THE COFFEE CAF INDUSTRY Coffee has been around in India since the 17th century.

However, coffee drinking has traditionally been largely restricted to domestic consumption, and mostly in the South Indian states of Tamil Nadu, Karnataka, Kerala and Andhra Pradesh. The Coffee Caf industry is currently one of the biggest and fastest growing sectors in business. The industry consists of a mix of individual cafs, hotel cafs and retail caf chains. Individual Cafs: The main bulk of revenue is earned by small, individual cafs, run mostly by families and friends. It is a relatively unorganized sector. There are millions of such cafs around the world, and they provide customers with a homely, casual experience. The bulk of these cafs are mainly in Europe, where every little town or village has local cafs, where people gather together for a conversation over coffee, or just to be alone with their thoughts. These cafs have been the birthplace and sanctuary for various creative minds, revolutionaries and thinkers of our time. These cafs set themselves apart from retail chain cafs and hotel cafs because they provide customers with a homely, classic appeal, which cannot be emulated. Hotel Cafs: Ever since the popularization of coffee, hotels all over the world started opening 24-hour coffee shops where visitors to the hotel could walk in for a cup of coffee and some food at any time. These coffeehouses are extremely important, because they provide international visitors to the hotel with a universal drink- coffee. Any customer can walk into any major hotel in the world, and enter the coffeehouse, and know what to expect. These cafs are not really major players in the coffee caf industry, but rather provide supplementary services to the hotel industry.

Retail Caf Chains: The last, and the most organized sector in the coffee caf industry, is the retail caf chain. Off late, these chains have become extremely popular and are growing at an ever-increasing pace. These retail chains have work with an organized structure of man, material and money. The work on developing a recognized brand consistent to all their outlets, which customers can easily relate to, wherever they go. They provide customers with a standardized level of

service and quality at each of their outlets. The vast popularity of these retail chains is shown in the rapid international growth of brands like Starbucks. Customers can do to any Starbucks across the world and know exactly what to expect. The main focus of our project is on a nationally recognized retail caf chain, Caf Coffee Day.

GROWTH OF CAF INDUSTRY IN INDIA Hot beverages have always been a part of the tradition of India, especially South India. Coffee took the first seat in South India when the traditional Brahmin classes brought down the beverage from the ruling British around the 1930s. During the early years the drink was confined only to traditional rich Brahmin families who served filter coffee in a davra tumbler. Coffee is no more confined to the rich Brahmin class now, though the tradit ion of serving filter coffee in the davra- tumbler continues to this day. In order to spread the drink, coffee houses emerged at various places in the country, which also served as the opposite places for lawyers and the educated class to hold discussions ranging from politics to cinema. It is also believed that many scripts and ideas for films evolved here. One of the oldest coffee houses in South India is the Raayars mess, Chennai, which serves first class filter coffee even today. The mess was established in the 1940s and continues the tradition of coffee but supplements it with tiffin also. The vintage location of the mess attracts huge crowds even today early in the mornings, Coffee however was not the only item on the menu. These places also served food and other drinks to their customers. The drink also became famous and as a result even five star hotels began cashing in on it. Several hotels all over the country started opening coffee- shops that catered to high- end customers. This showed the popularization of coffee cafs, to all sections of society. The drink has now become more of a concept than merely a drink itself. The last decade witnesses the growth of numerous coffee pubs in the country. A number of coffee caf owners tried to westernize the taste in contrast to the filter coffee. Now, large retail chains like Qwikys, Barista, and Caf Coffee Day have opened up around the country. The concept of a caf today is not merely about selling coffee, but about developing a national brand. Retail cafs now form a multi- crore industry in the country, and have huge potential for growth locally, and internationally.

FACTORS DRIVING CAF SECTOR Some key factors that have contributed to the growth of Indian caf market are:Enhanced purchasing power: The purchasing power of Indians has grown immensely in the past few years. With most of the families drawing double incomes, the consumers are quite comfortable in spending money while visiting a branded caf store. Young consumers: College going population and younger people also like to hang out with their friends in caf as they offer vibrant atmosphere. Social meeting point: Cafs are today considered an apt place for social engagements like for meet friends and even relatives. Several young women like to catch up with their friends in the relaxed and casual atmosphere of cafes. Business meetings: Other than social meetings, cafs are also becoming popular for business meetings. Now- a-days several brands offer Wi-Fi and internet facility at their cafes and thus business people and corporate employees prefer to meet their business associates there. Given these factors, both franchisors and franchisee can expect higher footfalls at their stores and operate profitably.

ROLE OF THE INDIAN CAF SECTOR IN OUR ECONOMY India is known to be a country of tea lovers however now more and more people have started consuming coffee, especially the people working in corporate sector and younger population. In western countries, cafeterias and coffee lounges are part of peoples everyday lives. In 2011, their per capita annual coffee consumption in India was a mere 80 grams, compared to 12.3 kg in the largest European nation and the United States (4.2 kg. In recent years, the coffee culture in India has grown substantially driving the consumer demand for caf outlets. Based on current market trends, if all goes well with current players in the market, these two countries will likely become among the top five markets for coffee consumption. Currently, the Indian cafe market is worth USD 230 million and as per industry experts, by 2017, the market will be around USD 410. Many Indian and international cafe brands have established their presence in Indian market. Franchising has been a popular mode of business expansion among F&B players and the model is also being increasingly being preferred by caf brands.

Impact on the Global Coffee Market The increased consumption of coffee in China and India is likely to be a boon for coffee production as well. As a result, more area will likely be brought under coffee cultivation. Indian coffee exports are likely to witness a dramatic fall between 2013 and 2022, on account of rising domestic consumption. Further, demand for coffee dispensing machines is expected to rise in these countries, which would be a boon for global coffee machine and pod manufacturers.

CAF COFFEE DAY It was in the golden soil of Chikmagalur that a traditional family owned a few acres of coffee estates, which yielded rich coffee beans. Soon Amalgamated Bean Coffee Trading Company Limited, popularly known as Coffee Day was formed. With Asia's second-largest network of coffee estates (10,500 acres) and 11,000 small growers, Coffee Day has a rich and abundant source of coffee. It has a rich coffee growing tradition since 1875 behind it coupled with the opportunity that arose with the deregulation of the coffee board in the early nineties, it began exporting coffee to the connoisseurs across USA, Europe & Japan. In the calendar year 2000, Coffee Day exported more than 27000 tonnes of coffee valued at US$ 60 m to these countries and, for the second time in its short career of 7 years retained the position as the largest coffee exporter of India. Caf Coffee Days menu ranges from signature hot and cold coffees to several exotic international coffees, tea, food, desserts and pastries. In addition, exciting merchandise such as coffee powders, cookies, mugs, coffee filters, etc. is available at the cafs. Caf Coffee Day (CCD) pioneered the caf concept in India in 1996 by opening its first caf at Brigade Road in Bangalore. Today, more than a decade later, Caf Coffee Day is the largest organized retail caf chain in India with cafes functioning in every nook and corner of the country. Drawing inspiration from this overwhelming success, Caf Coffee Day today has cafes in Vienna, Austria and Karachi. Whats more, new cafes are planned across Middle East, Eastern Europe, Eurasia, Egypt and South East Asia in the near future. Coffee Day has a wide and professional network in the major coffee growing areas of the country comprising over 48 agents and 50 collecting depots. Coffee Day's two curing works

at Chikmagalur and Hassan cure over 70,000 tonnes of coffee per annum, the largest in the country. Coffee Day has a well-equipped roasting unit catering to the specific requirement of the consumers. The process is carried out under the control of experienced personnel to meet highest quality standards. The most modern technology available is used to maintain consistency and roast the coffee beans to the demanding specifications of the discerning coffee consumers. VISION: To be the only office for dialogue over a cup of coffee MISSION: To be the best Cafe chain by offering a world class coffee experience at affordable prices. The offerings are designed in such a manner that one cannot be spelt without the other; there are the hot coffee or cold coffee combinations with delectable desserts and special coffee and eats combinations for even a group of four friends.

Coffee Day Comprises of the following Sub Brands 1. Coffee Day - Fresh & Ground 2. Caf Coffee Day 3. Coffee Day Vending 4. Coffee Day - Xpress 5. Coffee Day Exports 6. Coffee Day - Perfect Coffee Day's most unique aspect is that it grows the coffee it serves. Key Features Pioneers of the Caf Concept in India with the its first Caf at Brigade Road, Bangalore in 1996. This Caf was opened as a Cyber Caf (first of its kind) but later, with the burst of cyber cafes it reverted to its core competency. Coffee.

 Essentially a youth oriented brand with majority of its customers falling in the 15-29 year age bracket Each caf, depending upon its size attracts between 400 and 800 customers daily. It is a place where customers come to rejuvenate themselves and be themselves. USP of the Brand: Affordable Price Coffee Winner of Platinum, Gold, Silver and Bronze medals at the India Barista Championship 2002

TANGIBILTY SPECTRUM A useful way to distinguish a service from a product is to place them on a scale from tangible dominant to intangible dominant. When more than half the value comes from service element, the service lies strongly in the in tangibledominant section of the Tangibility Spectrum. The tangibility spectrum in case of coffee shops is as follows:

SERVICES QUALITY DIMENSIONS Reliability It is the ability to perform the promised service dependably and accurately. Each and every coffee shop (local one or International brand) promises best taste in terms of Coffee. These promises should me met accordingly in each and every aspect like quality & quantity. Assurance Assurance positioning would have to be backed up by evidence of the knowledge and thoughtfulness of administrators, faculty and staff and their ability to inspire trust and confidence. It includes the knowledge and courtesy of employees and their ability to convey trust and confidence. The employees at Caf Coffee Day are well trained to tackle problems without causing harm to customers. Tangibility It talks about the furniture, menus, the interiors etc i.e. Physical facilities, equipment & appearance of personnel. Empathy Caring, individualized attention the firm provides to their customers. The mission of Caf Coffee Day is To be the best Cafe chain by offering a world class coffee experience at affordable prices. This statement proves that they want to serve the target market i.e. the youth with full services that they want at an affordable price. Responsiveness Willingness to help customers and provide prompt service. Employees in Caf Coffee Day are not quick to respond to the queries of their customer since the working staff is less in number. But still they somehow manage to respond to customers as per their demand.

CHALLENGES FOR SERVICE PROVIDED BY CAF COFFEE DAY Getting skilled manpower CCD has 17,000+ people in growing, processing, and retailing coffee, coffee research and beverages research, food research, Coffee Lab at Bangalore, R&D Lab at Chikmagalur, own training facility, HR and recruitment, systems, etc. Getting skilled manpower, paying enough salary to retain them for a period of time and providing them with a growth path is a major challenge for CCD. Use of latest technology CCD makes use of latest technology in coffee plantation, curing and roasting. It has a state of the art Probat Roasting Machine with a capacity of 7000 tons/annum. CCD uses both drum & hot air roasters to cater espresso & filter coffee needs. It has indigenously developed low cost vending machine which is used in various corporate office and other institutions. Hence it needs constant capacity upgradation and technology upgradation. Competition As more and more brands are saturating the Indian cafe market, the competition between the brands is also increasing day by day. Cafs can be found at almost all the locations like shopping malls, high streets, schools and hospitals etc. People can easily find the super class of coffee at affordable price through the kiosk format stated at malls, high street, railway stations and airports. Apart from competition, there are certain challenges that every new or existing caf brand faces. Indians still prefer tea over coffee as it is relatively cheaper beverage than coffee. Most brands offer between Rs 50- 90 and locals are quite price conscious. Location is also another challenge for the cafe brands because many brands have already occupied the good places in metro cities. The brands that are entering now have to look for other places for expansion.