At Rs 1,000 crore, the coffee chain market in India is growing at about 30 per cent a year, with the top 40 cities boasting about 1,700 outlets. The annual consumption of coffee in India is 82 grams while, in the US, it is four kg and in some countries in Europe it is around 8 kg. Currently, India has about 1,800 coffee outlets, but in only around 200 of 6000 towns in India proving enormous potential for growth in the category

CCD, the largest organised retail cafe chain in the country is a part of India's largest coffee conglomerate, the Amalgamated Bean Coffee Trading Company. The first café was opened in 1996 on Brigade Road in Bangalore. The company has 1481 outlets in 28 states of the country. The company has three formats of cafes: CCD, CCD Lounge, CCD square.

The challenge

The entry of Starbucks in India through a 50.50 venture with Tata Global Beverages poses a threat to the leadership position of the brand. The key challenge is if, and how, to respond to competition.

Strategic response

Consumers in this category choose a brand that enhances their actual social self image and consumers prefer a brand whose personality matches that of their own. An extroverted and exciting personality of the brand matches that of the country’s young people. Although Starbucks has a different strategy, it may still pose a threat.

Disposable income

The aspirational Starbucks experience may attract more consumers wanting to give it a try. The brand can use following strategies:

Communication : Using affective component of tri-component attitude model to communicate how consumers were able to visit CCD because of its cost effective product line and how that visit turned memorable such as first date, etc, use classical conditioning method of consumer learning to emphasise how CCD is linked to social networking and youthfulness

CCD friendship : Communicating situations in which people became friends at CCD

Wider reach : Target tier 2 cities for opening new stores which is a blue ocean market. This is because Starbucks is positioned as a brand which serves consumers in the metros. Further this will also help in increasing the foot print of the brand.

CCD adda : The local stores can organize meet-up events such as parties, etc. The consumers can be informed about the event in advance and the stores can make arrangements.

Building loyalty : A system in which the attendant at the counter is able to present offers to the consumers according to their likes and dislikes. This can be based on analysis of the customer’s previous purchases, and can be accompanied by various loyalty schemes such as prepaid CCD cards, etc.

These strategies would help the CCD brand enhance customer value and help build customer loyalty and emotional connect, thereby protecting the brand’s leadership position.

(Manu Gupta is pursuing MBA - FT at the Delhi University's Faculty of Management Studies.)

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