Cafe Coffee Day Brews up a Storm

The storm brewing up in the coffee mug is getting hotter by the day. On the heels of Tata Coffee's recent tie up with the Barista chain of cafes, the Karnataka-based Amalgamated Bean Coffee Trading Company (ABC) has adopted an aggressive strategy to counter competition to its Cafe Coffee Day outlets.

The Rs 300 crore company is investing up to Rs 12 crores for adding 25 outlets across the country to the existing chain of 22 cafes in six months, after which it may scout for external funding through investors, Mr Surendra Kancheti, director of ABC told ET, after opening an outlet in the Hyderabad Airport, the first of its kind in an airport in India.

"The healthy competition created by the efforts towards consolidation in the market is helping create awareness about the cafe concept. Cafe Coffee Day will add 100 outlets in the next 12 months with existing internal resources. Though we aren't currently looking out, we will look at the possibility for external funding once we have 50-60 cafes operational, Mr Kancheti said.

The company has four outlets in Hyderabad, doing approximately Rs 70,000 to 75,000 per day with average walk-ins of 3,000 to 4,000, and is planning to add another outlet in the city and two other in Vizag.

The ABC, which owns 2,000 acres of plantations in Chikmagalur and Hassan, Karnataka and integrated the process right from the plantation stage, to curing and roasting and grinding and liquid coffee, is also looking at strengthening its Coffee Points, outlets where it sells freshly ground Coffee Day brands of coffee powder.

The largest coffee exporting company in India plans to invest about Rs 2.6 crore in the next six months on adding 15 coffee points to the existing 25 outlets in Hyderabad, and 10 each to the existing 14 in Vijaywada and Vizag, Mr Kancheti said.

ABC is also planning franchisee coffee point outlets in smaller towns in Rajamundry and Kakinada and other coastal towns. The company is working on awareness campaigns in the Telangana region to promote and inculcate the coffee drinking habit.