Cafe Coffee Day (CCD) has decided to go slow on its international expansion plans and will instead try to consolidate its standing in the domestic market following the entry of foreign entities like Starbucks. CCD has 16 outlets overseas including Czech Republic, Austria and Pakistan.
?Everyone is coming to India. This is a big market. We understand the market and it is easy to focus our energy here rather than discovering new markets,? Venu Madhav, the chief operating officer of CCD told FE. Citing a survey the company had done earlier, he added only 46% of the population between 17 and 35 years in top 8 cities of the country have ever visited a cafe of any brand. He said that it shows that there is still a lot of scope to grow the domestic market.
CCD now has 1,407 outlets in 205 cities with express kiosks adding another 900 units.?Amalgamated Bean Coffee Trading Company (ABCTC), the holding company of CCD, hopes to grow revenues by 20% this year. It had generated a revenue of R1,200 crore in 2011-12. The company plans to expand its premium brand Coffee Day Square, which is positioned to appeal to the connoisseurs of coffee and the upmarket brand Lounge.
“You struggle to motivate when your only competition is yourself. It will take five years for Starbucks to open 100 stores and we will open many more in this period,? said Jacob Kurian, partner with New Silk Route, a private equity that has invested in CCD. He said the competition has provided benchmarks and energy for CCD to compete with the best in the world.
However, there is a counterpoint. ?As the new brands enter India, the aspiration levels have gone up and the expectation is in terms of the overall experience. CCD has instead focussed on expansion and has resulted in brand dilution,? said Unni Krishnan, the managing director, Brand Finance, a brand consultancy. He added CCD has started chasing every segment rather than addressing this gap of experience thet international brands offer.
Madhav, however, maintained CCD always wanted to be a neighbourhood coffee shop and never?targeted?the premium market. ?Our core audience remains the youth. Food is like music. We are constantly reinventing and innovating ourself and stay relevant to the target market. We are trying to engage ?more and more with our consumers with a new television campaign,” Madhav said.
He said there will always be competition in the form of McDonalds or Pizza Hut. With the new food, desserts and other beverages menu, CCD has launched, it will be competing more with such brands. However, CCD still remains a coffee chain at heart with coffee still contributing to 55% of its revenues.
