CCD report1

8/7/2019 CCD report1

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CAF COFFEE DAY

UNDER THE GUIDANCE OF

PROF. M. A. Rajasekhar (Raj)

SUBMITTED BY:

DEEPAK PRAKASH TEJALE (10SBCM0261)

GARGI KUMARI (10SBCM0550)

ROHIT PANDEY (10SBCM0467)


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INTRODUCTION:-

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

Trading Company Ltd. (ABCTCL), popularly known as Coffee Day. This is a Rs. 300 crore ISO 9002

certified company. Its chief customers are in USA,Europe & Japan. Based in Chickmaglur, the

home of some of the best Indian Coffees, Coffee Day has its business spanning the entire gamut

of coffee consumption in India. Its different divisions include:

Coffee Day Fresh n Ground (354 Coffee bean and powder retail outlets)

Coffee Day Xpress (341 Coffee Day Kiosk)

Coffee Day Take away (7000 Vending Machines)

Coffee Day Exports

Caf Coffee Day

Coffee Day Perfect (FMCG Packaged Coffee) division

Caf Coffee Day (CCD) pioneered the caf concept in India in 1996 by opening its first caf at

Brigade Road in Bangalore. Till about the late 1990s 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 caf 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, Caf Coffee Day

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

brand identity of its own.


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Coffee Market in India

Non Traditional coffee Market

Grows 4 % of world coffee

Consumes 30% of coffee produced

Coffee culture unknown until late 1990

CAF COFFEE DAY IN THE PAST 12 YEARS:

cafe coffee day1996

1st caf in

2001

14 cafs in 6 cities

2008

607 cafs across 98

cities, and in

Near Future

Expanding to

Middle East,


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POSITIONING:

Caf Coffee Day, at its inception in 1996 was the vanguard of a caf culture in India. At a time

when the country was growing well economically and young India enjoyed higher spending

power, CCD as it is popularly known, started to set up the first retail chain of coffee bars. It

broke new ground in 1999 when the entire market grew phenomenally with the entry of new

players. From the beginning, it positioned itself as being a coffee bar and has maintained that

positioning for a long time now. For a consumer, CCD represents a fun place where one can

go with a whole bunch of friends at any time of the day and have a good time, over coffee. In

2002, Caf Coffee Day underwent a rebranding exercise through a change in its logo. The earlier

logo was a simple red square with a white streak running across, and Coffee Day written at the

bottom. At this stage, CCD was still perceived as a South Indian coffee joint similar to the

Coffee House in Kolkata, a place where intellectuals meet and spend their time discussing issues.

CCD saw a latent market in youngsters, who were increasingly looking for a place to spend time

with friends and have fun. It then created an umbrella mother brand, Coffee Day and four sub

brands to represent the various activities. The logo then incorporated red, white and green colors,

a larger font and emphasis on the word Caf. According to the company, red signifies

leadership and passion and the white swirl stands for purity of purpose and the feel of coffee.

The new color green endorsed the long heritage of CCD in growing coffee. Caf Coffee Day is

known to experiment with different caf formats. They have been:

Music cafs

Books cafs

Highway cafs


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Lounge cafs

Garden cafs

Cyber cafs

The most recent addition has been lounge cafes. These cater to a more niche segment than the

general consumer segment of CCD. The age group of 20-29 would be more able to afford a

lounge setting than the group of 15-19.

MARKETING MIX:

Product:Caf Coffee Day product mix constitutes a wide range of products that appeal primarily to

Indian coffee and snack lovers. Products have a decided Indian taste to it be it food or coffee.

Most of the eatables have been adopted to meet the Indian taste buds like samosa, biryani,

masala sandwich, tikka sandwich etc. Thus they have been trying to capture the Indian taste

along with classic coffee. The best selling item in summer is frappe, which is coffee and ice

cream blended together. The young people favor it. In winter it is cappuccino. Their

merchandising includes funky stuff like t-shirts, caps etc.

Price:

Considering that Caf Coffee Day knows its major customer lies in the bracket of 15- 29, it has

tried to derive a policy whereby it can satisfy all its customers. The price for a cup of coffee

ranges from Rs.45 to Rs 80. From the time it first started its operations, there has been only

minor changes in the pricing policy of Caf Coffee Day. The changes have been more due to the

government taxes than anything else.


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Place:

The strategy CCD has adapted is to place a cafe in every possible location where some business

can be generated. This is a prime factor in determining the success of a retail chain. Caf Coffee

Day looks to cater to their target market with strategically located outlets.

Their outlets are generally located in High Street/ Family Entertainment Centers, gas stations,

near Colleges etc.

Promotion:

CCD is involved in all the areas of serious consumer passion like:

Television: Caf Coffee Day held a contest around a very popular program on Zee English called

Friends. All the six lead characters are shown often visiting a coffee shop. They have tied up

with Channel [V]s Get Gorgeous contest.

Tie-ups: Besides that Caf Coffee Day also tie up lot of the youth brands. So they have a contest

going on with Levis, another one with Scooty, Liril, latest one with AirtelFriends.

Association with movies: CCD can be seen in movies like Khakhee and Mai Hoon Na

Sales Promotion: Cafe Coffee Day uses special Caf Citizen Card for rewarding Caf Coffee

Days customers. It is a loyalty program to gain new customers and retain the existing ones.

Process:

The ordering and delivery process in CCD was earlier based on self- service. But now in most its

coffee shops the waiter comes and takes away the order and delivers the order on table.


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Physical evidence:

a) Logo, image, brand: Caf Coffee Day has used bright red and green colors in its logo. RED

stands for leadership, vitality, passion for coffee. The GREEN stroke harks back the coffee

plantations that they own. Cafe is noticeably larger in the logo to denote that Caf Coffee Daypioneered the cafe concept in India way back in 1996.The font looks as though the letters have

congealed out of a liquid.

b) Architecture and Decor: Largely wood and granite based interior with young colors of today,

like lime green, yellow, orange, and purple predominate.

c) Literature: The literature provided by Caf Coffee Day is indicative of its youthful image. The

menus, posters, pamphlets are all designed to attract young and young at heart

People: People at Caf Coffee Day believe that People are hired for what they know but fired

for how they behave. Motivation and personal skill are laid emphasize upon. Their employees

are like friend to the customer but at the same time they know about the international standards

of hygiene and cleanliness and personal grooming.

ADVERTISING, SALES PROMOTION AND SEGMENTATIONSTRATEGY

Caf Coffee Day does not look at mass media as a viable area of advertising or marketing spend.

CCD is advertised through barter deals with other brands for ground events

BELOW-THE-LINE ACTIVITIES:

2003- Levis launched a new range ofLow Rise jeans through a campaign

called 6 below. CCD displayed POPs ofLevis in all its outlets during the

Campaign.

2004- The launch ofLiril Orange soap by HLL was conducted in Caf Coffee


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Day.

2004- TVS Scooty tied up with CCD for events in the coffee bars and at malls

on Valentines Day in February.

2004- CCD was the official ground partner for the Channel V Get Gorgeous

Contest

IN-FILM ADVERTISEMENTS:

Some Telegu and Tamil films with prominent brand placement Hindi films- It started with Bas

Yun Hi and then conscious advertisement decisions were made for Khakee, Main Hoon Na,

Kyun Ho Gaya Na and Mujhse Shaadi Karoge. All these movies were targeted at young movie-

goers, teenagers and people looking for light-hearted entertainment. These are much the same

kind of people who are likely to visit Caf Coffee Day. Serials like Kahani Ghar Ghar Kii, but

there are no important tie-ups with such entities.

SALES PROMOTIONS:

Merchandising- Every CCD stocks merchandise ranging from coffee mugs, T-shirts,

caps, bags, coffee filters, mints, different flavors of coffee powders, tea and cream,

wafers and biscottis. It also merchandises promotional materials for other brands it

associates with. When some brands are conducting events for which passes are

distributed or movie premiere tickets are given out, CCD is an important hub for these

activities as most of the target market.

CCDs Guide to Active Holidays- It is a travel guide focusing on adventure sports and is

available in the CCD outlets, for people seeking escapade from monotonous life.

Caf Beat- An in-house magazine which gives the entire low-down on whats happening

in CCD outlets across the world. It describes experiences of customers, celebrations in

CCDs, and covers youth-centric topics like movies, music, travel, lifestyle, e-dating,

books and careers. Around 38% of CCD goers read Caf Beat and some carry it back

with them.

CCD has now tied up with World Space and Micro sense to provide satellite connectivity

in its outlets.


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SEGMENTATION STRATEGY:

Caf Coffee Day has its main consumer base in the age group of 15-29 years. Its 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 35 years of age. The evidence of the connect CCD has been able to

make, particularly among the youth, comes from the findings of Brand Equity's Most Trusted

Brands 2008 survey. In the food services category, CCD ranks No 2, while McDonalds stands at

No. 3 and Barista lags at No 5. The graph below indicates official figures for the type of

consumers of CCD. We can clearly see that its most profitable segment is the 20-24 age brackets.

These customers can afford to visit CCD on a regular basis and have a habit-forming attitude

towards CCD.


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PRODUCT ANALYSIS

Caf Coffee Day has different caf formats across different cites. They can be categorized into

Music Cafs, Book Cafs, Highway cafs, Lounge cafs, Garden cafes, and Cyber cafs. Every

format has a different feel to it. Also, Caf Coffee Day changes or makes fresh additions to its

menu from time to time. This includes having specialty coffees from different countries, exotic

desserts and pina coladas. Since the target consumer is of an age where one constantly seeks

change, this makes sure that the consumer does not get bored with a repetitive style and seeks

new places to go to. Caf Coffee Day has changed its interiors twice since inception. First,

during its rebranding in 2002, where it brought in big photographic wall mounts of coffee

experiences, and yellow chairs and marble tables. In 2006, it again changed its decor to cane

chairs to give the outlets a more causal feel. Caf Coffee Day has hence constantly reinvented its

look to keep up with the ever-changing wants of its consumers.

GENERIC COMPETITION

DIRECT COMPETITORS:

Barista- This is the closest competitor to Caf Coffee Day in the Indian market. They

target the same class of upwardly mobile youth and young professionals. But Barista is

often viewed as a place to unwind after a hard days work or an ideal setting for somebusiness meetings.

Caf Mocha- This aims at providing a level of experience to the consumer this is hard to

imitate. Inspired by Morocco and Turkey, Mocha offers not just coffee but also sheeshas

from Egypt and gourmet desserts. Mocha calls itself a coffee shop for the soul.

Qwicky- Based mainly in Bangalore, Qwicky has a strong local hold in South India.


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INDIRECT COMPETITORS:

Eateries like McDonalds and Haldirams pose competition to CCD as they are likely

attractions for a consumer to be drawn to. A consumer can well contemplate why he

should spend around Rs. 45 on a coffee when he can get a burger and a coffee for the

same price at McDonalds.

Local tea joints and coffee shops like Caf Nescafe- They are smaller places but

nevertheless target the same set of consumers. Hence, CCD has to consider the threat a

shop like this could pose to it.

GLOBAL COMPETITORS:

Starbucks is planning to enter India shortly and would be stiff competition for even an

established brand like CCD.

Coffee bars in the market of the other country that Caf Coffee Day is entering is also be

a factor CCD will have to plan for before entering a market


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DISTRIBUTION STRATEGY

Today CCD has the largest network of cafes in India, with over 607 Company Owned Company

Operated cafes across 98 cities. But they do not follow a franchising strategy. The channel

partner has no involvement in the daily operational activities of the Caf in the retail space.

Neither would he have to invest in operational capital equipment or branding or marketing and

promotion of Caf Coffee Day. CCD opted not to follow forward integration and outsourced its

distribution responsibility to other parties in 2003. As its reach spreads across India and it is now

exploring smaller towns, CCD would find it more expensive to maintain on its own. The private

players would procure raw materials like sugar and paper cups but coffee beans would still come

from Bangalore.

COMPETITIVE STRATEGIES OF CAFE COFFEE DAY

Caf Coffee Day which follows a backward integration of the value chain procures coffee

beans from its base in Bangalore. This gives it a high sense of quality assurance and

guaranteed supply across its outlets as the same raw material is used in all outlets. But

Barista is a combination of imported coffee beans and beans from Tata coffee. This is a

relative disadvantage because if there is a discrepancy in the quality or supply, Barista

would have to consider alternatives and probably look for another supplier.

Similarly, the food items available in Caf Coffee Day are obtained from local suppliers

whereas Baristas food is catered by the Taj caterers. Caf Coffee Day would hence, have

a lower-cost advantage.

The brand strength of Caf Coffee Day in comparison to Qwickys and Caf Nescafe is

far greater and its reach is on a countrywide scale. A consumer travelling across cities

would not find it too difficult to seek a Caf Coffee Day outlet instead of deciding on

trying a Qwickys, which he is not accustomed to.

Caf Coffee Day has an advantage of top-of-mind recall for coffee-shop-goers in India,

especially because it set the caf ball rolling in the country.


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It is a place where a lot of young people can meet, chat, have fun and let their hair down,

rather than sit and sip a cup of coffee in prim and proper serenity. This is one of the main

factors for why it is chosen over places like Barista or Mocha.

MARKET EXPANSION:

Recently, Caf Coffee Day entered a tie-up with the Ginger hotels of the Taj. This caters to

business executives and is on a Smart basics platform. The outlet would be open to all, and not

just the hotel's guests. The aim is to increase footfalls in Ginger and increase the reach of Caf

Coffee Day. This way, CCD can reach out to another set of consumers, apart from the young

crowd it has mainly catered to.

Music Cafes:One can feel the fragrance of Coffee with their choice of music or video with the

help of Audio/Video Jukeboxes.

Book Cafes: Coffee experience will not be complete without a book, with a reading material;

one can enjoy the taste of coffee.

Highway Cafes: It is at NH-8, the Bangalore-Mysore Highway, and great ambience with snacks.

Lounge Cafes: The lounge format serves coffee-based products and other beverages. Including

the lounge format and a large chain of coffee bars the luxury of at Hauz Khas at Delhi and

southern avenue at Kolkata, Jubilee Hills at Hyderabad

Garden Cafe: At M.G.Road, Bangalore and also at GKII at New Delhi, available in the form of

pot coffee.


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Lifestyle Cafs Caf Coffee:

yCaf Coffee Day has 760 cafs in 115 cities in India.

yCaf coffee day has 6 cafs abroad, 4 in Vienna, 2 in Karachi

yAround 250,000 people visit the cafs everyday

This newly opened exclusive lounge also indulges in the art of brewing techniques

complemented by the right kind of food. Siphon, Pour-Over, French Press are the three different

types of brew that are included in the revamped menu as the range of distinct blends of coffee.

Commenting on the revamped menu, Ramachander Raman, head, Food and Beverages of Cafe

Coffee Day said, We have introduced these new brewing techniques for those who want to

indulge in the enjoyment of tasting and brewing coffee.

He also adds that unlike Cappuccino and Espresso, the coffee made out of these brewing

techniques is unique and is prepared easily. The coffee powder is finer and the aroma after

brewing is strong and truly exotic. He also recommends coffee without adding milk. I would

recommend drinking black coffee prepared out of these techniques as the taste is strong and one

can differentiate between the brewing techniques. Among these techniques the easy one is the

Pour-Over. Similar to our tea bags, the coffee powder in these bags drips into the cup giving a

flavorful concoction. All the three techniques can be easily used by home-makers but the coffee

granules have to be finer to brew using these filters. The menu also includes another brewing

technique called mix logy. A blend of flavors with coffee and unique spices gives you lip-


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smacking Caffeine that quenches your thirst in this scorching heat. The lounge gives you a

totally relaxing and engaging experience that you can share with your dear-ones.

SUCCESS OF CAF COFFEE DAY:

From where it stands today, with 595 cafs across 100 cities in India, three in Vienna, and two in

Karachi, this means opening more than one caf a day -- and not just in India. Siddhartha has

strong global ambitions: He wants 50 of these cafs to be located outside India.

While this might appear to be a tall order, CCD's investors feel otherwise. They see enough

potential in the coffee retail market for CCD to ramp up even faster. According to Naresh

Malhotra, formerly CCD's chief executive officer and now a director at the venture capital firmSequoia Capital: "This space has enough potential for Coffee Day to open a caf every 200 yards

in the country, within five minutes' walking distance of one another." Sequoia invested $20

million in ABC, one of India's largest integrated coffee conglomerates, two years ago.

Industry analysts estimate that fewer than 1,000 cafs make up India's organized space, but they

put the potential at around 5,000. The largest player after Coffee Day, Barista, has about 200

cafs. Java Green (around 75 cafs) and Mocha (around 25 cafs) are further behind. Venu

Madhav, head of operations at Caf Coffee Day, has started quietly thinking about a farther-out

caf target number for his team: 2,000.

The Coffee Day story is not just in its numbers, though. Coffee Day has been a pioneer.

According to Harish Bijoor, a visiting professor at the Indian School of Business (ISB) at

Hyderabad and CEO of Harish Bijoor Consults, "Coffee Day has brought about a paradigm shift

in the caf space in India." Subroto Bagchi, co-founder of the IT and R&D services company

MindTree Consulting, and author of the book, TheHigh Performance Entrepreneur, adds: "Caf

Coffee Day has redefined the coffee experience; it has been a trendsetter in the caf space.

Siddhartha has raised the coffee from a brew to an experience."


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