Analysts believe that the bid to make CCD a complete food and beverage player in the Indian market smells suspiciously of an effort to become a me-too McDonald’s. And though these are early days yet, if the plan works, CCD’s potential may well expand much beyond the Rs.450 crore domestic coffee market to encompass the limitless potential of India’s food market. However, brand watchers say that in the process CCD may well make some unpromising compromises with its ‘coffee hangout’ brand identity. “Not at all,” disagrees Alok, reasoning that whatever the changes in product portfolio, CCD will always have a coffee focus. “There will always be formats within our brand that will allow consumers to continue flirting with coffee viz. Coffee Day Square.”
This detailed segmentation of the market is where CCD really scores over competition. While the augmented food menu would be available at mostly the flagship CCD stores; other formats like Coffee Day Express, Coffee Day Square and the soon-to-be-launched Coffee Day Lounge will largely retain their coffee focus, where 80% of the portfolio will revolve around coffee. This, believes Alok, will allow the brand to keep their coffee positioning alive even as they offer Rajma Chawal to hungry consumers. “Coffee Day Square is for the premium single-origin coffee and Coffee Lounge would be for corporate guys who want privacy in official meetings,” explains Alok.
With over 10,000 acres of coffee estate spread in key coffee producing zones like Chikmagalur (Karnataka) and Araku Valley (A.P.); and 805 stores spread across India, CCD is already the market leader in the coffee chain segment and growing fastest at 30% per annum. In contrast, Barista has only 400 stores and neo-entrant Costa Coffee has 200 stores. To sharpen its edge, CCD is now sharpening its flank by planning to take its store-tally up to 1,000 stores by end-2009, including 15 Coffee Day Squares and 10 Coffee Express stores. At a time when other players are finding it difficult to cope up with the expensive real estate market, Coffee Express (with its small drive-in format) is growing at almost 25% per annum. Small surprise that CCD is proving to be a cash cow, contributing almost half of ABC’s total turnover as of today. Add to that Alok Gupta’s latest ambition to do a McDonald’s within CCD (with a carefully crafted positioning strategy to boot) and one can almost taste (pun intended!) the nature of success to come...
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Source : IIPM Editorial, 2010.
An Initiative of IIPM, Malay Chaudhuri and Arindam chaudhuri (Renowned Management Guru and Economist).
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