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Indian coffee cafe chains market overview

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The Chain Coffee Café segment has been burgeoning in India with several domestic and international brands making inroads to the market along with the widening of the café goers. with coffee becoming more of a fashion statement amongst the young and upwardly mobile.
Currently, there are approximately 100 café and bakery chain brands with an estimated 3,200 outlets spread across various cities in India.
The size of the organized café market is estimated to be 67 billion in 2014 and is projected to grow to 151 billion by 2020 at a CAGR of 15%.
The chain café market is approximately 27% of the total organized café market at 18 billion in 201 and is estimated to be 36% of the total organized market by 2020. The chained café market is estimated to grow at a CAGR of 20%.

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Indian coffee cafe chains market overview

  1. 1. Coffee Café Chains India Market Understanding
  2. 2. Indian Coffee Chain Market Outlook • Market Overview • Key Players • Market Potential by Outlet • Market Potential by Region
  3. 3. 5 18 22 26 32 38 45 54 16 49 55 62 69 77 87 97 21 67 77 88 101 115 132 151 2008 2014 2015P 2016P 2017P 2018P 2019P 2020P Chained Licensed Standalone Total Café Market Overview (Rs Billion)  The size of the organized café market is estimated to be 67 billion in 2014 and is projected to grow to 151 billion by 2020 at a CAGR of 15%.  The chain café market is approximately 27% of the total organized café market at 18 billion in 201 and is estimated to be 36% of the total organized market by 2020. The chained café market is estimated to grow at a CAGR of 20%.
  4. 4. Key Players 46% 5% 3%2% 2%1% 41% Market Share of Key Chained Brands by Number of Outlets in Chained Café Market–2014 Café Coffee Day Barista Costa Coffee Starbucks Dunkin Donuts CBTL Others Over the past 5 years the café culture has grown, with many new cafés being added along with the entry of some international players. The café segment has been burgeoning in India with several domestic and international brands making inroads to the market along with the widening of the café goers with coffee becoming more of a fashion statement amongst the young and upwardly mobile. Currently, there are approximately 100 café and bakery chain brands with an estimated 3,200 outlets spread across various cities in India. In the chained café market Café Coffee Day is the largest player in terms of the number of outlets. With 1,472 outlets it has a market share of 46% followed by Barista at 5%.
  5. 5. Brand March 2008 March 2009 March 2010 March 2011 March 2012 March 2013 March 2014 Present Count of Outlets Starbucks - - - - 2 32 40 64 Dunkin Donuts - - - - 7 20 29 50 CCD 700 850 1020 1100 1286 1454 1568 1472 Barista 180 205 220 200 160 180 180 169 Costa Coffee 41 48 58 75 96 100 100 82 CBTL 1 2 5 13 17 26 26 26 Market Potential by Outlet Café Coffee Day has been the pioneer in establishing the coffee culture in the chained café segment and has come a long way in terms of the number of outlets by opening its first outlet in 1996 and increasing the store count to about 1,472 by December 2014.  Barista, the second largest player in terms of outlets, started its operations in 2,000 and presently has around 169 outlets including 25 franchised outlets. Barista has expanded through the franchising route whereas Café Coffee Day is operating most of its outlets itself except a small number of franchisee ones.
  6. 6. 33% 74% 27% 52% 49% 38% 22% 9% 36% 22% 24% 17% 45% 17% 28% 17% 27% 38% 0.09 0.09 0.07 Starbucks Dunkin Donuts CCD Barista Costa Coffee CBTL Geographical spread of Key Brands in Chained Café Segment by no. of stores, December 2014 North South West East  The concentration of these new entries has been primarily in the metropolitan cities due to the cosmopolitan culture of these cities and the ease of back-end integration.  Geographically, southern part of the country contributes to 33% of the total number of chained outlets of all players operating in the café segment.  Café outlet penetration or spread is low in the eastern region with Café Coffee Day and Barista having just 9% of the total outlets.  Top eight cities of India contribute to 40-45% of the chain café market.  This straddling in the café space across segments and formats is sustained by players with an increasing presence in new locations like hospitals, college campuses, highways etc. It is a strategy by the café sector players to tap into a wider customer base. Market Potential by Region
  7. 7. Presence of key brands in the major cities as of December 2014. City CCD Starbucks Coffee Barista Costa Coffee Dunkin Donuts CBTL Delhi 161 10 18 18 18 4 Gurgaon 40 4 18 5 6 2 Greater Mumbai 192 23 16 18 5 8 Banglore 196 10 14 11 4 3 Chennai 90 1 5 4 - 1 Hyderabad 73 3 5 - - - Kolkata 80 - 12 - - 2 Pune 71 6 5 4 1 1 Brandwise % of stores in top 8 cities 61% 89% 55% 73% 68% 81%  The players in the Indian market are aggressively trying to gain a bigger pie of the market share in the growing café market in India.  Café Coffee Day has been very aggressive in expanding and has around four times the number of stores as compared to the next top four brands put together as on December 31, 2014.
  8. 8. Coffee Consumption Trends • Per Capita Consumption and Domestic Coffee Consumption • Product Sales & SKU Mix of Key Café Brands • Cafe Sales Mix - Dine in vs. non-Dine in • Cafe Sales Mix - Peak Business Hours
  9. 9. 8000 grams per year 110 grams per year 0 1000 2000 3000 4000 5000 6000 7000 8000 9000 Developed Countries India Per Capita Coffee Consumption (grams per year) India being primarily a tea-drinking nation, had witnessed a low consumption of coffee (with an exception of the Southern part of the country), both in terms of frequency and quantity. 60 64 68 70 75 80 85 90 94 102108 115 122 129 137 Domestic Coffee Consumption (000MT) The size of the retail coffee market in India stood at `30 billion in 2014 and is expected to grow to `51 billion by 2020. Domestic consumption of coffee is growing at 5-6% a year, while production is stagnating. Consumption in India is estimated at 0.125 million MT/ year against a production of 0.315 million MT. Southern part of the country accounts for nearly 80% of the total coffee consumption in India. However, there is more potential in the other regions outside South India, where the occasional consumers are high in number. Occasional drinkers contribute to 52% of the total coffee consumers, which essentially means that people have started experiencing this beverage. This presents an opportunity for growth and could be advantageously used to increase the consumption of coffee in the country by converting them to regular coffee drinkers.
  10. 10. Brand Avg. Food Sale Contribution Avg. Beverage Sale Contribution Avg Sales per Day (ASPD) Avg. Store Size Avg. cost/person % % Rs ‘000 Sq. ft. Rs Starbucks 47% 53% 60-65 1700-2000 175-200 Dunkin Donuts 72% 28% 45-50 1200-1500 150-175 CCD 39% 61% 15-20 1000-1200 125-150 Barista 32% 68% 15-20 800-1000 150-175 Costa Coffee 35% 65% 2-25 1200-1500 170-190 CBTL 33% 67% 45-50 1700-2000 175-200 Product Sales & SKU Mix of Key Café Brands In the overall café market, beverages dominate the Stock Keeping Unit (“SKU”) and sales mix primarily due to the nature of the coffee retail space. In the SKU mix, beverages hold over 50% and contribute to approximately 54% of café sales. This is followed by food and desserts. However, a variation can be seen at lounges; where food gains increased focus as it is a premium format with a variety of meal offerings. Food constitutes approximately 42% of the SKU mix with approximately 35% contribution to the sales mix. Across other coffee formats, beverages are mainstay in the mix with the popularity of hot beverages over cold beverages. Desserts contribution is small in the overall pie across SKU and sales mix due to the dominance of beverages and food.
  11. 11. 92% 81% 19% 8% 18% 80% 1% 1% Lounge Cafe Express Café Sales Mix- 2014 Dine-in Take Away Delivery 65% 34.7% 0.3% Total Café Sales Mix Dine-in Take Away Delivery Sales Mix - Dine in vs. non-Dine in The café culture has permeated the streets of India with majority of sales, over 80% coming from dine in across various formats followed by takeaway sales. In contrast, closely 80% of express sales come from take-away due to the very nature of the format –limited seating option and location mostly in office complexes and high footfall zones.
  12. 12. 2% 12% 25% 34% 24% 4% 3% 14% 25% 36% 20% 2% 12% 10% 39% 22% 15% 2% 0700-1100 1100-1300 1300-1600 1600-1900 1900-2200 2200-0000 Lounge Café Express Café Sales Mix: Peak Business Hours Cafés by their very nature are places to hang out, and the evening hours are the peak time, 1600-1900 hours. As for express formats which are located mostly in office complexes and offer takeaway and delivery services, afternoon time (1300-1600 hours) gets maximum customer traffic due to working professionals working in and around office complexes.
  13. 13. Global Market trends and Developments • Pricing of Cafés in India • Organized Café Market- A Global Comparison • Per Capita Spend in Food Services- Global Trends
  14. 14. Brand Cappuccino Expresso Hot Chocolate Brownie Veg. Sandwich Starbucks Coffee 120 100 135 160 170 Café Coffee Day 79 69 101 75 89 Barista 90 70 140 130 130 Costa Coffee 110 90 110 200 180 Coffee Bean And Tea Leaf 120 100 140 125 175 Dunkin Donuts 90 50 105 59 120 Pricing of Cafés in India  Café Coffee Day with the highest number of outlets and competitive pricing has attained better consumer penetration and strong connection with the young consumers.  Starbucks has emerged as an aspirational brand and has the biggest ticket size only second to Coffee Bean & Tea Leaf.  Barista recently witnessed a change in ownership and is revamping its market strategies.
  15. 15. Country Café Market Size (US $ million) No. of Café No. of Cafe per million People India 1070 19990 16 China 10746 27608 20 UK 9347 14292 223 USA 19014 23357 74 Germany 3114 31844 385 France 3994 19431 294 Brazil 3305 24324 119 Italy 9440 65571 1046 Malaysia 1555 4138 139 Thailand 416 4039 60 Indonesia 665 3136 12 Organized Café Market- A Global Comparison  India, as compared to the other markets detailed below, exhibits a definite potential for growth for the number of outlets in the café.  Italy has the maximum density of cafés per million people in the organized café market followed by Germany and France.
  16. 16. Country Per Capita transactions No./person/year Per Capita Spend-Food Services (US$)/Year India 72 32 China 103 375 UK 78 1311 USA 180 1558 Germany 51 559 France 63 845 Brazil 111 569 Italy 138 1463 Malaysia 46 278 Thailand 143 328 Indonesia 24 123 Per Capita Spend in Food Services- Global Trends  The per capita spend of India is the lowest as compared to the other countries as listed below. This is primarily due to higher rural population and preference of eating at home. This is due to less eating out options in the smaller cities and towns, compared to other countries like the USA, Italy and the UK.  Per capita number of transactions in India as compared to the USA, Thailand, Italy and Brazil is low is expected to grow over the next few years based on the growth of eating out culture.
  17. 17. Consumer Behaviour • Aggressive expansion by established brands, • Entry of new players in the space, • increased consumer purchasing power, • High café exposure and • Acceptability of the segment by the time-pressed consumer
  18. 18. Format Branding Offerings Target segment Footprint Café Network Café Coffee Day outlet Café Coffee Day a mix of coffees, teas and other beverages and food options value-conscious youth segment 1,423 outlets across 209 cities in India and 16 international outlets across Austria, Czech Republic and Malaysia Café Coffee Day The Lounge outlet The Lounge a mix of exotic coffees, teas, cocktails and international cuisines options trendy and affluent customers with a higher disposable income 42 outlets across seven cities in India Café Coffee Day The Square outlet The Square specialty coffees and teas and fine dining options coffee connoisseurs who seek the theatre of coffee seven outlets across four cities in India In Home Vending business Coffee Day Beverages a variety of coffees and teas; coffee is freshly brewed corporate and institutional clients 28,777 vending machines across India Fresh & Ground outlet Coffee Day Fresh & Ground 22 exclusive varieties of freshly brewed coffee powder residential households consumption and a large number of restaurants and eateries across South India 424 outlets across seven states in India Out of Home Coffee Day Xpress kiosks Coffee Day Xpress basic offerings of coffees and teas and light snack options caters to ‘Coffee onthe- go’ consumers 590 kiosks across 12 cities in India Production, Processing & Exports Coffee Day Exports green coffee beans large roaster and coffee traders one of the largest exporters of Indian coffee beans, primarily to Europe, Japan and the Middle East Format of Coffee Business wherein CCD Operates
  19. 19. Thank You. Dessence Hospitality Advisory Services PVT Ltd 303, Aar Pee Centre, 11th Road, MIDC, Andheri East Mumbai www.dessencehospitality.com chandni@dessenceconsulting.com +91-22-28228142 +91-9820075332

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