FINAL RESEARCH PROJECT

“CUSTOMER PERCEPTION AND ATTITUDE TOWARDS RETAIL COFFEE CHAINS – A STUDY IN

DELHI, W.R.T BARISTA, CCD, NESCAFE”

SUBMITTED IN PARTIAL FULFILLMENT OF PGDBM (2006-08)

Submitted to: XXXXXXXX

Submitted by XXXXXXXX

ACKNOWLEDGEMENT

I would not have completed this project without the help, guidance and support of

certain people who acted as guides and friends along the way. I would like to

express my deepest and sincere thanks to my faculty guide NAME, for her

invaluable guidance and help. The project could not be complete without her

support and guidance. I am also thankful to NAME for his help in completing the

project. They acted as a continuous source of inspiration and motivated me

throughout the duration of the project helping me a lot in completing this project.

INDEX

1. Introduction to the topic

2. Company profile

a. Barista

b. Café Coffee Day

c. Nescafe

3. Research objective

4. Research methodology

5. Data analysis

6. Future of coffee houses in India

7. Conclusion

8. Annexure1 – Questionnaire

9. Annexure2 – Literature review

10. Bibliography

INTRODUCTION

Today Coffee has become a lifestyle. Also, it has caught the fancy of today's

generation - youth. These were not the typical coffee drinking target customers. But

now they are a big part of the target base for coffeehouses. And it is fashionable to

be seen at the Coffee Pubs. It is in a way, a lifestyle statement.

That is bad news for tea - still the favorite brew for a majority of Indians, which has

been losing out to coffee in recent years. India is one of the world's largest exporters

of tea and also one of its biggest consumers. But it is coffee drinking which is

increasingly becoming a statement of young and upwardly mobile Indians.

And coffee bars, an unheard of concept till a couple of years ago, are suddenly big

business. Corner bars like these are offering more than just coffee and snacks to

their customers. For many of their regular patrons, a visit to these bars is also a part

of the western lifestyle they so much want to identify with.

The Coffee retailing sector in India is booming today, with several companies active

in the market. Some are local entities, some have come from abroad and have tied

up with local companies, and some seem to prepare themselves for an entry sooner

or later. The market growth is expected to be 20 to 30% annually in the next couple

of years.

Café Coffee Day (CCD) pioneered the café concept in India in 1996 by opening its

first café at Brigade Road in Bangalore. Till about the late 1990’s coffee drinking in

India was restricted to the intellectual, the South Indian traditionalist and the five

star coffee shop visitor. As the pure (as opposed to instant coffee) coffee café culture

in neighboring international markets grew, the need for a relaxed and fun “hangout”

for the emerging urban youth in the country was clearly seen.

Coffeehouse

A coffeehouse shares some of the characteristics of a bar, and some of the

characteristics of a restaurant, but it is different from a cafeteria. As the name

suggests, coffeehouses focus on providing coffee and tea as well as light snacks. This

differs from a café, which is an informal restaurant, offering a range of hot meals,

and possibly being licensed to serve alcohol. Many coffee houses in the Muslim

world, and in Muslim districts in the West, offer shisha, powdered tobacco smoked

through a hookah. In establishments where it is tolerated - which may be found

notably in the Netherlands, especially in Amsterdam - cannabis may be smoked as

well.

From a cultural standpoint, coffeehouses largely serve as centers of social

interaction: the coffeehouse provides social members with a place to congregate,

talk, write, read, entertain one another, or pass the time, whether individually or in

small groups.

History

Since the 15th century, the coffeehouse has served as a social gathering place in

Middle Eastern countries where men assemble to drink coffee (usually Arabic

coffee) or tea, listen to music, read books, play chess and backgammon, and perhaps

hear a recitation from the works of Antar or from Shahnameh. In 1457 the first

coffeehouse, Kiva Han, was opened in Istanbul, just four years after its conquest by

the Ottomans. Coffeehouses in Mecca soon became a concern as places for political

gatherings to the imams who banned them, and the drink, for Muslims between

1512 and 1524. In 1530 the first coffee house was opened in Damascus, and not long

after there were many coffee houses in Cairo.

In the 17th century, coffee appeared for the first time in Europe outside the Ottoman

Empire, and coffeehouses were established and quickly became popular. The first

coffeehouses in Western Europe appeared in Venice, due to the traffics between La

Serenissima and the Ottomans; the very first one is recorded in 1645. The first

coffeehouse in England was set up in Oxford in 1650 by a Jewish man named Jacob.

Oxford's Queen's Lane Coffee House, established in 1654, is still in existence today.

The first coffeehouse in London was opened in 1652 in St Michael's Alley, Cornhill.

The proprietor was Pasqua Rosée, the Armenian servant of a trader in Turkish

goods named Daniel Edwards, who imported the coffee and assisted Rosée in setting

up the establishment. Boston had its first in 1670. Pasqua Rosée also established

Paris' first coffeehouse in 1672 and held a city-wide coffee monopoly until

Francesca Procopio dei Coltelli opened The Cafe Le Procope [2]in 1686. This

coffeehouse still exists today and was a major locus of the French Enlightenment;

Voltaire, Rousseau, and Diderot frequented it, and it is arguably the birthplace of the

Encyclopédie, the first modern encyclopedia.

Though Charles II later tried to suppress the London coffeehouses as "places where

the disaffected met, and spread scandalous reports concerning the conduct of His

Majesty and his Ministers", the public flocked to them. They were great social

levellers, open to all men and indifferent to social status, and as a result associated

with equality and republicanism. More generally, coffee houses became meeting

places where business could be carried on, news exchanged and the London Gazette

(government announcements) read. Lloyd's of London had its origins in a

coffeehouse run by Edward Lloyd, where underwriters of ship insurance met to do

business. By 1739 there were 551 coffeehouses in London; each attracted a

particular clientele divided by occupation or attitude, such as Tories and Whigs, wits

and stockjobbers, merchants and lawyers, booksellers and authors, men of fashion

or the "cits" of the old city center. According to one French visitor, the Abbé Prévost,

coffeehouses, "where you have the right to read all the papers for and against the

government," were the "seats of English liberty.

The banning of women from coffehouses was not universal, but does appear to have

been common in Europe. In Germany women frequented them, but in England and

France they were banned. Émilie du Châtelet purportedly wore drag to gain

entrance to a coffehouse in Paris. In a well-known engraving of a Parisian

coffeehouse of c. 1700, the gentlemen hang their hats on pegs and sit at long

communal tables strewn with papers and writing implements. Coffeepots are

ranged at an open fire, with a hanging cauldron of boiling water. The only woman

present presides, separated in a canopied booth, from which she serves coffee in tall

cups.

The traditional tale of the origins of Viennese coffeehouses begins with the

mysterious sacks of green beans left behind when the Turks were defeated in the

Battle of Vienna in 1683. All the sacks of coffee were granted to the victorious Polish

king Jan III Sobieski, who in turn gave them to one of his officers, Franciszek Jerzy

Kulczycki. Kulczycki began the first coffeehouse in Vienna with the hoard. However,

it is now widely accepted that the first coffeehouse was actually opened by an

Armenian merchant named Johannes Diodato.

In London, coffeehouses preceded the club of the mid-18th century, which skimmed

away some of the more aristocratic clientele. Jonathan's Coffee-House in 1698 saw

the listing of stock and commodity prices that evolved into the London Stock

Exchange. Auctions in salesrooms attached to coffeehouses provided the start for

the great auction houses of Sotheby's and Christie's. In Victorian England, the

temperance movement set up coffeehouses for the working classes, as a place of

relaxation free of alcohol, an alternative to the public house (pub).

Coffee shops in the United States arose from the espresso- and pastry-centered

Italian coffeehouses of the Italian-American immigrant communities in the major

U.S. cities, notably New York City's Little Italy and Greenwich Village, Boston's North

End, and San Francisco's North Beach. Both Greenwich Village and North Beach

were major haunts of the Beats, who became highly identified with these

coffeehouses. As the youth culture of the 1960s evolved, non-Italians consciously

copied these coffeehouses. Before the rise of the Seattle-based Starbucks chain,

Seattle and other parts of the Pacific Northwest had a thriving countercultural

coffeehouse scene; Starbucks standardized and mainstreamed this model.

In the United States, from the late 1950s onward, coffeehouses also served as a

venue for entertainment, most commonly folk performers. This was likely due to the

ease at accommodating a lone performer accompanying themself only with a guitar,

even with limited floorspace; the political nature of much of 1960s folk music made

the music a natural tie-in with coffeehouses with their above-referenced association

with political action. A number of well known performers like Joan Baez and Bob

Dylan began their careers performing in coffeehouses. Blues singer Lightnin'

Hopkins bemoaned his woman's inattentiveness to her domestic situation due to

her overindulgence in coffeehouse socializing, in his 1969 Coffeehouse Blues.

From the 1960s through the mid-1980s, many churches and individuals in the

United States used the coffeehouse concept for outreach. They were often

storefronts and had names like The Gathering Place (Riverside, CA), The Lost Coin

(New York City), and Jesus For You (Buffalo, NY). Christian music (guitar-based) was

performed, coffee and food was provided, and Bible studies were convened as

people of varying backgrounds gathered in a casual "unchurchy" setting. These

coffeehouses usually had a rather short life, about three to five years or so on

average. An out-of-print book, published by the ministry of David Wilkerson, titled,

A Coffeehouse Manual, served as a guide for Christian coffeehouses, including a list of

name suggestions for coffeehouses.

Format

Coffeehouses in the United States often sell pastries or other food items

Cafes may have an outdoor section (terrace, pavement or sidewalk cafe) with seats,

tables and parasols. This is especially the case with European cafes. Cafes offer a

more open public space compared to many of the traditional pubs they have

replaced, which were more male dominated with a focus on drinking alcohol.

One of the original uses of the cafe, as a place for information exchange and

communication, was reintroduced in the 1990s with the Internet cafe or Hotspot

(Wi-Fi). The spread of modern style cafes to many places, urban and rural, went

hand in hand with computers. Computers and Internet access in a contemporary-

styled venue helps to create a youthful, modern, outward-looking place, compared

to the traditional pubs or old-fashioned diners that they replaced.

International variation

American coffee shops are also often connected with indie, jazz and acoustic music,

and will often have them playing either live or recorded in their shops. Coffeehouses

are often gathering places for underage youths who cannot go to bars.

In the United Kingdom, traditional coffeehouses as gathering places for youths fell

out of favour after the 1960s, but the concept has been revived since the 1990s by

chains such as Starbucks, Coffee Republic, Costa Coffee, and Caffè Nero as places for

professional workers to meet and eat out or simply to buy beverages and snack

foods on their way to and from the workplace.

In France, a cafe also serves alcoholic beverages. French cafes often serve simple

snacks such as sandwiches. They may have a restaurant section. A brasserie is a cafe

that serves meals, generally single dishes, in a more relaxed setting than a

restaurant. A bistro is a cafe / restaurant, especially in Paris.

In Australian cities, a traditional European cafe culture is thriving as a result of

significant immigration from mainland Europe in the 19th century and 20th

century. These establishments often cluster along certain streets and with the

weather allowing curb side seating much of the year certain areas resemble a large

party on a Friday or Saturday evening.

In Malaysia and Singapore, traditional breakfast and coffee shops are called kopi

tiams. The word is a portmanteau of the Malay word for coffee (as borrowed and

altered from the Portuguese) and the Hokkien dialect word for shop. Menus typically

feature simple offerings: a variety of foods based on egg, toast, and kaya (jam), plus

coffee, tea, and Milo, a malted chocolate drink which is extremely popular in

Southeast Asia and Australasia, particularly Singapore and Malaysia.

In parts of the Netherlands where the sale of cannabis is decriminalized, many

cannabis shops call themselves coffeeshops.

In modern Egypt, Turkey and Syria, coffeehouses attract many men and boys to

watch TV or play chess and smoke shisha.

a. Barista Coffee

Barista Coffee is a chain of espresso bars in India. Headquartered in Delhi, Barista

currently has espresso bars across India, Sri Lanka and the Middle East. It was

founded in 1997, p Led by the dynamic duo of Ravi Deol & the marketing ace

Sandeep Vyas; Barista was the fastest brand to make it to the list of super brand's

and is ranked among the top 50 phenomenons that changed India. Starbucks

corporations decided to enter into an agreement that allowed Barista Coffee to use

the brand for cafes as long as it allowed Starbucks to use the brand "Barista" for

brewing equipment. Italy's Lavazza has now acquired Barista.

Barista Coffee in India can be easily called the pioneers of ‘coffee culture’ in India.

Established in February 2000 to recreate the ambience and experience of the typical

Italian neighborhood Espresso Bars. Barista Coffee aims to provide a comfortable

and friendly place for people to relax and unwind over a cup of coffee.

Ownership: Barista Coffee Company is owned by Lavazza, Italy’s largest coffee

company. Lavazza is one of the most important roasters in the world, a leader in

Italy with a 46.5% share of the retail market (in value, source: Nielsen). It operates

in over 80 countries, in the Home and Away-from-Home sectors (Foodservice,

Vending and Retailing). In 2006 sales totalled USD 1.2 billion.

Outlets: Barista at present has over 170 Espresso Bars and 7 Barista Crèmes in over

29 locations: Delhi, Gurgaon, Bangalore, Hyderabad, Kolkata, Mumbai, Chennai,

Pune, Ghaziabad, Noida, Chandigarh, Mohali, Dehradun, Shimla, Mussorie, Jaipur,

Kanpur, Lucknow, Bhopal, Indore, Bhubaneshwar, Ahmedabad, Baroda, Cochin,

Coimbatore, Manipal, Guwahati etc. making it one of the largest retailers of specialty

coffees in Asia. Barista further has laid international footprints in Sri Lanka (4

outlets), Oman and UAE (6 outlets).

Ambience: Barista Coffee is not just about drinking coffee but also about the entire

experience. At Barista the ‘Joy of Coffee’ is reflected in the warm ambience, the

exotic flavours and the friendly service provided by the brew-masters. To add to the

informal ambience, Barista Espresso Bars offer games like Scrabble, Pictionary and

Battleship for the guests. Barista Espresso Bars were the first place where the

customers were called by their first names to create an atmosphere of informality

and friendliness. Barista in its outlets have Wi-Fi enabled corners for executives-on-

the-go. Open seven days a week, most Barista Espresso Bars begin brewing from 10

a.m. and are open till late night.

Coffee: Barista Coffee places strong emphasis on the quality of coffee beans and the

process of preparing, rich aromatic coffee. The coffee is created with carefully hand

picked mature cherries of the Arabica coffee plant, ensuring a uniform and high

quality harvest. This 100% Arabica coffee is sourced from Tata Coffee’s plantations

in Karnataka, India. House blend beans are sourced and roasted in India by Tata

Coffee. The international coffees such as Costa Rican, Kenyan and Jamaican Blue

Mountain are sourced from the respective countries and custom roasted in Italy.

Food: In an attempt to further enhance the experience at the Barista Espresso bars,

it has on offer a delicious snacks and dessert menu. On offer are authentic Italian

food items such as biscottis, paninis, wraps, twisters, puffs, sandwiches and other

munchies to go along with its wide coffee range. To cater to the sweet tooth, Barista

also offers mountains of ice creams, oodles of chocolate, chunks of crumbly apple

pies, walnut brownies etc.

Awards

Barista – the Super Brand

• Barista received the coveted Retail Award, voted by consumers as the 'Most

admired retailer of the year 2007: Catering Outlets' at the 4th IMAGES Retail

Awards (IRA) 2007, felicitating India’s top performing companies and professionals

in the business of retail. • Barista has also been voted Barista has been recognised

by the HT ‘Superbrand’ two years in succession. Food Guide as the best place to

have coffee. It is also the recipient of the ‘Café of the Year’ award given by The Times

Group – in the Times Food Guide.

A huge shot in the arm and validation of the company’s efforts has been the

recognition given independently by BBC, The Times of India and Business Standard

as the ‘Brand of the Year’ (2002).

Barista was also awarded the TOPS award for Specialty Coffee Excellence by the

Specialty Coffee Association of America (SCAA) which recognizes specialty coffee

retailers who differentiate themselves through better business practices.

Recently Barista was also recognized by the HT Food Guide as the best place to have

coffee as well as ‘Café of the Year’ award given by The Times Group – in the Times

Food Guide.

For the year 2003-05, Barista has been selected as one of the 100 superbrands in

the country and is amongst the youngest brands in the list, to achieve this status.

Marketing initiatives: In order to enhance this unique experience, Barista focuses

on themes and avenues that complement coffee such as music, books and art.

Barista has tied–up with brands such as Planet M and Corner Book Store to open

espresso corners in these stores. Here, the Barista ambience has been re-created

within the establishments giving the consumers the opportunity to enjoy a cup of

delicious coffee while browsing through a book, enjoying music or appreciating art.

Barista is a comfortable place to spend time with friends, family, strangers, the girl

next door, her neighbour's aunt, well, just about anyone. And even if you drop by

alone, they have some of the finest beverages to keep you company.

To begin with, there's the Barista House Blend - their signature blend of coffee and

select international coffees from some of the most noted coffee growing regions of

the world. Followed by an extensive list of steaming hot espressos, cappuccinos and

lattes made from the finest Arabica beans.

To cool things down, they have fruit smoothies and chilled granitas in tropical

flavours. And finally, a refreshing range of cold and frozen coffees that will make

anyone who tries them return for more.

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. Drawing inspiration from

them, they have single-handedly taken on the challenge to open people's eyes to the

simple pleasures of coffee and revolutionize the coffee drinking experience in every

city that we invade.

To live up to this promise, they have employed skilled Italian roastmasters at their

roastery in Venice. Sourced only the finest quality Arabicas. And have had our

espresso bars designed to reflect a warm, friendly and inviting atmosphere. Add to

this, a menu you can ponder over for hours and you have everything you need to

escape the pressures of daily life.

At last count, the aroma of fine Barista coffee permeated in over 100 espresso bars

across India, Sri Lanka and the Middle East.

b. Café Coffee Day

Café Coffee Day is a division of India's largest coffee conglomerate, Amalgamated

Bean Coffee Trading Company Ltd. (ABCTCL), popularly known as Coffee Day, a Rs.

300 crore ISO 9002 certified company. Coffee Day sources coffee from 5000 acres of

coffee estates, the 2nd largest in Asia, that is owned by a sister concern and from

11,000 small growers. It is one of India’s leading coffee exporters with clients across

USA, Europe & Japan.

With its roots in the golden soil of Chickmaglur, the home of some of the best Indian

Coffees and with the vision of a true entrepreneur nurturing it, Coffee Day has its

business spanning the entire value chain of coffee consumption in India. Its different

divisions include: Coffee Day Fresh n Ground (which owns 354 Coffee bean and

powder retail outlets), Coffee Day Xpress (which owns 341 Coffee Day Kiosk), Coffee

Day Take away (which owns 7000 Vending Machines), Coffee Day Exports and

Coffee Day Perfect (FMCG Packaged Coffee) division.

Café Coffee Day (CCD) pioneered the café concept in India in 1996 by opening its

first café at Brigade Road in Bangalore. Till about the late 1990’s coffee drinking in

India was restricted to the intellectual, the South Indian traditionalist and the five

star coffee shop visitor. As the pure (as opposed to instant coffee) coffee café culture

in neighboring international markets grew, the need for a relaxed and fun “hangout”

for the emerging urban youth in the country was clearly seen.

Recognizing the potential that lay ahead on the horizon, Café Coffee Day embarked

on a dynamic journey to become a large organized retail café chain with a distinct

brand identity of its own. From a handful of cafés in six cites in the first 5 years, CCD

has become India’s largest and premier retail chain of cafes with 498 cafes in 85

cities around the country.

“Enthused by the success of offering a world-class coffee experience, CCD has

opened a Café in Vienna, Austria and is planning to open other Cafes in the Middle

East, Eastern Europe, Eurasia, Egypt and South East Asia in the coming months.”

Cafe Formats

Café Coffee Day has been experimenting with café formats for quite sometime.

Backed by the motivation of providing customers with exciting choices as well as

constantly redefining ‘the café experience’, CCD has ventured into the following

formats:

Music Cafés provide customers with the choice of playing their favourite music

tracks on the Digital Audio Jukeboxes installed at the café! There are around 85

cafes with such jukeboxes. 32 cafes also provide customers with the visual treat of

watching their favorite music videos by means of Video Jukeboxes.

Book Cafés offer the perfect solution to people who think that the coffee experience

is incomplete without browsing through the bestsellers or reading a classic. CCD’s

book corners accentuate the age-old combination of ‘coffee and books’. This exciting

concept has been successfully tested at 15 cafes in 12 cities across India and the

numbers are set to grow exponentially. CCD has tied up with English Book Depot,

one of India’s leading book distributors for placement and rotation of reading

materials appealing to Café Coffee Day’s discerning customers.

Highway cafés on the Bangalore – Mysore highway and NH-8, presents the traveler

en route not only with good coffee and scrumptious snacks amidst great ambience

but also with clean restrooms to get rid of that weariness from the road!

Lounge cafés at Hauz Khas, Delhi and Southern Avenue, Kolkata(Southern Avenue)

and Hyderabad (Jubilee Hills) combines the style and luxury of a lounge with the

lively ambience and comfort of a café. With exquisite interiors, exotic menu and

thematic music CCD Lounge offers a whole new experience to the connoisseur while

assisting the latter through its team of hostesses who are poise and style incarnate

and are looked upon as fashion icons.

Garden cafés at M.G Rd, Bangalore and GKII, New Delhi combine the joy of

rejuvenating amidst verdant landscapes and pots of coffee.

Cyber cafés at Brigade Rd, Bangalore, Airport, Bangalore and Airport, Delhi

combine the urge to surf, not to mention get connected through the internet while

enjoying perfectly brewed cups of coffees, both domestic as well as International

blends!

Mission statement

“To be the best café chain in the world by offering a world class coffee experience at

affordable prices”.

Brand association

CCD has emerged as an interactive alternative media for brands to communicate

with the ‘young at heart’.

Other media, such as electronic, print and outdoor, offer brand communication

through visual and audio modes to a large section of the populace, both relevant and

irrelevant. Café Coffee Day offers a much more interactive, targeted communication,

sometimes adding even a taste dimension to a brand idea!

Various in-café collaterals used to impart visibility to a brand inside a café or to add

the element of interactivity to a campaign are Posters, Tent Cards, Danglers,

Leaflets, Brochures, Coasters, Drop boxes, Contest Forms, Stirrers, Standees etc.

Over the years, CCD has successfully promoted a number of

brands/products/events through various innovative tactics and promo ideas.

Cashing in on its mass captive audience, we at CCD have entered into tie-ups and

promotions which are well knit with our brand promise and which can be creatively

used to woo the Indian Youth.

Customer profile

The café is a meeting place for 15-29 year olds, both male and female who are

served the best coffee by friendly and informed staff, in an uplifting and invigorating

ambience.

Research shows that teen-agers form 25% of our customers while 38% of the

customers are between 20 and 24years and another 23% belong to the age group of

25-29 years. Students and young professional comprise around 72% of our

customers.

18% of the customers visit the cafes daily while another 44% visit weekly. Each café,

depending upon its size attracts between 500 and 800 customers daily, mainly

between 4pm and 7 pm. Customers describe Café Coffee Day as the place they

frequent most after “home and workplace/college”. It is a place where they meet

friends and colleagues, in groups of 3 or more; a place where they rejuvenate and

are free to be themselves rather than a place to be “seen at” vis a vis other cafes.

Awards

Cafe Coffee Day: the best Indian Food Services Brand

Business World

November 8th, 2004

Food services top 5

1. McDonald’s

2. pizza hut

3. café coffee day

4. barista coffee

5. domino’s

Out of the 3 coffeehouses studied, CCD is visited the most. The mean of CCD visited

is more than Barista and Nescafe.

c. NESCAFE

The rich taste of coffee is reflected in its rich history. The beginnings of NESCAFÉ

can be traced all the way back to 1930, when the Brazilian government first

approached Nestlé.

NESCAFÉ – a combination of Nestlé and café. NESCAFÉ was first introduced in

Switzerland, on April 1st, 1938. For the first half of the next decade, however, World

War II hindered its success in Europe. NESCAFÉ was soon exported to France, Great

Britain and the USA. American forces played a key role in re-launching NESCAFÉ in

Europe by virtue of the fact that it was included in their food rations. Its popularity

grew rapidly through the rest of the decade. By the 1950s, coffee had become the

beverage of choice for teenagers, who were flocking to coffee-houses to hear the

new rock ’n’ roll music. In 1965 NESCAFÉ continued to bring the world's best cup of

coffee by introducing freeze-dried soluble coffee with the launch of Gold Blend. Only

two years later they invented a new technology to capture more aroma and flavour

from every single coffee bean. In 1994 the 'full aroma' process was invented to make

the unique quality and character of NESCAFÉ even better.

Nestlé's commitment to sustainability is deeply rooted in the company's core values,

which drive the Company's way of doing business. (Nestlé Corporate Business

Principles)

The endorsement of these values is made through a whole set of principles that are

enforced at every stage of production, by every business or production unit,

employee, partner or vendor. (Nestlé Corporate Governance Principles). The

company's culture is guided by these principles, which ensure leadership fully

compatible with Nestlé's sustainability objectives. (Nestlé Management and

Leadership Principles)

FMCG major Nestle India, having catapulted its business with the launch of its

probiotic range of frozen dairy products, is now all set to grow its coffee business.

While coffee chains such as Café Coffee Day and Barista target the upper middle

class youth segment, Nestle India through its ‘Cafés’ is going all out to woo the

masses.

Mr. Martial Rolland, CEO, Nestle India, said, “The idea is to create a sustainable

model that is scalable through these cafes.

They use these outlets as our laboratories to try out new products and gauge the

reaction of consumers to the newer variants of coffee.

Not deterred by the competition the coffee chains could present, they are pleased

that there are more players in the competition as it will expose more consumers to

coffee.

“The difference between the coffee chains and us is affordability. No one knows

coffee the way we do.”

Nestle; however, plans to continue its cafes pan-India under the franchisee model.

They are focusing more on product delivery vis-À-vis the ambience. They refuse to

divulge the size of the company’s café business.

However, according to company officials it was far larger than some of the others

who claim to have the maximum number of outlets in the country.

Nestle has cafés across schools, colleges and offices.

Perfect blend

Affordability, in fact, is a major criterion for Nestle India as far as products are

concerned. The company’s motto to target the lowest denominator is clear through

the pricing of its brands in the category as well as the blends used in the products.

India is predominantly a tea drinking country. Therefore, the harsh and strong

flavour of coffee is not preferred by most people. So, the blends they use in their

brands are also very specific to consumer tastes.

New product

Based on consumer insight, the company has just launched its new product ‘Nescafe

Mild’, targeted specifically at the mass market of tea drinkers.

Their long heritage in the country helps them understand people better. Also with

the understanding of coffee that they have acquired globally, they want to leverage

their expertise here as well.

Cold coffee category

The company is also examining several possible segment forays under coffee,

however, moving away from hot to the cold category.

Though the market for products such as cold coffee is still very small in India,

experiences from their Café outlets have made them realise the growing demand for

it. They are examining possibilities of launching such products in India.

In fact, the coffee market in India in itself is rather small with great opportunity for

growth. And, as a company, they focus more to grow their coffee business here.

RESEARCH OBJECTIVE – “Customer Perception and Attitude towards retail coffee

chains – a study in Delhi, w.r.t Barista, CCD, Nescafe”

SUB OBJECTIVES:

1. Preference in choice of Coffee chain

2. Factor affecting the customer choice of coffee chains

3. Comparative analysis between different coffee chains

This research project will include the following issues-

Identifying the factors that influence the customer the most (factors such as

coffee taste, ambiance, affordability, etc.)

Customers purchasing behavior and attitude towards coffee houses (in terms

of which coffee-house they visit, for what purpose they visit a coffee-house,

on what occasions they prefer to visit a coffee-house, who influence there

preference, how much they spend etc.)

Identifying the most popular coffeehouse.

RESEARCH METHODOLOGY

While making a study we very often look for what type of research methodology is

to be used in this type of study. For implementation of a proper research

methodology we have to first understand the meaning of research.

Research is a scientific as well as systematic process, which includes defining and

redefining the problem to develop hypothesis, to collect and define the

information/data, to analysis the information and bring out the results.

The first step in research after defining the research problem and objectives is data

collection. The word data means any raw information, which is either quantitative

or qualitative in nature, which is of practical or theoretical use. The task of data

collection begins after a research problem has been defined and research design

chalked out. While deciding about the method of data collection, the researcher

should keep in mind that there are two types of data primary and secondary.

1. Primary data: -This is those, which are collected afresh and for the first Time,

and thus happen to be original in character. There are many ways of data collection

of primary data like questionnaire, observation method, interview method, through

schedules, pantry Reports, distributors audit, consumer panel etc.

2. Secondary data: -These are those data, which are not collected afresh and are

used earlier also and thus they cannot be considered as original in character. There

are many ways of data collection of secondary data like publications of the state and

central govt., website, journals, companies reports, reports prepared by researchers,

reports of various associations connected with business, Industries, banks etc. For

this project secondary data was taken from company’s reports and websites.

This project is a survey project. In this project first the secondary data will be

collected through websites, magazines and journals. Based on this information a

questionnaire will be designed for the target respondents. The primary data

collected through this fieldwork will be analyzed and used to generate results.

Target respondent – the target respondent are the people who have visited any of

the coffeehouses in Delhi.

RESEARCH DESIGN –

Type of research: Descriptive research

Sources of data: Primary Data & Secondary Data

Primary Data - Questionnaire

Secondary Data – magazines, Websites, Journals

Data collection method: Survey Method

Survey instrument: Questionnaire

Method of communication: Personal interview

Sampling technique: Convenient sampling

Sample size: 50

Sample unit: People who visit coffee houses in Delhi

Area of survey: Delhi

DATA ANALYSIS

N Minimum Maximum Mean Std. Deviation

BARISTA 50 1.00 3.00 1.9200 .77828

CCD 50 1.00 3.00 2.2800 .72955

NESCAFE 50 1.00 3.00 1.8000 .88063

Valid N

(listwise) 50

Descriptive Statistics

N Minimum Maximum Mean Std. Deviation

variety of coffee

50 2.00 4.00 3.3200 .68333

taste of coffee 50 3.00 4.00 3.6600 .47852 quality of coffee

50 3.00 4.00 3.6400 .48487

price of coffee 50 1.00 4.00 2.4400 .97227 ambience of outlet

50 2.00 4.00 3.1800 .69076

Customer 50 1.00 4.00 3.0200 .62237

Coffee house visited the most

nescafe ccd barista

25

20

15

10

5

0

Coffee house visited the most

Frequency

service location of outlet

50 1.00 4.00 2.6000 1.01015

offers, discounts, coupons etc

50 1.00 4.00 2.1000 1.01519

side order menu

50 1.00 4.00 2.4800 .88617

time for service

50 1.00 4.00 2.7800 .97499

Valid N (listwise)

50

While visiting a coffee house, taste of coffee is the most important factor for

choosing the coffee house, because it has the maximum mean of 3.66

Descriptive Statistics

N Minimum Maximum Mean Std. Deviation

B_variety 50 2.00 4.00 3.2600 .69429

C_variety 50 2.00 4.00 3.3600 .59796

N_variety 50 1.00 4.00 2.2000 .96890

Valid N

(listwise) 50

Out of the variety of coffee offered by Barista, CCD and Nescafe, CCD has good

variety than others, which has a mean of 3.36

Descriptive Statistics

N Minimum Maximum Mean Std. Deviation

B_taste 50 2.00 4.00 3.3000 .58029

C_taste 50 2.00 4.00 3.3800 .63535

N_taste 50 1.00 4.00 2.6400 .92051

Valid N

(listwise) 50

The taste of coffee of CCD has a mean of 3.38, which means than taste of coffee

offered by CCD is better than other coffee houses.

The following table shows that the mean quality of coffee offered by Barista is more

than the other 2 coffee houses; this means that Barista offers the best quality in

coffee

Descriptive Statistics

N Minimum Maximum Mean Std. Deviation

B_quality 50 2.00 4.00 3.3600 .63116

C_quality 50 1.00 4.00 3.3000 .73540

N_quality 50 1.00 4.00 2.4600 .95212

Valid N

(listwise) 50

Descriptive Statistics

N Minimum Maximum Mean Std. Deviation

B_price 50 1.00 4.00 2.1800 .74751

C_price 50 2.00 4.00 2.7400 .56460

N_price 50 2.00 4.00 3.1400 .75620

Valid N 50

(listwise)

The price offered by Nescafe is the most economic, which can be seen by the mean

which is more than the other two coffee houses.

Descriptive Statistics

N Minimum Maximum Mean Std. Deviation

B_ambience 50 2.00 4.00 2.9000 .70711

C_ambience 50 2.00 4.00 3.2200 .58169

N_ambience 50 1.00 4.00 2.4800 .86284

Valid N

(listwise) 50

The ambience of CCD is better than the other two coffee houses. The mean of

ambience is 3.22

Descriptive Statistics

N Minimum Maximum Mean Std. Deviation

B_cust.ser 50 1.00 4.00 2.7000 .64681

C_cust.ser 50 2.00 4.00 2.9200 .72393

N_cust.ser 50 1.00 4.00 2.2800 .72955

Valid N

(listwise) 50

The customer service offered by CCD is better than the customer service offered by

other two coffee houses.

Descriptive Statistics

N Minimum Maximum Mean Std. Deviation

B_location 50 1.00 4.00 2.5200 .86284

C_location 50 1.00 4.00 2.9200 .87691

N_location 50 1.00 4.00 2.5400 .78792

Valid N

(listwise) 50

The location of coffee house outlet of CCD is better than the other two coffee houses.

Descriptive Statistics

N Minimum Maximum Mean Std. Deviation

B_offer 50 1.00 3.00 1.8400 .71027

C_offer 50 1.00 4.00 1.9800 .71400

N_offer 50 1.00 4.00 2.1600 .97646

Valid N

(listwise) 50

The discounts, offers and coupons offered by Nescafe is better in comparison to the

other two coffee houses.

Descriptive Statistics

N Minimum Maximum Mean Std. Deviation

B_menu 50 1.00 4.00 2.4600 .86213

C_menu 50 1.00 4.00 2.6400 .87505

N_menu 50 1.00 4.00 2.8200 1.00793

Valid N

(listwise) 50

The side menu of Nescafe is better than the other two coffee houses. It includes

Maggi noodle which is the hot favorite in kids and youngsters.

Descriptive Statistics

N Minimum Maximum Mean Std. Deviation

B_time 50 1.00 4.00 2.7600 .77090

C_time 50 1.00 4.00 2.7400 .89921

N_time 50 1.00 4.00 2.6000 .80812

Valid N

(listwise) 50

Barista is better in time taken to serve the consumer. It has a mean of 2.76 which is

higher than the mean of other two coffee houses.

Descriptive Statistics

N Minimum Maximum Mean Std. Deviation

exe_b 50 2.00 4.00 3.1800 .66055

exe_c 50 2.00 4.00 3.4600 .54248

exe_n 50 1.00 4.00 2.7000 .76265

Valid N

(listwise) 50

The experience was enjoyed most in the settings of CCD, followed by Barista and

Nescafe respectively. The mean is 3.46

The total of Ranking of the 3 coffee houses is as under:

Descriptive Statistics

N Minimum Maximum Sum Mean Std. Deviation

BARISTA 50 1.00 3.00 96.00 1.9200 .77828

CCD 50 1.00 3.00 114.00 2.2800 .72955

NESCAFE 50 1.00 3.00 90.00 1.8000 .88063

Valid N

(listwise) 50

Barista – 96

CCD - 114

Nescafe - 90

The results show that CCD is ranked the first, followed by Barista as second, and

Nescafe is third in ranking.

The result in the table below shows that, the decision making for visiting a coffee

house is highly influenced by peer group or friends.

Descriptive Statistics

N Minimum Maximum Mean Std. Deviation

Own instinct 50 1.00 4.00 3.2000 .75593

Family 50 2.00 4.00 3.0800 .72393

Friends 50 2.00 4.00 3.4000 .57143

Work group 50 1.00 4.00 2.8600 .85738

Valid N

(listwise) 50

The table below shows that the reason to visit a coffee house is usually for

refreshment or get together with friends. 19 respondents voted for both

refreshments and get together with friends.

reason.visit

Frequency % Valid Percent Cumulative Percent

refreshment 19 38.0 38.0 38.0

get together 19 38.0 38.0 76.0

Dating 5 10.0 10.0 86.0

Work 7 14.0 14.0 100.0

Total 50 100.0 100.0

HYPOTHESIS TESTING

Hypothesis 1: youngsters feel that friends are very important while making a

decision to visit a coffee house.

youngster, elder * friends Crosstabulation

Friends Total

less important

important

Very important

youngster 1 Count 2 13 17 32 % within

youngster, elder 6.3% 40.6% 53.1% 100.0%

elder 2 Count 0 13 5 18 % within

youngster, elder .0% 72.2% 27.8% 100.0%

Total Count 2 26 22 50 % within

youngster, elder 4.0% 52.0% 44.0% 100.0%

Chi-Square Tests

Value df Asymp. Sig. (2-sided)

Pearson Chi-Square 5.019(a) 2 .081

Likelihood Ratio 5.716 2 .057 Linear-by-Linear Association

1.287 1 .257

N of Valid Cases 50

a 2 cells (33.3%) have expected count less than 5. The minimum expected count is

.72.

By doing cross tabulation, we can find that 53% of the youngster feel that friends

are very important while making a decision to visit a coffee house, while only 27%

of the elder feel that friends are very important while making a decision to visit a

coffee house.

The significance level in chi-square tests is more than .05.

Hypothesis 2: Females give more important to their family’s decision while visiting a

coffee house.

gender * family Crosstabulation

Family Total

less important important

very important

gender Male Count 11 12 10 33

% within gender

33.3% 36.4% 30.3% 100.0%

Female Count 0 12 5 17 % within

gender .0% 70.6% 29.4% 100.0%

Total Count 11 24 15 50

% within gender

22.0% 48.0% 30.0% 100.0%

The importance level of family, for females as well as males, while visiting a coffee

house is almost the same at 30.3% and 29.4%, proves the hypothesis to be false.

Hypothesis 3:

Younger people visit a coffee house for a get together with their friends

youngster, elder * reason.visit Crosstabulation

reason.visit Total

refreshment get together dating work

youngster, elder

1.00 Count 10 18 3 1 32

% within youngster, elder

31.3% 56.3% 9.4% 3.1% 100.0%

2.00 Count 9 1 2 6 18

% within youngster, elder

50.0% 5.6% 11.1% 33.3% 100.0%

Total Count 19 19 5 7 50

% within youngster, elder

38.0% 38.0% 10.0% 14.0% 100.0%

Chi-Square Tests

Value df Asymp. Sig.

(2-sided)

Pearson Chi-Square 16.400(a) 3 .001

Likelihood Ratio 18.748 3 .000 Linear-by-Linear Association

2.045 1 .153

N of Valid Cases 50

a 4 cells (50.0%) have expected count less than 5. The minimum expected count is 1.80.

The above cross tabulation between age class and reason for visit shows that 56% of

the younger people visit a coffee house for a get together with their friends.

FUTURE OF COFFEE HOUSES IN INDIA

The biggest players in India are CCD and Barista.

Most of the coffee houses do their Branding via the following attributes-

1. Experience

2. Customer service

3. Variety/ Variants of Coffee

4. Taste

5. Preparation - in terms of hot/cold

CCD plans to set up 'highway cafes' and 'drive through cafes' to attract customers.

These cafes would be set up at various petrol pumps and the company is seeking tie

ups with all leading petroleum companies in this regard. This will increase their

brand image and increase of Point of Sales.

Nescafe outlets in select cities are positioned on the lines of its Nescafe brand's

`taste that gets you going' theme. Café Nescafe’s offer beverages priced as

competitively as Rs 10.

Future

1. With increase in FDI, we will see more global players in India. Gloria Jeans was

also in news. Players like Starbucks may enter in India in coming few years.

2. Other FMCG giants such as Hindustan Lever and Tata Coffee will sooner or later

venture into the coffee chain business

In this industry, the tangible differentiators are very few. It’s only the intangible as

mentioned above creates a difference.

Concepts like Sensory Branding by Martin Lindstorm work here as coffee chains can

cover the aspect of smell, sight, sound (music inside the store), taste and touch of

the furniture inside.

CONCLUSION

Cafe Coffee Day: - This has been positioned for younger generations usually college

goers and young people. With outlets strategically positioned near colleges,

software companies and places where they can target customers. On analysis it can

be seen that majority of the customers are of 18-30 age group. People prefer coffee

day location for treats.

Barista Coffee: - Positioned for Executive class of customers who prefer premium

taste but not too high prices. Barista coffee customers are particular about taste and

a peaceful atmosphere. Usually these outlets have dim lighting and exclusive

treatment.

Nescafe: - Positioned for youngsters who like to have a sip of coffee and have a chat

with their friends at a really low price. The main emphasis is on the quality of coffee

and not on the ambience. They mainly target the mass population. With the side

menu as tempting as Maggi Noodles, they are a hot favorite among young couples.

ANNEXURE – 1

QUESTIONNAIRE

Please tick the relevant answer

Q1. How frequently do you visit a coffee house?

i. Every day ______________

ii. Alternate day ______________

iii. Weekly ______________

iv. Fortnightly ______________

Q2. Out of the 3 coffee houses, which one do you visit the most?

i. Barista _______________

ii. CCD _______________

iii. Nescafe _______________

Q3. How important are the following factors while visiting the coffee houses

Factors Very

important

Important Less

important

Not

important

Variety of coffee

Taste of coffee

Quality of coffee

Price

Ambiance

Customer service

Location

Offer/disc./coupons

Side order menu

Time for serving

Q4. Rate the following coffee houses on the following factors on a scale of 1 – 4 (1-

poor, 2-fair, 3-good, 4-excellent)

Factors Barista CCD Nescafe

Variety of coffee

Taste of coffee

Quality of coffee

Price

Ambiance

Customer service

Location

Offer/disc./coupons

Side order menu

Time for serving

Q5. Rate your experience with the following coffee-chains on the following scale

Very satisfied Satisfied Less satisfied Not satisfied

Barista

CCD

Nescafe

Q6. Rank the following coffee chains in order of preference. 3 being most preferred,

1 being less preferred

i. Barista _______________

ii. CCD _______________

iii. Nescafe _______________

Q7. How important are the following in your decision making for visiting a coffee

house

Very

important

Important Less important Not important

Your own

instinct

Family

Friends

Work group

Q8. Your reason to visit a coffee house is-

i. Refreshment __________

ii. Get together with friends __________

iii. Date __________

iv. Work __________

PERSONAL INFORMATION

Age: less than 20 _________

21 – 30 _________

31 – 45 _________

46 and above _________

Household Income: less than 2 lakh _________

2-6 lakh _________

6-10 lakh _________

10 lakh and above _________

Gender: Male _________

Female _________

ANNEXURE– 2

LITERATURE REVIEW -1

STORM IN THE COFFEE CUP

In the late 1990s, a silent cafe revolution was sweeping urban India. Coffee drinking

was increasingly becoming a statement of the young and upwardly mobile Indians.

Coffee bars, an unheard concept till a couple of years ago, had suddenly become big

business and coffee bars like Barista, Cafe Coffee Day (CCD) and Qwiky's had

become quite popular.

Though being a late entrant, Barista took elite India by storm. With 105 branches in

18 cities and annual sales of Rs. 650 million, Barista was clearly the leader in the

coffee retailing business in 2002. What made Barista different from others was the

ambience at its outlets.

Barista recreated the ambience and experience of the typical Italian neighborhood

espresso bars in India. The interiors were bright, trendy and comfortable. One could

play chess, read books, listen to music, enjoy the arts, surf the Net and sip an

Espresso Italiano, or Iced Cafe Mocha. CCD, which was started in 1996, had opened

50 outlets in 9 cities by 2002, with annual sales of Rs. 100 million.

CCD also provided a relaxing ambience with eye-catching crockery and bright décor.

The paintings on the wall were made by young artists, with the objective of

promoting young talent. CCD outlets also promoted their paraphernalia such as

caps, T-shirts, and coffee mugs.

With 21 outlets in 5 cities and annual sales of Rs. 43 million in the year 2002,

Qwiky's was also a strong contender in the growing coffee business. It positioned

itself as a place to hang out and spend time leisurely. One could order an Espresso,

Cappuccino, Lattes, Mochas, Panini et al. One could even choose between frothy or

intense, icy or piping hot, and aromatic and exotic coffee. It also had books and

magazines outlets and a casual wear under the Qwiky's brand.

Though CCD was the first to enter the coffee retailing business in India, it failed to

leverage on the first mover advantage. By 2002, Barista, which entered the market

in 2000, and Qwiky’s, which entered in 1999, had 105 and 21 branches respectively.

CCD had only 50 branches. According to company sources, the reason for its slow

growth was the time taken to complete the back-end operations of its retail outlets.

Analysts felt that Barista and Qwiky's also experienced similar problems but they

grew faster than CCD because they realized that running cafe is a hospitality

business and one needs to create the right ambiance and experience and back it up

with strong logistics.

In 2002, competition in the coffee retailing business was beginning to heat up with

all the three players looking for opportunities for growth.

Barista was opening a store every nine days and it also seemed to be better placed

than its competitors due to the strong support of Tata Coffee, which had a 34.3%

stake in Barista. However, analysts felt that it wouldn't be easy for Barista to

maintain its leadership position in future. By 2002, Barista had spent Rs 600 million

to establish its chain of 105 stores and in the process had accumulated losses.

Though its operating profit was 17% of the sales, it was not expected to turn black

soon because of its rapid expansion plans. Also as Barista imported everything from

chairs to coffee machines to coffee beans, any depreciation in the value of the Indian

Rupee would make imports costlier and squeeze its margins further.

A NOTE ON THE COFFEE INDUSTRY IN INDIA

India ranks 5th among the top 10 countries of the world accounting for 3 % of the

total world coffee production and exporting 80 % of the total produce.

It is also the fifth largest coffee producer. Being a traditional tea consuming country,

the average coffee consumption in India was quite low at 10 cups per person

annually (Refer Table I). People in the Northern region preferred instant coffee in

contrast to the people in the south, who preferred traditional filter coffee.

Coffee, a household beverage confined to South India became quite popular in the

late 1990s. The late 1990s saw the emergence of coffee chains. Moreover, there was

a transition from the conventional and out dated coffee house to a more

sophisticated and trendy coffee bars. In the late 1990s, non-traditional coffee

retailing outlets like coffee bar chains, coffee vending machines, and specialty coffee

powder shops offered exciting growth opportunities. They constituted 50 % of sales

in the Indian Coffee Industry. The growth of these specialty and gourmet coffee

shops was a result of the economic and demographic changes, higher disposable

incomes, increasing number of workingwomen, and increasing awareness and

exposure to global trends. (www.icmrindia.org)

LITERATURE REVIEW – 2

Branded coffee houses a rage in India

Anuradha Shenoy in Mumbai | July 16, 2005

Go to any of the mushrooming coffee bars and what do you find? The menu displays

not just a range of coffees, but an ever increasing list of soft drink concoctions and

other beverages mingling with snacks and mini-meals.

Strange? Maybe. With more than 500 coffee cafes in the country, up from 175 in

2002, coffee was the most happening beverage. And the players, from Barista Coffee

Co to Bangalore-based Cafe Coffee Day, were opening outlets practically every

weekend.

So far so good. Today, at Barista Coffee Co, coffee sales are much less than its other

offerings.

Sixty per cent of its sales are brewed from teas, smoothies, food items and

merchandise. At Bangalore-headquartered Cafe Coffee Day, 70 per cent of its sales

come from beverages including coffee. At Cafe Mocha, coffee sales are up from 3 per

cent three years ago when it first started to 17 per cent today.

What does all this mean? Coffee sales have not really stirred the storm they were

expected to be. But this has not deterred the coffee cafes from stretching their

brands.

Internationally, coffee sales are virtually stagnant, moving ahead at 0.5 per cent.

According to a 2005 research report by the United Nations Food and Agriculture

Organization, India's coffee consumption has been chugging along at 2.2 per cent

per annum.

With consumption pegged at 70,000 tones, branded coffee accounts for 53 per cent,

unbranded 40 per cent, with cafes constituting 7 per cent. Industry estimates peg

the annual growth rate of the coffeehouse segment at a half percent clip.

Despite these figures, if coffee houses are extending their network, according to

Sunalini Menon, chief executive of CoffeeLab, which provides evaluative services for

coffee manufacturers, it is because they provide more than just coffee.

"They are a venue to socialise, finalise business deals, conduct interviews, listen to

music and read in," she says.

According to Cafe Mocha's CEO, Dharmesh Karmorkar, call centres have been one of

the growth triggers. "Before the advent of night-time work enterprises, a coffee

house's customer was limited to individuals who worked daytime hours. Now, in

addition, we have an entire group of professionals who work a night-time shift."

There is also the issue of small town individuals moving away from their families to

larger cities for career opportunities that were not present before.

"This individualistic culture promotes the need for a venue to socialise with others

of their age who share their interests," he adds.

Barista's COO, Brotin Banerjee relies on the power of the youth and their increasing

disposable income.

"Several Indian students begin working at a very young age, sometimes right after

high school. They have the purchasing power," he says.

That's why with a Rs 20-crore (Rs 200 million) outlay, Barista is hoping to be an

international brand. Plans underway include 35-40 Baristas in Nepal, Malaysia,

Indonesia, Turkey, Iran and Bahrain.

Its strategy will centre around targeting college students in the age range of 16-20

to "catch them young" and induce "lifetime loyalty". Barista also plans to start

"platforms on the go" in partnership with petroleum companies to cater to

consumers travelling between cities.

Its current tally is 122 stores, which include Barista espresso bars, shop-in-shops

and corner stores.

Also, from 230 stores, Cafe Coffee Day's senior general manager Sudipta Sengupta

plans to add an additional 270 stores in the next three years.

"We will incorporate health foods like herb breads, sunflower seeds, multigrain

breads and bran sandwiches. We will also introduce a premium coffee and offer

merchandise such as filters, mugs, and message T-shirts," she says.

In a bid to take coffee to the masses, the new outlets will be in towns, which have a

population of one lakh and above.

While Barista and Cafe Coffee day are targeting mass-based consumption, Cafe

Mocha, with only nine franchise outlets, is focusing on imported coffees and an

upmarket clientele.

It wants to push its stores from nine to 65 in the next three years. There are plans to

open franchised stores in Indonesia, Singapore, Sri Lanka and two in the Middle

East.

In addition, the chain plans to invest Rs 3 crore (Rs 30 million) in human resource

development and Rs 8 crore (Rs 80 million) on the development of new menu items

every year.

Explains Karmorkar, "We're focusing primarily on knowledge building and

management and the expertise that our chefs and staff bring to the table."

Clearly, despite coffee consumption stagnating, coffee houses are finding it lucrative

to add value activities -- book clubs, film clubs, social activities, merchandise, food --

as the main plug. Drink to that!

(http://www.rediff.com/money/2005/jul/16spec1.htm)

LITERATURE REVIEW – 3

An Indian sector on the upswing: coffee shops

By M. A. Winter

Date of posting: 13-11-07

The Coffee retailing sector in India is booming today, with several companies active

in the market. Some are local entities, some have come from abroad and have tied

up with local companies, and some seem to prepare themselves for an entry sooner

or later. The market growth is expected to be 20 to 30% annually in the next couple

of years.

The first foreign coffee retailer who arrived was Costa Coffee, a chain of coffee shops

owned by leisure and hotel group Whitbread Plc from UK. Costa Coffee, together

with the Devjani Group as the first franchisee, opened the first outlet at Delhi’s

Connaught Place in 2005. Now, two years later, Costa operates already a total of 34

stores. Besides Delhi, Costa is present in cities like Mumbai, Agra, Jaipur and

Lucknow. The plan is to have 200 stores by the end of 2010, a spokesperson of

Whitbread Plc told FoodIndustryIndia.com.

Starbucks Corp from the US is another well known coffee chain, a big player in many

markets around the world. For India, there were plans to enter the market with a

partner. Now it seems that these earlier plans have been modified. In July, the

company has put on hold its earlier plans to enter India by the end of 2007, without

giving a reason. Speculation was on that the government might not have allowed the

joint venture with an Indian partner based in Indonesia on behalf of the foreign

direct investment regulation for single-brand retailing. Now, a few days back,

Starbucks has agreed a multi-country deal with its North-American partner PepsiCo

by which PepsiCo would sell the Starbucks ready-to-drink beverages in

international markets, including those countries that do not have Starbucks outlets,

like India. Basically, the agreement provides Starbucks the option to bring at least a

part of its product portfolio very quickly to Indian retail shelves.

Almost in the same time when Starbucks was making and pushing its plans for India,

Lavazza from Italy, in Italian eyes the mother country of all coffee drinkers, rushed

ahead and took over coffee chain Barista and Fresh & Honest for an amount of

reportedly Rs 480 crore from Chennai-based Sterling Infotech Group in May this

year. Some media reported that Amalgamated Bean Coffee Trading Ltd (ABCTL),

which owns India’s biggest coffee-cafe chain Cafe Coffee Day, was also interested to

buy Barista, but there was no confirmation. Barista is a major player in the premium

sector of the Indian sub-continent, with 150 cafés in Asia, of which 132 are in India

alone.

By far the biggest player in the market already is Cafe Coffee Day, a coffee chain

which is part of the Amalgamated Bean company. Run by venture capitalist V. G.

Siddhartha, Cafe Coffee Day operates 483 outlets at present, mainly in India, but also

some in Pakistan and two recently opened in Vienna, Austria. They plan to have a

total of over 2,000 outlets over the next four-and-half years, their CEO has said

earlier. Cafe Coffee Day has raised equity capital from Sequoia Capital to finance its

rapid expansion. Media reported an amount of US$ 35 million, and an additional

target amount of US$ 50 million which would be currently sought. ABCTL is

executing an interesting business model, as it is involved in the coffee business right

from growing, processing and selling in different forms and formats like export of

green coffee, selling of packed coffee, and selling of hot coffee in various retail

outlets and vending machines. (www.foodindustryindia.com)

BIBLIOGRAPHY

Websites

1. Cafecoffeeday.com

2. Nescafe.com

3. Barista.co.in

4. Wikipedia.org