B2B Assignment

Individual Assignment

SUBMITTED TO:
DR. SREERAM SIVARAMAKRISHNAN

SUBMITTED BY:
B2B, Section A
A002 Asish Adhikari

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Name of the Company: Coffee Day Beverages
Industry: Food and Beverages
Research Methodology:
Telephonic interview with the existing employees working with the organization along with the secondary research
About the company
• Coffee Day Beverages is the subsidiary of Coffee Day Global Limited. They are operating currently in India
and have limited operations in Nepal and Bhutan. The company has its headquarter in Bangalore and has
presence in all states in India.
• The company deals with coffee vending machines and have become the largest “fresh milk roasted coffee
beans vending chain” with 1.5 billion cups of coffee served annually through 50,000+ machines installed
across 24,000+ locations. Along, with the vending machine the company has the exclusivity to provide
roasted coffee bean, different variant of tea bags, stirrers, paper cups and sugar sachet. The customer can also
opt for different variant of soups, hot chocolate and other hot beverages to be taken with or without milk.
They also provided the breakdown as well as the preventive maintenance for each of their machines.
• The company has their customers divided into three segments:
o Institutional:
▪ Government
▪ Corporate Offices
o HoReCa: Along with hotel, restaurants and café they also serve in airport lounges, railway stations
o Small Businesses: Retail Shops, Bakeries etc.
Customer Segmentation:
The company has segmented the market into two major categories on the basis of purpose of usage of the machine
• Non-Revenue Generating: Used to serve employees and other business partners
• Revenue Generating: Used to serve customers of the business
However, in some enterprises the vending machine is used for both the purposes
Business Model:
The company has a very unique business model where each vending machines that they manufacture in their
Bangalore plant is their own asset. Instead of selling the machines to the customers, the company would give the
machine on a rental basis. The rent for each machine ranges from Rs. 1000 – Rs 2000. This depends on the
consumption pattern of the customers, number of machines he has rented as well as with the long-term relation with
the organization. Higher the consumption of the tea, coffee from the machine lower is the rent. Against the rent,
Coffee Day provides a one stop solution to the customers. They offer two types of maintenance service:
i) Preventive Maintenance: A service personnel would visit the machine each month and each the working
condition of the machine, replaces any parts in the machine which have been worn out and also check the
reading of the number of cups of coffee, tea, milk and water disposed by the machine.
ii) Breakdown Maintenance: If any issues arise with the machine, the customer can log a complaint through
a toll-free number and the technician would arrive to repair the machine.
Both of these services are free of cost and the customers are not charged even for the equipment repaired or replaced.
Also, along with this service the company also provide free installation of the machine if the customers want the
machine to be moved from one premises to another.
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The customers are also supplied with coffee beans, tea bags, sugar sachets, stirrers, paper cups and other hot
beverages and along with cookies and cakes. The supply of all these materials is done by the distributor appointed
by the company in that location. Each location will have one or more distributor and accounts to which it would
supply depends on the financial capability of the distributor. The institutional customers the credit period or the cash
rotation period is generally 2 months whereas in HoReCa and Retials segment it is 1 – 1.5 months. However, it is
noticed that the consumption in institutions is higher as compared to the other segments. The distributor hence has
to make a trade off between the volume sales and cash rotation period. Also, the distributors are responsible for the
collection of the rental from the account that they are supplying materials to.

Customer

+ Rental
Payment for materials
Supply of materials
Coffee Day

Distributors

Type of Demand:
The demand for the product is inelastic in nature for the consumables. However, it is observed that for the machine
rental it would be elastic in nature. This is due to the high cost bored by the customer in setting up the place for the
machine. Also, Coffee Day is one of the few players in the market which provided fresh milk coffee, its competitors
coffee provided a premix recipe for brewing coffee. Hence, the switching barrier is creating by the end consumers
of the product as well.
Type of the goods sold:
The company provides facilitating goods and services to its customers
The following list provides the details of about the types of products provided by Coffee Day for its consumers
• Vending Machines
o Coffee/Tea Vending Machines
▪ Automatic: Indus+, Indus, Celesta, B2C
▪ Semi-Automatic: Kaffa, Sienna
o Snack Vending Machine: Snack Bot
• Products: Coffee Beans/Powders, Tea & Infusions, Soups & Malts, Milk, Snacks
• Merchandize: Orion, Milk Frother, Coffee Capsules, Crockery, Roosh Tray, Gift Box, Milk Chiller
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Supply Chain of the Company:
Coffee Day is India’s largest integrated coffee company. They have almost 15000+ acres of coffee estate in the hills
of Chikmagalur, Karnataka. The coffee beans in there are hand picked and processed in the factories nearby and
packaged to be sent to the central warehouse in Bangalore. The company sources tea from different vendor depending
on the variants. The same is also done for the sugar sachet, paper cups and other products. Each product has Coffee
Day logo emblemed on it. From the central warehouse, the products are sent to the regional warehouses.
Each state in India has a regional warehouse (except for Manipur, Meghalaya, Mizoram, Nagaland, Arunachal
Pradesh and Tripura; these states are catered by Assam). The distributor places their demand based on the customer
requirement or the past consumption pattern of the customers and the products are supplied to the distributors’
warehouse from the regional warehouse. The distributors would then supply these materials to the end customers.
The sales person are required to indent the demand for their region before the beginning of each month as the supply
of materials happens only once in a month for the regional warehouse. However, the distributors can place their order
as and when required. The credit period for each of the distributor was 15 days.
For the vending machines, these are manufactured in the plant in Bangalore and are sent to regional warehouse as
per the indent of the sales of the salesperson. The vending machine are directly shipped to the customer’s location
from the regional warehouse. If any customer wants to terminate the contract with the company, they would have to
return the machine to Coffee Day, failure to which would result in the forfeit of the security deposit submitted by the
customers. Each machines type has different security deposit fixed.
Once the machine are returned to the regional warehouse, the team of service personals would work for the
refurbishment of the machine and make it ready to be delivered to a new client as per requirement.
Role of Salesperson:
The salesperson has two key stakeholders: End Customer and Distributors. They have to maintain a consultative
relation with both of them.
Each salesperson is allocated a territory and they are responsible for the growth of that territory. They are also
responsible for appointment of the distributors in the territory. They are required to search for the prospects, present
them with the offerings of Coffee Day and broker a deal. A rate contract valid for a period of 11 months is signed
for the supply of materials and rental of the machine. Before the signing of the contract, the details of the contract
have to be uploaded in the CRM of the company and due approval is required from the reporting manager as well as
the general manager of the region.
The salesperson is also responsible for the collection of the bill of materials from the distributors as well as the rentals
which has to be done twice every month. They are also required to work with other vertical like the operation and
logistics to track the movement of goods, finance for the credit and payment history and service team for the
installation and maintenance of the machines.
There are also Key Account Manager assigned to clients who have 50 or machines installed Pan India. These key
accounts are sometimes supplied directly from the regional warehouses
Quality Control Unit:

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The machines rolled out of the manufacturing units are ISO 90001:2015 certified. Also a dynamic team of Research
and Development centre is an integral part of the factory which focuses on innovation and technology. The potfolio
machines are also CE certified.
The plantations and the coffee factory are UTZ and Rainforest Alliance Certified.
Total Cost of Ownership:
The total cost of ownership of the product is lower as compared to its competitors, as the customers are not required
to purchase the machine. The market price of such machine are almost 1,00,000 per machine. Also, on an average
the customer ends up paying 5000 per year towards the second year of the machine. With a life time of 10 years the
total cost is
Other Machine: 1,00,000 + 5000* 9 years = 1,45,000
Cost of Coffee Day Machine: 1500*12 moths*10 years = 1,80,000
Although the cost is higher by an amount of 35,000 but Coffee Day provides a one stop solution for all the customer
needs. This value proposition creates a difference between the two. Also, the pan India presence of the organization
ensure that the machines are repaired within 4 hours of logging the complaint. This supports cannot be guaranteed
by the competitors.

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Annexure:
Machine Types:

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