SRI BALAJI SOCIETY

BALAJI INSTITUTE OF MANAGEMENT & HUMAN RESOURCE

DEVELOPMENT (BIMHRD)

Case study on
Entry of Starbucks Shaking Barista

SUBMITTED IN

Partial Fulfilment of the PGDM (Marketing) Curriculum For

Academic Year 2016-2018

By
Sagar Singhal
HRD1613183
 Declaration

This case study paper has been entirely prepared by me with the help of my mentors and
teachers. It involves information from the internet but doesn’t involve plagiarism. It is my
original work and has not already been published or submitted elsewhere. This case study
is written for the objective of learning for the reader but not for commercial use.

Sagar Singhal
HRD1613183
BIMHRD, Pune
 Table of
Content

Chapter Number Chapter Title Page Number

1 Declaration 2

2 Executive Summary 4

3 Introduction 5

4
Main Content: History
8

5 Analysis of the case 11

6 Solution 14

7 Conclusion 15

8 Bibliography 16
 Executive Summary

Starbucks entry in India happened to disrupt entire coffee chain industry. Which has not
made Barista loose its market share but also making it difficult for it to even survive in the
market. In this case study, a reader will get insights how a foreign player can shake the market
with its most important weapon “Brand Value”.
This case study also includes recommendation in solution section which aims towards taking
Barista back in the market and Thrive back strong. It includes some insights from the research
conducted by me in my summer internship project. The case study give conclusion at the
end.
 Introduction

The brand takes its name from the Italian term for a Coffee brew master.
Barista is the fastest growing coffee retailing chain in the country. Barista
Coffee was established in 1999. The Italian style café was promoted by the
New Delhi-based Java Coffee Company. Earlier Coffee was made with high
quality Arabic beans and Barista’s from Italy were invited to create blends.
Along with a large variety of Hot and Cold beverages, Barista even served
top- grade quality pastries, sandwiches and Muffins. Though being a late
entrant, Barista took elite India by storm. With 105 branches in 18 cities and
annual sales of Rs. 650 million, Barista was clearly the leader in the coffee
retailing business in 2002. What made Barista different from others was the
ambience at its outlets. Barista recreated the ambience and experience of
the typical Italian neighborhood espresso bars in India. The interiors were
bright, trendy and comfortable. One could play chess, read books, listen to
music, enjoy the arts, surf the Net and sip an Espresso Italiano, or Iced Cafe
Mocha. Due to strategic alliance with Tata Coffee in 2001, coffee beans are
provided by Tata coffee as well. Also, this would help the Barista to
strengthen its distribution network and provide opportunity to cater in the
hospitality, airline, catering and other allied businesses. It also has access to
top grade raw material, apart from the infusion of capital from TATA which
has enabled extensive expansion. It made the company cash-positive.
Barista traces its roots back to the old coffee houses in Italy - the hotbeds of
poetry, love, music, writing, revolution and of course, fine coffee. Drawing
inspiration from them, they have singlehandedly taken on the challenge to
open people's eyes to the simple pleasures of coffee and revolutionize the
coffee drinking experience in every city that they invade.To live up to this
promise, they have employed skilled Italian roastmasters at their roastery in
Venice. They sourced only the finest quality Arabicas and have had their
espresso bars designed to reflect a warm, friendly and inviting atmosphere.
Add to this, a menu one can ponder over for hours and have everything one
need to escape the pressures of daily life.At last count, the aroma of fine
Barista coffee permeated in over 100 espresso bars across India, Sri Lanka
and the Middle East.
Barista traces its roots back to the old coffee houses in Italy - the hotbeds of
poetry, love, music, writing, revolution and of course, fine coffee. Drawing
inspiration from them, they have singlehandedly taken on the challenge to
open people's eyes to the simple pleasures of coffee and revolutionize the
coffee drinking experience in every city that we invade. To live up to this
promise, they have employed skilled Italian roast masters at our roastery in
Venice. Sourced only the finest quality Arabicas. And have had their
espresso bars designed to reflect a warm, friendly and inviting atmosphere.
Add to this, a menu you can ponder over for hours and you have everything
you need to escape the pressures of daily life. At last count, the aroma of
fine Barista coffee permeated in over 100 espresso bars across India, Sri
Lanka and the Middle East. Franchisee Information

• Specialty coffee retailer offering high quality beverages and food

accompaniments

• Pioneers in establishing the concept of "organized coffee retailing as

an experience for the customer" at a national level in India

• Strong brand equity - connoting "premium" experience at reasonable cost

• Currently, amongst the leading food retail chains, in terms of number of

outlets, and the largest specialty coffee chain.

• Wide presence with 130 outlets across three countries including Dubai
and Sri Lanka • Key Shareholders- Sterling Group of Companies and Tata
Coffee Ltd. AWARDS A huge shot in the arm and validation of the
company’s efforts has been the recognition given independently by BBC,
The Times of India and Business Standard as the ‘Brand of the Year’ (2002).
Barista was also awarded the TOPS award for Specialty Coffee Excellence by
the Specialty Coffee
Association of America (SCAA), which recognizes specialty coffee retailers
who differentiate themselves through better business practices.
 Main Content: History of the case

Ever since Starbucks opened its first outlet in India, we’ve all been aware of the disruption in
the coffee market, but all customer comparisons have been spoken in hushed tones. And
even though I have seen the long lines outside a Starbucks outlet in New Delhi, the CCD’s
and Costa Coffee’s aren’t exactly empty either. (Although it eludes me why a city as busy as
New Delhi would have people with enough time to wait outside Starbucks for over two
hours just to get a cup of coffee). Guess that says something about Sbux’s success
in maintaining a premium position in India.

Hospitality:

In India, each time you go inside a Sbux, the baristas call out, “Welcome to Starbucks!”, and
when you leave they yell, “Thank you!”, which Guy has specifically asked me to mention to
you all that he finds a bit annoying! (“Very,” he calls out as I type!)

Although if you compare the hospitality for Starbucks vs Barista, I’ve had examples of good
hospitality at both chains. I like it especially when they remember my name and my regular
order.

Today, the coffee chain market is more than Rs 1,000 crore and is growing at almost 30 per
cent each year. The market is dominated by a few brands with CCD the largest in terms of
turnover and the number of outlets in India, followed by Barista – a distant second.

Other players are Costa Coffee, Mocha, Coffee Bean & Tea Leaf and Barista. Currently,
India has about 1,800 coffee outlets, or cafes, and business sources claim India can
accommodate another 2,700 cafes. This seems plausible given that, against global per capita
coffee consumption of 4 kg a year, India stands at 0.82 kg.

The CCD Journey

The Amalgamated Bean is among India’s top two coffee producers and exporters, with
10,500 acres of coffee plantations in Chikmagalur. It produces 7,000 tonnes of coffee every
year and sources another 35,000 tonnes from other plantations. About 25,000 tonnes are
exported and 3,000 tonnes used in CCD cafés.

The company started with its first store in Bangalore in 1996. It took six years to reach 35
outlets across the country by 2002.
However, by 2008 CCD had opened 595 outlets. And in 2012, the count stood at 1,400. In
the same period it went from zero to a Rs 800-crore turnover.

Currently the company has three formats: CCD, CCD Lounge (Premium Format), and CCD
Square (single-origin coffee, from one estate, not blended).

In addition to this, the company has 900 CCD Express (kiosks for take-away) and 16,000
vending machines in offices.

CCD had a clear vision that the outlets would not be coffee-drinking places. They would be
the perfect hangouts for young people and a place for occasional casual meetings for
corporates.

Therefore, the business model was built towards enabling CCD to be a good hangout place,
both in terms of its ambience and the pricing.

The philosophy of the brand is well captured in the tag line ‘A lot can happen over coffee’.

While all was going well for CCDs, Starbucks with its 50:50 joint venture with Tata Global
Beverages, entered the Indian market in its second attempt.
The Global player
Starbucks started in 1971 with one outlet but today, with more than 15,000 stores in 50
countries, Starbucks is the premier roaster and retailer of speciality coffee in the world. The
company in India, called Tata Starbucks Ltd., launched its first outlet in Mumbai in October
2012.

Starbucks expanded its presence to Delhi in January 2013 by opening two outlets at
Terminal III of the Indira Gandhi International Airport and later one in Connaught Place.
Initially, Starbucks opened a combination of standalone outlets located at malls, airports,
metro stations, and commercial complexes. The company plans to expand its retail footprint
in India by opening outlets in hospitals, near gyms or health stores, educational institutions
and corporate campuses.

The decision to open outlets inside Tata-owned retail stores and properties would depend on
the brand’s premium positioning. As of June 2013, Starbucks operates 15 outlets in two
cities. The company plans to have 50 outlets in India by the end of 2013.

The Problem
The business head at Barista has various questions on his mind.

Should Barista even recognise the entry of Starbucks as the latter is in a far more premium
segment than CCD?
Would the brand image of Starbucks just be of one-time novelty value or will it be able to
shift consumers to a more premium concept in the long term? Therefore, should Barista
react? And, if yes, how?

So the problem of the case is simply clear, how do Barista survive in Indian Coffee industry
where the market is dominated by international giant Starbucks and locally by CCD.

Analysis of the case

In a survey conducted by me in my summer internship project,
the respondents were asked the following questions

What reasons in behind that do not go to Barista?

Type No. of Respondents Percentage %

Price 120 60

Brand image 30 15

Taste 10 5

Availability 40 20
 SWOT ANALYSIS

It has also been found that each of the coffee shops have their own set of

Strengths, Weaknesses, Opportunities and Threats.

Barista

Strength:

• Claim to sell the best coffee

• Large Number of outlet

• In house sourcing of coffee beans

• Espresso-Highest selling coffee

Weakness:

• Expensive coffee

• Self service for the customers

• Quality of food- Stale breads

Opportunity:

• Large Untapped Market

• Tie-ups with other companies for promotion

Threat:

• Entry of Foreign players like Georgia, Starbucks etc

• Large unorganized market

Café Coffee Day

Strength:

• Large Number of outlet.

• In house sourcing of coffee beans.

• Tie Ups with good companies.

Weakness:

• Limited Target Audience.

• Follow the competitor strategy.

• Quality of food- Stale breads.

• Loud and Hard Music.

• Improper sitting arrangement.

Opportunity:

• Large Untapped Market

• Tie-ups with other companies for promotion. Threat:

• Entry of Foreign players like Georgia, Starbucks etc.

• Large unorganized market

 Solutions

1. Build physical Stimuli to create distinctive connection #BaristaBath

2. Blog posts should be posted time to time, with key words such as coffee and Café for SEO 


3. Give customers instant rewards for uploading “Selfie and pictures” on Facebook with Barista sunboards



4. Barista may have “Youtubers” to promote Barista as they are influencing young, women and Netizens
(NWN) just like CCD did 

5. Target current state-of-mind of customers with phrase on sunboards 

6. Start Email and SMS marketing to remain in top of the mind of customers 


7. Contribute with customers for a social cause 


14
 CONCLUSIONS

Taking its inspiration from Italian corner coffee bars and the US coffee chain Starbucks, Barista and other
Indian chains are also trying to educate customers about the virtues and finer points to coffee drinking.

Consumers are converging; they are thinking alike, they are aspiring for similar products. Tea drinking
nations like Britain and Japan have been converted to coffee drinking, and Indian consumers are seeking
similar lifestyles. Corner

bars like these are offering more than just coffee and snacks to their

customers. For many of their regular patrons, a visit to these bars is also a part of the western lifestyle they
so much want to identify with. However, as tea and coffee battle it out in big city restaurants and bars, the
most significant volume of tea is drunk by villagers in small shacks along the roadside. As long as these
roadside stalls continue to do thriving business, tea will have a safe future in India. . The coffee consumption
by Indians has increased in the last 4

to 5 years. The coffee demand was 169 MT in 1993-94 has increased to 306 MT

in 2006-07 and is further estimated to increase to 405 MT in 2010-11. Indian Market is slowly getting
converted into organized market. Many players would be coming and would be fighting for their share. As
India being a major consumption of hot beverages, it would be interesting to keep the track of what actually
transpires in the market in the near future.

When both CCD and Barista started business they did face a bit of a difficulty, as the Indian market had been
dominated by tea-drinkers till that time. When such café were launched, people had to be educated about
the different types of coffee, as no one knew the distinctions between a latte, cappuccino or
15
 frappe! So it took time for Indians to develop a taste for the different flavors.

CCD and Barista are in one business but their strategies are very different. Both are targeting to different class
of audience but they are competing with each other. Barista form very beginning has target to classes and not
masses. It is a premium class brand. But now they are changing their strategy and they are planning to target
masses but still upper class and in terms of prices they are not at par with CCD. CCD is a price warrior for
Barista. CCD has set up at least half a dozen outlets in Delhi and Mumbai, right next door to barista and is
hoping to lure barista’s customers with a cheaper menu. And may be because of this Barista has suffered huge
losses in the year 2002. Among 153 outlets, close to 40 make huge losses and another 10-20 barely break-
even.

16
 Bibliography

Web Sources:

www.barista.co.in

https://en.wikipedia.org/wiki/Barista_Lavazza

https://www.thespruce.com › ... › All About Coffee

economictimes.indiatimes.com/topic/Barista

Books Reference:

Marketing 4.0 by Phillip Kotler

Pandeymonium: Piyush Pandey On Advertising

Purple Cow by Seth Godin


Youtility by Jay Baer

17