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Jul, 01 2007

Coffee culture invasion

TODAY, the desire for drinking coffee is rampant amongst all Indian households. As a result, coffee cafes are spreading across every nook and cranny of the country.

Coffee CULTURE invasion

TODAY, the desire for drinking coffee is rampant amongst all Indian households. As a result, coffee cafes are spreading across every nook and cranny of the country. Both domestic and international coffee café giants are eyeing to invest in this Rs 800 crore industry. According to a research report by the United Nations Food and Agriculture Organisation, India's coffee consumption has been increasing at 2.2 per cent per annum. With domestic consumption increased from 60,000 tonnes to 80,000 tonnes, coffee industry in India is all set to play a major role in strengthening the over all economic scenario of the country.

Coffee café's and coffee culture

In the last couple of years, India has seen an explosion of coffee cafes and a never-before kind of mushrooming of a coffee culture. The real cause of this sudden change of taste among the Indian consumers is the invasion of satellite television and other media that has played a crucial role in introducing Indians, especially young Indians to the coffee culture. The youth of today prefer to sip the latest and costliest coffee flavours in the inviting décor of these cafes which provides them with great ambiance, allowing them to sit and 'chill out'.

With more than 700 coffee cafes in the country, up from 175 in 2002, coffee becomes the most happening beverage among the Indian consumers. As a result, big players, from Barista Coffee Company to Bangalore-based Cafe Coffee Day, are opening outlets in every nook and cranny of the country.

As coffee drinking becomes a fashion for the Indian consumers, especially among the college students and young working professionals to whom the booming economy has given surplus money to spend, a time is expected when the coffee cafés will eventually become a community hub with cafes such as pop music lovers' cafe, an intellectuals-only café and perhaps even a communists' café coming up.

Why franchising

Coffee consumption in cafes globally is moving ahead at a very slow rate of 0.5 per cent per annum, however, according to some industry experts, prevailing situation will not cause any damage to the Indian coffee industry. India is developing as a huge investor-friendly market for both local and international companies, and because of this, coffee chain major, Café Coffee Day is planning to expand its fleet of coffee outlets to 500 by the end of September 2007. Moreover, after the government increased the Foreign Direct Investment in India, major global players are eyeing the growth-oriented Indian market. And, therefore, no international coffee chain giant can even think of ignoring the booming Indian market now.

For international café chains, franchising offers the right option, because with the help of a franchise network they can easily penetrate the market. Even the biggest coffee chain in the world, Starbucks is eyeing to capture the market through franchising. Franchise concept is also getting popular among the Indian coffee chains now. They are willing to explore the opportunities for themselves, and with the increasing presence of international coffee chain majors on Indian soil, local FMCG companies such as Hindustan Lever and Tata Coffee are also opting for franchising to get into the competition.

Prominent players

With the increasing demand for coffee among the Indian consumers, many global and domestic coffee giants are seriously targeting India as a lucrative destination to invest in. Coffee chains like Barista Coffee, Costa Coffee, Cafe Coffee Day, Barnie's Coffee, Cafe Mocha, Craze Coffee, Qwiky's Coffee, Nescafe, and Coffee World have opened their outlets in different cities across the country. According to experts, coffee culture is growing bigger and as a result, domestic and international chains are lining up for big expansion plans during next 3 to 5 years.

Global player Starbucks Corporation is all set to make its India debut by the end of 2007. The coffee market in India is expanding fast and is perhaps the best time for foreign companies to build a base in India.

Coffee chains franchising in India are as follows:

Qwiky's Coffee:

Qwiky's Coffee started its operation from locations around the US, which includes California, Illinois, Massachusetts and North Carolina. In 1999 Qwiky's opened its first flagship store in Chennai. Chimayo Chains (P) Ltd was selected to develop the market in the Indian sub continent as a master franchisee. The company is also on the verge of opening more stores in Indonesia, Singapore and other locations under franchise agreements. Qwiky's Coffee is using its software experience to develop the state-of-the-art franchising management and electronic commerce programmes to support the Qwiky's network around the world.

When asked about the future of the coffee industry in India, O.J.Venkatesh, Country Manager (Franchise and Operation), Qwiky's Coffee said, "The future of coffee industry is very bright. In the coming years we will see that all malls and high street will have more than three cafes."

Coffee World:

Coffee World is a premium specialty coffee house that offers a comprehensive range of hot and iced coffees with fresh complementary foods such as waffles and sandwiches. The company places a lot of emphasis on picking and roasting the finest Arabic beans to create rich brews prepared by its highly trained professional coffee makers. To offer high quality beverages, Coffee World favours the use of fresh ingredients to prepare its iced and ice blended coffees, instead of just using pre-mixes. Coffee World operates a variety of outlets, ranging from large outlets up to small kiosks. The outlets are designed to give the look and feel of luxurious and comfortable living rooms.

Fred Mouawad, Chairman and CEO of GFA Corporation, said, "In India café coffee culture is growing, but it will take time for the industry to compete in international markets, as Indian consumers are not used to up-sizing yet, as they are not willing to spend more to get a larger quantity."

Craze Coffee:

Craze Coffee is a part of Enkay group of companies, which are Delhi-based and a name to reckon with, both in social and business circles. Craze Coffee is a mix of fast food restaurant with a coffee bar, a happening place with cool ambience, invigorating music and a relaxed atmosphere.

Its huge variety, fully prepared in an open kitchen requiring minimal space, is its USP. The pricing is the lowest in comparison to other coffee shops in the market and over the years, has developed its own recipes and established its own network of quality vendors, billing and inventory systems and software.

Mocha Coffee:

At Mocha a great deal of attention is paid to every detail; they take care of every need of its customers. This is reflected in the kind of music they play and the cups they serve to their customers.

Mocha Coffee commenced trading in 1987 as a small roasting house and retail outlet specialising in roasted coffee beans in Australia. In the year 2001, Mocha Coffee opened its first store in India. At present, the company is running about 13 café outlets across Mumbai.

When asked about what challenges Indian coffee chains were facing, Mocha Coffee's CEO, Riyaaz Amlani, said, "The problem with conventional coffee shops these days, is that they are all doing a bit of the same thing and to survive in the market they have to make their own place with a touch of difference."

Barnie's Coffee:

Barnie's Coffee and Tea Company was founded in 1980, and since then it has grown into one of the largest privately held specialty coffee shop in US. As one of the fastest growing companies, Barnie's Coffee has opened around 300 stores across the globe. The company's passion for coffee and excellence runs consistent from Dublin to New York and to New Delhi. A pioneer of flavoured coffee, it has opened its first outlet in Noida near Delhi. With the strategise expansion plan the chain has its presence in Jaipur, Raipur, Pune and Ahmedabad.

Barnie's offers flavours that match everyone's taste, ranging from classic such as Hazelnut and French vanilla to Santa's white Christmas.

Café Coffee Day:

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, Café Coffee Day has its business spanning the entire value chain of coffee consumption in India.

Café Coffee Day (CCD) pioneered the café concept in India in 1996 by opening its first café at Brigade Road in Bangalore. Recognising the potential that lay ahead on the horizon, CCD embarked on a dynamic journey to become a large organised retail café chain with a distinct brand identity of its own. From a handful of cafés in six cites in the first 5 years, CCD has become India's largest and premier retail chain of cafes with 415cafes in 83 cities around the country.

Speaking about the future of this industry, Simran Sablok, General Manager Marketing, Café Coffee Day, says, "The café industry has huge potential in India. There is a large demand for places such as ours and with more players coming in, the consumer will have varied choices."

Barista Coffee:

Barista Coffee Company started its mission to spread traditional Italian coffee culture with the opening of its first Espresso Bar in New Delhi in February 2000. Today, Barista has 166 outlets in 25 cities across India and employs more than 700 people. The company caters to over one and a half million guests every month.

Barista serves various flavours to its customers, which includes classic hot and cold coffees, signature drinks like Barista Frappe, Choco Frappe, Mocha tease, Fruit infusion iced teas, Fruit smoothies, Steaming Swiss chocolates, Pan cakes, Smoked chicken, Chicken tikka sandwiches and more.

When asked about the age group they are targeting, Partho Dattagupta, CEO, Barista Coffee Company, said, "Our Target consumer is aged between 20 and 30 years - young men and women who work hard and at the same time create time for relationships. Barista offers them a space where they can work, catch up with friends and spend time in solitude over a cup of coffee."

Costa Coffee:

From hotels to universities, hospitals, leisure centres, to airlines, pubs, bars and restaurants, one can find outlets of Costa Coffee every where. Costa Coffee offers unique Mocha Italia espresso coffee blend along with Costa branded crockery or takeaway cups and a full range of branded signage and merchandise. The story of Costa Coffee started way back in 1971 in London, where a couple named Bruno and Sergio Costa set up their famous coffee roastery in Lambeth, London, they started supplying local caterers and Italian coffee shops with an exciting coffee, slow-roasted the Italian way. The first Costa Espresso Bar was opened in Vauxhall Bridge Road in London seven years later. Costa Coffee started its Indian operations on September 8, 2005, by opening its first outlet at Connaught Place in New Delhi. Speaking about the coffee chain future in India, Virag Joshi, CEO of DIL group, who brings the brand to India, said, "Coffee shops have now become the 'third home' for most of the professionals and that is why coffee chain industry has got a bright future"

Wrap-up

Looking at the current trend and with the high economic growth, opportunity for continuous growth of this sector through franchise network is strong, especially among the coffee cafes across India. Coffee chain owners have realized that quantity does not equate to quality. Moreover, to keep up with the increasing demand for fresh-brewed coffee among Indian consumer, major industry players will have to keep improving their services further and which is good for the future of coffee industry in India.

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