The average sales per day (ASPD) at the outlets of Café Coffee Day (CCD), India’s largest retail coffee chain, is around three times lower than its strongest competitor Starbucks, the global brand which made its entry into the country in October, 2012.
The ASPD at CCD outlets stands in the range of R15,000-20,000 as compared with Starbucks’ R60,000-65,000 for FY14, according to information available with the draft red herring prospectus (DRHP) of Coffee Day Enterprises, which is planning a R1,150 crore initial public offer (IPO).
The above-mentioned ASPD refers to both beverage and food consumed at these outlets. Despite its size, CCD also has competition from other retail chains such as Dunkin’ Donuts, Barista, Costa Coffee, and Coffee Bean & Tea Leaf, with some of them showing higher ASPD. The average size per store of CCD, at 1,000-1200 sq ft, is lower than Starbucks’ 1700-2000 sq ft. CCD, founded by entrepreneur V G Siddhartha, opened its first outlet in 1996 and as of December, 2014, it has 1,472 outlets spread across 209 cities. Its nearest competitor Barista has 169 outlets.
Starbucks, which is present in India through a 50:50 joint venture with the Tata Group, has 64 outlets in the country. The DRHP stated that Café Coffee Day, with the highest number of outlets and competitive pricing, has attained better consumer penetration and a strong connect with young consumers. Starbucks has emerged as an aspirational brand and has the biggest ticket size, only second to Coffee Bean & Tea Leaf.
Barista recently witnessed a change in ownership and is revamping its market strategies.
The café chain market in India is approximately 27% of the total organised café market at R1,800 crore in 2014 and is estimated to touch 36% of the total organized market by 2020. The chained café market is estimated to grow at a
CAGR of 20%.
The per capita coffee consumption in India in 2011 was 110 grams per person per year. The size of the retail coffee market in India stood at R3,000 crore in 2014 and is expected to grow to R5,100 crore by 2020. The domestic consumption of coffee is growing at 5-6% a year, while production is stagnating, the DRHP stated.Consumption in
India is estimated at 0.125 million tonne (mt) per year against a production of 0.315 mt. The southern part of the country accounts for nearly 80% of the total coffee consumption in India.
According to CCD, there is more potential in the other regions outside South India, where the occasional consumers are high in number. Coffee Day Enterprises plans to raise around R1,150 crore through its planned IPO, offloading around 20% stake.
