Case Study Contents
- CCD – an established brand image in India
- CCD’s wide network – the anytime, anywhere cafe
- Exhibit 1: Total number of stores/cafes of Café Coffee Day and its competitors
- 1996 – 2008, CCD’s first store launch to building a strong competitive advantage
- Innovative formats to woo new customers
- Reinforcing brand image with the cluster approach strategy
- Company-owned stores instead of franchises to not dilute brand value
- Lower pricing and ‘no-segmentation’ approach
- From a largely south Indian retail chain to a national brand
- Reinvigorating the brand and taking it to the next level
- Projecting a feeling of togetherness
- Silent brew masters – special employee program
- Background Note (History of Cafe Coffee Day)
- Café Coffee Day – Quick Facts
- Exhibit 2: Various store/café formats of Café Coffee Day
- Exhibit 3: Different divisions of Café Coffee Day
- Exhibit 4: Brand Logo of CCD and its significance
- Exhibit 5: Sample Consumer profile by Age group at Café Coffee Day
Case Study Abstract
This case study covers the following issues:
- Examine and analyze Cafe Coffee Day’s brand strategy in India, its success and future challenges
“CCD today has become the largest youth aggregator, and from a marketing stand point, the success has come by focusing on the 3As: Accessibility, Affordability and Acceptability.”– Bidisha Nagaraj, the Marketing president of Cafe Coffee Day
“Although demographically, a typical consumer would be male or female between 15-29 years of age, belonging to middle or upper middle class, we call our consumers young or young at heart. We are about juke boxes, good and affordable coffee and food. The brand fit is with youth or the young at heart. So we often look out for brands that are aspirational in nature.” – Sudipta Sen Gupta, Marketing head, Café Coffee Day.
CCD – an established brand image in India
Cafe Coffee Day (CCD) has an established brand image in India and ranks No 2 in the Brand Equity’s Most Trusted Brands 2008 survey – in the food services category. Rival Barista is at No 5. CCD has been able to make a connection with the Indian consumers, predominantly among the youth. CCD is the market leader in India and was awarded the ‘Exclusive Brand Retailer of the Year’ by ICICI Bank in its Retail Excellence Awards 2005 for the organized retail sector.
CCD’s wide network – the anytime, anywhere cafe
CCD has been able to make its brand presence felt through the sheer number of stores. CCD has 620 cafes at present and it has ambitious plans to launch more than 900 cafes by the end of the current financial year. This means launching one store every other day which is not surprising from a company which launched a cafe (in 2005) in Vienna, the coffee capital of the world. CCD also has three cafes in Vienna, and two in Karachi, Pakistan. Lagging behind CCD in the Indian market, Barista has about 200 cafés, Java Green (around 75 cafés) and Mocha (around 25 cafés). The Indian organized sector has potential for around 5,000 cafés but fewer than 1,000 cafés exist currently.
Exhibit 1: Total number of stores/cafes of Café Coffee Day and its competitors
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Case Study Keywords
Cafe Coffee Day, CCD, Amalgamated Bean Coffee Trading Company Ltd., ABCTCL, V G Siddhartha, Café Beat, Brand Equity’s Most Trusted Brands 2008 survey, Bidisha Nagaraj – Marketing president, brand image, brand management, Exclusive Brand Retailer of the Year, Barista, Java Green, Mocha, company owned stores, national brand, south Indian retail chain, Chikmagalur, Co-branding, international brand consultant Landor, Silent brew masters – special employee program, a feeling of togetherness, Coffee Day Exports, Coffee Day Xpress, Coffee Day Take Away (coffee vending machines), Coffee Day Fresh ‘n Ground (ground coffee retail outlets), Coffee Day FMCG (packaged filter coffee powder)
- CCD’s vision: To be the only office for dialogue over a cup of coffee
- CCD’s Expansion Strategy: Cafe Coffee Day has around 821 outlets in 115 cities in India. CCD plans to take the total number of cafes to 1,000 by March 2010 and double it to 2,000 by 2014. (Update: By Jan 2012, CCD had approx 1,200 cafes and 900 Express outlets) In October 2009, CCD announced that it will increase its international presence from the current six outlets in Vienna and Pakistan to a total of 50 stores across Europe and Middle East in two years time.
- International coffee chains in India – Recent entrants in the Indian market include Gloria Jeans, Coffee Bean & Tea Leaf and Illy Café.
- Operating Formats – Café Coffee Day operates in both regular (Coffee Day Square) and premium formats (Lounge).
- Highway Cafes: In 2004, CCD began cafes on highways. By 2009, the total number of Café Coffee Day highway cafes rose to 30 owing to the overwhelming response it received from travellers.
- CCD’s new brand identity: In October 2009, CCD unveiled a new brand logo, a Dialogue Box, to weave the concept of ‘Power of Dialogue’. In accordance with this new brand identity, CCD planned to give all its existing outlets a new look by the end of 2009. Cafés would be redesigned to suit different environments such as book, music garden and cyber cafes suitable for corporate offices, university campus or neighborhood. The change plan included new smart menu, furniture design, among others.
- Coffee consumption in India is growing at 6% per annum compared to the global 2% plus. In India, the per capita consumption of coffee is around 85 grams while it is six kgs in the US.
- Milk production in India – India is the largest producer and consumer of milk in the world with 98% of milk being produced in rural India.
- Coffee production in India – India ranks sixth as a producer of coffee in the world accounting for 4.5% of the global coffee production. India has about 170,000 coffee farms cultivating around 900,000 acres of coffee trees.
- CCD’s International Expansion Strategy – In June, 2010 Cafe Coffee Day chain acquired Emporio for Rs 15 crore. Emporio is a Czech Republic-based café chain present at 11 locations. CCD plans to co-brand the chain as Café Coffee Day Emporio and later transition it to Café Coffee Day. CCD is also present in Vienna. The company wants to expand in the East European region, West Asia and the Asia-Pacific region.
- Cafe Market in India – Coffee retailers cover only 170 cities out of 3,000 in India (early 2011 reports). In 2008, according to Technopak Advisors, the Indian food servcies market – cafes, full-service restaurants, fast-food outlets/quick-service restaurants was estimated to be $6 billion (Rs 26,000 crore) with organized players taking 13% of the market. (By 2014 this number is expected to increase up to 27%.). According to Technopak Advisors, the café market in India is estimated at $150 million (Rs 678 crore) and growing at 40 per cent over the last five years.
- Organized coffee market in India: The organized coffee market in India is about Rs 600 crores. This is approximately 20% of the total domestic coffee consumption (Rs 3,000 crores).
- New Entrants in Indian Coffee Cafe market: In early 2011, Hindustan Unilever, the FMCG giant planned to open a cafe outlet in Mumbai named ‘Bru World Café‘ to popularize its in-house coffee brand Bru (HUL’s only coffee brand sold only in India).
- CCD to double its human resources count: CCD has 6,500 employees (as per Feb 2011 figures) with each cafe requiring about 6 employees. CCD plans to double its employee count by 2013.
- Lavazza – Espression store in India: In 2011, Lavazza, the Italian coffee brand opened its first signature coffee shop ‘Lavazza Espression’ in New Delhi, India.
- CoffeeDay Wakecup: In January 2012, CCD launched its own brand of coffee maker called CoffeeDay Wakecup targeting all coffee lovers. The product will be marketed at its 1125 cafes and 900 Express outlets. Competitor Lavazza had launched its own portable coffee machines (Lavazza Blue 850) already but targeted the premium segment with the price being higher than CCD’s machines.
- In February 2012, Café Coffee Day announced plans to install interactive touchscreen tablets in 500 cafes across the country.
Opportunity in the market
India’s hospitality market was in major flux. Explosive growth in the middle class was joined by a huge surge in business and leisure travel among domestic and foreign tourists. Ambitious international hotel brands were establishing themselves on the subcontinent. Tata-owned Taj Hotels Resorts and Palaces (THRP), India’s most celebrated luxury hotel brand, realized it had an opportunity to serve new segments of the market.
- 41% Of the population expected to be middle class by 2025
- By 2025, domestic luxury class will reach 24 million
A mixed bag of brands
The Taj brand had been diluted by years of opportunistic growth. The hotels in its portfolio—all Taj branded—offered two-star experiences, five-star experiences, and everything in between. Taj’s “mixed bag” of brands was confusing customer perceptions at a time when competition was fiercest.
Missing emotional appeal
BrandAsset Valuator (BAV) data and focus group findings revealed that although the Taj brand retained celebrity status, it was losing the emotional appeal critical for a top-end luxury brand.
India was perceived internationally as neither welcoming nor responsive, two of the most powerful drivers of esteem for hotel brands.
By building on perceptions of its brand as welcoming and responsive, Taj could both regain travelers’ love and mitigate the negative image of India.
A roadmap for the future
Based on our insights, Landor outlined six strategic principles:
- Move from a mono-brand structure to a sun-and-planets model.
- Reserve the Taj brand for the luxury segment only.
- Create distinct brands for other viable market segments.
- Carefully manage and limit the use of the Taj name.
- Differentiate between the luxury brand and the corporate entity.
- Name the corporate entity Taj Group.
New brands clarify tiers of service
Our recommendation for Taj’s brand architecture was a sun-and-planets model, falling between a branded house and a house of brands. At the center, the “sun” was Taj, remaining a top-tier luxury brand. Two new brands would fall under the Taj Group umbrella: one a full-service, Taj-endorsed upscale brand (Vivanta by Taj) and the other a mid-market business travel brand (The Gateway Hotel). A third new brand, Ginger, would offer two-star economy stays as a separate subsidiary not connected with the Taj name.
Reserving Taj for opulence
Landor recommended that Taj distinguish the Taj Group (the corporate brand) from Taj HRP (the luxury hotel brand), both visually and verbally. After creating a Taj Group identity, we developed a decision tree to limit the use of “Taj” in naming new properties and services, such as Taj Air.
A brand for every guest
New opportunities for luxury
With the Taj brand reserved for the most opulent hotels in the portfolio, Landor found ways to heighten its luxury experience for guests. We identified several key ownable opportunities, including the traditional greeting of the dvaar paalaka, the Taj Turndown menu, the Royal Shoeshine, and the Fond Farewell.
“The welcoming durbaans set a certain expectation for foreign visitors. Guests are about to start an India experience; they are not just entering a set of revolving doors.”Divia Thani Daswani, editor Condé Nast Traveller India
Vivanta by Taj for the upper upscale guest
Vivanta by Taj was designed to capture an emerging high-end segment. This younger, more cosmopolitan group of travelers wanted something new, contemporary, and technologically savvy.
Landor created the name, identity, positioning, customer journey, and look and feel for this stylishly smart hotel. Amenities include airport pickup, soothing music, and massage chairs. STR reports and Gallup surveys show that Vivanta has the highest RevPAR and customer engagement among its competitive set.
Condé Nast Traveler named Vivanta by Taj the third best hotel brand in the world.
The Gateway Hotel for the mid-market traveler
India’s booming market had given rise to a large number of domestic business travelers. Taj Group created the Gateway Hotel, a three-star national brand, to cater to this segment and fill the gap in its portfolio. Although it falls under the corporate umbrella, The Gateway is not endorsed by Taj, keeping its identity separate from the Taj’s luxury positioning.
The Gateway brand idea, Welcome perfection, succinctly expresses the hotel promise, and a clean, crisp identity system carries the message of contemporary environments with hassle-free service.
According to Nielsen research, Gateway was the third strongest brand in India only a year after its launch.
Ginger for the budget traveler
Ginger, a two-star economy brand, focuses on secondary and tertiary cities in India, where the hospitality sector can be disorganized and unpredictable. To avoid having Taj associated with a budget chain, Ginger functions as a separate subsidiary outside the purview of the Taj Group.
Its name and visual identity evoke a simple, practical hotel experience that strikes a balance between being Indian and being international—the sweet spot many Indian brands hope to achieve. Properties feature laundry and gym facilities as well as business centers to meet a variety of needs.
The South Asian Travel Tourism Expo named Ginger the best budget hotel chain in India.
Leadership faced a challenge in selling the new brand architecture to its staff, since many employees felt proud of working for the Taj brand. The core branding team painstakingly engaged each stakeholder group to instill confidence in the new strategy before launching publicly. Landor produced a brand spirit book and a 20-minute brand film to help employees embrace the transition.
Internal acceptance of the new structure has been extraordinary, and IHCL, Taj’s parent company, was recently named a Gallup Great Workplace. The success of the new brand architecture strategy has renewed the company’s commitment to international expansion, and it hopes to double its inventory in the next five years.
Credit Suisse named Taj one of only 27 Great Brands of Tomorrow expected to significantly outperform the market in the next three to five years.