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Presented by: Group 3

Shreyas H N (13110)
Nishanth M S (13160)
Hitesh P S (13161)

1.

Indian Coffee Market

2.

Retail Coffee Market

3.

Specialist Coffee Chains

4.

Caf Coffee Day

5.

Starbucks

6.

CCD face-to-face with Starbucks

In 2011, Tea consumption was 10 times more than that of coffee

Coffee started to become increasingly popular among the people

Between 2001-2011, CAGR for Coffee - 6.8% , Tea - 3.6%

Average coffee consumption per person in India - 100 gms compared to 4.5 kg in US

Primarily retailed through Kirana stores

Super and Hyper markets were growing slowly (20% of coffee sales through volume by 2011)

Bru (HUL), Nescafe (Nestle) were the two dominant brands

CCD Fresh ground and Bayars Coffee were increasing in popularity

By 2011, India had 2300 specialist coffee shops of which 95% belonged to Retail Coffee Chains

Organized Coffee market was expected to increase from 230 MN $ in 2013 to 410 MN $ in 2017

2008
1996
2005

2000

2008

2012

2012

Started by Mr. V G Siddhartha as Indias Largest Coffee Exporter (Amalgated Bean


Company)

First CCD store set up in Bangalore in 1995 with unique facilities - Internet, A/C,
High-end Furnishings

Also operated kiosks in heavily populated area, sold fresh coffee powder through
retail outlets in South India

By 2013, CCD was India's leading coffee chain with 60% market share and revenues
of $200mn USD

It operated 1469 stores, 1000 takeaway outlets, 450 fresh and ground retail outlets
and 22000 vending machines across 200 Indian cities and towns

ET named it one of India's most trusted brands in Food & Beverage segment

CCD Targeted young people aged between 15-30 years

Cafs were typically 800-1000 sq. ft.

Apart from coffee, CCD offered ready to eat items along with the desserts and other
merchandise.

Pricing was affordable and provided luxury compared to its competitors

Stayed away from media ads and more concentrated on promotional activities like
rock concerts

In 2004, CCD estimated that 60% of the customers were regular

Vertically integrated business model

11000 acres land, 3000 plantation workers

Having two curing mills with total capacity of 70000 tons, largest in India

Own coffee vending machines

CCD owns caf instead of franchising CCD took 50 days to set up a outlet while
others took more than 90 days

CCD hired staffs directly and avoided third party

Backward integration model

In 2002, launched 60 sq. ft. counter style outlets Railway station, Airport and
Hospitals etc.

In 2010 launched lounge catering to 28-36 age groups in Bangalore- 40-50% bigger
than caf

In 2008 launched Coffee Day Square twice bigger than lounge

Coffee Day Square could generate 4-7 times the revenue of a caf

Format

Target
customers

Size

Setup cost

Caf

Under 30

800-1000 sq. ft.

85,000

Lounge
Square

28-36
30+

2000 sq. ft.


2500 sq. ft.

130,000
190,000

Found it difficult to find good properties at reasonable price

Faced store level attrition and found difficult in retaining

Keeping consumers engaged

Keeping the store busy throughout the day

In 1987, Howard Schultz bought Starbucks for $3.8 million

Opened Cafes under Starbucks in Seattle, Poland and Vancouver where


coffee culture existed

No advertising. Instead relied on superior customer service and word of


mouth to attract customers

Provided high standard store ambience like place for meetings, phone calls
and work

In 1990s it had loyal customer base that include professionals, students,


taxi drivers, artists and shoppers

Purchased the coffee beans directly from the producing countries

It owned most stores rather than franchising

In 1996, International stores in Japan, China, The UK, Switzerland and other
European markets

Worked with local business partners

It priced its products at U.S levels

Offered as local preference like tea in Japan and China, Turkish coffee in Turkey
and Fresh orange juice in Spain

By Sept 2012 over 18,000 stores in 62 countries.

Historically China is a Tea drinking country

When it entered it partnered with 3 different companies in Northern, Eastern and southern
China

It offered green tea and local inspired foods.

It Educated Chinese about Coffee

It opened first in agricultural rich province of Nanchang in 2012, They spoke about coffee
ensuring individuals to be awake the whole day.

Service was on pair or above five star hotels in China

Starbucks focused on In-store experience. They concentrated on local experience.

It had higher profitability than in US.

Without right partner entering into complex Indian


market is difficult.

Chain

No. of Properties

In 2012, they entered into India. They signed a 50-50


joint venture with Tata beverages to set up Tata
Starbucks.

Taj Hotels

76 Hotels

Products were customized to suit Indian consumers


with the help of Tata

WestSide
Departmental Stores

74

In October 2012, First Store opened in South Mumbai

Over 75 Stores

By April 2013, They had 14 stores across India.

Croma Electronics
Stores

Initial Revenues in CD was High ($4K) and Average waiting time was stretching to over
half an hour

Early Consumer Interest

CCD were not surprised by the initial interest

They did utilize the retail industry grabbing the major headlines.

Starbucks Entry Strategy

They started with aggressive pricing

They offered premium food

Bought its global service practices to India

15-17% employees were poached from CCD but not top management officials

Opening 2 stores a month but it would accelerate

They attracted a broad range of customers including over 25 customers

India is a Pyramidal Market so attracting young customers is important

There focus on service, product innovation and new customer segments had expanded the
US market.

Customer service
Service expectation of customers is not met by CCD.
Maintaining the service levels is the challenge for Starbucks.
Real Estate
High real estate prices in India.
CCD has already present in many high street locations.
Starbucks has been chosen as anchor tenants in many prime locations.
In Type B and Type C locations and secondary locations Starbucks may have high operating
costs.

Looking ahead

CCD is well positioned in Indian market and is ready to take on foreign brands.

To take on competition, CCD has to improve the process, offerings and quality.

CCD for the first time spent $3 million in advertising

As of 2013, CCD can wait a bit longer and think about their strategy against their strategy

To conclude, CCD is ready to take on the global brands.