Marketing Management

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Marketing Management Case Studies

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Cafe Coffee Day – Brand Strategy in India

Case Study Contents

  1. Introduction
  2. CCD – an established brand image in India
  3. CCD’s wide network – the anytime, anywhere cafe
  4. Exhibit 1: Total number of stores/cafes of Café Coffee Day and its competitors
  5. 1996 – 2008, CCD’s first store launch to building a strong competitive advantage
  6. Innovative formats to woo new customers
  7. Reinforcing brand image with the cluster approach strategy
  8. Company-owned stores instead of franchises to not dilute brand value
  9. Lower pricing and ‘no-segmentation’ approach
  10. From a largely south Indian retail chain to a national brand
  11. Co-branding
  12. Reinvigorating the brand and taking it to the next level
  13. Projecting a feeling of togetherness
  14. Silent brew masters – special employee program
  15. Background Note (History of Cafe Coffee Day)
  16. Café Coffee Day – Quick Facts
  17. Exhibit 2: Various store/café formats of Café Coffee Day
  18. Exhibit 3: Different divisions of Café Coffee Day
  19. Exhibit 4: Brand Logo of CCD and its significance
  20. Exhibit 5: Sample Consumer profile by Age group at Café Coffee Day

     

Case Study Abstract

This case study covers the following issues:

  • Examine and analyze Cafe Coffee Day’s brand strategy in India, its success and future challenges

Introduction

“CCD today has become the largest youth aggregator, and from a marketing stand point, the success has come by focusing on the 3As: Accessibility, Affordability and Acceptability.”– Bidisha Nagaraj, the Marketing president of Cafe Coffee Day

“Although demographically, a typical consumer would be male or female between 15-29 years of age, belonging to middle or upper middle class, we call our consumers young or young at heart. We are about juke boxes, good and affordable coffee and food. The brand fit is with youth or the young at heart. So we often look out for brands that are aspirational in nature.” – Sudipta Sen Gupta, Marketing head, Café Coffee Day.

CCD – an established brand image in India

Cafe Coffee Day (CCD) has an established brand image in India and ranks No 2 in the Brand Equity’s Most Trusted Brands 2008 survey – in the food services category. Rival Barista is at No 5. CCD has been able to make a connection with the Indian consumers, predominantly among the youth. CCD is the market leader in India and was awarded the ‘Exclusive Brand Retailer of the Year’ by ICICI Bank in its Retail Excellence Awards 2005 for the organized retail sector.

CCD’s wide network – the anytime, anywhere cafe

CCD has been able to make its brand presence felt through the sheer number of stores. CCD has 620 cafes at present and it has ambitious plans to launch more than 900 cafes by the end of the current financial year. This means launching one store every other day which is not surprising from a company which launched a cafe (in 2005) in Vienna, the coffee capital of the world. CCD also has three cafes in Vienna, and two in Karachi, Pakistan. Lagging behind CCD in the Indian market, Barista has about 200 cafés, Java Green (around 75 cafés) and Mocha (around 25 cafés). The Indian organized sector has potential for around 5,000 cafés but fewer than 1,000 cafés exist currently.

Exhibit 1: Total number of stores/cafes of Café Coffee Day and its competitors

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Case Study Keywords

Cafe Coffee Day, CCD, Amalgamated Bean Coffee Trading Company Ltd., ABCTCL, V G Siddhartha, Café Beat, Brand Equity’s Most Trusted Brands 2008 survey, Bidisha Nagaraj – Marketing president, brand image, brand management, Exclusive Brand Retailer of the Year, Barista, Java Green, Mocha, company owned stores, national brand, south Indian retail chain, Chikmagalur, Co-branding, international brand consultant Landor, Silent brew masters – special employee program, a feeling of togetherness, Coffee Day Exports, Coffee Day Xpress, Coffee Day Take Away (coffee vending machines), Coffee Day Fresh ‘n Ground (ground coffee retail outlets), Coffee Day FMCG (packaged filter coffee powder)

Case Updates/Snippets

  • CCD’s vision: To be the only office for dialogue over a cup of coffee
  • CCD’s Expansion Strategy: Cafe Coffee Day has around 821 outlets in 115 cities in India. CCD plans to take the total number of cafes to 1,000 by March 2010 and double it to 2,000 by 2014. (Update: By Jan 2012, CCD had approx 1,200 cafes and 900 Express outlets) In October 2009, CCD announced that it will increase its international presence from the current six outlets in Vienna and Pakistan to a total of 50 stores across Europe and Middle East in two years time.
  • International coffee chains in India – Recent entrants in the Indian market include Gloria Jeans, Coffee Bean & Tea Leaf and Illy Café.
  • Operating Formats – Café Coffee Day operates in both regular (Coffee Day Square) and premium formats (Lounge).
  • Highway Cafes: In 2004, CCD began cafes on highways. By 2009, the total number of Café Coffee Day highway cafes rose to 30 owing to the overwhelming response it received from travellers.
  • CCD’s new brand identity: In October 2009, CCD unveiled a new brand logo, a Dialogue Box, to weave the concept of ‘Power of Dialogue’. In accordance with this new brand identity, CCD planned to give all its existing outlets a new look by the end of 2009. Cafés would be redesigned to suit different environments such as book, music garden and cyber cafes suitable for corporate offices, university campus or neighborhood. The change plan included new smart menu, furniture design, among others.
  • Coffee consumption in India is growing at 6% per annum compared to the global 2% plus. In India, the per capita consumption of coffee is around 85 grams while it is six kgs in the US.
  • Milk production in India – India is the largest producer and consumer of milk in the world with 98% of milk being produced in rural India.
  • Coffee production in India – India ranks sixth as a producer of coffee in the world accounting for 4.5% of the global coffee production. India has about 170,000 coffee farms cultivating around 900,000 acres of coffee trees.
  • CCD’s International Expansion Strategy – In June, 2010 Cafe Coffee Day chain acquired Emporio for Rs 15 crore. Emporio is a Czech Republic-based café chain present at 11 locations. CCD plans to co-brand the chain as Café Coffee Day Emporio and later transition it to Café Coffee Day. CCD is also present in Vienna. The company wants to expand in the East European region, West Asia and the Asia-Pacific region.
  • Cafe Market in India – Coffee retailers cover only 170 cities out of 3,000 in India (early 2011 reports). In 2008, according to Technopak Advisors, the Indian food servcies market – cafes, full-service restaurants, fast-food outlets/quick-service restaurants was estimated to be $6 billion (Rs 26,000 crore) with organized players taking 13% of the market. (By 2014 this number is expected to increase up to 27%.). According to Technopak Advisors, the café market in India is estimated at $150 million (Rs 678 crore) and growing at 40 per cent over the last five years.
  • Organized coffee market in India: The organized coffee market in India is about Rs 600 crores. This is approximately 20% of the total domestic coffee consumption (Rs 3,000 crores).
  • New Entrants in Indian Coffee Cafe market: In early 2011, Hindustan Unilever, the FMCG giant planned to open a cafe outlet in Mumbai named ‘Bru World Café‘ to popularize its in-house coffee brand Bru (HUL’s only coffee brand sold only in India).
  • CCD to double its human resources count: CCD has 6,500 employees (as per Feb 2011 figures) with each cafe requiring about 6 employees. CCD plans to double its employee count by 2013.
  • Lavazza – Espression store in India: In 2011, Lavazza, the Italian coffee brand opened its first signature coffee shop ‘Lavazza Espression’ in New Delhi, India.
  • CoffeeDay Wakecup: In January 2012, CCD launched its own brand of coffee maker called CoffeeDay Wakecup targeting all coffee lovers. The product will be marketed at its 1125 cafes and 900 Express outlets. Competitor Lavazza had launched its own portable coffee machines (Lavazza Blue 850) already but targeted the premium segment with the price being higher than CCD’s machines.
  • In February 2012, Café Coffee Day announced plans to install interactive touchscreen tablets in 500 cafes across the country.