Study the Impact on Retail Indian Coffee Industry with the Advent of Coffee Shops.
(With Emphasis on Cafe Coffee Day)
TABLE OF CONTENTS
• • • • • • • • • • • • • • • • • EXECUTIVE SUMMARY CONSUMER PROFILE ACKNOWLEDGEMENT INDIAN COFFEE INDUSTRY TODAYS COFFEE DRINKER ABOUT CAFE COFFEE DAY CAFE COFFEE DAY – MARKET SHARE GRAPH CAFÉ COFFEE DAY – SWOT ANALYSIS CHANGING MARKET STRATEGY OBJECTIVE OF THE STUDY SAMPLING TECHNIQUE DATA COLLECTION SAMPLE SIZE HYPOTHESIS ANALYSIS RECOMMENDATIONS QUESTIONNAIRE 3 4 6 7 7 9 11 13 14 15 16 17 18 19 20 29 31
CONSUMER TASTES AND HABITS ARE CHANGING IN INDIA AS COFEE BARS/CAFES SPRING ONTO THE SCENE. ESPRESSO, LATTES, AND
3 CAPPUCCINOS ARE FAST BECOMING POPULAR BEVERAGES IN THIS TEA CONSUMING NATION.
India has always been predominantly a Chai (Tea) drinking nation. However, there has been a sudden change in this trend with coffee becoming more and more popular in recent times especially among the younger population. The roadside Chai (Tea) thelas (shops) outside colleges and offices have been replaced by hip coffee joints like Barista and Café Coffee Day. The Chai (tea) that used to cost couple of rupees (5 cents) is replaced by coffee costing something like Rs. 100.
India has now becoming one of the fastest growing coffee markets in the world. According to Technopak Advisors, a global retail consultancy firm, the organized coffee retail business in India is over Rs.8 billion ($17 million), and the potential for coffee retail outlets are nearly 3,000.
With the Indian middle class consumer ready to spend more and be a part of global lifestyle and culture, coffee parlours in the country are on an expansion spree. From small-sized coffee parlours to classy coffee lounges leading coffee retailers such as Café Coffee Day, Barista, Costa Coffee and Coffee World have all been fighting hard to lure India’s growing middle class.
THE NEW SCENARIO:
4 Cafe culture is the latest trend to take the nation by storm. It joined the race simultaneous with the satellite culture. Although not as big, the culture has nonetheless caught on the consumer fancy and has spawned quite a few coffee chains. Amongst the big guns is Amalgamated Bean Coffee Trading Company’s Cafe Coffee Day.
This study cannot be complete without looking at the ever changing habits and preferences of consumers.
The consumer profile in India especially is one with varied cultural and traditional influences. In terms of coffee, southern India is supposed to be one of the major consumers of same as compared to the Northern and other parts of India.
Filter coffee is the preferred drink in south while instant coffee in north. Price also plays a major significant role in their purchase decision.
In this study we have looked at the consumer from the following aspects:
Their Monthly disposable income
Services offered to the consumer
Quality of the Product
Demographic segmentation of consumers
Consumer Perception towards such upcoming retail services in India is another consideration.
6 The project is the result of the efforts of many people. We would like to place on record our sincere thanks to the various people for their assistance, guidance and co-operation for the successful completion of this project.
First and Foremost, we owe our sincere thanks to Institute of Management & Computer Studies for all the support provided in terms of the library for providing us with timely requirements of books and also the computer lab for giving an access to the computers and also the Internet.
Our overriding debts continue to the respondents without the time and sincere efforts of whom the project would not have got its current shape. And last but not the least friends and family members who have given us enough support, encouragement and blessings without which the completion of this project was not possible.
INDIAN COFFEE INDUSTRY
7 India ranks 5th among the top 10 countries of the world, accounting for 3 % of the total world coffee production and exporting 80 % of the total produce. It is also the 5th largest coffee producer. Being a traditional tea consuming country, the average coffee consumption in India was quite low at 10 cups per person annually. People in the Northern region preferred instant coffee in contrast to the people in the south, who preferred traditional filter coffee.
Coffee, a household beverage confined to South India became quite popular in the late 1990s. The late 1990s saw the emergence of coffee chains. Moreover, there was a transition from the conventional and out dated coffee house to a more sophisticated and trendy coffee bars. In the late 1990s, non-traditional coffee retailing outlets like coffee bar chains, coffee vending machines, and specialty coffee powder shops offered exciting growth opportunities. They constituted 50 % of sales in the Indian Coffee Industry. The growth of these specialty and gourmet coffee shops was a result of the economic and demographic changes, higher disposable incomes, increasing number of working women, and increasing awareness and exposure to global trends
Today's Coffee Drinker
Today's coffee drinker who visits the cafés is mainly the youth between the ages of 15 and 35. Students form a majority of the customer base for the cafés. Café Coffee Day estimates that about 60% of the footfalls in its 300 plus outlets are those of students. Barista estimates the same to be 40% in its outlets. Many of these youngsters consider a café as a meeting place for discussing their projects or just interacting with other students
8 rather than as a place that just serves coffee. Many of these outlets have juke box music, wi-fi connections, and even a cell phone charging station. It's a place where one can sit, talk, relax and incidentally drink a cup of gourmet coffee with added flavors such as chocolate, caramel, and hazelnut. Hence, many outlets serve more than just the various varieties of gourmet coffee. Since students and youngsters in general prefer snacks rather than meals, cafés serve both Indian and continental snacks. Costa Coffee as part of their menu is planning on introducing wraps and actually adding an Indian flavor to suit the local palate. Barista and Café Coffee Day have entrenched themselves into the minds of the consumer. They have outlets at almost every street corner and concentrating more on areas, which are likely to be visited by youngsters. It would be rather difficult to steal customers from the two leading chains even though they might claim to offer a `smoother' blend. Pricing will be a major factor in this regard. Starbucks and Barnie's might invite traffic into their outlets initially for the novelty aspect but might not lead to a loyal customer base as consumers might realize that they are paying a huge price for the `un-perceived' value of a `smoother' blend. Whether these foreign players will really make inroads and what slice of the pie they will take is yet to be seen. It's certainly worth the wait to see them make a mark in the mind of the consumer.
ABOUT CAFE COFFEE DAY
Café Coffee Day is a chain of coffee shops in India. A division of Amalgamated Bean Coffee Trading Company Ltd. (ABCTCL), it is commonly known as Café Coffee Day. It opened its first cafe in 1996 on Brigade Road in Bangalore, and today has the largest cafe retail chain in India - with 450 cafes across 69 cities in India. The cafe chain has had much success riding, and to some extent creating, the cafe culture wave that swept across metropolitan India following the BPO boom and the resultant increase in youth spending power. With a hip, trendy image, the chain attracts a lot of young folk who work in BPO businesses. Its different divisions include: Coffee Day Fresh 'n' Ground (which owns 350 coffee bean and powder retail outlets), Coffee Day Xpress (which owns 341 Coffee Day kiosks), Coffee Day Takeaway (which owns 7000 vending machines), Coffee Day Exports and Coffee Day Perfect (FMCG Packaged Coffee) division. It is now entering the European market as well, making forays into Pakistan, Austria and Germany to set up cafes abroad. One unique aspect of Café Coffee Day is that it grows the coffee it serves. The coffee beans are produced in the golden soil of Chikmagalur.
10 Café Coffee Day has created its own identity. When one thinks of a café it’s got to be Café Coffee Day. The font used for “Café” is called SLURRY. The upward swirl in the logo depicts the freshness and the aroma it provides with every sip. It has emphasized great attention in choosing the colours, which is young and vibrant. The Tag line - “A LOT CAN HAPPEN” is aptly chosen for the brand whose major objective is to cater the youth in the 15–29 year age bracket. The location chosen by Café Coffee Day also ensures that people can rejuvenate and be themselves. It has a well equipped roasting unit catering to the specific requirement of the consumers. There are Self service counters/outlets, but table service is also provided. Cafe Coffee Days after sales service team are well trained and certified to service a wide range of manual, semi-auto to fully-auto Coffee machines and related equipments. The vast knowledge and experience of Cafe Coffee Day Coffee team will enable them to serve customers well. They have been able to secure a strong foothold in the marketplace by ensuring customers are happy and need not look anywhere else for the best service and product range. Customers have attested to the consistent flavors and aroma of premium quality Coffee and comprehensive range of other products, made even better by prompt and friendly service. Cafe Coffee Day Coffee Team is confident that being part of a global network which will give them strength and diversity as they strive to improve to service customers better.Café Coffee Day believes that - “People are hired for what they know but fired for how they behave”.
11 Cafe Coffee Day Competitors includes
• • •
Barista Cafe Mocha Qwikys
Café Coffee Day – Market Share Graph
Other consists of branded retails chain like
• • • •
Costa Mr. Bean Coffee Mocha Qwikys
Café Coffee Day takes on Barista
CAFÉ C DAY 4 4 4 3.5 3.5 4 4 4
BARISTA 3.5 3 3 4 4 4 3.5 3.5
1. Taste & Quality of products 2. Prices of products. 3. Order/ Delivery time/process. 4. Performance of staff. 5. Ambience. 6. Availability of products. 7. Value for money of products. 8. Overall performance
Café Coffee Day is the clear winner as it exceeds Barista on the key parameters
Café Coffee Day - SWOT Analysis
Strengths Taste & Quality of their products. Grow their own coffee beans Projected as an “affordable” brand.
Weakness Lacks the power and strength expected to maintain brand loyalty. Average rating for their behavior and service.
Threats The brand doesn’t project a clear image to customers about what Café Coffee Day is all about. Brand Loyalty is not so strong
Opportunities Over 40% of the population is under the age of 20, hence untapped market share and potential for growth. The use of clever collaborations (bookstore, etc)
CHANGING MARKETING STRATERGY
Cafe Coffee Day Coffee Company is changing its positioning from a premium retail outlet to that of a hangout or a meeting place frequented by young people. Company officials say this is because the nature of Cafe Coffee Day's clientele ranges from young college-goers to young professionals. "With such a profile affordability becomes an important issue." Given below is the kind of Product Mix, Café Coffee Day has on their menu. It clearly reflects the kind of marketing strategy it would like to undertake - Keep the Indian taste alive.
C ffees&T o eas H t C ffee o o E re sp sso E re n A e n sp sso m rica o M cch to a ia C p u in a p ch o C fé L tte a a C o cin h co o C fé M ch a o a Irish C ffe o e In tern atio al C ffee n o C lo b n J a V ld z o m ia u n a e E io ia Q h a th p n a w h K n n S fa e ya a ri C ld C ffees o o S e tM t w e in C ld S a o p rkle B n ie B n n ra d d a a a T p l Ice e ro ica b rg Ice E d skim o R efres in A h g ltern ativ es G itas ran B o O ne lo d ra g Co B e o l lu P e p le C sh in a p ru E e ld Ice m ra R b S rp u y u rise E atab les M eltin M m ts g o en B n n W ln t C ke aaa a u a C o la M u h co te o sse B n n C ra e P a a a a m l ie C o la D u h u h co te o g n t Co s o kie M rb C ke a le a P e p le G ta x in a p e u C o la C ke h co te a Ic C e ream s Vn a illa C o la h co te S a n B st e so s e Q ic B u k ites S m sa a o P ff u P izza C ssia t ro n F n F s re ch rie K th R ll a i o W p ra s B iriya i/K lch n u a
S o th m o ies M n o C la a ag o d S w e C la a tra b rry o d C rem s o as L i itch G g r S ice in e p P a C la a in o d
C ffee A d n o d -o s Hn y oe F v u dS p la o re yru s W ip e C a h p d re m S o Ice C a co p re m C o la S u h co te a ce T eas A m ssa M sa C a a la h i L m n n Ice T a e o e K sh iri Q h a a m a wh
CoR o l efres ers h F it J ice ru u s M e l W te in ra a r
OBJECTIVE OF THE STUDY
The reason for selecting the brand ‘Cafe Coffee Day’ as the subject for research study was to understand how the various attributes present or absent, with respect to a product affects the buying behavior of the consumers.
The study was also undertaken to analyze whether there was any scope for improvement for the subject under consideration and what can be done to improve its standing vis a vis its competitors. The study was important for us to gain valuable insights into the behavioral patterns of the consumers when it comes to buying a product which has a premium attached to it.
It was also necessary to understand how people react to a product which has a snob value attached to it and to understand the level of acceptability of a product when certain attributes are available and when certain attributes are absent.
The sampling technique applied was the stratified sampling technique. Target population was first identified as students and working executives under the assumption that these segments were among the most frequent users of the said product.
Thus two mutually exclusive strata were formed. Next from each strata at random, respondents were identified and questionnaires were distributed so that data can be collected. Also age – group was one of the factors that would be considered for deciding the basis of collection of information. Within stratified sampling, simple random sampling was used as questionnaires were distributed at random to students and the working executives.
One of the shortfalls of the above technique would be that other consumers such as those constituting a family have been completely ignored as only students and working people have been considered. Had the above segment been included, our study would have been more comprehensive and could have given us another dimension to look into.
Data was collected in the form of personal interview i.e. using the concept of mall intercept. This method was selected, as it was the fastest way to collect data. If more time was available then the respondents could have been targeted directly in the Coffee shop at the appropriate time. Thus the primary data was collected through Surveys, whereas the source for secondary data was the various websites.
Since focus was only those Respondents who have visited Cafe Coffee Day, survey area would be concentrated near Cafe Coffee Day outlets. • • Andheri (West) Dadar (East)
DATA PROCESSING AND ANALYSIS
The statistical tools which will be used are as follows: a) Graph and Frequencies b) Any other tool based on the type of data collected
The questionnaire consisted of both open ended and close ended questions. Some sample questions that were asked were:
a) Have you ever visited Cafe Coffee Day?
(Y / N)
b) What do you like most about Cafe Coffee Day? 1) Ambience 2) Service 3) Coffee 4) Any other
Took a pilot survey of 20 candidates and asked them, “What is the deciding factor while buying Coffee at a Coffee Bar”. It was found that 75% of the sampled respondents in the pilot test were affected by the price. Thus we took price as the parameter for evaluating perception of Coffee bars
(estimated proportion of success)
(estimated proportion of failure)
The formula for estimating sample size in case of proportion is N = (Z/E) 2 P * Q
(95% confidence level in standard error units) = 1.96
E (maximum allowance of error between true proportion and sample proportion) = 0.10
(1.96/0.10)2 * .75 * .25 =72.03=72 (app.)
Therefore N = 72 (approx) Thus our Sample Size will be 72 respondents
HYPOTHESIS STATEMENT 1
To test which attribute plays the major role in drinking Coffee at Cafe Coffee Day H0 = Price is the sole deciding factor while buying Coffee at Cafe Coffee Day H1= Price is not the sole deciding factor while buying Coffee at Cafe Coffee Day
HYPOTHESIS STATEMENT 2
Testing the brand loyalty of the customers. H0 = Students are not brand loyal to CAFE COFFEE DAY. H1 = Students are brand loyal to CAFE COFFEE DAY. Time spent at CAFE COFFEE DAY is directly related with amount spent
I. WHICH COFFEE BARS DO YOU VISIT V/S CATEGORY
CATEGORY Executives Students 10 6 7 4 13 2 16 4
Coffee Bars Café Coffee Day Barista Café Coffee Day, Barista Café Coffee Day, Costa Coffee, Barista,Others Café Coffee Day, Costa Coffee, Barista Café Coffee Day, Barista,Others
Total 16 11 29 6
1 3 36
2 4 36
3 7 72
From the table it was observed that 28% of the working respondents (i.e. 10 out of 36 working respondents) only visited Cafe Coffee Day.
On the other hand only 16% student respondents (6 out of 36 student respondents) went only to Cafe Coffee Day.
This table also highlighted a very important characteristic of student respondents, i.e., student population are more prone to switching Brands as compared to, Working class who tend to be more ‘Brand – Loyal’
21 I. HOW DID YOU COME TO KNOW ABOUT CAFE COFFEE DAY
HOW DID YOU COME TO KNOW ABOUT CAFE COFFEE DAY
Frequency Percent Friends Word of Mouth Hoardings Vicinity Friends & Word of Mouth Friends & Vicinity Friends, Vicinity & Word of Mouth Friends, Hoardings & Word of Mouth Hoardings & Vicinity Total 23 8 1 12 10 9 6 1 2 72 31 11.1 1.3 16.6 13.8 12.5 8.3 1.3 2.7 100.0
Most of the respondents (31%) came to know about Cafe Coffee Day through their peer group or word of mouth (13.8%), or because the Cafe was located in their area i.e. their vicinity (16.6%)
This shows that the circle of friends plays an important role in influencing the decision of an individual to visit a Coffee Bar.
At the same time it also helps if the bar is located in your area of residence or work – place.
22 II. DOES COFFEE REMIND YOU OF CAFE COFFEE DAY
The above question was specifically put so that the brand recall value of the brand ‘Cafe Coffee Day’ could be tested.
Majority of the respondents (67.3%) did not associate Cafe Coffee Day with Coffee.
This was identified as one of the problem areas. Possible solutions are suggested in the recommendations that follow
DOES COFFEE REMIND YOU OF CCD
23 III. HOW FREQUENTLY DO THEY VISIT CAFE COFFEE DAY V/S CATEGORY Category Total Executives Students 4 10 14 14 16 30 18 10 28 36 36 72
How frequently do they Visit CCD
Once in a week Once a month Once in Six Months Total
Through this question an attempt was made to analyse who are the frequent visitors to the Bar and accordingly a strategy could be devised to target the audience.
The statistics revealed that students visit the bar more often than the working executives while the execs visit the bar only once a while.
18 16 14 12 10 8 6 4 2 0 Executives Students Once in a week Once a month Once in Six Months
24 IV. HOW MUCH TIME DO YOU SPEND AT CAFE COFFEE DAY V/S ONE TIME SPENDINGS AT CAFE COFFEE DAY
One Time Spending At Café Coffee Day Less Than RS.50 Less than 1 Hour HOW MUCH TIME DO 1-2 Hours THEY SPEND AT CAFE 2-3 Hours More COFFEE DAY Than 4 Hours Total 8 41 18 5 72 2 2 4 RS.50RS.150 11 26 4 RS.150RS.250 6 10 2 5 ABOVE RS. 250 Total
19 45 6 2
The objective of this question was to study whether the spending increased with time.
It was observed that as the time spent at the bar increased, the tendency to spend increased and this peaked for the category of people who spent around 1 – 2 hrs. After this peak point the spending dropped.
Thus highlighting that people sitting for 1-2 hrs spend the most and after this point their consumption level falls.
25 • This proves our Hypothesis (“Time spent at CAFE COFFEE DAY is directly related with spending”) false.
The maximum order that was booked was for the price range of Rs. 50 – Rs. 150.
V. CATEGORY V/S ONE TIME SPENDINGS AT CAFE COFFEE DAY
Through the table it was found that one time spending of students was more in the range of Rs.0- Rs.150.
Whereas working group are the ones who spent the most, their one time spending ranged from Rs. 50 to Above Rs.250.
This also proves that working group is better source of income than student group, one of the reasons being that working group has better purchasing power than students.
26 VI. PERCEPTION ABOUT CAFE COFFEE DAY AS A PERFECT COFFEE BAR PERCEPTION ABOUT CAFE COFFEE DAY AS A PERFECT COFFEE BAR Frequency YES NO Total 45 27 72 Percent 62.5 37.5 100.0 Cumulative Percent 62.5 100.0
Majority of the respondents surveyed (about 62.5% ) felt that Cafe Coffee Day was the perfect place to have Coffee.
This shows that Cafe Coffee Day has been successful to a considerable amount in the minds of people. But they would need to work upon new strategies to keep their position.
PERCEPTION ABOUT CCD AS A PERFECT COFFEE BAR
27 VII. RATINGS OF CAFE COFFEE DAY ON VARIOUS PARAMETERS
From the below fig, it can be seen that ambience is highly valued at Cafe Coffee Day by the consumers
RATINGS OF CCD ON VARIOUS PARAMETERS
0.00 4.84 0.00 1.61 9.68
3.23 1.61 8.06
8.06 4.84 16.13
29.03 30.65 50.00 60% 54.84 40% 61.29 46.77 40.32 GOOD 20% 19.35 9.68 0% PRODUCTS QUALITY HYGIENE AMBIENCE SERVICE PROXIMITY PRICE 38.71 VERY GOOD 16.13 54.84 POOR 59.68 BAD AVERAGE
This also proves our hypothesis 1 that price is not the deciding factor to visit CAFE COFFEE DAY.
VIII. CATEGORY WISE RANKING OF CAFE COFFEE DAY
It can be said after looking at fig below that working class ranked CAFE COFFEE DAY as a no1 Coffee shop
On the other hand the students have ranked café Coffee day as the no 1 brand and Barista 2nd
25 20 15 10 5 0 CCD Barista Others
It can also be verified from the above responses that working class are brand loyal than the student class.
This also proves the hypothesis 2 “Students are not brand loyal”
As per the results obtained during the course of the project we have come across the following set of recommendations:-
The most obvious fact that came out from the project was price was one of the factors that served as a hindrance not only to the students, but also to the working executives. Thus the most likely solution to this problem would be nothing but decreasing the price but at the same time the profitability of the joint should not be affected.
The next possible step that the Coffee – bar should take is to increase its awareness among its target audience. This it can achieve by various means of advertising and that too keeping in mind the specific categories of its consumers. For e.g. it can target the students by sponsoring the cultural events that are organized in various colleges.
Keeping in mind that a student cannot spend as much as a working executive does, special rates can be introduced for the students.
30 • Further more the joint can also toy with the idea of floating special membership cards for its patrons so that they would get certain rebates and this would result into increase in the frequency of their visits as this policy will encourage them to visit the joint.
New varieties of product should be introduced on an experimental basis.
Also to increase the reach of the consumers more and more outlets should be established.
The Coffee – bar can go in for competitive analysis to understand the competition and realize its current standings.
31 QUESTIONNAIRE [Information provided by the respondent will be kept fully confidential and will be used only for the academic purpose.] Q1 Do you visit Coffee Bars? If yes which ones? Yes Café Coffee Day Barista Costa Coffee Q2 Where did you hear about Cafe Coffee Day? A) Friends C) Hoardings B) Word of Mouth D) Located in my Area No
Q3 Does Coffee Reminds you of Cafe Coffee Day? Yes No
Q4 What attracts you to Cafe Coffee Day? A) Ambience C) Products Offered B) Service. D) Location
Q5 How frequently do you visit Cafe Coffee Day? A) Everyday C) Once in 2 Weeks B) Once in a week D) Once a month
Q6 How much time do you spend at Cafe Coffee Day? A) Less than1 hour C) 2 – 3 hours B) 1 – 2 hours D) More than 4 hours
Q7 Describe in one sentence what comes to your mind first, when you hear about Cafe Coffee Day?
32 ____________________________________________________________________ _ Q8 Do you perceive Cafe Coffee Day as a perfect Coffee bar? Yes No
Q9 Rate Cafe Coffee Day on following parameters? 1 Very Good Product Variety Product Quality Price Hygiene Ambience Service Provided Location Q10 What difference do you find between drinking Coffee at Cafe Coffee Day and at other Coffee Bars _______________________________________________________________________ _______________________________________________________________________ __ Q11 What is your average one time spending at Cafe Coffee Day? A) Less than Rs.50 C) Rs.150 – Rs.250 B) Rs.50 – Rs.150 D) Above Rs.250 2 Good 3 Avg 4 Bad 5 Poor
Q12 Rate the following according to your perception? A) CAFE COFFEE DAY B) Barista C) Costa Coffee Q13 Would you like to give any special suggestions to Cafe Coffee Day?
33 _______________________________________________________________________ _______________________________________________________________________ __