Introduction
The Indian coffee industry is a growing industry. With the increase in disposable income among the Indian middle class, the growth on foreign coffee chains has increased rapidly. The competition in the market is growing, as there are a number of players like Barista, Cafe Coffee Day, and Mocha have entered the market since 2001. The main offerings f the coffee shops are lifestyle and coffee. The main market for such cafes is in the metros and the southern part of the country.
Main body
The target market of the foreign coffee makers in India is the students and technology professionals who have increasingly adopted a western lifestyle. Further, the main target customers are the middle class and above from the metropolitan cities in India.
India provides a growing market for not only coffee but for all industries due to its looming middle class and growing disposable income with them. Indian market provides according to the UN report, coffee consumption is expected to increase by 2.2 percent annually. In 2008, the consumption of coffee has increased 4.9 percent (India Coffee 2009). The scope for branded coffee in 2005 was 53 percent. Thus, there is an offering of a growing market with an increasing income. Thus, India can be dubbed as a key market for the global coffee industry.
The Indian coffee industry provides the opportunity to tab on one of the worldâs youngest population, which is fast adopting the western culture. With a large professional pool, the countryâs coffee shops have taken the opportunity to go into collaboration with call centres. Further, the increased number of call centres in the country has also increased the number of customers in the coffee shops. The growth has received a boost due to the technology professionals, retired affluent, youth, and balance seekers (Tea & Coffee Trade Journal 2005). Therefore, the increased consumption of coffee can be attributed to lifestyle change among the Indian populace. Moreover, the food, beverages and tobacco is expected to be 43 percent of the total household spending (The Economist Intelligence Unit 2005). According to the report due to rapid urbanization, growth, and increased private consumption, there is an expected increase of 9 percent from 2005-09. The report states that coffee industry is becoming a noticeable sector in the urban Indian market.
2. In order to estimate the extent to which a company has undergone globalization, Global Capability Index (GCI) and the Global Revenue Index (GRI) are considered (Lasserre 2003; Buckley & Ghauri 2004; Besanko et al. 2007). GCI is calculated by the ration of distribution of assets for capital-intensive industry in the regions the company operates or labour to the distribution of assets in those regions for the industry. GRI is calculated by considering the ratio of the companyâs sales in its major world regions to the industry demand in those regions.
Costa Coffee ranks low in both GRI and GCI. This is so because the company operates in two main regions i.e. Europe (mostly in the UK) and Asia. I believe Costa Coffee is a dominant regional player i.e. it has a strong GRI and is inclined at increasing the distribution of its production units around other regions more aggressively. One example of such expansion plans are in opening stores in India. Therefore, it has a high GCI too.
Therefore, after mapping the Global ambition of Costa Coffee we can state that presently it is a dominant regional player but moving strongly towards becoming a global player through its expansion spree.
Costa Coffee is a niche player in the Indian market. The target customers are mainly executives and professionals therefore making a small group of people. The main aim of the company is to open maximum number of stores in Indian cities wherein it will target a large market.
The coffee that is offered in India is a standardized product, which is offered in most Costa outlets around the globe. The coffee will be roasted in London and will come from Venezuela and Kenya. This will ensure standardization of the product.
The main aim of the company is to provide a differentiated product as it has planned to import roasted beans from its UK roaster. (Moon 2005; Morrison 2009) The coffee that will be offered in the Indian market will be trademark Costa taste that is a bit bitter due to its Italian style roasting. Therefore, they intend to differentiate their product through offering a different taste and target customer. However, the company has priced its product competitively, at par with its competitorâs barista and CafĂ© Coffee Day.
Therefore, with a differentiating product, the company is a position to provide the product at a competitive price. As the company aims at enhancing customer value through providing a differentiated, superior quality product, branding, outlet ambience, etc. therefore the coffee shops will try to make the most of the products it has to offer to the market. Costa, therefore, adopts a standardised strategy, which helps in its differentiated positioning. (Kogut 2002)
As a global player, Costa intends to standardise its products, which actually provides it the advantage of leveraging the competitive advantages of the company from its dominant markets. (De Wit & Meyer 2004; Ulgado 1993) Therefore, Costa has transferred a lot of its competitive advantage into India by sourcing the raw material from its original supply chain. Therefore, it intends to fully utilize its critical efficiency built in the UK (home country) to develop its presence in India.
Yes, Costa enjoys competitive advantage in India of its experience in coffee brewing and roasting which is sourced from UK. Further, it is using its global brand name in order to leverage its competitive advantage.
Conclusion
In order to attain sustainable advantage in India, it will have to increase customer loyalty. As Costa introduces a different brew of coffee, the still nascent and growing coffee market in India has to be introduced to its new style. Therefore, brand building and introduction of the customers to its differentiated product is essential to make the product experience excellent, which will increase customer loyalty and make the companyâs competitive advantage sustainable (Kogut 2002; Lovelock & Yip 1998; Yip 1989; Ălvarez & Merino 2008). Further, the company has to leverage its global brand name. Costa is still a new name in India with limited number of outlets. Its presence in major cities is still not known. The expansion and branding of the global name is important to retain loyalty. Further the company must leverage its existing value chain in order to derive efficiency from it.
Figure 2: Value chain for costa coffee (Lasserre 2003)
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