National Coffee Day

The American National Coffee Association’s “National Coffee Drinking Trends” market research survey recently found that 82 percent of American adults drink coffee, and that those who drink coffee weekly are increasingly on the rise. The survey further reveals that the average coffee consumption in the U.S. is 3.1 cups of coffee per day. And yesterday, 29th September was celebrated as “National Coffee Day” across the US. Although it is not clear who started this and from where did this concept originate, the day is revered all over the country. Most coffee chains offer freebies on this day – the list is long, but let me give some snippets...

• At Starbucks, VIA instant coffee is introduced and the Tall cup is complimentary at select outlet
  
• At McDonalds, free cups of Newman’s Own Coffee at select outlets
  
• At Panera Bread stores, but 1 and get 1 for free
  
• At Dunn Bros, carry the published coupon and get a Coffee for free… And they also encourage you to forward the coupon as much as possible to family and friends and bring as many visitors as possible to the Cafe!

In India, to the best of my knowledge, there is no such thing (yet). It was the same with Valentine’s Day, Mother’s Day, Father’s etc. a decade ago. Also, I am unsure if we will follow something like this in future – I may be wrong. Traditionally, India has been a Tea consuming country, mostly in the North of India while Coffee has been an all time favourite in the South. This is largely because the North was always the tea growing belt (Assam and Darjeeling are world famous and even have a Geographic Indication) and coffee for South (from Chikmaglur & Coorg) – so for obvious reasons such as transportation, logistics and other factors, probably people were used to consuming a certain type of beverage (like how Rice is consumed more in the South and Wheat in the North). According to rough estimates, a family of four in Urban India consumes about 1.40 kg of coffee or tea every month – that’s two cups per person a day on weekdays with a higher frequency over the weekends. Ofcourse, we are talking about the traditional South Indian Filter Coffee or Tea that’s made using packaged tea powder, boiling water and milk. Indian Households usually do not consume Cappuccinos or Lattes or Espressos as these equipments are neither popular nor affordable in India for the time-being.

The Cafe culture started over a decade ago in India, in 1996 to be precise when a small coffee shop opened at the world famous Brigade Road in Bangalore. The outlet also had an internet centre - that’s around the time the Internet was launched in India and it used to cost over INR 60 for an hour of browsing compared to less than One Rupee an hour today (if you are in the best monthly plans). That was the beginning. Today, there are over 2,500 Cafes across the country and growing. The innovation of the Cafe culture was brought into India by Amalgamated Bean Coffee Trading Company Limited, headquartered in Chikmaglur, a nondescript yet beautiful locale on the foothills of the Western Ghats that grows most of the coffee in India, with its Head office in Bangalore. With the trade name “Cafe Coffee Day” and various other formats, the company today operates at over 810 locations and is expected to cross the 1,000 mark by next year as per media reports.

CCD as it is popularly known operates across the major Domestic and International Airports in India including “Bengaluru International Airport”, almost all the popular Malls in the country, various Offices and Establishments, IT Parks, Movie Halls and Multiplexes, Educational Institutions, Hospitals, Highways and High Streets and is also present in Pakistan and Austria. There are half-a-dozen national players in the market including Barista Lavazza, Cafe Mocha, Costa Coffee, Coffee Bean and Tea Leaf, Gloria Jeans, Illy, etc. and several regional/city-wise operators. The distinct feature among these outlets is that they provide the products and ambience of the Coffee Shops that are in Five Star Hotels but at reasonable prices with easy access. While many follow the service concept such as in Restaurants, some also follow the “take-away” model, both of which are equally popular and welcomed by consumers. The estimated market size of the Organized Coffee Outlets is approx. INR 800 Crores (USD 1 = INR 48) and has been growing at over 35% CAGR for the past few years. Starbucks, world’s largest coffee chain entered and exited India last year (due to FDI regulations) and is planning an entry soon. This makes India the fastest growing Coffee Retail market in the world.

While there are over 2,500 outlets across the country, we are talking about a country of a Billion people – so even if you assume 1% of this population (10,000,000) would be the most relevant target segment, assume they would each visit a cafe once a month (10,000,000 visits in a group of say, two people) and each outlet would service 500 customers every day on an average, we would still need over 10,000 Outlets across the country to meet the growing demand. Ofcourse, these are mathematical calculations and the reality maybe a little different, but still, the opportunity is HUGE. The whole world acknowledges that India is the youngest country on earth with over half of the country’s population under 35 years of age and this is the largest consuming class. With growing incomes and salaries, opening up of several industries, and early age of employment (Avg 22 years), coffee consumption at cafes is seeing unpredictable growth across the country. From pilgrim centres like Vaishnav Devi to exotic holiday destinations like Goa, Rajasthan and Kerala, from Kashmir to Kanyakumari (the northern and southern most cities), there are coffee shops coming up all over.

The focus segment however remains the Teens and Tweens. Tweens, as I call them are those in their Twenties – from beginning to work until they are 29, their lifestyle and habits are changing so much and faster by the day. The two segments contribute over 70% of the customer base at the Cafes. The reasons for this segment to visit the cafes are varied – from pursuing their college studies, to hang around with friends, the first “date”, and as they grow up, casual meetings and business meetings, and even serious discussions. After all, “A lot can happen over coffee!” In my case, a lot has happened. What about yours? If you are a teen or a tween or any one of those at heart, rush to the nearest cafe, and by popularity, most probably your choice would a Cafe Coffee Day. In India, we believe everyday is a coffee day. Cheers.

Thank you!

It's exactly six months since I started actively writing on this blog. I would like to thank each one of you who have constantly supported me and encouraged with various ideas, suggestions and thoughts in this endeavor. I have been able to implement a few and the others would follow.

Keep visiting my site as often as possible; to make it easier and simpler for you, I have included RSS Syndicate as well as commencing a new E-Group titled Retail Enthusiasts. The Group would act as a platform for all the group members to share best practices.

Thank you again and look forward to being in touch.

give me more.

With a little bias, I would like to call them the BIG Four of Indian Retail (like the ones in the Auditing world such as E&Y, PwC, KPMG and Deloitte) – The Future Group, Reliance, Tata and Birla. My very close friends and associates are working in very senior positions in other Retail Organizations, but going by history, these four are expected to lead the Great Indian Retail Story that is unfolding faster than the world believes. While the Future Group came into Bangalore over six years ago, the Tatas and Reliance came over the past years. And last week, Birlas opened their first and largest (yet) Hypermarket in Bangalore. Aptly named more. MEGASTORE, it is located on the Outer Ring Road, quite equidistant from Marathalli, KR Puram and Whitefield. Approximately, over 1 million people are expected to be living in a 10 sq. km area from here (based on various studies on the internet that advocates catchment analyses) and over 100,000 households that appear to be the most relevant target segment. Within the same area, there is a Big Bazaar on Old Madras Road and Whitefield, Total Hypermarket on Sarjapur Road, and a few more expected. With a dozen malls in various level of completion in this area, it is indeed going to be one of the most watched markets in Bangalore as far as Organized Retail is concerned.



I managed to spend some quality time at the new hyper – more from an academic and learning perspective than from the main motive – shopping. My first impression – Wow. State of the art, world class Hypers have arrived and it was nice to see consumers’ acceptance too. By the way, if there is one place where the entire family visits over the weekend to while away time, to buy things that are “perceived” to be cheaper, to catch up with other relatives or to buy some grocery and household articles, then it is the modern Hypers! Yes – it was a sight to see last Saturday when everyone in the family was there – to see the new Outlet, to check out the offers that were being popularized, and to “save” – the new mantra of the modern household families.



While it is a continuing debate on what is the ideal size of the Hypers, how many SKUs should they carry and whether specialty Hypers would work, I believe what we need is higher penetration – more outlets within a locality than fewer “Big Boxes”. We already have a dozen players at a regional, national and international level within the country that are focusing on these models, so it would be possible to have more than one operator/retailer in a specific locality. And Indian consumers need a variety and seek a change quite often, so they would end up visiting different outlets over a period of time – and hence I wonder if “Hyper Store Loyalty” is anything but a big wish for the Retailers.



When one looks at the Store front, it is very welcoming. The “Free Parking” signage is soothing and sends a positive message to shoppers. That there are no other commercial attractions or hangouts close by would mean that visitors come into the store only. As you enter, the Clubmore Loyalty desk is visible. Again, this communicates shoppers that if they are loyal, then they would be rewarded. Smart. Large trolleys are located at the entrance to ensure that most shoppers pick it up as early as possible (for obvious reasons). Just after this, the confusion begins. There are over 18 Cash counters and to enter the ground floor, one has to weed through the customers who are billing! Strange. Almost no one would do that. So, I approached the gentleman who was standing near the check-out, observing and ensuring a disciplined and smooth flow of operations and asked him how/where should I begin my journey. He showed me a travellator that’s near the window and asked me to go to the first floor before I come back to the Ground. I did. I was fumbled to see that the travellator arrives at a dead end – only to be greeted by the Security Guard who is standing there clueless. And just as I pass by, I see another travellator that takes you to the next floor. As always, one couldn’t find a store directory at any of these places. Usually, shoppers who haven’t especially come to shop would have gone up.

But the sincere me who was on an academic tour went into the first floor only to get caught into the crowd. Men’s formals mixed with casuals and then the women’s categories and well, a large “Saree” and other Indian ethnic wear followed and at the end of the floor was stainless steel, plastic and other household items! The travellator at the end of this floor takes you to the ground floor. But I wanted to see the next floor above. So, I came back to where I started and took the way upward. Again, this arrives in a “no-man’s land” – so, I turn left and get into the electronics area which leads to home appliances which leads to sports equipments and ends with bicycles! One walks back all the way to take the travellator down to the next floor and then to the ground floor. Phew. I guess the planners have probably somewhere forgotten why the travellators are created/placed. They are not for moving people from one floor to another (a simple elevator would do that); rather, they are placed such that shoppers walk across areas which they wouldn’t have otherwise and so to see some conversions. So, then I finally came to the ground floor. Strangely, Fruits and Vegetables along with Meat and Dairy products were at the fag end. The philosophy that they must be kept at the entrance is defeated – probably because we expect shoppers to finish buying everything until they reach this area. We expect.

Suddenly realized that I had to pick up some stuff which my aunt had reminded the same morning, so took the list out and bought them. With just three products on hand, I walked towards the cash counters – and voila! All the counters were busy, with atleast three of four trolleys in each of them. There was no “Express Counter” according to one of the staff around, so I politely handed over all the products in his hand to bid adieu. Only to see the signage “Express Counter” at the end! Now, we all agree that most of the shoppers do not visit a hyper to buy the top-ups or the smaller articles, but what happens to those who do so? There were only two express counters and both had atleast six customers and usually, one doesn’t wait for so long.



Finally, I stepped out into the open area where I started my tour. It had taken me about 40 minutes for a full visit from start to finish. I would expect that it would be double or more if one had to shop. Decent enough time to convert as many as possible and also to increase bill values. I am not even talking about the promotions/pricing as they seemed to be attractive enough for families to shop (more than what they would have wanted to). At the entrance (or exit however you call), I didn’t find the customary short-eats – Pop Corn, Sweet Corn, Chat items and some fast food. Although this is not a mainstay, it contributes quite much to the total sales of the Hyper at the end of the day. And it does bring in regular shoppers to have a quick bite. As I stood on the other side of the road, looking at this marvelous structure, I was wondering if all the hype has paid off and what a challenge it would be to sustain the operations. There are large hoardings all over the city placed at strategic locations (one near my house that’s 22 km away from the store), but after all the waiting for the past months and a whole lot of effort by various team members, it was sense of disappointment for me. Of course, an average shopper would think/ interpret/ blog as much as I do, but what they look for in such outlets is not what they get – convenience. After all, Hypermarkets are not about the hyper space alone, it’s also about Hyper convenience of shopping. more.- convenience, if you may allow me to say so.