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Coffee Wars in India Café Coffee Day 2013 Case Solution
| Solution Id | Length | Case Author | Case Publisher |
|---|---|---|---|
| 2584 | 1436 Words (6 Pages) | David B. Yoffie, Rachna Tahilyani | Harvard Business School : 715444 |
A Word File
The case is based on Café Coffee Day (CCD) – a local coffee player in the Indian market that prides itself for being a trendsetter in helping evolve the coffee consumption trend amongst the Indian youth – giving a rise to the coffee culture in the Indian market. The case focuses on the impeding challenge the company faces as the global coffee giant, and player, Starbucks, enters the local market. CCD which has more than 1400 coffee cafes in India, also highlights a string of other growth challenges the company faces- including a clash of the coffee culture with the local Indian culture and norms, increased property rentals, and high attrition in the industry along with evolving customer demands and expectations. Starbucks, ventured into India through a partnership with local giant, Tata, and experienced high demand and a quick roll out into the urban centers of the country. The case highlights formidable challenges for CCD – focusing on the response that CCD should adopt in the face of Starbucks’ entry along with other increased challenges and issues.
Following questions are answered in this case study solution:
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What are the issues faced by Café Coffee Day? (Explain them)
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What are your recommendations?
Case Study Questions Answers
1. What are the issues faced by Café Coffee Day? (Explain them)
1. Growth potential undermined by tea culture in India
One of the foremost issues highlighted in the case is that of beverage consumption culture. The Indian market is fonder, and culturally attuned towards drinking tea than coffee. While CCD has targeted the urban youth if the country for promoting the coffee culture, the company is challenged to break the traditional norms and customs around tea drinking that are present in India, and the homes of people – including that of its target audience. The growth and expansion potential of the company is therefore challenged and restricted by the widespread consumption of tea, and the presence of different tea brands in the market.
2. Increased competition from Starbucks
Another challenge and issue identified in the case relates to the increased competition. With the evolution of the Indian market, and the increased coffee consumption trends displayed by the youth, there have been many competitors for CCD in the market – both local as well as international. One of the most intimidating competitors for the company is Starbucks – an international coffee chain renowned not only for its cafe favors and taste, but also for its coffee cafes, ad culture.
3. Growth challenges from local expansion: increased property prices
Property prices were another challenge that obstructed growth for the company. CCD competed not only with other coffee cafes, but other industries such as electronics also for property, and desirable locations. Most property and shops in the Indian market were available for an increasingly priced rent – owing to high demand from various industries and their players. These high prices often deterred growth in desirable locations for the financial burden they resulted in. CCD offered to pay rent as a percentage of the business – resulting in riskier situation for the company where high business revenue would result in a higher rental payment and a lower business revenue would result in a lower rental payment.
4. Talent management
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