Coffee Wars In India Case MGT 409
Lauren Little
Peter Lindeman
MGT 409009
Cafe Coffee Day Case Analysis
Background
Cafe Coffee Day (CCD) successfully created a coffee revolution through changing
India’s ten times more tea drinkers to young coffeeloving social outlets. V.G. Siddhartha, the chairman and CEO focused on targeting India’s youth, becoming a market leader, building operational efficiency, and segmenting the market. His success was compromised with the entrance of Starbucks to the Indian coffee market. Starbucks offered customer service that CCD struggled with and offered a new and exciting brand to younger customers. However, the 50% higher prices at Starbucks was a turnoff to younger customers who were very loyal the the CCD brand. The strategic issue of this case is how Cafe Coffee Day should manage its business strategy in order to compete with Starbucks entering the Indian coffee market.
II.
Strategic Analysis
Porter’s five forces of industry competition serve as an excellent tool for examining the industrylevel competitive environment for CCD. Threat of new entrants is relatively high as they have been faced by Starbucks, Costa,
Lavazza, and more. They are however the market leaders in India and one of the largest exporters of coffee in the country. Leading to the rivalry among competitors in the industry which is mediumlow, contingent to the entrance of
Starbucks. CCD currently has 40% of the market. The bargaining power of suppliers is low, as
CCD produces its own coffee and therefore does not face any issue. Bargaining power of buyers is medium as they target young middle to middleupper classes with reasonably priced beverages. As 60% of the customers are regulars many cannot resist the lower prices and modern atmosphere that CCD offers as they cater to creating a social outlet and provide fun promotions.
Threat of substitute products and services is low when focusing not only on the beverage but the atmosphere that CCD has created with its
Peter Lindeman
MGT 409009
Cafe Coffee Day Case Analysis
Background
Cafe Coffee Day (CCD) successfully created a coffee revolution through changing
India’s ten times more tea drinkers to young coffeeloving social outlets. V.G. Siddhartha, the chairman and CEO focused on targeting India’s youth, becoming a market leader, building operational efficiency, and segmenting the market. His success was compromised with the entrance of Starbucks to the Indian coffee market. Starbucks offered customer service that CCD struggled with and offered a new and exciting brand to younger customers. However, the 50% higher prices at Starbucks was a turnoff to younger customers who were very loyal the the CCD brand. The strategic issue of this case is how Cafe Coffee Day should manage its business strategy in order to compete with Starbucks entering the Indian coffee market.
II.
Strategic Analysis
Porter’s five forces of industry competition serve as an excellent tool for examining the industrylevel competitive environment for CCD. Threat of new entrants is relatively high as they have been faced by Starbucks, Costa,
Lavazza, and more. They are however the market leaders in India and one of the largest exporters of coffee in the country. Leading to the rivalry among competitors in the industry which is mediumlow, contingent to the entrance of
Starbucks. CCD currently has 40% of the market. The bargaining power of suppliers is low, as
CCD produces its own coffee and therefore does not face any issue. Bargaining power of buyers is medium as they target young middle to middleupper classes with reasonably priced beverages. As 60% of the customers are regulars many cannot resist the lower prices and modern atmosphere that CCD offers as they cater to creating a social outlet and provide fun promotions.
Threat of substitute products and services is low when focusing not only on the beverage but the atmosphere that CCD has created with its