FINAL RESEARCH PROJECT

CUSTOMER PERCEPTION AND ATTITUDE

TOWARDS RETAIL COFFEE CHAINS A STUDY IN
DELHI, W.R.T BARISTA, CCD, NESCAFE

SUBMITTED IN PARTIAL FULFILLMENT OF PGDBM (2006-08)

Submitted to:
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Submitted by
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 ACKNOWLEDGEMENT

I would not have completed this project without the help, guidance and support of
certain people who acted as guides and friends along the way. I would like to
express my deepest and sincere thanks to my faculty guide NAME, for her
invaluable guidance and help. The project could not be complete without her
support and guidance. I am also thankful to NAME for his help in completing the
project. They acted as a continuous source of inspiration and motivated me
throughout the duration of the project helping me a lot in completing this project.
INDEX

1. Introduction to the topic

2. Company profile
a. Barista
b. Caf Coffee Day
c. Nescafe
3. Research objective
4. Research methodology
5. Data analysis
6. Future of coffee houses in India
7. Conclusion
8. Annexure1 Questionnaire
9. Annexure2 Literature review
10. Bibliography
INTRODUCTION

Today Coffee has become a lifestyle. Also, it has caught the fancy of today's
generation - youth. These were not the typical coffee drinking target customers. But
now they are a big part of the target base for coffeehouses. And it is fashionable to
be seen at the Coffee Pubs. It is in a way, a lifestyle statement.

That is bad news for tea - still the favorite brew for a majority of Indians, which has
been losing out to coffee in recent years. India is one of the world's largest exporters
of tea and also one of its biggest consumers. But it is coffee drinking which is
increasingly becoming a statement of young and upwardly mobile Indians.

And coffee bars, an unheard of concept till a couple of years ago, are suddenly big
business. Corner bars like these are offering more than just coffee and snacks to
their customers. For many of their regular patrons, a visit to these bars is also a part
of the western lifestyle they so much want to identify with.

The Coffee retailing sector in India is booming today, with several companies active
in the market. Some are local entities, some have come from abroad and have tied
up with local companies, and some seem to prepare themselves for an entry sooner
or later. The market growth is expected to be 20 to 30% annually in the next couple
of years.

Caf Coffee Day (CCD) pioneered the caf concept in India in 1996 by opening its
first caf at Brigade Road in Bangalore. Till about the late 1990s coffee drinking in
India was restricted to the intellectual, the South Indian traditionalist and the five
star coffee shop visitor. As the pure (as opposed to instant coffee) coffee caf culture
in neighboring international markets grew, the need for a relaxed and fun hangout
for the emerging urban youth in the country was clearly seen.
Coffeehouse

A coffeehouse shares some of the characteristics of a bar, and some of the

characteristics of a restaurant, but it is different from a cafeteria. As the name
suggests, coffeehouses focus on providing coffee and tea as well as light snacks. This
differs from a caf, which is an informal restaurant, offering a range of hot meals,
and possibly being licensed to serve alcohol. Many coffee houses in the Muslim
world, and in Muslim districts in the West, offer shisha, powdered tobacco smoked
through a hookah. In establishments where it is tolerated - which may be found
notably in the Netherlands, especially in Amsterdam - cannabis may be smoked as
well.

From a cultural standpoint, coffeehouses largely serve as centers of social

interaction: the coffeehouse provides social members with a place to congregate,
talk, write, read, entertain one another, or pass the time, whether individually or in
small groups.

History

Since the 15th century, the coffeehouse has served as a social gathering place in
Middle Eastern countries where men assemble to drink coffee (usually Arabic
coffee) or tea, listen to music, read books, play chess and backgammon, and perhaps
hear a recitation from the works of Antar or from Shahnameh. In 1457 the first
coffeehouse, Kiva Han, was opened in Istanbul, just four years after its conquest by
the Ottomans. Coffeehouses in Mecca soon became a concern as places for political
gatherings to the imams who banned them, and the drink, for Muslims between
1512 and 1524. In 1530 the first coffee house was opened in Damascus, and not long
after there were many coffee houses in Cairo.

In the 17th century, coffee appeared for the first time in Europe outside the Ottoman
Empire, and coffeehouses were established and quickly became popular. The first
coffeehouses in Western Europe appeared in Venice, due to the traffics between La
Serenissima and the Ottomans; the very first one is recorded in 1645. The first
coffeehouse in England was set up in Oxford in 1650 by a Jewish man named Jacob.
Oxford's Queen's Lane Coffee House, established in 1654, is still in existence today.
The first coffeehouse in London was opened in 1652 in St Michael's Alley, Cornhill.
The proprietor was Pasqua Rose, the Armenian servant of a trader in Turkish
goods named Daniel Edwards, who imported the coffee and assisted Rose in setting
up the establishment. Boston had its first in 1670. Pasqua Rose also established
Paris' first coffeehouse in 1672 and held a city-wide coffee monopoly until
Francesca Procopio dei Coltelli opened The Cafe Le Procope [2]in 1686. This
coffeehouse still exists today and was a major locus of the French Enlightenment;
Voltaire, Rousseau, and Diderot frequented it, and it is arguably the birthplace of the
Encyclopdie, the first modern encyclopedia.

Though Charles II later tried to suppress the London coffeehouses as "places where
the disaffected met, and spread scandalous reports concerning the conduct of His
Majesty and his Ministers", the public flocked to them. They were great social
levellers, open to all men and indifferent to social status, and as a result associated
with equality and republicanism. More generally, coffee houses became meeting
places where business could be carried on, news exchanged and the London Gazette
(government announcements) read. Lloyd's of London had its origins in a
coffeehouse run by Edward Lloyd, where underwriters of ship insurance met to do
business. By 1739 there were 551 coffeehouses in London; each attracted a
particular clientele divided by occupation or attitude, such as Tories and Whigs, wits
and stockjobbers, merchants and lawyers, booksellers and authors, men of fashion
or the "cits" of the old city center. According to one French visitor, the Abb Prvost,
coffeehouses, "where you have the right to read all the papers for and against the
government," were the "seats of English liberty.

The banning of women from coffehouses was not universal, but does appear to have
been common in Europe. In Germany women frequented them, but in England and
France they were banned. milie du Chtelet purportedly wore drag to gain
entrance to a coffehouse in Paris. In a well-known engraving of a Parisian
coffeehouse of c. 1700, the gentlemen hang their hats on pegs and sit at long
communal tables strewn with papers and writing implements. Coffeepots are
ranged at an open fire, with a hanging cauldron of boiling water. The only woman
present presides, separated in a canopied booth, from which she serves coffee in tall
cups.

The traditional tale of the origins of Viennese coffeehouses begins with the
mysterious sacks of green beans left behind when the Turks were defeated in the
Battle of Vienna in 1683. All the sacks of coffee were granted to the victorious Polish
king Jan III Sobieski, who in turn gave them to one of his officers, Franciszek Jerzy
Kulczycki. Kulczycki began the first coffeehouse in Vienna with the hoard. However,
it is now widely accepted that the first coffeehouse was actually opened by an
Armenian merchant named Johannes Diodato.

In London, coffeehouses preceded the club of the mid-18th century, which skimmed
away some of the more aristocratic clientele. Jonathan's Coffee-House in 1698 saw
the listing of stock and commodity prices that evolved into the London Stock
Exchange. Auctions in salesrooms attached to coffeehouses provided the start for
the great auction houses of Sotheby's and Christie's. In Victorian England, the
temperance movement set up coffeehouses for the working classes, as a place of
relaxation free of alcohol, an alternative to the public house (pub).

Coffee shops in the United States arose from the espresso- and pastry-centered
Italian coffeehouses of the Italian-American immigrant communities in the major
U.S. cities, notably New York City's Little Italy and Greenwich Village, Boston's North
End, and San Francisco's North Beach. Both Greenwich Village and North Beach
were major haunts of the Beats, who became highly identified with these
coffeehouses. As the youth culture of the 1960s evolved, non-Italians consciously
copied these coffeehouses. Before the rise of the Seattle-based Starbucks chain,
Seattle and other parts of the Pacific Northwest had a thriving countercultural
coffeehouse scene; Starbucks standardized and mainstreamed this model.

In the United States, from the late 1950s onward, coffeehouses also served as a
venue for entertainment, most commonly folk performers. This was likely due to the
ease at accommodating a lone performer accompanying themself only with a guitar,
even with limited floorspace; the political nature of much of 1960s folk music made
the music a natural tie-in with coffeehouses with their above-referenced association
with political action. A number of well known performers like Joan Baez and Bob
Dylan began their careers performing in coffeehouses. Blues singer Lightnin'
Hopkins bemoaned his woman's inattentiveness to her domestic situation due to
her overindulgence in coffeehouse socializing, in his 1969 Coffeehouse Blues.

From the 1960s through the mid-1980s, many churches and individuals in the
United States used the coffeehouse concept for outreach. They were often
storefronts and had names like The Gathering Place (Riverside, CA), The Lost Coin
(New York City), and Jesus For You (Buffalo, NY). Christian music (guitar-based) was
performed, coffee and food was provided, and Bible studies were convened as
people of varying backgrounds gathered in a casual "unchurchy" setting. These
coffeehouses usually had a rather short life, about three to five years or so on
average. An out-of-print book, published by the ministry of David Wilkerson, titled,
A Coffeehouse Manual, served as a guide for Christian coffeehouses, including a list of
name suggestions for coffeehouses.

Format

Coffeehouses in the United States often sell pastries or other food items

Cafes may have an outdoor section (terrace, pavement or sidewalk cafe) with seats,
tables and parasols. This is especially the case with European cafes. Cafes offer a
more open public space compared to many of the traditional pubs they have
replaced, which were more male dominated with a focus on drinking alcohol.
One of the original uses of the cafe, as a place for information exchange and
communication, was reintroduced in the 1990s with the Internet cafe or Hotspot
(Wi-Fi). The spread of modern style cafes to many places, urban and rural, went
hand in hand with computers. Computers and Internet access in a contemporary-
styled venue helps to create a youthful, modern, outward-looking place, compared
to the traditional pubs or old-fashioned diners that they replaced.

International variation

American coffee shops are also often connected with indie, jazz and acoustic music,
and will often have them playing either live or recorded in their shops. Coffeehouses
are often gathering places for underage youths who cannot go to bars.

In the United Kingdom, traditional coffeehouses as gathering places for youths fell
out of favour after the 1960s, but the concept has been revived since the 1990s by
chains such as Starbucks, Coffee Republic, Costa Coffee, and Caff Nero as places for
professional workers to meet and eat out or simply to buy beverages and snack
foods on their way to and from the workplace.

In France, a cafe also serves alcoholic beverages. French cafes often serve simple
snacks such as sandwiches. They may have a restaurant section. A brasserie is a cafe
that serves meals, generally single dishes, in a more relaxed setting than a
restaurant. A bistro is a cafe / restaurant, especially in Paris.

In Australian cities, a traditional European cafe culture is thriving as a result of

significant immigration from mainland Europe in the 19th century and 20th
century. These establishments often cluster along certain streets and with the
weather allowing curb side seating much of the year certain areas resemble a large
party on a Friday or Saturday evening.

In Malaysia and Singapore, traditional breakfast and coffee shops are called kopi
tiams. The word is a portmanteau of the Malay word for coffee (as borrowed and
altered from the Portuguese) and the Hokkien dialect word for shop. Menus typically
feature simple offerings: a variety of foods based on egg, toast, and kaya (jam), plus
coffee, tea, and Milo, a malted chocolate drink which is extremely popular in
Southeast Asia and Australasia, particularly Singapore and Malaysia.

In parts of the Netherlands where the sale of cannabis is decriminalized, many

cannabis shops call themselves coffeeshops.

In modern Egypt, Turkey and Syria, coffeehouses attract many men and boys to
watch TV or play chess and smoke shisha.

a. Barista Coffee

Barista Coffee is a chain of espresso bars in India. Headquartered in Delhi, Barista

currently has espresso bars across India, Sri Lanka and the Middle East. It was
founded in 1997, p Led by the dynamic duo of Ravi Deol & the marketing ace
Sandeep Vyas; Barista was the fastest brand to make it to the list of super brand's
and is ranked among the top 50 phenomenons that changed India. Starbucks
corporations decided to enter into an agreement that allowed Barista Coffee to use
the brand for cafes as long as it allowed Starbucks to use the brand "Barista" for
brewing equipment. Italy's Lavazza has now acquired Barista.

Barista Coffee in India can be easily called the pioneers of coffee culture in India.
Established in February 2000 to recreate the ambience and experience of the typical
Italian neighborhood Espresso Bars. Barista Coffee aims to provide a comfortable
and friendly place for people to relax and unwind over a cup of coffee.

Ownership: Barista Coffee Company is owned by Lavazza, Italys largest coffee

company. Lavazza is one of the most important roasters in the world, a leader in
Italy with a 46.5% share of the retail market (in value, source: Nielsen). It operates
in over 80 countries, in the Home and Away-from-Home sectors (Foodservice,
Vending and Retailing). In 2006 sales totalled USD 1.2 billion.
Outlets: Barista at present has over 170 Espresso Bars and 7 Barista Crmes in over
29 locations: Delhi, Gurgaon, Bangalore, Hyderabad, Kolkata, Mumbai, Chennai,
Pune, Ghaziabad, Noida, Chandigarh, Mohali, Dehradun, Shimla, Mussorie, Jaipur,
Kanpur, Lucknow, Bhopal, Indore, Bhubaneshwar, Ahmedabad, Baroda, Cochin,
Coimbatore, Manipal, Guwahati etc. making it one of the largest retailers of specialty
coffees in Asia. Barista further has laid international footprints in Sri Lanka (4
outlets), Oman and UAE (6 outlets).

Ambience: Barista Coffee is not just about drinking coffee but also about the entire
experience. At Barista the Joy of Coffee is reflected in the warm ambience, the
exotic flavours and the friendly service provided by the brew-masters. To add to the
informal ambience, Barista Espresso Bars offer games like Scrabble, Pictionary and
Battleship for the guests. Barista Espresso Bars were the first place where the
customers were called by their first names to create an atmosphere of informality
and friendliness. Barista in its outlets have Wi-Fi enabled corners for executives-on-
the-go. Open seven days a week, most Barista Espresso Bars begin brewing from 10
a.m. and are open till late night.

Coffee: Barista Coffee places strong emphasis on the quality of coffee beans and the
process of preparing, rich aromatic coffee. The coffee is created with carefully hand
picked mature cherries of the Arabica coffee plant, ensuring a uniform and high
quality harvest. This 100% Arabica coffee is sourced from Tata Coffees plantations
in Karnataka, India. House blend beans are sourced and roasted in India by Tata
Coffee. The international coffees such as Costa Rican, Kenyan and Jamaican Blue
Mountain are sourced from the respective countries and custom roasted in Italy.

Food: In an attempt to further enhance the experience at the Barista Espresso bars,
it has on offer a delicious snacks and dessert menu. On offer are authentic Italian
food items such as biscottis, paninis, wraps, twisters, puffs, sandwiches and other
munchies to go along with its wide coffee range. To cater to the sweet tooth, Barista
also offers mountains of ice creams, oodles of chocolate, chunks of crumbly apple
pies, walnut brownies etc.
Awards

Barista the Super Brand

Barista received the coveted Retail Award, voted by consumers as the 'Most
admired retailer of the year 2007: Catering Outlets' at the 4th IMAGES Retail
Awards (IRA) 2007, felicitating Indias top performing companies and professionals
in the business of retail. Barista has also been voted Barista has been recognised
by the HT Superbrand two years in succession. Food Guide as the best place to
have coffee. It is also the recipient of the Caf of the Year award given by The Times
Group in the Times Food Guide.

A huge shot in the arm and validation of the companys efforts has been the
recognition given independently by BBC, The Times of India and Business Standard
as the Brand of the Year (2002).

Barista was also awarded the TOPS award for Specialty Coffee Excellence by the
Specialty Coffee Association of America (SCAA) which recognizes specialty coffee
retailers who differentiate themselves through better business practices.

Recently Barista was also recognized by the HT Food Guide as the best place to have
coffee as well as Caf of the Year award given by The Times Group in the Times
Food Guide.

For the year 2003-05, Barista has been selected as one of the 100 superbrands in
the country and is amongst the youngest brands in the list, to achieve this status.

Marketing initiatives: In order to enhance this unique experience, Barista focuses

on themes and avenues that complement coffee such as music, books and art.
Barista has tiedup with brands such as Planet M and Corner Book Store to open
espresso corners in these stores. Here, the Barista ambience has been re-created
within the establishments giving the consumers the opportunity to enjoy a cup of
delicious coffee while browsing through a book, enjoying music or appreciating art.

Barista is a comfortable place to spend time with friends, family, strangers, the girl
next door, her neighbour's aunt, well, just about anyone. And even if you drop by
alone, they have some of the finest beverages to keep you company.

To begin with, there's the Barista House Blend - their signature blend of coffee and
select international coffees from some of the most noted coffee growing regions of
the world. Followed by an extensive list of steaming hot espressos, cappuccinos and
lattes made from the finest Arabica beans.

To cool things down, they have fruit smoothies and chilled granitas in tropical
flavours. And finally, a refreshing range of cold and frozen coffees that will make
anyone who tries them return for more.

Barista traces its roots back to the old coffee houses in Italy - the hotbeds of poetry,
love, music, writing, revolution and of course, fine coffee. Drawing inspiration from
them, they have single-handedly taken on the challenge to open people's eyes to the
simple pleasures of coffee and revolutionize the coffee drinking experience in every
city that we invade.

To live up to this promise, they have employed skilled Italian roastmasters at their
roastery in Venice. Sourced only the finest quality Arabicas. And have had our
espresso bars designed to reflect a warm, friendly and inviting atmosphere. Add to
this, a menu you can ponder over for hours and you have everything you need to
escape the pressures of daily life.

At last count, the aroma of fine Barista coffee permeated in over 100 espresso bars
across India, Sri Lanka and the Middle East.

b. Caf Coffee Day

Caf Coffee Day is a division of India's largest coffee conglomerate, Amalgamated
Bean Coffee Trading Company Ltd. (ABCTCL), popularly known as Coffee Day, a Rs.
300 crore ISO 9002 certified company. Coffee Day sources coffee from 5000 acres of
coffee estates, the 2nd largest in Asia, that is owned by a sister concern and from
11,000 small growers. It is one of Indias leading coffee exporters with clients across
USA, Europe & Japan.

With its roots in the golden soil of Chickmaglur, the home of some of the best Indian
Coffees and with the vision of a true entrepreneur nurturing it, Coffee Day has its
business spanning the entire value chain of coffee consumption in India. Its different
divisions include: Coffee Day Fresh n Ground (which owns 354 Coffee bean and
powder retail outlets), Coffee Day Xpress (which owns 341 Coffee Day Kiosk), Coffee
Day Take away (which owns 7000 Vending Machines), Coffee Day Exports and
Coffee Day Perfect (FMCG Packaged Coffee) division.

Caf Coffee Day (CCD) pioneered the caf concept in India in 1996 by opening its
first caf at Brigade Road in Bangalore. Till about the late 1990s coffee drinking in
India was restricted to the intellectual, the South Indian traditionalist and the five
star coffee shop visitor. As the pure (as opposed to instant coffee) coffee caf culture
in neighboring international markets grew, the need for a relaxed and fun hangout
for the emerging urban youth in the country was clearly seen.

Recognizing the potential that lay ahead on the horizon, Caf Coffee Day embarked
on a dynamic journey to become a large organized retail caf chain with a distinct
brand identity of its own. From a handful of cafs in six cites in the first 5 years, CCD
has become Indias largest and premier retail chain of cafes with 498 cafes in 85
cities around the country.

Enthused by the success of offering a world-class coffee experience, CCD has

opened a Caf in Vienna, Austria and is planning to open other Cafes in the Middle
East, Eastern Europe, Eurasia, Egypt and South East Asia in the coming months.
Cafe Formats

Caf Coffee Day has been experimenting with caf formats for quite sometime.
Backed by the motivation of providing customers with exciting choices as well as
constantly redefining the caf experience, CCD has ventured into the following
formats:

Music Cafs provide customers with the choice of playing their favourite music
tracks on the Digital Audio Jukeboxes installed at the caf! There are around 85
cafes with such jukeboxes. 32 cafes also provide customers with the visual treat of
watching their favorite music videos by means of Video Jukeboxes.

Book Cafs offer the perfect solution to people who think that the coffee experience
is incomplete without browsing through the bestsellers or reading a classic. CCDs
book corners accentuate the age-old combination of coffee and books. This exciting
concept has been successfully tested at 15 cafes in 12 cities across India and the
numbers are set to grow exponentially. CCD has tied up with English Book Depot,
one of Indias leading book distributors for placement and rotation of reading
materials appealing to Caf Coffee Days discerning customers.

Highway cafs on the Bangalore Mysore highway and NH-8, presents the traveler
en route not only with good coffee and scrumptious snacks amidst great ambience
but also with clean restrooms to get rid of that weariness from the road!

Lounge cafs at Hauz Khas, Delhi and Southern Avenue, Kolkata(Southern Avenue)
and Hyderabad (Jubilee Hills) combines the style and luxury of a lounge with the
lively ambience and comfort of a caf. With exquisite interiors, exotic menu and
thematic music CCD Lounge offers a whole new experience to the connoisseur while
assisting the latter through its team of hostesses who are poise and style incarnate
and are looked upon as fashion icons.

Garden cafs at M.G Rd, Bangalore and GKII, New Delhi combine the joy of
rejuvenating amidst verdant landscapes and pots of coffee.
Cyber cafs at Brigade Rd, Bangalore, Airport, Bangalore and Airport, Delhi
combine the urge to surf, not to mention get connected through the internet while
enjoying perfectly brewed cups of coffees, both domestic as well as International
blends!

Mission statement
To be the best caf chain in the world by offering a world class coffee experience at
affordable prices.

Brand association
CCD has emerged as an interactive alternative media for brands to communicate
with the young at heart.

Other media, such as electronic, print and outdoor, offer brand communication
through visual and audio modes to a large section of the populace, both relevant and
irrelevant. Caf Coffee Day offers a much more interactive, targeted communication,
sometimes adding even a taste dimension to a brand idea!

Various in-caf collaterals used to impart visibility to a brand inside a caf or to add
the element of interactivity to a campaign are Posters, Tent Cards, Danglers,
Leaflets, Brochures, Coasters, Drop boxes, Contest Forms, Stirrers, Standees etc.

Over the years, CCD has successfully promoted a number of

brands/products/events through various innovative tactics and promo ideas.
Cashing in on its mass captive audience, we at CCD have entered into tie-ups and
promotions which are well knit with our brand promise and which can be creatively
used to woo the Indian Youth.

Customer profile
The caf is a meeting place for 15-29 year olds, both male and female who are
served the best coffee by friendly and informed staff, in an uplifting and invigorating
ambience.

Research shows that teen-agers form 25% of our customers while 38% of the
customers are between 20 and 24years and another 23% belong to the age group of
25-29 years. Students and young professional comprise around 72% of our
customers.

18% of the customers visit the cafes daily while another 44% visit weekly. Each caf,
depending upon its size attracts between 500 and 800 customers daily, mainly
between 4pm and 7 pm. Customers describe Caf Coffee Day as the place they
frequent most after home and workplace/college. It is a place where they meet
friends and colleagues, in groups of 3 or more; a place where they rejuvenate and
are free to be themselves rather than a place to be seen at vis a vis other cafes.

Awards

Cafe Coffee Day: the best Indian Food Services Brand

Business World
November 8th, 2004

Food services top 5

1. McDonalds
2. pizza hut
3. caf coffee day
4. barista coffee
5. dominos
Out of the 3 coffeehouses studied, CCD is visited the most. The mean of CCD visited
is more than Barista and Nescafe.

c. NESCAFE

The rich taste of coffee is reflected in its rich history. The beginnings of NESCAF
can be traced all the way back to 1930, when the Brazilian government first
approached Nestl.

NESCAF a combination of Nestl and caf. NESCAF was first introduced in

Switzerland, on April 1st, 1938. For the first half of the next decade, however, World
War II hindered its success in Europe. NESCAF was soon exported to France, Great
Britain and the USA. American forces played a key role in re-launching NESCAF in
Europe by virtue of the fact that it was included in their food rations. Its popularity
grew rapidly through the rest of the decade. By the 1950s, coffee had become the
beverage of choice for teenagers, who were flocking to coffee-houses to hear the
new rock n roll music. In 1965 NESCAF continued to bring the world's best cup of
coffee by introducing freeze-dried soluble coffee with the launch of Gold Blend. Only
two years later they invented a new technology to capture more aroma and flavour
from every single coffee bean. In 1994 the 'full aroma' process was invented to make
the unique quality and character of NESCAF even better.

Nestl's commitment to sustainability is deeply rooted in the company's core values,

which drive the Company's way of doing business. (Nestl Corporate Business
Principles)
The endorsement of these values is made through a whole set of principles that are
enforced at every stage of production, by every business or production unit,
employee, partner or vendor. (Nestl Corporate Governance Principles). The
company's culture is guided by these principles, which ensure leadership fully
compatible with Nestl's sustainability objectives. (Nestl Management and
Leadership Principles)
FMCG major Nestle India, having catapulted its business with the launch of its
probiotic range of frozen dairy products, is now all set to grow its coffee business.

While coffee chains such as Caf Coffee Day and Barista target the upper middle
class youth segment, Nestle India through its Cafs is going all out to woo the
masses.

Mr. Martial Rolland, CEO, Nestle India, said, The idea is to create a sustainable
model that is scalable through these cafes.

They use these outlets as our laboratories to try out new products and gauge the
reaction of consumers to the newer variants of coffee.

Not deterred by the competition the coffee chains could present, they are pleased
that there are more players in the competition as it will expose more consumers to
coffee.

The difference between the coffee chains and us is affordability. No one knows
coffee the way we do.

Nestle; however, plans to continue its cafes pan-India under the franchisee model.
They are focusing more on product delivery vis--vis the ambience. They refuse to
divulge the size of the companys caf business.

However, according to company officials it was far larger than some of the others
who claim to have the maximum number of outlets in the country.

Nestle has cafs across schools, colleges and offices.

Perfect blend

Affordability, in fact, is a major criterion for Nestle India as far as products are
concerned. The companys motto to target the lowest denominator is clear through
the pricing of its brands in the category as well as the blends used in the products.
India is predominantly a tea drinking country. Therefore, the harsh and strong
flavour of coffee is not preferred by most people. So, the blends they use in their
brands are also very specific to consumer tastes.

New product

Based on consumer insight, the company has just launched its new product Nescafe
Mild, targeted specifically at the mass market of tea drinkers.

Their long heritage in the country helps them understand people better. Also with
the understanding of coffee that they have acquired globally, they want to leverage
their expertise here as well.

Cold coffee category

The company is also examining several possible segment forays under coffee,
however, moving away from hot to the cold category.

Though the market for products such as cold coffee is still very small in India,
experiences from their Caf outlets have made them realise the growing demand for
it. They are examining possibilities of launching such products in India.

In fact, the coffee market in India in itself is rather small with great opportunity for
growth. And, as a company, they focus more to grow their coffee business here.

RESEARCH OBJECTIVE Customer Perception and Attitude towards retail coffee

chains a study in Delhi, w.r.t Barista, CCD, Nescafe

SUB OBJECTIVES:
1. Preference in choice of Coffee chain
2. Factor affecting the customer choice of coffee chains
 3. Comparative analysis between different coffee chains

This research project will include the following issues-

Identifying the factors that influence the customer the most (factors such as
coffee taste, ambiance, affordability, etc.)
Customers purchasing behavior and attitude towards coffee houses (in terms
of which coffee-house they visit, for what purpose they visit a coffee-house,
on what occasions they prefer to visit a coffee-house, who influence there
preference, how much they spend etc.)
Identifying the most popular coffeehouse.
RESEARCH METHODOLOGY
While making a study we very often look for what type of research methodology is
to be used in this type of study. For implementation of a proper research
methodology we have to first understand the meaning of research.

Research is a scientific as well as systematic process, which includes defining and

redefining the problem to develop hypothesis, to collect and define the
information/data, to analysis the information and bring out the results.

The first step in research after defining the research problem and objectives is data
collection. The word data means any raw information, which is either quantitative
or qualitative in nature, which is of practical or theoretical use. The task of data
collection begins after a research problem has been defined and research design
chalked out. While deciding about the method of data collection, the researcher
should keep in mind that there are two types of data primary and secondary.

1. Primary data: -This is those, which are collected afresh and for the first Time,
and thus happen to be original in character. There are many ways of data collection
of primary data like questionnaire, observation method, interview method, through
schedules, pantry Reports, distributors audit, consumer panel etc.
2. Secondary data: -These are those data, which are not collected afresh and are
used earlier also and thus they cannot be considered as original in character. There
are many ways of data collection of secondary data like publications of the state and
central govt., website, journals, companies reports, reports prepared by researchers,
reports of various associations connected with business, Industries, banks etc. For
this project secondary data was taken from companys reports and websites.

This project is a survey project. In this project first the secondary data will be
collected through websites, magazines and journals. Based on this information a
questionnaire will be designed for the target respondents. The primary data
collected through this fieldwork will be analyzed and used to generate results.

Target respondent the target respondent are the people who have visited any of
the coffeehouses in Delhi.

RESEARCH DESIGN
Type of research: Descriptive research

Sources of data: Primary Data & Secondary Data

Primary Data - Questionnaire
Secondary Data magazines, Websites, Journals

Data collection method: Survey Method

Survey instrument: Questionnaire

Method of communication: Personal interview

Sampling technique: Convenient sampling

Sample size: 50

Sample unit: People who visit coffee houses in Delhi

Area of survey: Delhi

DATA ANALYSIS

N Minimum Maximum Mean Std. Deviation

BARISTA 50 1.00 3.00 1.9200 .77828
CCD 50 1.00 3.00 2.2800 .72955
NESCAFE 50 1.00 3.00 1.8000 .88063
Valid N
50
(listwise)
 Coffee house visited the most

25

20

15
Frequency

10

0
barista ccd nescafe
Coffee house visited the most

Descriptive Statistics

N Minimum Maximum Mean Std. Deviation

variety of
50 2.00 4.00 3.3200 .68333
coffee
taste of coffee 50 3.00 4.00 3.6600 .47852
quality of
50 3.00 4.00 3.6400 .48487
coffee
price of coffee 50 1.00 4.00 2.4400 .97227
ambience of
50 2.00 4.00 3.1800 .69076
outlet
Customer 50 1.00 4.00 3.0200 .62237
service
location of
50 1.00 4.00 2.6000 1.01015
outlet
offers,
discounts, 50 1.00 4.00 2.1000 1.01519
coupons etc
side order
50 1.00 4.00 2.4800 .88617
menu
time for
50 1.00 4.00 2.7800 .97499
service
Valid N
50
(listwise)

While visiting a coffee house, taste of coffee is the most important factor for
choosing the coffee house, because it has the maximum mean of 3.66

Descriptive Statistics

N Minimum Maximum Mean Std. Deviation

B_variety 50 2.00 4.00 3.2600 .69429
C_variety 50 2.00 4.00 3.3600 .59796
N_variety 50 1.00 4.00 2.2000 .96890
Valid N
50
(listwise)

Out of the variety of coffee offered by Barista, CCD and Nescafe, CCD has good
variety than others, which has a mean of 3.36

Descriptive Statistics

N Minimum Maximum Mean Std. Deviation

B_taste 50 2.00 4.00 3.3000 .58029
C_taste 50 2.00 4.00 3.3800 .63535
N_taste 50 1.00 4.00 2.6400 .92051
Valid N
50
(listwise)

The taste of coffee of CCD has a mean of 3.38, which means than taste of coffee
offered by CCD is better than other coffee houses.

The following table shows that the mean quality of coffee offered by Barista is more
than the other 2 coffee houses; this means that Barista offers the best quality in
coffee

Descriptive Statistics

N Minimum Maximum Mean Std. Deviation

B_quality 50 2.00 4.00 3.3600 .63116
C_quality 50 1.00 4.00 3.3000 .73540
N_quality 50 1.00 4.00 2.4600 .95212
Valid N
50
(listwise)

Descriptive Statistics

N Minimum Maximum Mean Std. Deviation

B_price 50 1.00 4.00 2.1800 .74751
C_price 50 2.00 4.00 2.7400 .56460
N_price 50 2.00 4.00 3.1400 .75620
Valid N 50
(listwise)

The price offered by Nescafe is the most economic, which can be seen by the mean
which is more than the other two coffee houses.

Descriptive Statistics

N Minimum Maximum Mean Std. Deviation

B_ambience 50 2.00 4.00 2.9000 .70711
C_ambience 50 2.00 4.00 3.2200 .58169
N_ambience 50 1.00 4.00 2.4800 .86284
Valid N
50
(listwise)

The ambience of CCD is better than the other two coffee houses. The mean of
ambience is 3.22

Descriptive Statistics

N Minimum Maximum Mean Std. Deviation

B_cust.ser 50 1.00 4.00 2.7000 .64681
C_cust.ser 50 2.00 4.00 2.9200 .72393
N_cust.ser 50 1.00 4.00 2.2800 .72955
Valid N
50
(listwise)

The customer service offered by CCD is better than the customer service offered by
other two coffee houses.
 Descriptive Statistics

N Minimum Maximum Mean Std. Deviation

B_location 50 1.00 4.00 2.5200 .86284
C_location 50 1.00 4.00 2.9200 .87691
N_location 50 1.00 4.00 2.5400 .78792
Valid N
50
(listwise)

The location of coffee house outlet of CCD is better than the other two coffee houses.

Descriptive Statistics

N Minimum Maximum Mean Std. Deviation

B_offer 50 1.00 3.00 1.8400 .71027
C_offer 50 1.00 4.00 1.9800 .71400
N_offer 50 1.00 4.00 2.1600 .97646
Valid N
50
(listwise)

The discounts, offers and coupons offered by Nescafe is better in comparison to the
other two coffee houses.

Descriptive Statistics

N Minimum Maximum Mean Std. Deviation

B_menu 50 1.00 4.00 2.4600 .86213
C_menu 50 1.00 4.00 2.6400 .87505
N_menu 50 1.00 4.00 2.8200 1.00793
Valid N
50
(listwise)

The side menu of Nescafe is better than the other two coffee houses. It includes
Maggi noodle which is the hot favorite in kids and youngsters.

Descriptive Statistics

N Minimum Maximum Mean Std. Deviation

B_time 50 1.00 4.00 2.7600 .77090
C_time 50 1.00 4.00 2.7400 .89921
N_time 50 1.00 4.00 2.6000 .80812
Valid N
50
(listwise)

Barista is better in time taken to serve the consumer. It has a mean of 2.76 which is
higher than the mean of other two coffee houses.

Descriptive Statistics

N Minimum Maximum Mean Std. Deviation

exe_b 50 2.00 4.00 3.1800 .66055
exe_c 50 2.00 4.00 3.4600 .54248
exe_n 50 1.00 4.00 2.7000 .76265
Valid N
50
(listwise)

The experience was enjoyed most in the settings of CCD, followed by Barista and
Nescafe respectively. The mean is 3.46
The total of Ranking of the 3 coffee houses is as under:

Descriptive Statistics

N Minimum Maximum Sum Mean Std. Deviation

BARISTA 50 1.00 3.00 96.00 1.9200 .77828
CCD 50 1.00 3.00 114.00 2.2800 .72955
NESCAFE 50 1.00 3.00 90.00 1.8000 .88063
Valid N
50
(listwise)

Barista 96
CCD - 114
Nescafe - 90

The results show that CCD is ranked the first, followed by Barista as second, and
Nescafe is third in ranking.

The result in the table below shows that, the decision making for visiting a coffee
house is highly influenced by peer group or friends.

Descriptive Statistics

N Minimum Maximum Mean Std. Deviation

Own instinct 50 1.00 4.00 3.2000 .75593
Family 50 2.00 4.00 3.0800 .72393
Friends 50 2.00 4.00 3.4000 .57143
Work group 50 1.00 4.00 2.8600 .85738
Valid N
50
(listwise)

The table below shows that the reason to visit a coffee house is usually for
refreshment or get together with friends. 19 respondents voted for both
refreshments and get together with friends.

reason.visit

Frequency % Valid Percent Cumulative Percent

refreshment 19 38.0 38.0 38.0
get together 19 38.0 38.0 76.0
Dating 5 10.0 10.0 86.0
Work 7 14.0 14.0 100.0
Total 50 100.0 100.0
HYPOTHESIS TESTING

Hypothesis 1: youngsters feel that friends are very important while making a
decision to visit a coffee house.

youngster, elder * friends Crosstabulation

Friends Total
less importa Very
important nt important
youngster 1 Count 2 13 17 32
% within
6.3% 40.6% 53.1% 100.0%
youngster, elder
elder 2 Count 0 13 5 18
% within
.0% 72.2% 27.8% 100.0%
youngster, elder
Total Count 2 26 22 50
% within
4.0% 52.0% 44.0% 100.0%
youngster, elder

Chi-Square Tests

Value df Asymp. Sig. (2-sided)

Pearson Chi-Square 5.019(a) 2 .081
 Likelihood Ratio 5.716 2 .057
Linear-by-Linear
1.287 1 .257
Association
N of Valid Cases 50
a 2 cells (33.3%) have expected count less than 5. The minimum expected count is
.72.

By doing cross tabulation, we can find that 53% of the youngster feel that friends
are very important while making a decision to visit a coffee house, while only 27%
of the elder feel that friends are very important while making a decision to visit a
coffee house.
The significance level in chi-square tests is more than .05.

Hypothesis 2: Females give more important to their familys decision while visiting a
coffee house.

gender * family Crosstabulation

Family Total
less very
important important important
gender Male Count 11 12 10 33
% within
33.3% 36.4% 30.3% 100.0%
gender
Female Count 0 12 5 17
% within
.0% 70.6% 29.4% 100.0%
gender
Total Count 11 24 15 50
% within
22.0% 48.0% 30.0% 100.0%
gender
The importance level of family, for females as well as males, while visiting a coffee
house is almost the same at 30.3% and 29.4%, proves the hypothesis to be false.

Hypothesis 3:
Younger people visit a coffee house for a get together with their friends
youngster, elder * reason.visit Crosstabulation

reason.visit Total
refreshment get together dating work
youngste 1.00 Count
10 18 3 1 32
r, elder
% within youngster,
31.3% 56.3% 9.4% 3.1% 100.0%
elder
2.00 Count 9 1 2 6 18
% within youngster,
50.0% 5.6% 11.1% 33.3% 100.0%
elder
Total Count 19 19 5 7 50
% within youngster,
38.0% 38.0% 10.0% 14.0% 100.0%
elder

Chi-Square Tests

Asymp. Sig.
Value df (2-sided)
Pearson Chi-Square 16.400(a) 3 .001
Likelihood Ratio 18.748 3 .000
Linear-by-Linear
2.045 1 .153
Association
N of Valid Cases
50
a 4 cells (50.0%) have expected count less than 5. The minimum expected count is 1.80.

The above cross tabulation between age class and reason for visit shows that 56% of
the younger people visit a coffee house for a get together with their friends.

FUTURE OF COFFEE HOUSES IN INDIA

The biggest players in India are CCD and Barista.
Most of the coffee houses do their Branding via the following attributes-
1. Experience
2. Customer service
3. Variety/ Variants of Coffee
4. Taste
5. Preparation - in terms of hot/cold

CCD plans to set up 'highway cafes' and 'drive through cafes' to attract customers.
These cafes would be set up at various petrol pumps and the company is seeking tie
ups with all leading petroleum companies in this regard. This will increase their
brand image and increase of Point of Sales.
Nescafe outlets in select cities are positioned on the lines of its Nescafe brand's
`taste that gets you going' theme. Caf Nescafes offer beverages priced as
competitively as Rs 10.

Future

1. With increase in FDI, we will see more global players in India. Gloria Jeans was
also in news. Players like Starbucks may enter in India in coming few years.

2. Other FMCG giants such as Hindustan Lever and Tata Coffee will sooner or later
venture into the coffee chain business

In this industry, the tangible differentiators are very few. Its only the intangible as
mentioned above creates a difference.

Concepts like Sensory Branding by Martin Lindstorm work here as coffee chains can
cover the aspect of smell, sight, sound (music inside the store), taste and touch of
the furniture inside.

CONCLUSION
Cafe Coffee Day: - This has been positioned for younger generations usually college
goers and young people. With outlets strategically positioned near colleges,
software companies and places where they can target customers. On analysis it can
be seen that majority of the customers are of 18-30 age group. People prefer coffee
day location for treats.

Barista Coffee: - Positioned for Executive class of customers who prefer premium
taste but not too high prices. Barista coffee customers are particular about taste and
a peaceful atmosphere. Usually these outlets have dim lighting and exclusive
treatment.

Nescafe: - Positioned for youngsters who like to have a sip of coffee and have a chat
with their friends at a really low price. The main emphasis is on the quality of coffee
and not on the ambience. They mainly target the mass population. With the side
menu as tempting as Maggi Noodles, they are a hot favorite among young couples.

ANNEXURE 1
QUESTIONNAIRE
Please tick the relevant answer

Q1. How frequently do you visit a coffee house?

i. Every day ______________
ii. Alternate day ______________
iii. Weekly ______________
iv. Fortnightly ______________

Q2. Out of the 3 coffee houses, which one do you visit the most?
i. Barista _______________
ii. CCD _______________
 iii. Nescafe _______________

Q3. How important are the following factors while visiting the coffee houses
Factors Very Important Less Not
important important important
Variety of coffee
Taste of coffee
Quality of coffee
Price
Ambiance
Customer service
Location
Offer/disc./coupons
Side order menu
Time for serving
Q4. Rate the following coffee houses on the following factors on a scale of 1 4 (1-
poor, 2-fair, 3-good, 4-excellent)
Factors Barista CCD Nescafe
Variety of coffee
Taste of coffee
Quality of coffee
Price
Ambiance
Customer service
Location
Offer/disc./coupons
Side order menu
Time for serving
Q5. Rate your experience with the following coffee-chains on the following scale
Very satisfied Satisfied Less satisfied Not satisfied
Barista
CCD
Nescafe

Q6. Rank the following coffee chains in order of preference. 3 being most preferred,
1 being less preferred

i. Barista _______________
ii. CCD _______________
iii. Nescafe _______________
Q7. How important are the following in your decision making for visiting a coffee
house
Very Important Less important Not important
important
Your own
instinct
Family
Friends
Work group

Q8. Your reason to visit a coffee house is-

i. Refreshment __________
ii. Get together with friends __________
iii. Date __________
iv. Work __________

PERSONAL INFORMATION

Age: less than 20 _________

 21 30 _________
31 45 _________
46 and above _________

Household Income: less than 2 lakh _________

2-6 lakh _________
6-10 lakh _________
10 lakh and above _________

Gender: Male _________

Female _________
ANNEXURE 2

LITERATURE REVIEW -1

STORM IN THE COFFEE CUP

In the late 1990s, a silent cafe revolution was sweeping urban India. Coffee drinking
was increasingly becoming a statement of the young and upwardly mobile Indians.
Coffee bars, an unheard concept till a couple of years ago, had suddenly become big
business and coffee bars like Barista, Cafe Coffee Day (CCD) and Qwiky's had
become quite popular.

Though being a late entrant, Barista took elite India by storm. With 105 branches in
18 cities and annual sales of Rs. 650 million, Barista was clearly the leader in the
coffee retailing business in 2002. What made Barista different from others was the
ambience at its outlets.

Barista recreated the ambience and experience of the typical Italian neighborhood
espresso bars in India. The interiors were bright, trendy and comfortable. One could
play chess, read books, listen to music, enjoy the arts, surf the Net and sip an
Espresso Italiano, or Iced Cafe Mocha. CCD, which was started in 1996, had opened
50 outlets in 9 cities by 2002, with annual sales of Rs. 100 million.

CCD also provided a relaxing ambience with eye-catching crockery and bright dcor.
The paintings on the wall were made by young artists, with the objective of
promoting young talent. CCD outlets also promoted their paraphernalia such as
caps, T-shirts, and coffee mugs.

With 21 outlets in 5 cities and annual sales of Rs. 43 million in the year 2002,
Qwiky's was also a strong contender in the growing coffee business. It positioned
itself as a place to hang out and spend time leisurely. One could order an Espresso,
Cappuccino, Lattes, Mochas, Panini et al. One could even choose between frothy or
intense, icy or piping hot, and aromatic and exotic coffee. It also had books and
magazines outlets and a casual wear under the Qwiky's brand.

Though CCD was the first to enter the coffee retailing business in India, it failed to
leverage on the first mover advantage. By 2002, Barista, which entered the market
in 2000, and Qwikys, which entered in 1999, had 105 and 21 branches respectively.
CCD had only 50 branches. According to company sources, the reason for its slow
growth was the time taken to complete the back-end operations of its retail outlets.
Analysts felt that Barista and Qwiky's also experienced similar problems but they
grew faster than CCD because they realized that running cafe is a hospitality
business and one needs to create the right ambiance and experience and back it up
with strong logistics.

In 2002, competition in the coffee retailing business was beginning to heat up with
all the three players looking for opportunities for growth.

Barista was opening a store every nine days and it also seemed to be better placed
than its competitors due to the strong support of Tata Coffee, which had a 34.3%
stake in Barista. However, analysts felt that it wouldn't be easy for Barista to
maintain its leadership position in future. By 2002, Barista had spent Rs 600 million
to establish its chain of 105 stores and in the process had accumulated losses.

Though its operating profit was 17% of the sales, it was not expected to turn black
soon because of its rapid expansion plans. Also as Barista imported everything from
chairs to coffee machines to coffee beans, any depreciation in the value of the Indian
Rupee would make imports costlier and squeeze its margins further.

A NOTE ON THE COFFEE INDUSTRY IN INDIA

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 fifth largest coffee producer. Being a traditional tea consuming country,
the average coffee consumption in India was quite low at 10 cups per person
annually (Refer Table I). 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 workingwomen, and increasing awareness and
exposure to global trends. (www.icmrindia.org)

LITERATURE REVIEW 2

Branded coffee houses a rage in India

Anuradha Shenoy in Mumbai | July 16, 2005

Go to any of the mushrooming coffee bars and what do you find? The menu displays
not just a range of coffees, but an ever increasing list of soft drink concoctions and
other beverages mingling with snacks and mini-meals.

Strange? Maybe. With more than 500 coffee cafes in the country, up from 175 in
2002, coffee was the most happening beverage. And the players, from Barista Coffee
Co to Bangalore-based Cafe Coffee Day, were opening outlets practically every
weekend.

So far so good. Today, at Barista Coffee Co, coffee sales are much less than its other
offerings.

Sixty per cent of its sales are brewed from teas, smoothies, food items and
merchandise. At Bangalore-headquartered Cafe Coffee Day, 70 per cent of its sales
come from beverages including coffee. At Cafe Mocha, coffee sales are up from 3 per
cent three years ago when it first started to 17 per cent today.

What does all this mean? Coffee sales have not really stirred the storm they were
expected to be. But this has not deterred the coffee cafes from stretching their
brands.

Internationally, coffee sales are virtually stagnant, moving ahead at 0.5 per cent.
According to a 2005 research report by the United Nations Food and Agriculture
Organization, India's coffee consumption has been chugging along at 2.2 per cent
per annum.

With consumption pegged at 70,000 tones, branded coffee accounts for 53 per cent,
unbranded 40 per cent, with cafes constituting 7 per cent. Industry estimates peg
the annual growth rate of the coffeehouse segment at a half percent clip.
Despite these figures, if coffee houses are extending their network, according to
Sunalini Menon, chief executive of CoffeeLab, which provides evaluative services for
coffee manufacturers, it is because they provide more than just coffee.

"They are a venue to socialise, finalise business deals, conduct interviews, listen to
music and read in," she says.

According to Cafe Mocha's CEO, Dharmesh Karmorkar, call centres have been one of
the growth triggers. "Before the advent of night-time work enterprises, a coffee
house's customer was limited to individuals who worked daytime hours. Now, in
addition, we have an entire group of professionals who work a night-time shift."

There is also the issue of small town individuals moving away from their families to
larger cities for career opportunities that were not present before.

"This individualistic culture promotes the need for a venue to socialise with others
of their age who share their interests," he adds.

Barista's COO, Brotin Banerjee relies on the power of the youth and their increasing
disposable income.

"Several Indian students begin working at a very young age, sometimes right after
high school. They have the purchasing power," he says.

That's why with a Rs 20-crore (Rs 200 million) outlay, Barista is hoping to be an
international brand. Plans underway include 35-40 Baristas in Nepal, Malaysia,
Indonesia, Turkey, Iran and Bahrain.

Its strategy will centre around targeting college students in the age range of 16-20
to "catch them young" and induce "lifetime loyalty". Barista also plans to start
"platforms on the go" in partnership with petroleum companies to cater to
consumers travelling between cities.
Its current tally is 122 stores, which include Barista espresso bars, shop-in-shops
and corner stores.

Also, from 230 stores, Cafe Coffee Day's senior general manager Sudipta Sengupta
plans to add an additional 270 stores in the next three years.

"We will incorporate health foods like herb breads, sunflower seeds, multigrain
breads and bran sandwiches. We will also introduce a premium coffee and offer
merchandise such as filters, mugs, and message T-shirts," she says.

In a bid to take coffee to the masses, the new outlets will be in towns, which have a
population of one lakh and above.

While Barista and Cafe Coffee day are targeting mass-based consumption, Cafe
Mocha, with only nine franchise outlets, is focusing on imported coffees and an
upmarket clientele.

It wants to push its stores from nine to 65 in the next three years. There are plans to
open franchised stores in Indonesia, Singapore, Sri Lanka and two in the Middle
East.

In addition, the chain plans to invest Rs 3 crore (Rs 30 million) in human resource
development and Rs 8 crore (Rs 80 million) on the development of new menu items
every year.

Explains Karmorkar, "We're focusing primarily on knowledge building and

management and the expertise that our chefs and staff bring to the table."

Clearly, despite coffee consumption stagnating, coffee houses are finding it lucrative
to add value activities -- book clubs, film clubs, social activities, merchandise, food --
as the main plug. Drink to that!

(http://www.rediff.com/money/2005/jul/16spec1.htm)
LITERATURE REVIEW 3

An Indian sector on the upswing: coffee shops

By M. A. Winter

Date of posting: 13-11-07

The Coffee retailing sector in India is booming today, with several companies active
in the market. Some are local entities, some have come from abroad and have tied
up with local companies, and some seem to prepare themselves for an entry sooner
or later. The market growth is expected to be 20 to 30% annually in the next couple
of years.

The first foreign coffee retailer who arrived was Costa Coffee, a chain of coffee shops
owned by leisure and hotel group Whitbread Plc from UK. Costa Coffee, together
with the Devjani Group as the first franchisee, opened the first outlet at Delhis
Connaught Place in 2005. Now, two years later, Costa operates already a total of 34
stores. Besides Delhi, Costa is present in cities like Mumbai, Agra, Jaipur and
Lucknow. The plan is to have 200 stores by the end of 2010, a spokesperson of
Whitbread Plc told FoodIndustryIndia.com.

Starbucks Corp from the US is another well known coffee chain, a big player in many
markets around the world. For India, there were plans to enter the market with a
partner. Now it seems that these earlier plans have been modified. In July, the
company has put on hold its earlier plans to enter India by the end of 2007, without
giving a reason. Speculation was on that the government might not have allowed the
joint venture with an Indian partner based in Indonesia on behalf of the foreign
direct investment regulation for single-brand retailing. Now, a few days back,
Starbucks has agreed a multi-country deal with its North-American partner PepsiCo
by which PepsiCo would sell the Starbucks ready-to-drink beverages in
international markets, including those countries that do not have Starbucks outlets,
like India. Basically, the agreement provides Starbucks the option to bring at least a
part of its product portfolio very quickly to Indian retail shelves.

Almost in the same time when Starbucks was making and pushing its plans for India,
Lavazza from Italy, in Italian eyes the mother country of all coffee drinkers, rushed
ahead and took over coffee chain Barista and Fresh & Honest for an amount of
reportedly Rs 480 crore from Chennai-based Sterling Infotech Group in May this
year. Some media reported that Amalgamated Bean Coffee Trading Ltd (ABCTL),
which owns Indias biggest coffee-cafe chain Cafe Coffee Day, was also interested to
buy Barista, but there was no confirmation. Barista is a major player in the premium
sector of the Indian sub-continent, with 150 cafs in Asia, of which 132 are in India
alone.

By far the biggest player in the market already is Cafe Coffee Day, a coffee chain
which is part of the Amalgamated Bean company. Run by venture capitalist V. G.
Siddhartha, Cafe Coffee Day operates 483 outlets at present, mainly in India, but also
some in Pakistan and two recently opened in Vienna, Austria. They plan to have a
total of over 2,000 outlets over the next four-and-half years, their CEO has said
earlier. Cafe Coffee Day has raised equity capital from Sequoia Capital to finance its
rapid expansion. Media reported an amount of US$ 35 million, and an additional
target amount of US$ 50 million which would be currently sought. ABCTL is
executing an interesting business model, as it is involved in the coffee business right
from growing, processing and selling in different forms and formats like export of
green coffee, selling of packed coffee, and selling of hot coffee in various retail
outlets and vending machines. (www.foodindustryindia.com)

BIBLIOGRAPHY
Websites
1. Cafecoffeeday.com
2. Nescafe.com
3. Barista.co.in
4. Wikipedia.org