Barista Coffee Company

Read the caselet carefully and answer the following questions:

1. It's obviously testing times for coffee bars, the storm may just be brewing in the cup. What are the causes of concern for coffee pubs?

2. With coffee pubs being unsuccessful in sweeping the country, stand-alone coffee bars brew strategies for sustained profitability and market growth. What are the growth measures that coffee pubs could undertake to come out of the slump?

Pub-crawlers haven’t had it better. That’s something that has been evident in the past few years, when names such as Barista, Caf6 Coffee Day and Qwiky’s made sipping smoothies, granitas and ice-float coffee famous and fashionable. Most of these pubs have great ambience, and claim to offer quality coffee experience. But now, it seems like the initial euphoria has died down.

For example, Barista Coffee Company – the four-year-old, 130-stores-strong pub – which made visiting pubs aspirational and respectable, is now adopting a franchise route for expansion, setting up Espresso Bars in smaller towns, and talking of affordable pricing upfront, all for the first time since it set up operations.

Coffee conglomerate Amalgamated Bean Coffee Trading Company Ltd. (ABCTC), which operates its retail chain, Cafe Coffee Day, is in the process of shifting to a regionalized food and beverage offerings from a westernized menu, based on findings from a countrywide research.

The Chennai-based Chimayo Chains Pvt. Ltd, which operates the Qwiky’s coffee bar chain, has set up a new company by the name of Chimayo BPO Pvt. Ltd., making it the first of its kind in the business process outsourcing (BPO) space to offer professional services to companies for food and beverages.

And, as if competition from each other was not enough, established FMCG players too are in the fray, vying for their own space in the coffee pub retail space. Take FMCG major Nestle. The food company’s Caf6 Nescafe outlets in select cities are positioned on the lines of its Nescafe brand’s ‘taste that gets you going’ theme. Caf6 Nescafes offer beverages priced as competitively as Rs.10.

FMCG giants such as Hindustan Lever and Tata Coffee are sooner or later expected to venture into the coffee chain business. The US-based Starbucks too is expected to stage an entry into India.

Finally, there’s Amoretto’s, a start-up food and beverages service caf6 chain, positioned as a ‘non-alcoholic’ mocktails, cocktails and shocktails bar.

On the other hand, elaborates Jagdeep Kapoor, Managing Director, Samsika Marketing Consultants: “Sensible growth and expansion is the need of the hour. Since coffee drinking is only an occasional habit in India, for every 100 new coffee bars, I expect 20 to shut down, unless the players manage an appropriate mix of location and viability. To avoid a shakeout, each parlor will need to stand up for itself and turn in cash profits.”

The players themselves maintain they are taking forward their growth and expansion plans through the slow and steady route, and differentiating by way of hard-core strategies.

Tata Coffee Ltd. picked up a strategic 34.3 per cent equity stake in Barista Coffee Company in mid -2001. Barista also announced its intention to make its maiden overseas foray through a 51:49 joint venture arrangement with the Sri