Many successful business deals happen over a cup of coffee. Drinking coffee or tea and the coffee shop culture has grabbed the youth across India.
With coffee drinkers growing manifold, the organised and unorganised coffee shop brands are leaving no stone unturned to expand their presence pan-India. Read on to find out the brewing benefits in this sector. India is the sixth largest producer of coffee in the world and has made a name in the international market. Collectively, Karnataka, Kerala and Tamil Nadu contribute about 99 per cent of the total coffee production in the country.
According to market studies, coffee retail is growing at 10 to 12 percent a year and organised coffee retail business is pegged at Rs 25 billion. Its consumption in India has increased from 55 thousand tonnes to 75 thousand tonnes in the last three years, 80 percent is exported of the total produce.
An Associated Chambers of Commerce and Industry of India (ASSOCHAM) study says country’s tea market is expected to reach Rs 33,000 crore by 2015 from the current level of Rs 19,500 (in 2011). India accounts for about 30 per cent of global output and nearly 25 per cent of tea produced worldwide is consumed in the country only.
Indian café market is booming and many young entrepreneurs and even already established successful entrepreneurs are taking up café biz for reaping benefits. According to Judd Williams, Regional Director, Middle East and Asia, Costa Coffee, says, “The café market size is estimated at Rs 1,000 crore and growing at around 30 per cent. There are today close to 2,000 outlets across 40 cities and these cities alone can accommodate another 2,000 cafes in the next few years. Since India is such a huge market, even small percentage of market can mean very big and exciting numbers for brands. The long term prospects are robust as the coffee culture takes stronger root and percolates down to smaller cities.”
Branded market to grow exponentially
Off late, the branded tea or coffee chains have seen a huge demand. Due to changing lifestyles, people have become brand conscious and they do not mind paying a bit more for the branded beverages. The stupendous rise of national and international coffee chains like Barista, Café Coffee Day, Costa Coffee and Cafe Desire to name a few, only shows it is just beginning of the trade.
Costa Coffee with 2,900 units globally is now tapping new markets in India. Costa with over 100 stores here is currently present in 14 cities across India including Delhi NCR, Mumbai, Bangalore, Chennai, Kochi, Jaipur, Agra, Pune and Ludhiana.
“We would be present in every part of the country with over 1,000+ franchisees and also around 200 franchisees in other countries. This will make our brand “Most trusted and Global Brand”,” says Ghouse Mohiuddin, MD, Cafe Desire, Radiant Consumer Appliances Pvt Ltd.
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Brewing through franchising
Coffee chain outlets top the priority list for investors planning to invest in food and beverage (F&B) businesses. Opening a coffee outlet is among top 10 business ideas in F&B industry. The growth in this business has also happened because of brands expanding via franchise route.
“We offer franchisees in two models – Franchise- Owned Franchise- Operated (FOFO) and Franchise Owned- Company- Operated (FOCO). Our franchisees have been able to break even within a period of 18-24 months. The period varies from location to location and the type of café they are operating. Currently, we have more than 125 stores across India. Of which, 45 are franchisee stores. With the exposure of tier-II and III cities getting exposed to urbanization, there is a huge demand supply gap for cafes in such cities and definitely an area for franchisees to start a new venture,” shares Pranav Joshi, Business Development Manager, Brewberrys.
Judd Williams adds, “We operate via franchise model in India and work in close partnership with our long standing partner Devyani International Limited (DIL) to grow our presence in India. DIL's expertise in the Indian retail food and beverage sector has enabled Costa to build a strong brand presence and both Costa and DIL will continue to work hard to develop the business and provide our Indian consumers with authentic, irresistible coffee, in a warm and welcoming environment, in convenient locations.”
Operating via the franchise model, Ghouse Mohiuddin, tells Franchise India, “The possibility of scaling up the business inspired us to opt for the franchise route. As we are dealing with products which are high in demand across the country, this made us think franchising is apt for our brand.”
So invest in the piping hot café business opportunity to make rapid strides in your entrepreneurial voyage. With couple of international brands making a foray in India, there are opportunities galore in this business.