss.


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References

1. http://www.mocha.co.in2. http://www.java-green.com3. www.barista.co.in/4. www.cafecoffeeday.com5. http://indiacoffee.org6. http://retailrise.com7. Sustainability Competitive AdvantagePankaj Khemawat8. www.marketingpractice.com
http://www.marketingpractice.com/http://www.marketingpractice.com/

mrp final report by prateek kapoor

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