Grabbing a cup of mocha might soon come with a host of extras. Coffee chain Costa Coffee is planning to use everything from live comedy shows to book readings and music concerts to “engage” with customers, as competition heats up in the coffee business.
Laughter, music, books and art are the four new consumer engagement verticals created by Costa Coffee to sustain double digit growth in a competitive environment. With separate sub brands under these four verticals, the Rs 100-crore coffee chain hopes to ‘delight' its consumers besides simply serving them their cup of coffee.
Speaking to Business Line, Mr Santhosh Unni, CEO, Costa Coffee said, “In a competitive environment we have to delight our customers and so we have developed a consumer engagement strategy across verticals such as music, books, art and laughter.”
Costa Coffee has drawn up activities such as comedy shows (Costa Laughaccina) at some of its large sized outlets. This would be followed by other activities like book readings, poetry sessions and music clubs called Rhythm & Brew.
“Our next vertical for consumer engagement would be music and we are already talking to music companies who are on the verge of releasing their albums. In book reading, we would be associating with publishers and expect all these activities to dovetail into our coffee business,” said Mr Unni.
Rising costs have not helped. “On an average we have taken a price hike of 12 per cent in a year but not all of it has been passed on to the consumer,'' he added.
The UK-based company entered the Indian market by appointing Devyani International (part of the Rs 3,000 crore RJ Corp) as an exclusive master franchisee in 2005.
Since its entry, a host of other premium coffee chains have come up and there is also the impending entry of Starbucks. “While there is competition, there will not be a squabble with more coffee chains coming in. The entry of Starbucks will only do good to the category as it is the number one player while we are the second largest coffee chain. We expect our pricing to be almost similar to that of Starbucks,'' added Mr. Unni.
In fact, coffee retail will continue to be at the premium end of the market. “There is nothing like a mass segment in the café segment today,” he said.
With plans of adding another 50 outlets this year, Costa Coffee is also exploring new locations such as airports, highways and hospitals as potential locations. “We would be spending about Rs 35 crore this year on the new outlets and expect to sustain growth rates at 20 per cent,'' said Mr Unni.