Just a couple of hours before Starbucks and Tata Group announced their much-delayed and talked-about India plans, Café Coffee Day said they had opened the 150th outlet in Bangalore, their home city in which its first café was opened 14 years ago.
Even as Starbucks is gearing up for the launch of their first store, in another six to seven months, Café Coffee Day would have more likely touched the 1,200th store mark by then — an average of one café every third day.
“We welcome the entry of Starbucks into India. It will certainly add to the excitement of the culture of cafes here and we are looking forward to an expanded market going forward,” said Venu Madhav A, COO, Café Coffee Day.
Café Coffee Day, India’s largest café player, is operational in 150 cities and towns in India and is looking forward to add 250-300 stores from the present count of 1,050 cafes. It is the market leader in the segment, followed by Barista (200 cafes) and Costa Coffee, which is managed by Devyani International in India, with 70 units.
Backed by an expansive captive coffee plantations in Chikmagalur in the pristine Western Ghats, Café Coffee Day took upon itself the task of deriving more value for the coffee bean and not be affected by the vagaries of the volatile export market. It pioneered the café concept in India, a market which is now worth close to Rs 2,000 crore with around 1,500 cafes. And as a statement from Café Coffee Day said: “We have redefined the coffee experience being the trend-setter in the café space and will continue to do so with our unique offering and consumer experience opportunities.”
Harish Bijoor, noted brand consultant who has a long association with coffee industry in India, told Business Standard recently: “CCD has the ability to emerge as the mass cafe and Starbucks is in the danger of becoming a niche cafe in a country where true-blue brand success is measured in mass-manners of speaking.”
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Madhav of CCD, however, said it was too early to predict the impact. “We do not know what formats Starbucks will bring to India and what will be their marketing strategies. There will be no knee-jerk reactions on our part and we will continue to focus on our expansion plans.”
According to industry estimates, India, in the current context can take 5,000 cafes and there is space for three to four large pan-India players.
CEO, Costa Coffee India, Santosh Unni said, “My reaction to the entry of Starbucks would have been different if the geography, which I am operating in was the size of Bahrain. There is no need to be paranoid. In fact, it is a positive development for the sector. With Starbucks coming into India, the quality of cafés will certainly improve.”
Costa Coffee, a global brand, which matches step-to-step with Starbucks in the UK market is looking at an aggressive rollout in India during 2011 and will have a total of around 120 cafes this year.
Costa Coffee, which derives an average day sales of Rs 24,000 per café and among the top in this metric, feels location is always the factor which decides the success of a café. “It is an impulsive decision to get into a café and it should also come with a convenience factor. The other aspect is the Indian market is growing exponentially and the Starbucks entry is indeed a good sign for the sector,” Unni said.
According to Ramesh Srinivas, executive director, KPMG, Starbucks is most likely making a soft entry. “It is only a pilot. Here it could be a niche player, unlike many in the other markets where they are present at every street corner. So, they may be looking at various formats they could try here. It’s nothing more than testing the waters before their hard entry. In India, their model followed elsewhere may not work out as they will be targeting the big cities where real estate costs are quite high. As of now, it’s only a wild guess as to what market they may be targeting.”