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Module 1: Estudios de caso

    Study Reminders

    If you look at this, incidentally, all these cases which I am going to discuss are taken
    from my case studies book including this Cafe Coffee Day. At the end of this case each
    of these cases you will find questions. When I am analyzing these cases I will be
    answering those questions also. So, this will give you an idea of how to attempt a case
    analysis in the real context.
    The case which we first discussed in the beginning of the course on Suryodhaya was also
    a real case; if you can recall, it was the introduction of a new product in the Indian
    market. Then we discussed one more case how the Toyota Company cannibalized one of
    its very good products namely the Toyota Qualis and came out with Toyota Innova.
    Now, this is the Cafe Coffee Day, Cafe Coffee Day popularly known with the acronyms
    CCD is a part of India’s largest coffee conglomerate, the Amalgamated Bean Coffee
    Trading Company Limited popularly known as Coffee Day. So, this Cafe Coffee Day
    owes its origin to the entrepreneurship of one individual by name V. G Siddhartha.
    This company was founded in the year 1996, it is head quartered in Bangalore, it is an
    ISO 9002 certified company. The first Cafe of this Cafe Coffee Day started operating in
    1996 at Brigade Road Bangalore considered to be one of the famous up joints in the city.
    So, frequented by a large number of youngsters, very close to the MG Road and it has
    almost all the representations whether it be from the companies or from the financial
    institutions just in and around it.

    Started with this, first cafe at Brigade Road this incidentally kindly note that all the case
    studies which we are going to discuss; it has updated data till about 16, 2015 16’s.
    Suppose you want to update it further, you are welcome to do it, you can go up to 2019
    also. So, this starting with this one Cafe Coffee Day in 96 at Brigade Road; this CCD
    developed 1534 outlets across 28 states of India. It expanded their outlets to Karachi,
    Vienna, Dubai and Prague.
    So, one of these first Indian coffee company is to do so. In fact, it remains the only
    coffee company even to this day to have these types of outlets abroad. So, if you look at
    the average foot falls for this CCD, it is between 400 to 800 per cafe per day. So, you can
    expect this type of sales per cafe per day. So, for the first time this company launched
    what is called the coffee bar concept in India.
    So, this coffee bar concept in India came out for the first time through this Cafe Coffee
    Day. From where does this Cafe CCD source its coffee seeds? It sources its coffee seeds
    from 5000 acres of coffee estates basically from the area called Chikmagaluru in
    Karnataka and it is the second largest in Asia.
    (Refer Slide Time: 07:12)

    If you look at the type of growth that it has registered it is quite phenomenal. If you see
    the coffee industry itself in India, it is the sixth largest coffee producer in the world; it
    contributes to about 4.5 percent of the entire world’s coffee production. India has about
    170,000 coffee forums cultivating around 900,000 acres of coffee trees. Among this

    Karnataka accounts for 70 percent of the country’s total coffee production followed by
    Kerala 22 percent and Tamil Nadu 7 percent. So, if you see Karnataka is the hub of the
    coffee industry in India.
    It is also the reason that the coffee board, the Indian coffee board is also head quartered
    in Bangalore. As per the survey of this Indian coffee board, increased rate in domestic
    consumption was 5 to 6 percent that is there was a grow increase in the rate of
    consumption of coffee between 5 to 6 percent per annum. Coffee consumption in India,
    had increased from 94400 tons in 2008 to 1,45,185 tons in 2015 that at the time
    provisional figures. The exports comprised 80 percent of India’s coffee production, while
    only 20 percent was utilized for domestic purpose.
    In other words most of the coffee that you may be drinking abroad might have come
    from India only ok. You might be taking coffee in the United States but that coffee the
    origin of that coffee may be from India and will be mostly from India. So, this is the way
    the Indian coffee industry has grown and this is represented on the right side by this
    graph how it has grown and what is represented on this in this graph is also given an
    explanation on the left.
    (Refer Slide Time: 10:42)

    So, if you look at some of the important events with respect to this coffee industry, since
    1975 traditionally growing coffee bean started. So, when was it started means it started
    from the year 1875. Early 90’s opportunity arose with the deregulation of the coffee

    board in Coffee Day began exporting coffee to connoisseurs around across USA, Europe
    and Japan.
    So, it was sometime during this 90’s when liberalization took place, this Coffee Day
    began came in began exporting coffee to the connoisseurs across USA, Europe and
    Japan. In 96 this CCD was first set up at Brigade Road in Bangalore. So, initially it
    started doing exporting coffee then starting setting it up set up the first CCD at Bangalore
    in Bangalore at Brigade Road. In the year 2000 it exported more than 27000 of tons of
    coffee valued at US dollars 60 million to countries like USA, Europe and Japan.
    Look at the way the growth has taken place. Just within a few years this CCD was able to
    export more than 27000 tons of coffee valued at US 60 million dollars to countries like
    USA, Europe and Japan and for the second time in its short carrier of 7 years retained the
    largest coffee exporter of India.
    So, CCD owns that is 2002 CCD owned near 2013 cafes in all major cities of India and
    operated it operated all this cafes also. It owned and operated all this cafes in 2002. So,
    its a wonderful story, with respect to coffee by an enterprising individual. And this CCD
    was a highly enterprising industry setup by this gentlemen Siddhartha.
    (Refer Slide Time: 14:11)

    What happened in the year 2008, CCD expanded to 595 cafes across 100 cities in India;
    not only did it expand across India, it expanded outside India also open 3 in Vienna that

    is Austria, 2 in Karachi and it targeted to expand all 950 cafes in a year from 2018. So,
    this is see they wanted to expand to 950 from 2008. Then the next mile stone of this
    CCD in 2010 was its revenue touched something like 45 million dollars; it created jobs
    for 5000 employees, in 2010 it owned 1016 cafes in 135 cities.
    In 2011, according to the brand trust report of 2012 CCD was ranked 150 a 125 among
    Indians most trusted brands and subsequently went up further across also further up as
    well. In 2013 the same brand trust report Cafe Coffee Day was ranked as 210th among
    India’s most trusted brands; in other words it came down a little.
    It received the prestigious shell Helen shell Helen Keller Award of 2013 which
    recognized CCD’s contribution towards the improvement of lives of persons with
    disabilities by encouraging change in recruitment attitude. In other words CCD was
    encouraging a appointments for physically challenged people also; it gave number of
    appointments for physically challenged individuals as well.
    By 2014 the turnover of CCD had registered rupees 25 billion. So, many times one
    question is asked what is the question that is asked, how many 0’s are there in a million?
    So, if you look at the number of 0’s in a million it is 6; how many 0’s are there in a
    billion? The number of 0’s in a billion is 9 ok, sometimes people ask you.
    Do you know how many 0’s are there in 1 crore? So, the number of 0’s in 1 crore is 7.
    So, so in one of the popular debates which was going on the TV on the state of economy
    in the country, they were the persons who were in the debate one of them was saying a
    person relate associated with perhaps one of the political outfits saying that we are
    targeting 5 trillion dollars as India’s economic growth in 2024.
    So, the other person was asking do you know how many 0’s are there in a trillion? So, he
    was saying 5 trillion dollars by 2024 and the other person was saying do you know how
    many 0s are there in a trillion for which this gentlemen from this political outfit was not
    immediately able to give the answer ok. So, how many 0’s are there in a trillion in a
    trillion there are 12 0’s ok.
    So, if you are targeting an economy of 5 trillion it is 5 followed by 12 0’s US dollars
    understood, then 1 US dollar if you put it approximately at rupees 70 this 5 followed by
    12 0’s 5 trillion you multiply it again by 70; that will give you the rupees trillion that you

    can expect. So, approximately you can expect this targeting of the Indian economy by
    the present government by 2024 to be in the region of 350 that is 70 into 5.
    So, 350 trillion rupees, 350 trillion rupees which is a very tall order considering that the
    state of economy is not all that rosy. So, we are day in and day out seeing over the
    channels that this sector is in problem the other sector is in problem. So, all this may be
    due to the effect of the global economy as well, but to target such a high growth of 5
    trillion US dollars considering the state of economy as it exists today is also a big
    So, this is as of see as of 2015; if you look at CCD. March 2015 there were 1530 outlets
    across 29 states of India.
    (Refer Slide Time: 22:12)

    So, if you look at the sub divisions of Coffee Day, you had cafe division as CCD, CCD
    square CCD lounge what is it that this CCD sells? So, this is the logo of this Cafe Coffee
    Day which you are seeing at on your on the right side, according to CCD it sells an
    So, drinking coffee in CCD is an experience, it is a popular hangout spot that offers a
    wide range of food and hot stroke cold beverage options. So, this is this is the main this
    thing of this Cafe division; typically located in central locations that literally advertise

    themselves. So, you find all these CCD outlets in very popular locations and they do not
    require a separate advertisement that location itself is an advertisement for CCD.
    So, even if you look at Bangalore airport, you have the CCD outlet in many of the
    lounges. So, you go to the plaza lounge you have this CCD you see CCD coffees being
    served. So, the coffee that you get in the lounge in the Bangalore airport basically comes
    from CCD. Coffee Day express what is this Coffee Day express? It is a small format
    convenienced coffee, that offers hot and cold beverages.
    So, if you do not have that much time to hangout, you have the Coffee Day express
    where you can get your coffee quick and first customers who are on the go this is the
    type of coffee that you have in the lounges in the airport. So, you do not have lot of time,
    but you can get this variety of coffees; whether it is the cappuccino or whether it is the
    filtered coffee or which ever.
    So, there are three four varieties which they sell which they offer you in most of these
    lounges. And it is attended to constantly by a person who serves you this hot coffees
    predominantly located in high food fall areas like malls railway stations multiplexes now
    add to that the airports also. So, the coffee exports or production procurement and export
    this called PPE; it is involved in selling various grades of coffee in the domestic and the
    international markets.
    So, this is the arum of this cafe division where it sells it exports this coffee in the form of
    this green coffee and this arum is called PPE. There is a vending division what is this
    vending division doing? This vending division is basically into installation of vending
    machines at various client locations, you can request CCD to put a vending machine in
    your location also. So, these type of vending machines are available in many of the
    software companies as well.
    So, one of the companies which makes use of this in Bangalore in fact, it had a big outlet
    of Cafe Coffee Day it was Infosys ok. So, this is so the vending division provides
    installation of vending machines at various client locations; then sells consumables for
    use in the vending machine. There is one more that is a packaging division. What does
    this do? It gives you fresh and ground stores that is you get fresh packaged coffee
    powder in the local market you can get through this CCD only.

    Fresh coffee powder you can these are also coming from the basically from the coffee
    estates in and around Chikmagalur. And it had it was selling the largest retailer of
    powdered coffee in India it was in fact, if you take the powdered coffee CCD was selling
    the largest powdered coffee in India in 2050 itself. I am recounting to you through all
    this slides how CCD has grown.
    (Refer Slide Time: 28:39)

    If you look at the major chunk of now the next question is how do you segment the
    market for this CCD? That is what is the target market for this CCD; you are looking at
    segmentation, you are looking at target positioning. In this slide who ever all the people
    who were frequenting basically if you look at it, you are having the client tale from about
    19 years below 16 years also between 16 and 19, between 20 and 24, between 25 and 30
    forming the major chunk. So, the group between 20 to 30; if you look at that, it accounts
    for 57 percent of the overall percentage.
    So, the youth population, they are very very fond of visiting the CCD; because it is
    located in a very central place in most of the cities would like to hangout spend time in
    the CCD over a cup of coffee discussing so many things. The group comprises mainly
    college going students and young working professionals.
    So, this is a type of segment which was frequently visiting the CCD. If you look at it this
    25 to 30 age group itself constituting to 28 percent, then the if you look at the 16 to 19

    and 20 to 24, 20 to 24 is contributing to 29 percent 16 to 19 contributing to 21 percent;
    below 16 also contributing to 13 percent and above 19 contributing to 9 percent.
    So, in other words, if you look at it this is has of 2015; this is how you could draw the
    segmentation with respect to CCD; between above 19 and 20 itself contributed to 20
    percent. 20 to 24 you had a 29 percent and 16 to 19 you had 21 percent of people of this
    percent is frequenting CCD; this 25 to 30 group was the highest with 30 28 percent.
    (Refer Slide Time: 31:52)

    So, this is an illustration of who hangs out at CCD. So, you find the working
    professionals you find in the center the aroma hot coffee with its aroma and this CCD
    cups very prominently getting displayed. And you have the last this thing which says that
    you could do it to start to make a friend or to enjoy.
    So, basically it targeting the youth, you could do it may be a stranger with a stranger or
    you could do it for love of coffee all those types of things which are exhibited here.

    (Refer Slide Time: 33:13)

    So, basically if you have some time to hangout, CCD offered the place for this hanging
    out. The other point which CCD did was to venture into multiple formats like music
    cafes, book cafes, highway cafes then cyber cafes, then garden cafes. So, these are this is
    again another type of hangout joints; suppose you are going in a highway you find in
    many of the highways this Cafe Coffee Day again being very popular.
    So, whether it is the Bangalore, Mysore highway or whether it is the Bangalore
    Mangalore highway or whether you are going from Bangalore to Madras you find these
    types of highway cafes also being very popular of this CCD. And, now they are planning
    to launch this was some of them might have already got launched the sports café, the
    fashion Cafe and the singles cafes.

    (Refer Slide Time: 34:22)

    So, the next question which comes who are the competitors were Cafe Coffee Day? You
    find big names, the direct competitors for CCD is Barista; then Cafe Mocha, Costa
    Coffee, then Gloria Jeans, Minerva Coffee shop and Bru; this is the direct competition
    these people are directly selling this coffee.
    If you look at the indirect competitors you are having McDonalds you are having
    Haldiram. If you look at the global competitors, you have the Star Bucks and the Costa
    Coffee. So, in a way you can be you can feel proud that an Indian brand has this type of
    competition and able to do so well.
    So, this was the direct competition coming from Barista, Coffee Mocha, then Costa
    Coffee, Gloria Jeans, Minerva Coffee Shop and the Bru; the indirect ones coming from
    McDonald Haldirams then the global competition coming from Star Bucks and Costa

    (Refer Slide Time: 36:07)

    If you looked at the market share of these competitors, this is represented by this
    diagram. If you looked at CCD, the number of stores as of a 2015 it was 1350 compared
    to that if you looked at Baristas it was 318, the Costa Coffee at 100, the Mocha at 18 the
    Coffee Bean and Tea Leaf at 18, then the Gloria Jeans at 17, the Bru worlds Cafe at 7
    and then you had the Dunkin Donuts at 5. So, this is the way it stood in 2012 September
    so, 2012 September only. If you looked at the Cafe footprint CCD was really head and
    shoulders above its competitors.
    (Refer Slide Time: 37:18)

    So, what have we done? We have traced the history of CCD; how it started? How it
    growth? How is the growth of CCD till about 2015; then we looked at what is the type of
    competition, it is facing who are the competitors, then with respect to the market what
    we did was we looked at what is that type of market presence each of this competitors
    have. So, when we looked at it we found that CCD was way above to the competitors.
    So, then we do with respect to CCD what is called this SWOT analysis strengths,
    weakness, opportunities and threats. If you looked at the strengths of CCD, it is an
    excellent brand name and having good visibility has this 9002 ISO certified certification,
    a best quality service and taste. So, you can just recently when I was going from
    Bangalore to Mysore I could get this coffee in one of these CCD outlets at around 11.30
    in the night.
    So, and very hot coffee and very tasty as well. So, then the youth oriented brand the USP
    of the brand was though it was costly compared to the usual coffee which is available
    elsewhere in most of these middle class hotels or this other hotels common hotels which
    you frequent whether it is on the highway or in the cities. The USP of the brand is still
    compared to the ambiance it offers; it says that at affordable prices. Then what is the
    weakness of this company?
    One of the weaknesses is, some of these sites which they have selected for this CCD;
    there is a feeling that not much thought has gone in it is a wrong site selection; though
    the ambience generally is good, there is lot that can be done further to further this
    ambiance this decor and ambiance could be further improved.
    So, this CCD could copy from these global leaders about this ambiance and decor how
    that ambiance is and try to reproduce or even better the ambiance in the CCD outlets. So,
    of course, it is having competition from other coffee chains restaurants and food joints.
    What is the type of opportunity it presents? The opportunity for this CCD is it is the
    fastest growing industry in Asia and has this wonderful merchandizing possibilities; it
    can tie up with other companies for promotion.
    So, if it is enterprising enough, it can tie up with many other companies for promotion,
    you can also tax small markets has well. So, then you may have to do or you may have to
    tweak your pricing strategies to this smaller markets. And you can look at cheaper
    varieties of coffee for catering to these smaller markets as well. So, if you look at that

    threats that this CCD is facing, terrific competition from Barista, Mochas, Gloria Jeans,
    Costa Coffee and Star Bucks.
    There are other players also who offer this hangout locations; it is not just CCD there is
    lot of competition for CCD from this unorganized market so, terrific competition for
    CCD from unorganized market. Many times CCD is dependent on government
    commodity rates so, the type of pricing the government gives for this coffee industry
    how it is going. So, CCD is dependent on that also.
    So, this slide presents to you now you should do a SWOT analysis for a company. So,
    what we have done here is a SWOT analysis for a company like CCD. We will stop here
    we will continue very shortly.