Coffee wars in india case study solution

9-714-409 AUGUST 8, 2013 DAVID B. YOFFIE TANYA BIJLANI Coffee Wars in India: Café Coffee Day Takes on the Global Brands V.G. Siddhartha, founder and chairman of Amalgamated Bean Coffee (ABC) Trading Company, popularly known as Café Coffee Day, sipped a frothy cappuccino in his office in the South Indian city of Bangalore. ABC was a privately held company, with minority investments by several private equity firms, such as KKR. The crown jewel in ABC was Siddhartha’s retail creation, Café Coffee Day (CCD), which successfully developed the café culture in India. Although India was historically a tea drinking nation, where a cup of chaia could be purchased at a roadside stall for a few rupees, CCD attracted India’s large young population with espresso-based beverages, snacks, jukeboxes, and popular merchandise. The company also operated takeaway kiosks in heavily populated areas; sold fresh coffee powder through retail outlets in Southern India; and ran premium café formats for older customers. By April 2013, CCD was India’s leading coffee chain, with over 60% of the market. India’s Economic Times had named CCD as one of India’s most trusted brands – ranked No. 2 in the ‘Food & Beverage’ segment.1 The company’s bright red logo, along with its popular tag line, “A lot can happen over coffee,” was a familiar sight across urban India. Seven months earlier, U.S.-based Starbucks Coffee Company (Starbucks), had opened its first 11 stores in Mumbai and Delhi, India’s commercial and political capitals. Starbucks was the world’s largest coffee chain company with over 18,000 outlets across 62 countries. Starbucks had entered India through a joint venture with the Tata Group, India’s largest business conglomerate, giving it access to coffee plantations as well as premium real estate. Despite its high prices, Starbucks received a grand welcome, including massive media coverage and long queues outside of its luxurious stores. Siddhartha and the Director of CCD, Venu Madhav, had plenty of experience beating global brands in India. Costa from the U.K., Lavazza from Italy, Gloria Jean’s from Australia, and Coffee Bean and Tea Leaf from Southern California in the U.S. had all struggled to make significant inroads in the Indian market. Yet Siddhartha and Madhav wondered if Starbucks might be different. In their discussions, Madhav and Siddhartha were reasonably confident that CCD “only needed a slight course correction” to handle Starbucks, but they also debated whether a bigger, bolder response was necessary. a Chai is a Hindi word for tea prepared with milk, sugar, and sometimes spices. ________________________________________________________________________________________________________________ Professor David B. Yoffie and Research Associate Tanya Bijlani prepared this case. It was reviewed and approved before publication by a company designate. Funding for the development of this case was provided by Harvard Business School, and not by the company. Professor Yoffie had a prior business relationship with the current chairman of CCD. HBS cases are developed solely as the basis for class discussion. Cases are not intended to serve as endorsements, sources of primary data, or illustrations of effective or ineffective management. Copyright © 2013 President and Fellows of Harvard College. To order copies or request permission to reproduce materials, call 1-800-545-7685, write Harvard Business School Publishing, Boston, MA 02163, or go to www.hbsp.harvard.edu/educators. This publication may not be digitized, photocopied, or otherwise reproduced, posted, or transmitted, without the permission of Harvard Business School.