Search the Internet          Tips  Sites: Finance, Investment

Coffee Day outlets now coming to north India

Imran Qureshi in Bangalore

The coffee shop business appears to be getting into the fast lane, with the pioneering Bangalore-based Amalgamated Bean Company stepping up operations by entering the northern cities of India.

After opening the latest Coffee Day café at the Hyderabad airport, India's largest coffee exporter is scheduled to open its next café at the Delhi airport next week.

That will be followed by one at Ansal Plaza, a shopping complex in the Indian capital, and in Noida. These will be the first of 30 cafes in Delhi alone.

These would be followed up with outlets at Amritsar, Jodhpur and other northern Indian cities and Goa. The company intends to open its cafes in Bombay by April.

The Rs 2.5 billion ABC, which launched its first café in this India's hi-tech capital with Coffee Day's Cyber Café six years ago, plans to scale up its cafes from the present 22 to 200 and nearly double its 250 branded coffee retail outlets by December 2003.

"We are changing everything, including the logo to make the Coffee Day cafes a comfortable place for the young to meet. They will all have a fresh youthful ambience. In two years we want to make sure multinationals don't enter India," Naresh Malhotra, director, ABC, said.

The scaling up of operations is significant because the coffee café culture has caught the imagination of the young and the middle-aged in southern and western cities of India.

Industry observers see a further segmentation in the coffee café business, as domestic companies smell the aroma of success by ramping up before the possible entry of multinationals like Starbucks.

"We will be practically opening one café or more every week from next week all over the country. And very soon we will start setting up 3,000 vending machines all over India," says Malhotra.

"We are already selling 2,000 cups of coffee every day at each of our 22 cafes in Bangalore, Chennai, Hyderabad and Mangalore. People did not know that there were so many blends of coffee available.

"We are the only integrated coffee company -- from plantation to the cup of coffee in Coffee Day café -- and cost is our greatest plus factor. We are clearly focused on coffee. We started Coffee Day to build the coffee drinking habit in India," he adds.

"The market is already getting segmented. And there will be more segmentation in the next couple of years," says Harish Bijoor, formerly of Tata Coffee.

The Barista cafes, in which Tata coffee has a 32.5 per cent stake, serves the upmarket segment with varieties of coffee whose price range begins at Rs 40. At Coffee Day prices are Rs 8 to 10.

The variants do not end in the price range but extend to ambience. And it is not confined to just the Baristas and Coffee Days. It extends to Qwicky's and other coffee cafes like Java City.

"Coffee Day started the trend. Barista opened 11 months ago and now has 38 cafes. By December 2003, the assessment is that there will be 450-500 such cafes all over India. One would not be surprised if this goes up to 2,000 by 2005," says Bijoor.

"If multinationals enter in this area, the sky would be the limit," adds Bijoor, who believes the coffee cafe business will be worth Rs 2.5 billion to Rs 3 billion by the end of next year.

India produces 300,000 tonnes of coffee, 80 per cent of which is exported. Domestic consumption has remained stagnant at less than 60,000 tonnes.

Indo-Asian News Service

Money
Business News

Tell us what you think of this report