Objectives

To focus on competing in a marketplace this already exists.

To focus on the value analysis.

To focus on execution (better marketing, lower cost base etc).

Chapter-1
Introduction
1.1 About the Coffee Caf Industry
The Coffee Caf industry is currently one of the biggest and fastest growing sectors in
business. The industry consists of a mix of individual cafs, hotel cafs and retail caf
chains.

Individual Cafs:
The main bulk of revenue is earned by small, individual cafs, run mostly by families
and friends. It is a relatively unorganized sector. There are millions of such cafs
around the world, and they provide customers with a homely, casual experience. The
bulk of these cafs are mainly in Europe, where every little town or village has local
cafs, where people gather together for a conversation over coffee, or just to be alone
with their thoughts.

These cafs have been the birthplace and sanctuary for various creative minds,
revolutionaries and thinkers of our time. The most recent example is the author J.K.
Rowling, who has written most of the Harry Potter series of books, sitting at her local
caf. These cafs set themselves apart from retail chain cafs and hotel cafs because
they provide customers with a homely, classic appeal, which cannot be emulated.

Hotel Cafs:
Ever since the popularization of coffee, hotels all over the world started opening 24hour coffee shops where visitors to the hotel could walk in for a cup of coffee and
some food at any time. These coffeehouses are extremely important, because they
provide international visitors to the hotel with a universal drink- coffee. Any customer
can walk into any major hotel in the world, and enter the coffeehouse, and know what

to expect. These cafs are not really major players in the coffee caf industry, but
rather provide supplementary services to the hotel industry.

Retail Caf Chains:

The last, and the most organized sector in the coffee caf industry, is the retail caf
chain. Off late, these chains have become extremely popular and are growing at an
ever-increasing pace. These retail chains have work with an organized structure of
man, material and money. The work on developing a recognized brand consistent to
all their outlets, which customers can easily relate to, wherever they go. They provide
customers with a standardized level of service and quality at each of their outlets. The
vast popularity of these retail chains is shown in the rapid international growth of
brands like Starbucks, Barista, CCD and Costa Coffee.

1.2 Interesting facts about Coffee & Cafs:

Coffee was first known in Europe as Arabian Wine.

Coffee is presently the second most traded commodity in the world. It is second only
to oil.
3

Nescafe was invented by Nestle because it had to assist the Brazilian government to
solve its coffee surplus problem.
1.3 Growth of Caf Industry in India
Hot beverages have always been a part of the tradition of India, especially South
India. Coffee took the first seat in South India when the traditional Brahmin classes
brought down the beverage from the ruling British around the 1930s. During the early
years the drink was confined only to traditional rich Brahmin families who served
filter coffee in a davra- tumbler. Coffee is no more confined to the rich Brahmin
class now, though the tradition of serving filter coffee in the davra- tumbler
continues to this day.
In order to spread the drink, coffee houses emerged at various places in the country,
which also served as the opposite places for lawyers and the educated class to hold
discussions ranging from politics to cinema. It is also believed that many scripts and
ideas for films evolved here. One of the oldest coffee houses in South India is the
Raayars mess, Chennai, which serves first class filter coffee even today. The mess was
established in the 1940s and continues the tradition of coffee but supplements it with
13 tiffins also. The vintage location of the mess attracts huge crowds even today early
in the mornings, Coffee however was not the only item on the menu. These places
also served food and other drinks to their customers.
The drink also became famous and as a result even five star hotels began cashing in
on it. Several hotels all over the country started opening coffee- shops that catered to
high- end customers. This showed the popularization of coffee cafs, to all sections of
society.
The drink has now become more of a concept than merely a drink itself. The last
decade witnesses the growth of numerous coffee pubs in the country. A number of
coffee caf owners tried to westernize the taste in contrast to the filter coffee.
Now, large retail chains like Starbucks, Costa Coffee, Barista, and Caf Coffee Day
have opened up around the country. The concept of a caf today is not merely about
selling coffee, but about developing a national brand. Retail cafs now form a multicrore industry in the country, and have huge potential for growth locally, and
internationally.

Chapter-2
Competitors Analysis
1. Starbucks
Starbucks Corporation is an American global coffee company and coffeehouse
chain based in Seattle, Washington. Starbucks is the largest coffeehouse company in
the world, with 20,891 stores in 62 countries, including 13,279 in the United States,
1,324 in Canada, 989 in Japan, 851 in China, 806 in the United Kingdom, 556 in
South Korea, 377 in Mexico, 291 in Taiwan, 206 in the Philippines, 171 in Thailand
and 10 in India.
1.1 Product

Cappuccino

With less milk than a latte, cappuccino offers a stronger espresso flavour and a
luxurious texture. To make it properly requires much skill and attentiveness. Arguably
the most important part is frothing the foam to velvety perfection as the milk steams
something our baristas take great care to achieve. The milky moustache that clings to
your upper lip is proof weve made yours right. And may we say, you wear it well.

Caff Mocha

Theres no question chocolate and coffee are flavours that

meant for each other. Both are rich and full of depth. Where
one is creamy, the other is roasty. They complement each
other perfectly. And when they come together under a fluffy
cloud of sweetened whipped cream, youll wish their union would last forever.

Caff Americano

In Europe, coffee is essentially espresso which, in America, isnt very much coffee.
To create a caff americano a coffee that satisfies the American preference for more
sips in every cup Europeans simply add hot water to their espresso. While
the americano is similar in strength and taste to American-style brewed coffee, there
are subtle differences achieved by pulling a fresh shot of espresso for the beverage
base. The best way to discover these nuances, of course, is to try a cup yourself.

Caramel Macchiato

Scores of people are passionate devotees of this signature beverage. So bewitched are
they, youd think it was some kind of magical elixir. Well theres no hocus pocus here.
Well tell you exactly what goes into it: creamy vanilla-flavored syrup, freshly
steamed milk with a topping of velvety-rich foam, an intense hit of our Espresso
Roast, a finishing of buttery caramel drizzle okay, we take it back. That does
sounds like magic to us. (And it tastes even better.)

Espresso Frappuccino Blended Beverage

Much like our original Coffee Frappuccino blended beverage, this delectable
indulgence is a refreshing blend of our dark-roasted coffee, milk and ice. However the

added shot of our rich and smooth Espresso Roast creates a bolder coffee flavour that
espresso lovers get really excited about.

Mocha Frappuccino Blended Beverage

If making the most of sunny weather is a priority for you in the summer, this
delicious, decadent beverage should come to mind. It's sweet, creamy and cold just
the way a good summer treat should be. And it serves up the rich, satisfying taste of
chocolate and coffee. Pure indulgence for pure enjoyment.
1.2 Offerings

Perfect as a gift, this Starbucks hamper set comes with two dark red star ceramic
mugs with a Christmas blend of ground coffee and caramel flavour syrup.
1.3 USP
Commitment to the highest quality coffee in the world
1.4 Marketing strategy

Perfect Cup of Coffee

Customer Satisfaction
Creating a Starbucks Community
Innovation

2. Cafe Coffee Day

7

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

Bean Coffee Trading Company Ltd. (ABCTCL). ABCTCL grows coffee in its own
estates of 10,000 acres (4047 ha). The land value of the plantations is US$250300
million. It is the largest producer of Arabica beans in Asia. Apart from this, the group
also sources coffee from 11,000 small growers. ABCTCL is one of Indias leading
coffee exporters with clients across USA, Europe and Japan.

2.1 Products
Macchiato

Espressos punch smoothened and mellowed by a dollop of foamed milk.

Chococinno

Our special king-size cappuccino with the richest chocolate sauce.

Cafe mocha

Espresso with hot milk and sinful chocolate sauce.

Chill-o-coffee
8

Savour rich and delightful coffee tones iced to perfection

Ethiopian

Coffee straight from the land of its inception. International gourmet blends. A double
shot of espresso brewed from a imported coffee beans topped with steamed and
foamed milk.

Iced Eskimo

Very rich, very cool with a strong coffee edge.

2.2 Offerings
9

It contains 1 Cookie tin, 1 Potato Stix, 1 Basket and 5 Twin Pack

2.3 USP
Most recognizable and affordable brand in India.
2.4 Marketing strategy

Informal ambience
Cool hang out for college crowd and teenagers
Main target commercial and residential clusters in metros
Also targeted corporate houses, mall, airport
Price 20% lower than competitors

3. Barista
Established in February 2000, Barista Lavazza is noted as a pioneer of Indian caf
culture. The Barista Lavazza chain of espresso bars delivers a truly Italian coffee
experience in warm, friendly and relaxed environment. It aims to provide a
comfortable place for people to unwind over interesting conversations and a cup of
coffee. Barista Lavazza consists of young adults, who are exposed to global lifestyles
and appreciate the authentic flavours and tastes of coffee. At last count, the Barista

10

Coffee Company Limited has over 200 Barista Lavazza Espresso Bars and Barista
Lavazza Crmes in over 30 cities across India.

3.1 Products
Espresso italiano

Truely Italian coffee shot.

Cappuccino

Fresh brew with foamed milk for that splendid aroma and rich taste.

Brrrista mocha frappe

Appetizing cup of cold coffee blended with chocolate and ice cream.

Caffe Mocha

11

Freshly brewed coffee with frothed milk and hot chocolate fudge for a great flavour
and an unforgettable coffee experience.
3.2 Offerings

Barista Coffee Book Collectors Edition - Quality three piece Coffee set with 800ml
Coffee Pot - Alchemy Coffee Syrup 250ml - Ital Almond Biscotti 150g - Coffex
Ground Coffee 250g - Bahlsen Choco Leibniz Biscuits125g - Lindt Chocolate 100g
3.3 USP
Finest Italian and Arabica coffees and cuisines at great value prices
3.4 Marketing strategy

Lifestyle brand with Italian neighborhood

Brew masters from Italy to create blend
Make customers occasional indulgence into a habit
Store-in-store concept with specific themes
Home brew segment fresh coffee

4. Costa Coffee
Costa Coffee is a British multinational coffeehouse company with headquarters
in Dunstable, United Kingdom and is a wholly owned subsidiary of Whitbread PLC.
It is the second largest coffeehouse chain in the world behind Starbucks and the
largest in the United Kingdom.

12

Costa Coffee was founded in London in 1971 by the Italian brothers Sergio and Bruno
Costa, as a wholesale operation supplying roasted coffee to caterers and specialist
Italian coffee shops. It was acquired by Whitbread in 1995, since when it has grown to
over 1,700 stores across 28 countries. The business has 1,375 UK restaurants, 2,500
Costa Express vending facilities and a further 800 outlets overseas.

4.1 Products

Espresso

Behold the ideal way to give your taste buds a wake up call. Yep, while our perfectly
poured espresso may look small in stature, it sure packs an almighty punch with its
intense, strong taste.

Macchiato

Experience the signature hit from our espresso roast, topped with just a dash of milk.

Americano

13

A delicious coffee that mixes shots of espresso with hot water.

Caffe latte

It's simply made with a shot of espresso and fresh steamed milk.

Mocha

With hot chocolate and steamed, frothed milk

4.2 Offerings

The Costa Gift Card is the ideal gift for all Coffee Lovers.
4.3 USP
14

Popular British coffee brand now going global with innovative products
4.4 Marketing strategy

Unique Production Process

Target Market
Product Lines and Pricing Strategy
Overall Impression and Market Position

Chapter-3
Demand supply Gap
15

Sales increased by almost 50% compared to 2009, with 121.234 MT green coffee sold
in 2010 equivalent to 2.020.564 bags (60kg/bag). The forecast for 2011 is to reach
over 140.000 MT sales.

Coffee Sales
160
140
120
100

Coffee Sales

80
60
40
20
0
2007

2008

2009

2010

2011

A Modern Experience with Coffee

The country of India, with over one billion people, is a relatively new market for
many brands. In the modern age, however, the people of India are more frequently
embracing Western brands more than ever and it is becoming somewhat of a status
symbol, especially among the young and open-minded in a country where the median
age is only 25.
First, while coffee consumption per person, on average, may be low, there is still a
huge market for coffee consumption. John Culver, president of Starbucks' Asia and
China region, told the Wall Street Journal that India currently runs about $200 million
annually in revenue from existing coffee houses, and Culver states cafes and coffee
sales are expected to receive 25% growth. Starbucks could take a great chunk of
market share as India's primary coffee house chain, Cafe Coffee Day, is estimated to
service 2/3 of the coffee house industry. Although competition may be fierce, the

16

simple lack of numbers in competitors provides Starbucks a unique advantage to gain

footing in a $200-plus million market
The American coffee giant first tried to enter India in 2007 but plans failed. CCD on
the other started operations in 1996 and has a total of 1,285 stores and plans to take it
to 2,000 outlets by 2015.
Costas and Baristas have far less stores but are also looking at aggressive expansions.
Lavazza, which owns the Barista coffee chain, has 160 stores and is looking at more
than doubling the numbers by 2015.

17

Chapter-4
Customer profile
1. Starbucks

Age: Young adults

Nice place to relax, chat, chilly music. Trendy coffees which present their
lifestyle

Age: Middle age

Place to calm down, relax, chat, read a book. Possibility for a small (healthy)
snack with a great coffee

Psychographic: Coffee lovers

Trendy, fresh, high quality, new developed coffee

Psychographic: Atmosphere lovers

2. Cafe Coffee Day
Cafe coffee day has its main consumer base in the age group of 15-19 years. Their
customers are mainly middle class and upper middle class youth who are upwardly
mobile. From the market, CCD seeks to target not just the youth but anyone who is
young at heart. More than 10% of their customers are above 35years of age. The
evidence to connect CCD has been able to make, particularly among the youth, comes
from the findings of Brand Equitys Most Trusted Brands 2008 survey.
3. Barista
Over 65% of Baristas customers are in the 15- 30 age- group. The majority of these
are students and young urban professionals.
4. Costa coffee
Consumers economic profile will be
Upper Middle Class
Privileged Class
18

While the age demographics will be:

Students and Youngsters
Professionals
Families
Mature Consumers

Gender and Ethnic/Religious Background was researched to have minimal or no

effect on the choices concerning coffee made by consumers and their patronage of
coffee houses.

19

Chapter-5
Value Cost Analysis
1. Starbucks
1.1 Price
Product

Short

Tall

Grande

Venti

Cappuccino

95

115

135

Caff Mocha

125

145

165

Caff Americano
Caramel

90
115

110
135

130
155

150
-

Macchiato
Espresso

160

180

200

140

160

180

Frappuccino
Blended
Beverage
Mocha
Frappuccino
Blended
Beverage
1.2 Utility

Cakes
Frappe
Shakes
1.3 Interpretation
The price of Starbucks are high as compared to other brands.

20

2. Cafe Coffee Day

2.1 Price
Product
Macchiato
Chococinno
Cafe mocha
Chill-o-coffee
Ethiopian
Iced Eskimo

Price
65
80
78
83
92
72

2.2 Utility

Cold coffee
Cakes
2.3 Interpretation
The price of CCD is lowest and there is high level of customer satisfaction.

3. Barista
3.1 Price
Product

Regular

Grande

Espresso italiano

50

70

Cappuccino

75

95

Brrrista mocha frappe

120

Caffe Mocha

90

110

3.2 Utility

Frappe
Shakes
3.2 Interpretation
The price of Barista is reasonable but there is less customer satisfaction as compared
to other brands.

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4. Costa Coffee
4.1 Price
Product

Small

Medium

Large

Espresso

79

89

Macchiato

79

89

Americano

95

105

119

Caffe Latte

99

109

125

Mocha

129

139

155

4.2 Utility

Cakes
Cold coffee
Ice cream
4.3 Interpretation
The price of Costa Coffee is lower as compared to Starbucks and their customer
satisfaction is average.

Chapter 6
22

Risk Uncertainties
1. Starbucks
Strength

1.Excellent brand name and brand visibility

2.Huge young crowd as target group
3.Excellent ambience and service
4.Biggest and most popular coffee outlet in the world
5.Has own brands of food products and coffee
6.Globally most recognized brand name
7. One of the strongest franchises in the world with more than 6500

Weakness

licenses shops in the world

1.Expensive
2.Too crowded on weekends leads to loss of customers
3. Too focus on US domestic market.
4. Because of its perfectness of employee service, some employees

Opportunity

complaints about the management which push them to always be perfect.

1.Introduce cheaper versions of coffee
2.Tap the smaller towns/cities
3. Could diverse their product not only in coffee.

Threat

4. Rising consumerism in emerging markets

1.Threat from existing coffee chains and fast food outlets
2.Dependent on Govt commodity rates
3. Global financial crisis which make peoples tend not to spend too much
money.
4. Threats of substitute products and services include other drink items
such as colas, teas or juices that are sold in retails.
5. Ill effects of coffee consumption.

2. Cafe Coffee Day

Strength

1.Excellent brand name and brand visibility

2.Huge young crowd as target group
23

3.Excellent ambience and service

4.Over 1000 outlets and 300,000 visitors per day
Weakness
Opportunity

5. It produces/grows the coffee it serves hence reducing the cost.

1. High competition in this segment
1.Introduce cheaper versions of coffee
2.Tap the smaller towns/cities
3. Merchandising.

Threat

4. Tie ups with other companies for promotion

1.Entry of foreign players like Starbucks
2.Dependent on Govt commodity rates
3. Large unorganized market.

3. Barista
Strength

1.Excellent brand name and brand visibility

2.Huge young crowd as target group
3. Excellent Human Resource Ambience and dcor.
4. Strong brand recall and popularity amongst urban youth.
5. Had over 200 stores across India.

Weakness

6. Loyalty programs to offer discounts and attract customers

1.Perceived as Expensive brand
2.Competition from other coffee outlets, restaurants and fast food joints

Opportunity

means tough segment

1.Introduce cheaper & unique versions of coffee
2.Tap the smaller towns/cities

Threat

3. Can diversify in tea beverage segment

1.Threat from existing coffee chains and fast food outlets
2.Dependent on Govt commodity rates

3.Overall macro environment to support high disposable income.

4. Costa Coffee
Strength

1.Excellent brand name and brand visibility

2. Wide range of products.

Weakness

3. Reputation for value for money.

1. Present in a limited number of countries

Opportunity

2. Very few number of stores

1. Taking over, merging, or forming strategic alliances with other coffee
companies.
24

2. Expanding in various consumer markets such as in India and china.

3. Continuously expanding
.Threat from existing coffee chains and fast food outlets

Threat

2. Intense price competition.

Interpretation

All the coffee retailers should target low income group by opening their stores

in less developed areas.

The retailers should take out regular offers to increase their sales.

Recommendations

Barista has an extremely strong brand image, but they need to work hard on

improving their customer perception of being and expensive brand.

Customers have very high expectations of the taste & quality of products.
Barista needs to work hard at this aspect, especially for coffee and eatables

products.
All the retailers should lower their price and should also target the lower class.
Indian market is always influenced by the traditions followed in the Western

counterparts hence the success of Mcdonalds, etc.

They should introduce regular offers to increase their sales.
All the coffee retailers should open their stores in less developed areas.
25

Conclusion

Starbucks is newly opened in New Delhi and they have occupied high market

share.

Cafe Coffee Day has least price and high customer satisfaction
The coffee products offered by Barista are less as compared to others.
Costa Coffee has less number of stores.

26

Bibliography

www.starbucks.in
www.cafecoffeeday.com
www.barista.co.in
www.costacoffee.co.in
www.mbaskool.in
P. K. Ghosh, Strategic Planning and Management

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