CUSTOMER-PERCEPTION-AND-ATTITUDE-TOWARDS-RETAIL-COFFEE-CHAINS-–-A-STUDY-IN-DELHI-W.R.T-BARISTA-CCD-NESCAFE1

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 contemporarystyled 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-onthe-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 issuesIdentifying 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 (listwise)

N

50

Coffee house visited the most

25

20

15

Frequency

10

5

0 barista

ccd

nescafe

Coffee house visited the most

Descriptive Statistics

variety of coffee taste of coffee quality of coffee price of coffee ambience of outlet Customer

N

Minimum

Maximum

Mean

Std. Deviation

50

2.00

4.00

3.3200

.68333

50

3.00

4.00

3.6600

.47852

50

3.00

4.00

3.6400

.48487

50

1.00

4.00

2.4400

.97227

50

2.00

4.00

3.1800

.69076

50

1.00

4.00

3.0200

.62237

service location of outlet offers, discounts, coupons etc side order menu time for service Valid N (listwise)

50

1.00

4.00

2.6000

1.01015

50

1.00

4.00

2.1000

1.01519

50

1.00

4.00

2.4800

.88617

50

1.00

4.00

2.7800

.97499

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 (listwise)

N

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 Valid

50 N

(listwise)

1.00

4.00

2.6400

.92051

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 (listwise)

N

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 (listwise)

N

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 (listwise)

N

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 Valid

50 N

(listwise)

1.00

4.00

2.8200

1.00793

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 (listwise)

N

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)

Barista – CCD

50

96

- 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

youngster elder Total

1 2

Count % within youngster, elder Count % within youngster, elder Count % within youngster, elder

Friends less important 2

Total importa nt 13

Very important 17

32

6.3%

40.6%

53.1%

100.0%

0

13

5

18

.0%

72.2%

27.8%

100.0%

2

26

22

50

4.0%

52.0%

44.0%

100.0%

Chi-Square Tests

Pearson Chi-Square

Value 5.019(a)

df 2

Asymp. Sig. (2-sided) .081

Likelihood Ratio Linear-by-Linear Association N of Valid Cases

5.716

2

.057

1.287

1

.257

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

gender

Male

Female Total

Count % gender Count % gender Count % gender

within within

within

Family less important 11

Total important 12

very important 10

33

33.3%

36.4%

30.3%

100.0%

0

12

5

17

.0%

70.6%

29.4%

100.0%

11

24

15

50

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 refreshment youngste r, elder

Total

1.00

Count

2.00

% within youngster, elder Count % within youngster, elder Count % within youngster, elder

get together

Total dating

work

10

18

3

1

32

31.3%

56.3%

9.4%

3.1%

100.0%

9

1

2

6

18

50.0%

5.6%

11.1%

33.3%

100.0%

19

19

5

7

50

38.0%

38.0%

10.0%

14.0%

100.0%

Chi-Square Tests

Pearson Chi-Square Likelihood Ratio Linear-by-Linear Association N of Valid Cases

Value 16.400(a) 18.748 2.045

3 3

Asymp. Sig. (2-sided) .001 .000

1

.153

df

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 CONCLUSION

furniture

inside.

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

Not

important

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 (1poor, 2-fair, 3-good, 4-excellent) Factors Variety of coffee Taste of coffee Quality of coffee Price Ambiance Customer service Location Offer/disc./coupons Side order menu Time for serving

Barista

CCD

Nescafe

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 Your own instinct Family Friends Work group Q8. Your reason to visit a coffee house isi.

Refreshment

__________

ii.

Get together with friends

iii.

Date

iv.

Work

__________

__________ __________

PERSONAL INFORMATION Age:

less than 20

_________

Less important Not important

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.

LITERATURE REVIEW – 2 Branded coffee houses a rage in India

(www.icmrindia.org)

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.

BIBLIOGRAPHY Websites 1. Cafecoffeeday.com

(www.foodindustryindia.com)

2. Nescafe.com 3. Barista.co.in 4. Wikipedia.org