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Costa Coffee, a prominent British coffee chain and a Coca Cola subsidiary, has strategically placed India among its top 10 priority markets, expressing ambitious plans to introduce 40-50 specialty coffee stores annually. Since its inception in India in 2005, Costa Coffee has navigated the market through its franchise partner, Devyani International. Philippe Schaillee, the global Chief Executive Officer (CEO), emphasized the brand's commitment to growth, discussing the company’s plan to open 40-50 new stores every year.
Costa Coffee recently inaugurated its 150th store in New Delhi, marking a milestone for the brand. The brand is not only expanding its physical presence but also strategically aligning with key partners. An announcement was made regarding a partnership with the multiplex chain PVR-INOX, signalling a strategic move to tap into the diverse consumer base frequenting entertainment venues. Furthermore, Costa Coffee is leveraging its collaboration with the ICC Men’s World Cup, a move intended to secure a more substantial market share.
India, recognized as one of the top 20 markets globally, stands out for its remarkable potential and rapid growth. Philippe Schaillee highlighted the Indian market's impressive Compound Annual Growth Rate (CAGR) of 11%, in stark contrast to the global market's CAGR of 5%.
This robust growth is attributed to the younger generation's evolving preferences, with a notable shift towards specialty coffee. The CEO noted that this shift is propelled by the younger generation's exposure to specialty coffee stores coupled with the rise of disposable incomes. These coffee establishments have transformed into hubs of exploration and experimentation. Moreover, with rising disposable incomes, new individuals are continually embracing this trend, illustrating the market's dynamic nature.
Currently catering to a population estimated at 20-25 million people gravitating towards specialty coffee, the Indian coffee market's growth trajectory is further emphasized by its relatively lower consumption per capita. In comparison to global averages of 200 cups per year, tea-drinking countries like India witness consumption rates limited to 20-30 cups annually.
An interesting facet of Costa Coffee's operations in India is its sourcing strategy. The brand proudly claims to source 100% of its coffee from the Chikmagalur and Coorg regions in Karnataka, contributing to a sense of local connection and sustainability.
While pursuing growth opportunities, Costa Coffee remains disciplined and focused on consolidating its position in the market. Currently, there are no plans to expand beyond larger cities. The strategic approach involves strengthening the brand's presence across the country, with a significant emphasis on major cities that offer substantial consumer bases.
In summary, Costa Coffee's robust growth strategy in India revolves around targeted expansion, strategic partnerships, and a keen understanding of evolving consumer preferences. The brand's commitment to disciplined growth, emphasis on major cities, and locally sourced coffee underscore its efforts to establish a lasting and impactful presence in India's dynamic coffee market.
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