Focus on increasing visibility in top-tier locations: Costa Coffee's Nair

Coffee, and more specifically, specialty coffee, is pretty much at a tipping point, Nair said

Costa Coffee, which has a store count of 200 across the country, continues to expand at a steady pace in the Indian market. In an exclusive interview, Vinay Nair, vice president, Costa Coffee, India, and emerging markets, spoke in a video interview with Sharleen D’Souza on the healthy growth that the coffee market is witnessing in India. Edited excerpts:
 

What are your expansion plans for Costa Coffee as the coffee culture is picking up in the country?

Coffee, and more specifically, specialty coffee, is pretty much at a tipping point. If you look at the sheer number of new coffee players coming in, the expansion plans by everybody, and what we are seeing in terms of interest by consumers in all forms of coffee. India is reaching a tipping point. We've had a pretty good journey over the last couple of years. You've seen the numbers. We recently celebrated our 200th store in India, in Bangalore.

We are broadly excited by the opportunity we see in specialty coffee and in the Indian market. We have called out store numbers anywhere between 50 to 60 a year and are in line with the expansion we have done for the last couple of years. We have an appetite for more, provided we see opportunities shaping up. That's the broad view on expansion. We've recently opened about four stores on the Delhi-Mumbai Expressway. We are encouraged by the results that we are seeing again, a very strong coffee occasion that is developing around travel.

The consumer is coming back to work and that's very different from six to eight months ago when people were still working from home. We are seeing tremendous interest, both from landlords of large corporate tech parks and from offices to open stores. We continue to be excited about where the category is headed and our broad expansion plans for India.

Where will you focus on the expansion of stores?

The expansion strategy prioritises growing our presence in key urban centres, targeting both existing markets and emerging cities.

 Our focus is on increasing visibility in top-tier locations such as airports, highways, commercial hubs, offices, and healthcare facilities. This approach will ensure a broader market reach while strengthening our footprint across India.

Currently, what is the coffee market in India growing at?

What we are seeing through research and publicly available data, specialty coffee is growing in the range of 11-12 per cent in India. That's the kind of CAGR that we are seeing in the last two, or three years post-pandemic. I'm personally excited by the conversations and work that is starting to happen around coffee. There's specialty coffee, international brands like us, filter coffee in the south, which is getting its own makeover and a lot of players are emerging in the value segment as well. This is fantastic for a nascent category like coffee.

 How are you looking at competition entering the segment?

It is great for a nascent category like coffee. Offices are coming back; airports are growing, thus increasing the area of opportunities. But we are excited about the fact that the coffee category is seeing so much interest because it develops faster.

Will your revenues continue to grow at a healthy pace?

In the previous quarter which Devyani International published, it was quite healthy and we saw 40 per cent plus revenue growth. It is super important that we continue to generate revenues out of our existing stores (same-store sales growth), which is innovation around food, localisation, the spectrum of pricing, creating more occasions, and making sure that key players like the coming festival season are strong and well maintained. They become important to grow your existing real estate.

The second source of growth also comes to new expansion and disciplined expansion, both are important. We are keen to make sure that even as you smartly expand, we also continue to do a good job with the existing real estate. That's a big learning, and that's something which is critical to our growth story in India. Devyani International has got a strong growth agenda on coffee. We are excited to be partnering with them and working with them on multiple fronts to execute the opportunity that we have seen in India.