Submitted ByName: Chirag SankeshwariStudent Id:

ST20095348

MARKETING ASSIGNMENT

Indian Coffee Industry Café Coffee Day – An Overview Market size, Growth trends and Future

projections Market Segments, Targeting &

Positioning Macro Analysis Marketing Mix Competitor Analysis Distributor Channel Strategy

AGENDA

• India is the sixth largest coffee producer in the world and contributes for 3.9 percent of global coffee production. Of the total coffee production, 70 per cent is exported and 30 percent is consumed. In 2014–15, India's coffee export volume was 286,545 metric tonnes (India Brand Equity Foundation, 2015).  The per capita consumption of coffee in India is only about 90 grams, considerably low compared to other coffee exporting nations. This shows the immense potential for the domestic coffee industry to grow.

• The market size of retail coffee in India is estimated to be approx. 1700 crore. The coffee industry compromises of players from local as well as international markets. The main players who constitute this industry are Café Coffee Day, Barista Lavazza, Starbucks and Costa Coffee.

• Café Coffee Day a parent company of Coffee Day Group is the one of the leading retail cafe chain in the country. Café Coffee Day pioneered the café culture and first to launch the coffee bar concept in India. Their portfolio includes Technology Parks & SEZs, Logistics, Investments, Financial Services and Hospitality. The target population of the cafe is majorly the young population in the urban cities with disposable income.

Source: 1. http://www.ibef.org/exports/coffee-industry-in-india.aspx2. http://www.coffeeday.com/aboutus.html#overview-scroll

Indian Coffee Industry

• Café Coffee Day is largest coffee chain in India owned by Coffee Day Global Limited. Earlier known as Amalgamated Bean Coffee Trading Company. Coffee day Global Ltd grows coffee in its own real estates of 12,000 acres. It is Asia’s largest producer of Arabica beans exporting to the clients across various countries including USA, Europe and Japan.

• Café Coffee Day started as a retail restaurant in 1996. The first outlet was set up by V.G. Siddhartha on July 11, 1996 at Brigade Road, Bangalore. It rapidly expanded in various cities across the country by adding more stores with more than 1000 cafés across the nation by 2011. The company is well known for being vertical integrated to cut costs from possessing the plantations, growing the coffee, vending the coffee machines to making the furniture for the outlets. Cafe Coffee Day has also expanded overseas with its outlets in Austria (Vienna), Czech Republic, Malaysia & Cairo, Egypt.

• A 1,150 crore ISO 9002 certified company. Over 1423 cafes spread across 209 cities in India

Source: 1. http://trak.in/tags/business/2015/06/27/cafe-coffee-day-ipo-rs1150-cr/2. http://www.cafecoffeeday.com/aboutus

Café Coffee Day An

Overview

• The Global Coffee Market is around USD 100 Billion and is projected to grow 4.7% annually from 2015 to 2019.

• About 2.5 million bags are being added to global coffee consumption every year with around 80% of its growth belonging to emerging markets.

• India is primarily a tea-drinking nation, and has witnessed a low consumption of coffee (exception of South India), with per capita consumption of 110g/year 8 kg in developed countries.

• Indian Café Market is estimated to be around Rs.6,700 crore in 2014 and is projected to grow to Rs15,100 crore by 2020 at a compounded annual growth rate (CAGR) of 15%.

• The chain café market is approximately 27% of the total organized cafe market at Rs.1,800 crore in 2014 and is estimated to grow 36% of the total organized market by 2020. The chain cafe market is estimated to grow at a CAGR of 20%.

• Over the past 5 years the café culture has grown with many new cafés being added along with the entry of some international players.

Source: 1. http://in.investing.com/analysis/cafe-coffee-day-ipo---very-

hot-coffee-32922. http://www.ico.org/monthly_coffee_trade_stats.asp

MARKET SIZE, GROWTH

TRENDS & FUTURE

PROJECTIONS

TARGETING• Middle class and upper middle class youth• Students, House wives and youngsters• People who value a great cup of coffee• CCD Seeks to target not just the youth but anyone who is "young at heart”.• Medium Price Band

POSITIONING• “Third Place" away from the home

and college or workplace for the young and the young at heart.

• Coffee lovers• A place for hangout• Tagline: a lot does happen over

coffee!

SEGMENTATION

Café Coffee Day has its main consumer base in the age group of

16 – 30 years.

MARKET SEGMENTS TARGETING

POSITIONING

Perceptual Mapping

High Quality Service

Low Quality Service

Expensive

Affordable

Economic

Social

Technological

Environmental

• Less bureaucratic hurdles• Easy sourcing of coffee beans• Cost control because of Govt. regulations

• Heavy coffee drinkers in South India• Cheaper sourcing maintain quality

• Targets youth and middle class• Affordable for a meeting place

• Marketing strategy based around technology• Provide entertainment over Bluetooth &Wi-Fi

Political

• Limited production/Less pollution• Use biodegradable plastics

Legal• Ethical and based on customer delight• Less consumer complaints and quick customer service

MACRO ANALYSIS

Critical Success Factors

• Highly rated Taste & Quality of Products

• Value for Money Proposition

• Strong Youth Orientation

• Strong Brand Image• Excellent Customer

Service• Strong base for

Expansion & Growth

Product• Wide range• Frappe – Summer

• Cappuccino - Winter

• Merchandizing

Price• Range from Rs45 to Rs100

• Over the years only minor changes in pricing policy

Place• All locations• Strategically located outlets

• Coffee machines in college canteens

• Kiosks in offices

Promotion

• Channel [V]’s “Get Gorgeous” Contest

• Tie up with youth brands

• Khakee and Main Hun Na

• Sales Promotion

Process• Self service to table service

• Complaints and feedback

• Response time

People• “People are hired for what they know but fired for how they behave”

• Motivation and personal skills

Physical Evidence

• Logo in “Dialogue Box”

• Architecture and décor

• Coffee table books

• Tag line : “A lot can happen over coffee”

MARKETING MIX

Threat of new

entrants (LOW)

Buyer’s

Power(HIGH)

Supplier’s

Power(LOW)

Threat of Substitut

es(HIGH)

Industry Rivalry(HIGH)

Porter’s Five Forces

Model

Objectives & Issues:-Threat of new entrants - Medium• Presence of several established brands/hangout places/fast food

joints• High costs for starting a coffee shop chain• Government policies promoting FDI (Starbucks)Buyer’s Power - High• Low switching cost• Variety of products• Variety of services

Supplier’s Power - Low• Absence of cartelization• Government regulations on prices of milk and coffee• Backward integration

Threat of substitutes - High• Aerated drinks, milk beverages, juice centers and tea shops• Fast food joints like Pizza Hut, McDonalds etc• Hangout places like Hukka parlours and Bistro

Industry Rivalry - High• Local Coffee chains like Barista, Mochas• Entry of international coffee chains such as Starbucks, Costa Coffee,

Gloria Jeans

Direct competitors• Barista – This is the closest comp of CCD in

the Indian market. They target the same class of upwardly mobile youth and young professionals. But barista is always viewed as a place to unwind after a hard day’s work or an ideal setting for some business meetings.

• Café mocha-this aims at providing level of experience to the customer is hard to imitate. Inspired by morocco and turkey, mocha offers not just coffee but also sheeshas from Egypt and gourmet desserts. Mocha itself calls a coffee shop for the soul.

Competitors Analysis

Indirect competitors• Eateries like Mc Donald’s and Haldiram’s

pose competition to cd as they are likely attraction for customers to be drawn to a consumer can well understand why he should spend around RS 45 on a coffee when he can get a burger and a coffee for the same price at Mc Donald’s.

• Local tea joints and coffee shops like café Nescafe – they are smaller places but nevertheless target the same set of consumers

Source:https://www.vetr.com/research/NASDAQ:CCD/posts/7331349842-IPO-Watch-Indias-Cafe-Coffee-Day

MARKET SHARE – 2014

STRENGTHS

• First-mover advantage• Excellent brand name and visibility• Largest retail chain of cafes• ISO 9002 certified company• Quality, service and taste• Youth oriented brand• USP of brand – Highly affordable brand • Reduction in cost

WEAKNESS

• Lack of individual attention to loyal customers

• Unavailability of fresh food• Market penetration of coffee bars is

5%• Weak brand image and lacks strength

to maintain brand loyalty

OPPORTUNITY• Fastest growing industries in Asia• Merchandising• Tie ups with other companies for

promotion• Tapping smaller market• Cheaper varieties of coffee

THREAT• Competition with Barista, Mochas,

Gloria Jeans, Costa Coffee & Starbucks• Presence of other ‘Hangout’ locations• Unorganized market• Dependent on government commodity

rates

SWOT ANALYSIS

Easy accessibilityThere is a Cafe Coffee Day outlet in every major city in India and are easily accessible.

Rural area locationsCustomers in the smaller communities also enjoy good quality coffee and snacks at affordable costs because the Cafe has set up outlets in the rural areas in India.

DistributorsThe coffee produced on the Cafe’s farms, are distributed through wholesalers and retailers to customers who wish to use the coffee at home.

Distribution Channel Strategy

CHIKMAGALUR

Outlets

Bangalore South IndiaHead Distributor

New Delhi North IndiaHead Distributor

Local Warehouse Local Warehouse

Outlets Outlets Outlets Outlets Outlets

Main difficulties was to find the accuracy of data

Research is restricted to the secondary data collection

Observations were time consuming

Data for present scenario was unavailable

  

Limitations 

BIBLIOGRAPHY1. Philip Kotler, Kevin Lane Keller, Abraham Koshy, Mithileshwar Jha (2013). Marketing Management: A South Asian Perspective 14th Edition, Dorling Kindersley (India)

Pvt. Ltd. 2. Isita Lahiri, Sujit Kumar Ghosh (2012). Principles of Marketing and E – Commerce. Dorling Kindersley (India) Pvt. Ltd. 3. V S Ramaswamy, S Namakumari (2013). Marketing Management: Global Perspective 5th Edition, McGraw-Hill Education (India) Pvt. Ltd.4. Leon G. Schiffman, Leslie Laser Kanuk, S. Ramesh Kumar (2010). 10th Edition, Consumer Behavior, Dorling Kindersley (India) Pvt. Ltd.5. Warren J. Keegan, Naval K. Bhargava (2011). Global Marketing Management 7th Edition, Dorling Kindersley (India) Pvt. Ltd.6. Cooper, D.R. and Schindler, P.S. (2011) Business research methods, 9th Edition, New Delhi:7. Tata McGraw Hill Education Private Limited. 8. Saunders, M., Lewis, P. and Thornhill, A. (2011) Research methods for business students, 5th Edition, Noida: Dorling Kindersley (India) Pvt. Ltd.9. Brewing Fresh Formulations (A Case Study Of Café Coffee Day) Published by Indian Streams Research Journal Vol. 3, Issue. 8 (September 2013)10. Coffee Experience and Drivers of Satisfaction, Loyalty in a Coffee outlet- With special reference to "café coffee day.“ Published by Journal of Contemporary

Management Research Vol. 5, Issue 2 (September 2011)11. Effect of Brand Personality Congruence on Brand Loyalty in CCD Outlets – A Structural Equation Modelling Approach Published by Mediterranean Journal of Social

Sciences Vol. 6, No. 6 S2 (November 2015)12. A Study on Consumer Attitude Towards Café Coffee Day Published by Reflections Journal of Management Vol. 5 (January 2016)13. India Food FOODS, BEVERAGES & INGREDIENTS DIGEST June / July 201014. http://www.ibef.org/exports/coffee-industry-in-india.aspx15. http://trak.in/tags/business/2015/06/27/cafe-coffee-day-ipo-rs1150-cr/16. http://www.cafecoffeeday.com/aboutus17. http://www.wevio.com/research-and-analysis-articles/global-coffee-industry-facts-statistics-of-2014-2015/18. http://www.india-briefing.com/news/indias-coffee-industry-9367.html/19. http://in.investing.com/analysis/cafe-coffee-day-ipo---very-hot-coffee-329220. http://ipocentral.in/cafe-coffee-day-ipo-review-eligible-for-conglomerate-discount/21. http://www.coffeeday.com/aboutus.html#overview-scroll22. http://www.indianotes.com/Analysis/Cafe-Coffee-Day-IPO--Very-Hot-Coffee/197812/240/IO23. http://businesstoday.intoday.in/story/cafe-coffee-day-in-promising-companies-list/1/18661.html24. http://www.ico.org/monthly_coffee_trade_stats.asp25. https://www.vetr.com/research/NASDAQ:CCD/posts/7331349842-IPO-Watch-Indias-Cafe-Coffee-Day

THANK YOUa Lot can happen over coffee…