Coffee Wars Indi Cafe Coffee Day ( Ccd ) Essay

The Wall Street Journal, Boston Globe , and the Economist as well as many other media outlets of record were all in consensus when they declared the onset of coffee crisis in October 2001; farmgate prices had sharply dropped reaching a thirty-year low of $0.39 per pound in This price was below the cost of coffee production at the time, listed at USD 0.60 per pound.(Economist 2001) Price declines are not such an uncommon occurrence, but what is more troubling is that the cash market for coffee suffers from high price volatility. For a more detailed look please see Appendix 1: Cash Price Variation. Coffee producers , who are mainly located in developing countries , are highly vulnerable to price risk in the cash market ,

Buckstar Coffee has accumulated excess capital over the past five years, which has led to the consideration of an expansion project. The two alternatives are between expanding product offerings and services or expanding the company’s footprint in Canada. The CEO’s goal is to execute a plan that will increase profits and maintain a workable supply chain. After conducting my analysis, I have to come to the decision that the first alternative, expanding product offerings and services, will be more efficient in achieving the ultimate goal.

In general the coffeehouse industry in the United States was experiencing an increase in coffee consumption per capita due to the “Starbucks effect”. At this time Starbucks was operating approximately 20,000 stores in the United States and was living a fast expansion strategy worldwide.

Starbucks is one of the leaders in coffee industry. Starbucks has entered into many new markets and today it has more than 16,000 outlets across the globe (Johnson, Scholes and Whittington 2011). Due to unlimited business opportunities, Starbucks Corp has set strategies to enter India as it is next major hub for development in near future. Previously Starbucks has gained wide success in China and Japan due to high consumption of coffee and tea. Since its inception, Starbucks has tapped the major markets across the world, India was left untapped. In India, Starbucks has setup alliances with TATA Global Beverages which is a unit of TATA Group of Companies. Starbucks along with TATA has started with an investment of $80 million and plans to open 50 coffee shops in a year. Currently few coffee shops has been setup by Starbucks, however in near future, it is expected that the company will achieve its target in capturing Indian market (Lamb2009). Thus, besides sourcing coffee beans from TATA, Starbucks can now explore more Asian markets (Hitt, Ireland and Hoskisson 2012).

• International coffee chains in India – Recent entrants in the Indian market include Gloria Jeans, Coffee Bean & Tea Leaf and Illy Café.

The objective of this project has been to understand the marketing mix of Barista and Café Coffee Day and compare the two firms in terms of their operations and other aspects. We took up organized coffee retailing as we wanted to understand what it takes to sell not only a coffee but a whole experience in a country where coffee is not as preferred & popular as tea. The firms that have ventured into coffee retailing business in the country are Café Coffee Day, Nescafe Café, Café Mocha, Georgia Coffee, Chimayo Chains owned Qwiky’s brand of coffee pubs and Barista to name a few. Out of these we chose Barista and Café Coffee Day for our study because of their popularity and wide

Cafe Coffee Day (CCD) is a well established Indian coffee retailer, and it is famous for offering high quality and diverse products to different customer groups. For example, espresso-based beverages, snacks for young age customers, premium store format for older customers etc. By April 2013, CCD had over 60% of market shares in Indian coffee market. However, it is facing a big challenge from U.S.–based Starbucks Coffee Company (Starbucks). Starbucks recently opened 11 stores in Mumbai and Delhi, due to its high brand awareness; it attracted lots of customers and medias.

Café Coffee Day (CCD) is an Indian coffee retailer that was established in 1995. Founded by V.G. Siddhartha, this company has quickly grown to become the leading coffee retailer in India with 60% of the market share, 1,469 locations, and 22,000 vending machines throughout the country. (Yoffie) What makes Café Coffee Day special is its complete ownership of its coffee beans from the growing at its plantations to the brewing in its retail outlets. CCD is owned by Amalgamated Bean Coffee Trading Company Limited, which owns and produces coffee beans from its own plantations and these coffee beans are the same ones that are used at Café Coffee Day. Due to ABC’s ownership of its own plantations it has no middle man that would increase costs to CCD.

Competitive advantages are strengths and strategies that keep a company ahead of its competitors. It is hard to measure competitive advantage and harder to maintain it. Some competitive advantages are fleeting. The successful companies are those that leverage their competitive advantage successfully and repeatedly.

Café Coffee Day was the leading company of coffee chain industry in India owned 1,469 stores with 60% market share by 2013 (Yoffie and Bijlani, 2014). However, Starbucks the largest global coffee company has entered India to compete with Indian local coffee company especially Café Coffee Day. Starbucks has brought its strong capital, the premium level of service and the high quality of coffee product and cooperated with the largest business conglomerate in India. The problem is how CCD could maintain its market leadership facing with the expansion of Starbucks. In this report that the main competitive advantages and challenges of CCD are explained first with analytical tools such as SWOT, PESTEL and Porter’s five forces theory. In order to give any recommendations to the lead team in the second part of this report, perspectives of corporate social responsibility and creating shared value has been used to analysis what the company should do. Corporate social responsibility means firms contributing social benefits instead of only focus on maximizing profits (McWilliams, 2015) and creating shared value “implies creating economical value while simultaneously creating value for the society (Lapiņa, Borkus, and Stariņeca, 2012)”. To point out how CCD could maintain its position that what competitive advantages and challenges of the company should be examined.

Café Coffee Day, popularly known as CCD, is an India based chain of coffee houses established by Amalgamated Bean Coffee Trading Company (ABCTC). Cafe Coffee Day set up its 1st store in Bengaluru, India in 1996. ABCTC, which is based at Chikmagalur in Karnataka state, grows coffee about 10,000 acres of plantations. It is also the largest producer and exporter of Arabica beans in Asia. V. G. Siddhartha, an Indian businessman from Karnataka is the founder of CCD. Today, CCD is among India’s favourite coffee shops. The company’s mission is to be the best Cafe chain by offering a world class coffee experience at affordable prices.

First of all, people in local communities suffer from poverty because of imbalanced trade and payment to the commodity that they grow. Their lives depend a great deal on so-called global commodities such as coffee, cacao, and tea, which can be available to citizens in developed countries at a low price. Therefore the demand of these commodities has increased in the last few decades. According to Ambinakudige (2009), coffee that is one of the most traded commodities in the world is the main means of small farmers’ lives in developing countries. He examined how people in developing worlds are influenced by volatile global markets, especially focused on small farmers in the Kodagu district of India. In 1998, the amount of coffee export reached to US$469 million. However, after the International Coffee Agreement collapsed, known as the coffee crisis, which deregulated the international coffee supply, the labour force in coffee sector decreased in India, and 150,000 jobs were lost between 2000 and 2002 (Oxfam, cited in Ambinakudige 2009). People cannot manage their coffee plants and yield, earn enough money to return a loan on time, and get the loan the following year, which results in less investment in coffee. That cycle makes their lives worse and makes people stay in the cycle of poverty (Ambinakudige 2009 p.562).

Never before in the history of the world there has been so many different variety of start ups. The economies which where once just domestic are entering international markets. Thus making the global market look just local.

In India café coffee day and barista are most popular and well-known café. These companies sell similar products but their positioning and target audience are very different from each other. Despite of serving to different audience, these players compete among themselves. Each player fights for its share of market. They try to differentiate themselves by the way of product or price or promotion. Café coffee day got a high rating in the market survey, for the quality and taste of their products. If they work on this particular aspect, there is a huge potential for them to attract customers, simply based on the taste and quality of their products.

Competitive advantage is really a position that the company makes return upon its investment that is higher than the price of the expense. Competitive advantage ought to be relevant, distinctive, and environmentally friendly. The word competitive advantage may be the ability acquired through characteristics and resources to do at a greater level compared to others within the same business or marketplace. It is essential mostly simply because that aggressive advantage can make sure that a organization earns extra returns for a longer time of period. Almost just about all businesses need to face rigid competition using their business competition in almost any market these days. Having a benefit over them is not enough to ensure the organization