Cafe Coffee Day & StarBucks:

History of CCD:

Cafe Coffee Day, A division of Amalgamated Bean Coffee Trading Company Ltd.

(ABCTCL), having its headquarters in Chikkamagaluru, Karnataka. It opened its first

cafe in 1996 on Brigade Road in Bangalore, and today has the largest cafe retail chain in

India – with over 1000 Café’s in 141 cities.

“Running café is a hospitality business and one needs to create the right ambiance and

experience and back it up with strong logistics”

Café coffee day is a 750 crores ISO 9002 certified company has over 5000 acres of coffee

states which is second largest in Asia registered as a social service provider to people.

Large numbers of coffee day cafes are located in Bangalore. The cafe chain has had much

success riding, and to some extent creating, the cafe culture wave that swept across

metropolitan India following strong economic growth resulting in an increase in youth

spending power. It has even tied up with World Space and Micro sense to enable its cafes

with satellite radio and Wi-Fi, respectively. Its first Wi-Fi cafe was opened on Lavelle

Road, Bangalore.

Its different divisions include:

• 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

• Café Coffee Day

• Coffee Day Perfect (FMCG Packaged Coffee) division

The coffee market in India has been growing due to the demand for Ready to Drink

coffee and has become a part of an individual’s daily consumption basket. Due to

changing cultures, consumers are becoming aware of domestic and foreign brands, which

are boosting the consumption levels.

The export promotion schemes and other subsidies by the GOI, and increasing trend of

eating out coupled with the rising share of young population has driven the market.

Well-established coffee shop chains, such as Cafe Coffee Day (CCD) and Barista,

enhanced their pan-India presence in the latter part of the review period. In 2010, Cafe

Coffee Day and Barista had 970 and 200 stores, respectively, and they aim to continue

expanding in the next few years. Meanwhile, several relatively new players, such as

Costa Coffee, Coffee Bean, Gloria Jean’s and Java Coffee, are trying to establish a

footing in Indian coffee retailing. Both these factors drove on-trade consumption of fresh

coffee beans in 2010, with volumes growing by 12%. On-trade sales have emerged as the

primary sales channel for fresh coffee beans, in the absence of any appreciable off-trade

consumption.

Indian Coffee Chains market is quite mature which is evident from the fact that Café

Coffee Day alone maintains more than 1000 Café’s in 141 cities in India. This forms the

main focus of this project.

History of Starbucks:

Starbucks, American company that is the largest coffeehouse chain in the

world. Starbucks was founded by Jerry Baldwin, Gordon Bowker, and Zev Siegel,
opening its first store in 1971 across the street from the historic Pike Place Market in
Seattle. The three Starbucks founders had two things in common; they were all
coming from academia, and they all loved coffee and tea. They invested and borrowed
some money to open the first store in Seattle and named it “Starbucks” after the first
mate in Herman Melville’s classic novel Moby Dick.
Alfred Peet, a coffee-roasting entrepreneur, was a major inspiration to the founders of
Starbucks. Peet was a Dutch immigrant who had begun importing fine arabica coffees
into the United States during the 1950s. In 1966 he opened a small store, Peet’s
Coffee and Tea, in Berkeley, California, that specialized in importing first-rate coffees
and teas. Peet’s success encouraged the Starbucks founders to base their business
model on selling high-quality coffee beans and equipment, and Peet’s became the
initial supplier of green coffee beans to Starbucks. The partners then purchased a used
roaster from Holland, and Baldwin and Bowker experimented with Alfred Peet’s
roasting techniques to create their own blends and flavours.
By the early 1980s, Starbucks had opened four stores in Seattle that stood out from the
competitors with their top-quality fresh-roasted coffees. In 1980 Siegel decided to
pursue other interests and left the two remaining partners, with Baldwin assuming the
role of company president.

In 1981 Howard Schultz, a sales representative for Hammarplast, a Swedish company

that made kitchen equipment and housewares from which Starbucks bought drip-
coffee makers, noticed how large the company’s orders were, which prompted him to
pay it a visit. Schultz was so impressed that he decided to pursue a career at
Starbucks, and he was hired as the head of marketing in 1982. Schultz noticed that
first-time customers sometimes felt uneasy in the stores because of their lack of
knowledge about fine coffees, so he worked with store employees on developing
customer-friendly sales skills and produced brochures that made it easy for customers
to learn about the company’s products.

Schultz’s biggest idea for the future of Starbucks came during the spring of 1983
when the company sent him to Milan to attend an international housewares show.
While in Italy, he was impressed with the country’s cafés, and he thought of doing
something similar in Starbucks. However, Baldwin and Bowker were not enthusiastic
about Schultz’s idea, as they did not want Starbucks to deviate much from its
traditional model of business. They wanted Starbucks to remain strictly a coffee and
equipment seller and not turn into a café that served espressos and capuccinos.

Seeing that he would not be able to persuade Baldwin and Bowker to embrace the
café idea, Schultz left Starbucks in 1985 and started his own coffee chain called Il
Giornale, which was an immediate success, quickly expanding into multiple cities.

In March 1987 Baldwin and Bowker decided to sell Starbucks, and Schultz was quick
to purchase the company. He combined all his operations under the Starbucks brand
and committed to the café concept for the business, with additional sales of beans,
equipment, and other items in Starbucks stores. The company entered into a meteoric
period of expansion that continued after the company went public in 1992. Starbucks
soon became the largest coffee-house chain in the world. By the early 21st century,
Starbucks had a presence in dozens of countries around the globe and operated over
20,000 stores.
 Vision And Mission

Vision of CCD:
“To be the best café chain in the country by offering world class

coffee experience at affordable prices”.

Mission of CCD:
To be ranked no. 1 among the service sector.

To provide the best quality services to customers at affordable

prices.

CCD is aiming to create its own niche merchandising like Indian

coffee powder, cookies, coffee mugs and curry paste.

Philosophy of CCD:
Its philosophy is to provide world class trendy lifestyle
products and experience to its customers and in order to
execute it, it has opened some new outlets with the facility of
music lounges, book cafes etc.

Vision of Starbucks:
This instilled a vision at Starbucks to “treat people like
family, and they will be loyal and give their all.”
The vision statement is articulated around the concept
of family, loyalty, and generosity.
 What it means from the business standpoint is that
Starbucks is a place where people spend a lot of time.
Therefore, it has to feel like a second home.

Mission of Starbucks:
To satisfy customers and to create a “third place”
environment our Coffee.
It has always been, and will always be, about quality.
We’re passionate about ethically sourcing the finest coffee
beans, roasting them with great care, and improving the lives
of people who grow them. We care deeply about all of this;
our work is never done.

Philosophy of Starbucks:
Starbucks core values are written like a philosophy and
they are:
Creating a culture of warmth and belonging, where
everyone is welcome.
Acting with courage, challenging the status quo.
Being present, connecting with transparency, dignity
and respect.
Delivering our very best in all we do, holding ourselves
accountable for results.
We are performance driven, through the lens of
humanity.
 Goals
CCD:
Café Coffee Day, popularly known as CCD, would add around 100 stores every
year focusing on the metro markets. Besides and also look to tap the opportunities
coming out from the tier II and tier III places.

The company, which opened its first store in 1996 in Bengaluru, is presently operating
1,740 CCD stores in around 250 cities.

On being asked about the expansion plan, Café Coffee Day Chief Executive Officer
Venu Madhav told PTI, "Eventually, we would be looking at 2,500 stores at least in a
couple of years coming in ... We need to add about 800 stores. That the eventual target
we are looking for."

According to him, as part of the expansion process, some cafes would be closed and
new stores would come at new locations.

On being asked about the time frame, Madhav added, "It would take 7-8 years to
happen."

"We would plan to add around 100 stores every year and then take it to wherever the
opportunity is available," he added.

As part of its expansion, most of the CCD would come in the developed metro
market, but the company would explore the opportunities coming from tier II and tier
III cities.

"Most of the new stores would be in tier 1, because the opportunity in tier I is bigger,"
he said adding "We would also look on tier III places.

Now, the consumption of coffee in India is on the rise and several coffee chains like
Starbucks, Costa Coffee are competing in the segment at different price points.

On being asked about competition in the segment, Madhav said that CCD would focus
on 'affordability' and 'value-conscious customers'.

"Our target is youth and affordable luxury. We are sticking to our positioning of what
we need to do and create offering which are for value-conscious customers. We are
not worried about those things," he added.

Starbucks:
Starbucks has developed a mission statement that includes cultural
development, innovation, high performance and accountability as elements of the
company's values. The corporate mission statement defines the company's goals.

Starbucks' mission is "to inspire and nurture the human spirit – one person, one cup
and one neighborhood at a time." The company aims to meet this goal through the
development of a culture that embraces acceptance and is supportive of personal
growth. As stated in the company's values, personal growth occurs through challenge
and grows the company as well. This goal of acceptance extends into the company's
diversity and accessibility policies. Company leaders are developed to lead
multicultural teams of individuals with diverse perspectives and insights that ensure
company growth and improved service delivery for customers. The company seeks to
grow relationships with a diverse network of suppliers through strategic community
relationship-building.

Starbucks also strives to be open and genuine in its interactions with suppliers,
employees and customers. This is reflected in the company mission to drive
performance without sacrificing individual and corporate humanity. The company
practices this value through its community-building policies, which spur area
development through investment. Starbucks values delivering the very best service
and accepting responsibility when expectations are not met.
 Consumer Status
CCD Consumer:
Research shows that 37% of the customers are between 20 and 24years. 27% of
the customers are between the age group of 25-29 years. 60% of the customers who
visit the café are male and 40% are female. 52% of customers who visit the cafes are
students. 18% of the customers visit the cafes daily while another 44% visit weekly.
Each café, depending upon its size attracts between 500 and 800 customers daily,
mainly between 4pm and 7 pm. Customers describe Café Coffee Day as the place they
frequent most after “home and workplace/college”. It is a place where they meet
friends and colleagues, in groups of 3 or more. The prices here are perceived to be
reasonable and it is a place where customers come to rejuvenate themselves and be
themselves rather than a place to be “seen at” vis a vis other cafes.

Brand Image

Café Coffee Day is a regular meeting place for 15 to 29 years old, both male
and female, who are waited on by friendly and informed staff, and are offered the best
made coffee, hot or cold, beverages and food in an invigorating ambience. It is urban
youngsters favorite “hangout”. Its customers are mostly young college students and
young professionals. It is for those who are young or young at heart.

Products

Café 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, biryani, masala sandwich, tikka sandwich etc. Thus they have been
trying to capture the Indian taste along with classic coffee. The best selling item in
summer is frappe, which is coffee and ice cream blended together. The young people
favor it. In winter it is cappuccino. Their merchandising includes funky stuff like t-
shirts, caps etc.

Prices

Considering that Café 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. From the time it first started its
operations, there has been only minor changes in the pricing policy of Café Coffee
Day. The changes have been more due to the government taxes than any thing else.

People

People at Café Coffee Day believe that “People are hired for what they know
but fired for how they behave”. Motivation and personal skill are laid emphasize
upon.

Starbucks Consumer:
Starbucks’ primary target market is men and women who are aged 25 to 40.
They account for almost half (49 percent) of its total business (like the coffee chain’s
consumers). Starbucks’ appeal to this consumer age group through hip, contemporary
design that is consistent in its advertising and decor. And working to keep its products
current as status symbols.
The target audiences for Starbucks share a variety of characteristics, including a
high-income bracket, an awareness of social status and environmental consciousness.
Starbucks’ recent decision to carry bakery products from San Francisco-based La
Boulange has reinforced the coffee chain’s upscale, artisanal image.
Starbucks’ young female customers place a premium on health and personal
appearance. So the chain targets them with lower-calorie “skinny” beverages.
Recently, Starbucks has begun to target affluent young families with products like
organic fruit squeezes for toddlers and containers of vanilla milk.

Starbucks’ primary target market is men and women aged 25 to 40. They
account for almost half (49 percent) of its total business. Starbucks’ appeal to this
consumer age group through hip, contemporary design that is consistent in its
advertising and decor. And working to keep its products current as status symbols.
Customers tend to be urbanites with relatively high income, professional careers and a
focus on social welfare. This target audience grows at a rate of 3 percent annually.
Young Adults

Young adults aged 18 to 24, total 40 percent of Starbucks’ sales. Starbucks

positions itself as a place college students can hang out, study, write term papers and
meet people. A Starbucks appeal to this consumer directly through introducing
technology as soon as it comes available, focusing on social networking and actively
cultivating a “cool” image. The young adult audience grows 4.6 percent each year.
Kids and Teens
Kids and teens are also a large part of Starbucks’ target audience. Together,
customers aged 13 to 17 accounts for just 2 percent of Starbucks’ sales, but most
items for kids are purchased by the parents. Whether the focus is on the steamed milk
that Starbucks’ baristas refer to as “babyccinos” or the sugary, caffeinated, whipped
cream topped coffee drinks that are so popular with teenagers, kids and teens form a
large part of Starbucks business. Kids go there with their parents; both mother and
child leave with a cup in hand. Teens Meanwhile use Starbucks as a place to hang out
with friends or study. Starbucks may not cater directly to kids (and risk criticism
about the high calorie and caffeine content of some of its drinks) but it does make its
products kid-friendly, offering special child sizes for instance.

Complimentary Products
Specialty coffee drinks account for around 75 percent of Starbucks’ sales, but
an increasing amount of its business is centered on selling whole bean coffees and
merchandise. Starbucks has made its coffees available for direct order online, in
supermarkets and offered select food service outlets the chance to carry Starbucks’
family of coffee, including Starbucks brand, Seattle’s Best and Starbucks VIA. These
products give consumers a chance to have the “Starbucks’ experience” at home, and it
is an area that Starbucks is pushing.