CAF COFFEE DAY

a lot can happen over coffee

SUBMITTED TO :MR.GURUPREET VIRK (Assistant Prof. In Management Deppt. )

SUBMITTED BY:SUCHETAN SINGH

Cafe Coffee Day

Type Industry

Public Restaurants Retail coffee and tea Retail beverages 1996 Bangalore, Karnataka, India 1090 V. G. Siddhartha, Founder and Director[1]

Founded Headquarters Number of locations Key people

Services Revenue Employees Subsidiaries

Coffee US$45 million 5000 Coffee Day Fresh n Ground Coffee Day Xpress Coffee Day Take Away Coffee Day Exports Coffee Day Perfect CafeCoffeeDay.com

Website

INTRODUCTION
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Caf Coffee Day is a venture of the AMALGAMETED BEAN COMPANY. It is a large organized retail cafe chain with its distinct brand identity of its own, offers a world class coffee experience to its customers at affordable prices. It has positioned itself as a place for hangout especially for the youngsters and for the informal meetings. With increasing demand of liquid coffee among public, since 1990s there has been a drastic increase in the number of coffee parlours, with Cafe coffee day opening its 100 th outlet in Delhi. Coffee parlours have witnessed an increase in their customer base as in now, consumption of coffee being not restricted to the elite class only. The increase in the disposable income and the lifestyle are the two major factors contributing towards the visit of all people of all ages and classes visit coffee parlours, thus helping in the market penetration and expansion of outlets for CCD. Strategic alliances of Cafe Coffee day with brands like Garfield, Levis, Elle 18, etc that are youth centred helped CCD in increasing its sales at less cost and creating a youth oriented brand image. It is also giving the gift and the discount vouchers to the customers who are frequent visitors. CCD, with its first outlet in Bangalore basically had an urban market. People of all age groups visit it, but their main target is the youth. CCD has positioned itself as a place for having coffee and fun together at the same time.

MISSION

TO BE THE BEST CAF CHAIN IN THE WORLD BY OFFERNG A WORLD CLASS COFFEE EXPERIENCE AT AFFORDABLE PRICE.

HISTORY
ABOUT 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. This is a Rs. 300 crore ISO 9002 certified company. Its chief customers are in USA, Europe & Japan. Based in Chickmaglur, the home of some of the best Indian Coffees, Coffee Day has its business spanning the entire gamut of coffee consumption in India. Its different divisions include: 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 neighbouring 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. Coffee Day Fresh n Ground (354 Coffee bean and powder retail outlets) Coffee Day Xpress (341 Coffee Day Kiosk) Coffee Day Take away (7000 Vending Machines) Coffee Day Exports Caf Coffee Day Coffee Day Perfect (FMCG Packaged Coffee) division

CAF COFFEE DAY IN THE PAST 12 YEARS:

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1996 -1st caf in 2001-14 cafs in 6 cities 2008-607 cafs across 98 cities, and in Near Future-Expanding to Middle East, Eurasia East.

The Name
ABTCL was looking at a simple name that would be representative of a daily purchase of coffee - something that would denote how coffee was an every 'day occurrence. Therefore,
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the name Coffee Day. Post this, when the Coffee Day group was on the verge of completing the entire Bean-to-Cup experience with coffee cafes being a very promising branch, the word Caf was prefixed to Coffee Day. Hence, Caf Coffee day was decided as the final name.

Logo

Old Logo The font used for Caf is called SLURRY. The font looks as though the letters have congealed (coagulated) out of a liquid. The First Caf Coffee Day logo was a bright red cube with a green stroke above e in Caf Coffee Day. The word Caf was made to appear dominant to indicate Caf Coffee Days introduction of Caf culture in India. The font used for Caf is called SLURRY- The font looks as though the letters have congealed or coagulated out of liquid. After recognizing the buzz of conversations that invariably accompanied the coffee being served at their tables. Caf Coffee Day introduced a new logo with a Dialogue box in it. This was to highlight the strong connection between Coffee and Conversations. Another indication of the dialogue is the two-way conversation between Caf Coffee Day and its customers.

The Tag Line

A lot can happen over coffee" became a popular line among youngsters. In a bid to take their coffee chain national in 2000, the management decided to strengthen their brand pull with an appealing tag line. Factors like ambience, food, music, atmosphere and meeting people were identified as the aspects that were drawing people to their Cafes. Encompassing all these factors in a single line, the sentence "A lot can happen over Coffee, was phrased.
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Vertical Integration
The company is known for being vertically integrated to cut costs: from owning the plantations, growing the coffee, making the coffee machines to making the furniture for the outlets. The machines cost them Rs 1.2 lakh each, which they say is half the cost of an imported coffee machine. The maintanence cost of CCD's machines is also less than foreign machines.

Outlets
The first CCD outlet was set up on july 11th, 1996, at Brigade Road, Bengaluru (Then known as Bangalore), Karnataka Following this, CCD crossed over 1000 cafes through out the nation by 2011. They have a minimum of 1151 outlets. The number increases almost every week. A meter on their official website (Cafecoffeeday.com) keeps continuous track of the number. A cup of coffee is sold for Rs 50 onwards.

International outlets:
Caf Coffee Day made its foray into the international market of Coffee cafes by opening outlets at Karachi, Vienna and most recently in Prague.

Caf Emporio
Caf coffee day, in June 2010, acquired Caf Emporio- A caf chain from Czech Republic. Cafe Emporio has 11 cafes in Czech Republic- 7 of them in Prague and 1 each in Brno and Olomouc and 2 at Freeport-Hate. Caf Emporio runs on 2 formats similar to CCDs regular cafs and Lounge & Square set ups. The regular cafes are pure play cafs serving hot and cold beverages and ready to eat snacks while the lounges and squares come with a broader menu and elegant layouts.

Divisions
Cafe Coffee Day's divisions include:
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Coffee Day Fresh 'n' Ground, which owns 450 coffee bean and powder retail outlets. Coffee Day Square, a high level coffee bar in Bangalore. Coffee Day Xpress, which runs 900 plus Coffee Day kiosks. Coffee Day Beverages, which runs over 14,000 vending machines. Coffee Day Exports, its exporting wing. Coffee Day Perfect, its (FMCG Packaged Coffee) division.

Awards
CCD has won the best BREWMASTERS in the country. Its track record at the IBC(India Barista Championship) & WBC(World Barista Championship) is as follows: 2002 : Top 3 positions at IBC & CCD represented India and won the 3RD rank i.e. silver medal beating much fancied USA, Italy and Brazil at the WBC at Oslo, Norway.

2003 : Top 5 ranks at IBC & stood 5th at WBC at Boston, USA. 2004 : Top 6 positions at IBC & resulted at WBC at Trieste, Italy. 2005 : Top 6 positions at IBC & resulted at WBC at Seattle,USA 2006: Second and third place at IBC 2008: Top three positions at IBC and represented India at WBC at Copenhagen

2009: CCD secured the first, third, fourth and Most Promising Talent position at the IBC and represented India at WBC at Atlanta 2010: First, second and fourth place at the IBC and represented India at the WBC in London

POSITIONING
Caf Coffee Day, at its inception in 1996 was the vanguard of a caf culture in India. At time when the country was growing well economically and young India enjoyed higher spending power, CCD as it is popularly known, started to set up the first retail chain of coffee bars. It broke new ground in 1999 when the entire market grew phenomenally with the entry of new players. From the beginning, it positioned itself as being a coffee bar and has maintained that positioning for a long time now. For a consumer, CCD represents a fun place where one can go with a whole bunch of friends at any time of the day and have a good time, over coffee. In 2002, Caf Coffee Day underwent a rebranding exercise through a change in its logo. The earlier logo was a simple red square with a white streak running across, and Coffee Day written at the bottom. At this stage, CCD was still perceived as a South Indian coffee joint similar to the Coffee House in Kolkata, a place where intellectuals meet and spend their time discussing issues. CCD saw a latent market in youngsters, who were increasingly looking for a place to spend time with friends and have fun. It then created an umbrella mother brand, Coffee
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Day and four subbrands to represent the various activities. The logo then incorporated red, white and green colours, a larger font and emphasis on the word Caf. According to the company, red signifies leadership and passion and the white swirl stands for purity of purpose and the feel of coffee. The new colour green endorsed the long heritage of CCD in growing coffee.

ADVERTISING, SALES PROMOTION AND SEGMENTATION STRATEGY

Caf Coffee Day does not look at mass media as a viable area of advertising or marketing spend. CCD is advertised through barter deals with other brands for ground events.

BELOW-THE-LINE ACTIVITIES:
2003- Levis launched a new range of Low Rise jeans through a campaign called 6 below. CCD displayed POPs of Levis in all its outlets during the campaign. 2004- The launch of Liril Orange soap by HLL was conducted in Caf Coffee Day. 2004- TVS Scooty tied up with CCD for events in the coffee bars and at malls on Valentines Day in February. 2004- CCD was the official ground partner for the Channel V Get Gorgeous contest

IN-FILM ADVERTISEMENTS:
Some Telegu and Tamil films with prominent brand placement
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 Hindi films- It started with Bas Yun Hi and then conscious advertisement decisions were made for Khakee, Main Hoon Na, Kyun Ho Gaya Na and Mujhse Shaadi Karoge. All these movies were targeted at young movie-goers, teenagers and people looking for lighthearted entertainment. These are much the same kind of people who are likely to visit Caf Coffee Day. Serials like Kahani Ghar Ghar Kii, but there are no important tie-ups with such entities.

SALES PROMOTIONS:
Merchandising- Every CCD stocks merchandise ranging from coffee mugs, Tshirts, caps, bags, coffee filters, mints, different flavours of coffee powders, tea and cream, wafers and biscottis. It also merchandises promotional materials for other brands it associates with. When some brands are conducting events for which passes are distributed or movie premiere tickets are given out, CCD is an important hub for these activities as most of the target market. CCDs Guide to Active Holidays- It is a travel guide focusing on adventure sports and is available in the CCD outlets, for people seeking escapade from monotonous life. Caf Beat- An in-house magazine which gives the entire low-down on whats happening in CCD outlets across the world. It describes experiences of customers, celebrations in CCDs, and covers youth-centric topics like movies, music, travel, lifestyle, e-dating, books and careers. Around 38% of CCD goers read Caf Beat and some carry it back with them. CCD has now tied up with WorldSpace and Microsense to provide satellite connectivity in its outlets.

SEGMENTATION STRATEGY:
Caf Coffee Day has its main consumer base in the age group of 15-29 years. Its customers are mainly middle class and upper middle class youth who are upwardly mobile. From the market, CCD seeks to target not just the youth but anyone who is young at heart. More than 10% of their customers are above 35 years of age. The evidence of the connect CCD has been able to make, particularly among the youth, comes from the findings of Brand Equity's Most Trusted Brands 2008 survey. In the food services category, CCD ranks No 2, while McDonalds stands at No. 3 and Barista lags at No 5. The graph below indicates official figures for the type of
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consumers of CCD. We can clearly see that its most profitable segment is the 20-24 age brackets. These customers can afford to visit CCD on a regular basis and have a habit-forming attitude towards CCD.

PRODUCT ANALYSIS
Caf Coffee Day has different caf formats across different cites. They can be categorized into Music Cafs, Book Cafs, Highway cafs, Lounge cafs, Garden cafs, and Cyber cafs. Every format has a different feel to it. Also, Caf Coffee Day changes or makes fresh additions to its menu from time to time. This includes having specialty coffees from different countries, exotic desserts and pina coladas. Since the target consumer is of an age where one constantly seeks change, this makes sure that the consumer does not get bored with a repetitive style and seeks new places to go to. Caf Coffee Day has changed its interiors twice since inception. First, during its rebranding in 2002, where it brought in big photographic wall mounts of coffee experiences, and yellow chairs and marble tables. In 2006, it again changed its dcor to cane chairs to give the outlets a more causal feel. Caf Coffee Day has hence constantly reinvented its look to keep up with the ever-changing wants of its consumers.

GENERIC COMPETITION
DIRECT COMPETITORS:
Barista- This is the closest competitor to Caf Coffee Day in the Indian market. They target

the same class of upwardly mobile youth and young professionals. But Barista is often viewed as a place to unwind after a hard days work or an ideal setting for some business meetings.
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 Caf Mocha- This aims at providing a level of experience to the consumer which is hard to imitate. Inspired by Morocco and Turkey, Mocha offers not just coffee but also sheeshas from Egypt and gourmet desserts. Mocha calls itself a coffee shop for the soul. Qwicky- Based mainly in Bangalore, Qwicky has a strong local hold in South India.

INDIRECT COMPETITORS:
Eateries like McDonalds and Haldirams pose competition to CCD as they are likely attractions for a consumer to be drawn to. A consumer can well contemplate why he should spend around Rs. 45 on a coffee when he can get a burger and a coffee for the same price at McDonalds. Local tea joints and coffee shops like Caf Nescafe- They are smaller places but nevertheless target the same set of consumers. Hence, CCD has to consider the threat a shop like this could pose to it.

GLOBAL COMPETITORS:
Starbucks is planning to enter India shortly and would be stiff competition for even an established brand like CCD. Coffee bars in the market of the other country that Caf Coffee Day is entering is also be a factor CCD will have to plan for before entering a market.

DISTRIBUTION STRATEGY
Today CCD has the largest network of cafes in India, with over 607 Company Owned Company Operated cafes across 98 cities. But they do not follow a franchising strategy. The channel partner has no involvement in the daily operational activities of the Caf in the retail space. Neither would he have to invest in operational capital equipment or branding or marketing and promotion of Caf Coffee Day. CCD opted not to follow forward integration and outsourced its distribution responsibility to other parties in 2003. As its reach spreads across India and it is now exploring
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smaller towns, CCD would find it more expensive to maintain on its own. The private players would procure raw materials like sugar and paper cups but coffee beans would still come from Bangalore.

COMPETITIVE STRATEGIES OF CAF COFFEE DAY

Caf Coffee Day which follows a backward integration of the value chain procures coffee beans from its base in Bangalore. This gives it a high sense of quality assurance and guaranteed supply across its outlets as the same raw material is used in all outlets. But Barista is a combination of imported coffee beans and beans from Tata coffee. This is a relative disadvantage because if there is a discrepancy in the quality or supply, Barista would have to consider alternatives and probably look for another supplier. Similarly, the food items available in Caf Coffee Day are obtained from local suppliers whereas Baristas food is catered by the Taj caterers. Caf Coffee Day would hence, have a lower-cost advantage. The brand strength of Caf Coffee Day in comparison to Qwickys and CafNescafe is far greater and its reach is on a countrywide scale. A consumer travelling across cities would not find it too difficult to seek a Caf Coffee Day outlet instead of deciding on trying a Qwickys, which he is not accustomed to. Caf Coffee Day has an advantage of top-of-mind recall for coffee-shop-goers in India, especially because it set the caf ball rolling in the country. It is a place where a lot of young people can meet, chat, have fun and let their hair down, rather than sit and sip a cup of coffee in prim and proper serenity. This is one of the main factors for why it is chosen over places like Barista or Mocha.

MARKET EXPANSION
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Recently, Caf Coffee Day entered a tie-up with the Ginger hotels of the Taj. Thiscaters to business executives and is on a Smart basics platform. The outlet wouldbe open to all, and not just the hotel's guests. The aim is to increase footfalls inGinger and increase the reach of Caf Coffee Day. This way, CCD can reach out toanother set of consumers, apart from the young crowd it has mainly catered to.

MARKETING MIX
Products: Caf Coffee Day product mix constitutes a wide range of products that appeal primarily to Indian coffee and snack lovers. products have a decided Indian taste to it - be it food or coffee. Most of the eatables have been adopted to meet the Indian taste buds like samosa, masala sandwich, tikka sandwich etc. Thus they have been trying to capture the Indian taste along with classic coffee. Prices: Considering that Caf Coffee Day knows its major customer lies in the bracket of 15- 29, it has tried to derive a policy whereby it can satisfy all its customers. The price for a cup of coffee ranges from Rs.17 to Rs.54. Promotion: Caf Coffee Day has used mass media promotions. But they are involved in all the areas of serious consumer passion. They promote via Television, tie-ups with different brands, contest, sales promotion, association with movies, etc. Place: This is a prime factor in determining the success of a retail chain. Caf Coffee Day is focusing mainly in malls and main markets.

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SWOT ANALYSIS
Strengths: Very strong market penetration In house sourcing of coffee beans Tie ups with companies Affordable price(average price is Rs.40) Customer friendly employees It is ISO902 certified company

Weakness:

Loud & noisy:- Its not a good place to have business talks Congested(improper sitting arrangement) Follow the competitors strategy Unable to categorize either as a premium product or as a mass product Quality of food as compared to the competitors

Opportunity: Tie ups with other companies for promotion Diversification in food industry Large untapped market To use media for effective advertisement
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Threat: Competitors like Caf Mocha, Barista & international players like Georgia, Starbucks

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QUESTIONS:
Q1. What environmental factors are responsible for the popularity of liquid coffee retailing? The environmental factors that contributed to the growth of liquid coffee retailing were:
a. Demographic factors:

Demographic factors as well as income shift was prompting more and more people of all age groups to visit these coffee parlours. 80% of the population of India consists of people between the age group of 15-29yrs, this being an added advantage as CCD mainly focus on youth. The increasing stressed life of the youngsters and the corporate during the work days make them to visit places like CCD to relax and to have fun time. b. Psychographic factors Psychographic factors such as people are ready to spend and they prefer to enjoy their leisure hours outdoor also lead to the popularity of coffee parlours. c. Urbanization and changing lifestyle: Increased adaptation to urbanization and changing lifestyle of people was another factor contributing to their growth.

Q2. What prompted marketers to use coffee parlours as media vehicles? There were various reasons for coffee parlours being used as media vehicles. Some of them can be as follows:
a. Increasing popularity of coffee outlets among all age groups, as a result of which the

companies can reach to more people at a single point of time.

b. Large customer base c. Demographic factors that are people of all age, culture, and region visited these outlets

which act as a tool for the media to address their issues and their promotional offers directly to the large group.
d. Geographic factors such as coffee parlours were easily accessible by the people and

also rendered the product at a comparatively cheaper price.

e. These outlets were not merely coffee parlours but also a place where people came to 17

relax. Thus advertisements of other brands created a long lasting impact on the people.

These were various reasons for coffee parlours being used as media vehicles.

Q3. How can coffee parlour chains benefit from running promos of other companies at their stores? Benefits that coffee parlours extracted from running promos of other companies were: a. Being backed by big companies such as Elle18,Garfield etc helped them to create market positioning,
b. Market penetration is led by running special promos on Valentines Day, Christmas etc.

c. Tendency among people to follow brand names in turn increased the customer base of these outlets,

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