- Term Papers and Free Essays

Business Analysis of Coffee Retail in India

Essay by   •  July 1, 2019  •  Article Review  •  1,738 Words (7 Pages)  •  559 Views

Essay Preview: Business Analysis of Coffee Retail in India

Report this essay
Page 1 of 7

Business Analysis of Coffee Retail in India

Business Analysis of Coffee Retail in India

Coffee industry in India is growing rapidly in the past few years, mainly due to the entry of big chains like Café Coffee Day, Tata Starbucks, Costa Coffee, Coffee by Di Bella, etc. The coffee retail market was valued at INR 70 billion in 2015 and is expected to double by 2020. India has primarily been a tea drinking nation, although coffee has been a predominant drink in the south. Many factors are involved in huge rise of this industry: the rise of middle class, increasing westernization, the rise of experience economy and heavy marketing of coffee places as a place to hang out with friends. This report will mainly use Tata Starbucks as focal points for analysis of coffee retail as a business.

Exhibit 1:  

[pic 1]


3C Analysis of Coffee Retail Industry

To understand the basic business model of the company the 3C model is being used, i.e. The customer, competitor and corporation.


Affordability plays a major role in the choice of target customers. For these chains, the target customers can be broadly differentiated into the following segments based on their demographics.

College Students: These are the young demographic, open to experiences and not particularly cost conscious. To target this audience, cafes are usually located near colleges and malls. Their main idea is to become a frequent haunt for these people.

Young Professionals: People who have just started working and need caffeine to continue focus on their projects and work long hours. Many industrial parks have cafes inside their campus.

Artists: The cafes usually have a policy to let their customers sit for a long stretch of time. This helps the groups to bond with each other over coffee and ample time and space for the artist

Tourists: The major chains usually have a standardized offering over regions. This aids the tourists in the way that they get the same taste of coffee everywhere and hence they prefer to go to their choice café for familiarity in foreign land.


In the Indian market, the major players in coffee retail are: Starbucks, Costa Coffee, Barista, Café Coffee Day, Coffee by Di Bella, Aroma’s Coffee, Theobroma. Also, since majority of the population in India prefers to drink tea over coffee, the emergence of the tea lounges also poses a threat to the coffee retail chains.


To study corporation, the following key metrics will be analysed.

  1. Operations

Most coffee retails follow either of two business models:

  1. Standard retail model: there is a headquarter and various branches in different regions
  2. Franchisee model: the main company licenses out the retail outlets in a certain region to a smaller company and both the companies share the profits.
  3. Joint Venture: An alliance between two corporations to jointly own and operate in a certain location and both the companies share the profit.

Starbucks operates in India under the umbrella of Tata Beverages in a Joint Venture and sharing 50-50 of the profits. India as a whole comes under the CAP (China Asia Pacific) operations for Starbucks, along with China, Vietnam, Singapore, etc.

  1. Logistics

For efficient operations in Starbucks, India is divided into three major sections, North (which handles operations in North and East, East through a semi dependant remote warehouse), West and South region. Each of these regions are operated independently using a hub and spoke model. Each of these regions have a single warehouse, and materials are transported from here to other cities, and from one city to the other. Interconnections within the channel have been maintained in a way to ease out transport material, not just from warehouse but also from one city to another in case of stores from one city facing stockout. One major logistics team specific to India oversees the inter-region and intra-region operations.

  1. Coffee Value Chain

Mainly two types of coffee beans are widely consumed: Arabica and Robusta. Arabica has a milder and smoother taste whereas Robusta is used for making more bitter coffee. Coffee retails claim to use the better-quality Arabica beans. Raw unroasted coffee beans from Asia, Africa and Latin America are washed at the origin and sourced to a central distribution centre where they are custom roasted and then sourced all over the world to regional distribution centres, via sea or land, and then transported to retail outlets.

Starbucks, at the time of entering Indian markets used to ship roasted coffee to India, shipping time of which ranged from 65 to 80 days decreasing the already limited shelf life of coffee, that is around 8 months. Starbucks generally sources coffee from Sumatra, Kenya and Italy. They have also added Indian variants of coffee to their product mix. In 2012, Starbucks and Tata Beverages operationalised a coffee roasting and packaging plant in Kushalnagara, near Coorg.

This eases out the operation as the green coffee beans are much easier to transport, and the extra time gives the coffee bean to develop more complexity in their flavour.

Products and packaging material are imported from their headquarters. Tata Beverages also owns a syrup factory in Bangalore which allows the company to locally source beverage and some other food products. As of now, around only 30% of their products are imported and the rest 70% are locally sourced.

  1. Location Planning

Traffic volume and convenience play a major factor in deciding of location for retail outlets. The same is seen in many of the cafes. For this purpose, competing cafes usually tend to locate its stores next to each other for higher traffic volume, high visibility and greater convenience for customers, a phenomenon referred to as clustering. Starbucks is specifically prone to locate its stores near competing stores, in streets with high traffic.



Download as:   txt (11.1 Kb)   pdf (183.2 Kb)   docx (53.7 Kb)  
Continue for 6 more pages »
Only available on
Citation Generator

(2019, 07). Business Analysis of Coffee Retail in India. Retrieved 07, 2019, from

"Business Analysis of Coffee Retail in India" 07 2019. 2019. 07 2019 <>.

"Business Analysis of Coffee Retail in India.", 07 2019. Web. 07 2019. <>.

"Business Analysis of Coffee Retail in India." 07, 2019. Accessed 07, 2019.