cafe coffee day- coffee wars in india

1. CASE ANALYSIS
COFFEE WARS IN INDIA – CCD
Question 1:
The significant issue of the case is how Café Coffee Day can retain their marketplace share as
reputation as marketplace leaders in that precise phase after Starbucks have entered the Indian
Industry in 2012.
The case have a look at info how CCD had became the marketplace leaders in that section by
capturing 60% of market share until 2012 by means of handling the competition successfully
from Costa from the U.K., Lavazza from Italy, Gloria Jean’s from Australia, and Coffee Bean
and Tea Leaf from Southern California.
But Siddartha (Chairman Of Café Coffee Day Global Limited) and Madhav (director of Coffee
Day Global Limited) wondered if Starbucks may be one of a kind. In their discussions,
Madhav and Siddhartha had been moderately assured that CCD “only needed a slight course
correction” to handle Starbucks, but additionally they debated whether or not a larger, bolder
response was important.
The case progress further, it discusses how Starbucks isn't like the existing competition of
Café Coffee Day Global Limited. Partnering with Tata helped Starbucks to have many
advantages as Tata is certainly one of the largest conglomerate in India, as an example, Tata
became a huge partner for Starbucks: further to the many premium locations it is able to offer
Starbucks, Tata become well connected, which allowed it to open shops quicker than
other foreign manufacturers may want to. Since Tata become also a large espresso producer, it
gave Starbucks the capacity to offer a a local coffee brand rather than import coffee at a higher
price.
CCD management believed it was too early to assess Starbucks’likelihood of success, most
CCD executives felt that Starbucks India would face many challenges, they also recognized
that Starbucks would be a tough competitor.

2. Starbucks’preliminary pricing for espresso became aggressive. The benchmark for espresso
chains was the rate of a cappuccino, and `a hundred (about US$2) become perceived as a
psychological barrier. Starbucks’basic cappuccino became `99 in comparison to `66 at a CCD
café. Starbucks presented top rate food, together with a few domestically stimulated dishes.
Food rate factors have been incredibly excessive for India: a sandwich may cost `a hundred
twenty five as compared with `85 at CCD. Starbucks, which prided itself on excessive provider
requirements, delivered its global carrier practices to India, and provided two times the pay
stage of CCD.
Starbucks shops had been large and greater lavish than an ordinary CCD café, and it
became starting approximately such shops a month, however CCD executives believed that
store openings would accelerate.. Starbucks had opened a number of its first shops in near
proximity to a CCD outlet in high locations. According to Madhav, “Volumes at those CCD
cafés were up as much as 15%–25%.”One of the big questions turned into whether or not the
market might certainly section, inside the first six months, Starbucks attracted a extensive
cross-segment of customers, with a heavy dose of working professionals over 25.CCD, by
contrast, changed into weighted towards teenagers and college students under 25
While Starbucks changed into pricey for the average Indian, the huge unknown thing was if
and the way Starbucks may set off a shift in customers’ patterns. In many other countries,
Starbucks had raised their willingness to pay for premium coffee. Starbucks recognition
on service, product innovation, and new consumer segments, including specialists, had
increased the U.S. And plenty of non-U.S. Markets. At the same time, Starbucks had
additionally failed in some international locations, which includes Australia.
CCD executives felt that the employer had the gain in actual property that it got into many
high-avenue places early, at pretty low expenses. However, in line with enterprise insiders,
some department shops and high locations along with the Delhi airport had invited Starbucks
to be an anchor tenant at relatively lower rents, because they felt that its presence

3. would result in more walk-ins. As a result, Starbucks was expected to be able to quickly roll
out stores at such locations.
Siddhartha and Madhav agreed that “a slight course correction” was possibly in order.
CCD need to improve both its food and beverage breadth and best, improve interiors, and
enhance service levels via greater education. In addition, CCD become big sufficient in 2013
that it is able to start spending to build its emblem.
The real debate was whether this become sufficient. “If pushed to the wall, ”stated Madhav,
“we could be much more aggressive. ”What if Starbucks ’trajectory in India turned into
comparable to that during China or America? Madhav commented that CCD should without
difficulty respond: instead of 3% of CCD shops being squares and lounges, perhaps CCD must
increase the number of the squares and lounges to 25% or 30% of the portfolio. This might
mean changing extra cafés into lounges in addition to building more lounges and squares.
Instead of upgrading 150 stores according to 12 months, perhaps improve 200 or three hundred
stores consistent with 12 months. And instead of spending simplest $3 million on advertising
and marketing, double or triple brand spending.
Neither Siddhartha nor Madhav had all the solutions. Starbucks had simplest opened eleven
shops in the great Indian marketplace. It was much too early to predict how the coffee wars
could play out. The “slight course correction” turned into already underway, but if CCD
wanted to take the more competitive technique, it couldn't wait too lengthy. It would take time
(and a variety of investment) to put into effect the “driven to the wall” approach. Both
Siddhartha and Madhav believed a choice on whether to be more aggressive need to be
made by using year-end 2013.

4. Question 2:
Competitor Analysis
Starbucks
A pinnacle Café Coffee Day competitor, Starbucks Corporation is an American coffee
organization and based in Seattle, United States. The predominant products of the enterprise are
espresso, tea, smoothies, baked foods, and sandwiches. The corporation symbolizes the most
important espresso enterprise in the global.
Starbucks gives top class espresso and snacks which posed top notch competition for CCD. They
have dependable clients and an international community which might be the best electricity of
Starbucks. There weak point is the steeply-priced espresso which might not be lower priced to all
of the Indians. Starbucks can amplify to top Indian towns and the partnership with Tata is likewise
a first-rate opportunity.
Costa Coffee
Also seemed as a pinnacle Café Coffee Day competitor, Costa Coffee is a espresso residence
enterprise that turned into founded for the duration of the year 1971 and is established in
Bedfordshire, England. Costa Coffee is the second biggest coffeehouse chain across the globe and
primary in the United Kingdom.
The agency become founded with the aid of the Costa family. It changed into to start with started
as a wholesale operation that elements roasted coffee to caterers and Italian espresso shops. The
enterprise was obtained through White bread for the duration of the yr 1995. Since then it had
grown to about 3401 stores see in about 31 nations.
McDonald’s McCafe
McCafe is a popular coffee residence food and beverage chain that is owned by McDonald. The
employer became based at some stage in the yr 1993 and is released in Melbourne, Australia. The
organization is established in Illinois, United States. The concept of McCafe turned into brought
to create an surroundings and foot-site visitors for the McDonald’s keep. Their retailers are visited
through humans of all age agencies as it offers a diffusion of menu. The organisation merchandise
are attempted and tested with the aid of McDonald and offers a superb product with a viable fee.

5. This is the main fulfillment of this logo. Due to their fantastic emblem cost, McCafe is taken into
consideration one of the pinnacle Café Coffee Day competition.
Lavazza
Lavazza is a manufacturer of espresso products that changed into established at some stage in the
yr 1895 and is based in Turin, Italy. The business enterprise changed into founded via Luigi
Lavazza who initially commenced a small grocery store.
The agency imports espresso from locations like Colombia, Brazil, Costa Rica, Guatemala,
Indonesia, Uganda, Mexico, and the United States. Lavazza chooses the fine coffees from
plantations international to create the corporation’s specific mixture like the Moka pot this is
brewed for breakfast espresso, coffee at the bar after lunch and the famous cappuccino at the coffee
ruin at paintings from the merchandising system. Due to their excellence of Lavazza espresso as
of nowadays, it's miles taken into consideration one of the pinnacle Café Coffee Day competition.
Dunkin Donuts
Dunkin Donut is a food and beverage, coffeehouse enterprise that turned into hooked up
throughout the year 1950 and is based in Massachusetts, United States. It is an American
multinational short provider restaurant chain and serves many food merchandise like baked foods,
warm liquids, iced beverages, frozen liquids, donuts, sandwiches, and smooth drinks. The
organisation has about 12,000 restaurants in about 36 countries. From the brand call, the
preliminary concept became to promote fresh donuts along with a warm mug of espresso and step
by step started generating many other products. Due to their steady provider to their clients, the
corporation sees many unswerving clients and because of which it's miles taken into consideration
one of the pinnacle Café Coffee Day competition.
Gloria Jean’s Coffee
Gloria Jean’s Coffee is a popular coffeehouse corporation that changed into founded within the yr
1979 and is centered in New South Wales, Australia. The company turned into founded with the
aid of Gloria Jean Kvetko in a small city in Chicago. The logo then established its opportunity in
Australia via purchasing its global licensing rights. At gift, the business enterprise has opened
approximately a thousand espresso houses throughout 39 international locations globally. The

6. corporation has bought Retail Food Group at some stage in the yr 2014. Due to their outstanding
emblem and its presence inside the espresso enterprise, Gloria Jean’s Coffee is considered one of
the pinnacle Café Coffee Day competitors.
Question 3:
CCD’s Competitive position as it prepares for the battle with Starbucks
The most important electricity of Café Coffee Day was its early front inside the Indian marketplace
that gave it an early entrance benefit. Because of the early basis within the Indian market, the Café
Coffee Day had grabbed a marketplace proportion of extra than 60% and became the first
preference of the Indian clients. The company become completely incorporated vertically, from
its beans to the fixtures inside the cafes and lounges, in as lots as a massive portion of its rivals
outsource the dominant part of their deliver chains. Because of the fully backward included
version, it's far giving complete control over the coffee production method.
Coffee Day manufactured its very own coffee vending machines and café furniture, and procured
gadget inclusive of air conditioners, ovens, pastry coolers nationally. Management predicted that
internally sourced furnishings could save over 25% as compared to extent wholesale purchases.
Similarly, it manufactured espresso machines at a cost about $2,000 as compared to $7,000 for an
imported system which enables them to perform at lower fees compared to Starbucks.
Coffee Day focuses extra on the center elegance and upper middle magnificence which makes it
inexpensive for them. Their pricing is a good deal lower than its competitors. When in comparison
to Starbucks, it's miles 50 percentage less priced. This makes Coffee Day an lower priced luxury
to its clients. Starbucks average bill for 2 can be approximately $nine-$12, while at CCD, it will
likely be round $3.Five. Indians may choose CCD tons over Starbucks as Indians are known to be
very charge touchy. Also in comparison to Starbucks, CCD has greater number of stores which
can be without difficulty on hand to its clients even in tier-1 and tier-2 towns. Whereas Starbucks
has its shops simplest within the huge towns in the USA.
CCD’s target population is majorly the young people of India. CCD is tons more appealing for the
younger Indians to hang around at due to its relatively low fees. Whereas maximum of the young

7. people mainly the scholars wouldn’t be able to manage to pay for Starbucks. Also the other key
power of CCD over Starbucks is its sturdy emotional connect to the youngsters. This has been a
key driving force for CCD’s increase.
So some distance CCD has very restrained cognizance in affluent phase for growth. Even after
successful experiments in lounges and square formats, CCD is taking into consideration its
portfolio growth with awareness on prosperous segment. This is a big attractive and largely
untapped marketplace. Starbucks saw this opportunity and has partnered with TATA Group to tap
it. Due to adjustments in external environment, demand for better customer service has accelerated.
With the entry of Starbucks, it has raised the service level performance benchmarks. Starbucks
may be very widely recognized internationally for its provider whereas in CCD, the carrier is in
the main transactional as the employees are from rural areas which from time to time made it
difficult for them to speak with the consumers and to conform to the customer’s culture. Also
because of massive number of stores it has made it difficult for CCD to manipulate its employees
and to provide better services. Starbucks is widely known globally while CCD isn't always. This
thing plays a huge role even as attracting the clients in India in which Indians have a interest for
well- recognized overseas brands.
Question 4:
Present Scenario CCD
• CCD attracted India’s Large younger population with coffee based totally liquids, snacks ,
jukeboxes and popular merchandises
• The business enterprise additionally operated takeout kiosks in closely populated regions, sold
clean espresso powder thru stores in Southern India, and ran top rate café formats for older clients.
• By March 2013, CCD turned into India’s leading espresso chain, with over 60% of the
marketplace. India’s Economic Times had named CCD as certainly one of India’s most trusted
brands—ranked No. 2 within the “Food & Beverage” segment.

8. Present Scenario Starbucks
• The employer’s vivid red emblem, along with its famous tag line, “A lot can happen over coffee,”
became a familiar sight across urban India.
• In October 2012, U.S.-primarily based Starbucks Coffee Company (Starbucks) entered the Indian
marketplace.
• Over the subsequent seven months, it opened eleven shops in Mumbai and Delhi, India’s business
and political capitals.
• Starbucks became the world’s biggest coffee chain corporation, with over 18,000 stores across
sixty two nations.
• Starbucks had entered India through a joint project with the Tata Group, India’s largest business
conglomerate, giving it get right of entry to to coffee plantations, as well as top rate real property.
• Despite its top rate pricing, Starbucks obtained an awesome response from Indian purchasers,
including long queues outside its large, highly-priced shops.
Response
They simplest wanted a moderate route correction. The beneath stated factors could justify the
assertion
• They had lots of experience beating global brands in India. Costa from the U.K., Lavazza from
Italy, Gloria Jean’s from Australia, and Coffee Bean and Tea Leaf from Southern California in the
U.S. Had all struggled to make giant inroads in the Indian marketplace.
• Starbucks and CCD cater to unique marketplace segment. Starbucks cater to workplace going
premium clients whilst CCD has carried out inexpensive pricing to draw India’s Youth.
• There may be Slight Correction inside the meals services to have a product not some thing lesser
than the services from Starbucks.

9. • Opening extra number of CCD lounges in the growth plan. This could give direct competition to
the premier client segment of the Starbucks.
• They already have a completely incorporated marketing strategy. They brew their personal coffee
and that they even teach their upcoming body of workers.
• Cost benefits they've already received in furniture and merchandising machines could be difficult
to achieve for Starbucks ultimately.
• The foremost aggressive advantage for CCD is the prevailing Infrastructure which could value
a lot to Starbucks. They even have big shops of around 4000 to 5000 sq. Feet. Which could add to
their misery. They can't come up with the money for to pay very excessive leases.
Frequency of in line with purchaser visit in line with week is a bonus for CCD because of its low
priced pricing.