ABOUT CAF COFFEE DAY Caf Coffee Day is a division of India's largest coffee conglomerate, Amalgamated Bean Coffee

Trading Company Ltd. (ABCTCL), popularly known as Coffee Day. This is a Rs. 300 crore ISO 9002 certified company. Its chief customers are in USA, Europe & Japan. Based in Chickmaglur, the home of some of the best Indian Coffees, Coffee Day has its business spanning the entire gamut of coffee consumption in India. Its different divisions include: Coffee Day Fresh n Ground (354 Coffee bean and powder retail outlets) Coffee Day Xpress (341 Coffee Day Kiosk) Coffee Day Take away (7000 Vending Machines) Coffee Day Exports Caf Coffee Day Coffee Day Perfect (FMCG Packaged Coffee) division

Caf Coffee Day (CCD) pioneered the caf concept in India in 1996 by opening its first caf at Brigade Road in Bangalore. Till about the late 1990s coffee drinking in India was restricted to the intellectual, the South Indian traditionalist and the five star coffee shop visitor. As the pure (as opposed to instant coffee) coffee caf culture in neighbouring international markets grew, the need for a relaxed and fun hangout for the emerging urban youth in the country was clearly seen. Recognizing the potential that lay ahead on the horizon, Caf Coffee Day embarked on a dynamic journey to become a large organized retail caf chain with a distinct brand identity of its own. POSITIONING Caf Coffee Day, at its inception in 1996 was the vanguard of a caf culture in India. At a time when the country was growing well economically and young India enjoyed higher spending power, CCD as it is popularly known, started to set up the first retail chain of coffee bars. It broke new ground in 1999 when the entire market grew phenomenally with the entry of new players.

From the beginning, it positioned itself as being a coffee bar and has maintained that positioning for a long time now. For a consumer, CCD represents a fun place where one can go with a whole bunch of friends at any time of the day and have a good time, over coffee. In 2002, Caf Coffee Day underwent a rebranding exercise through a change in its logo. The earlier logo was a simple red square with a white streak running across, and Coffee Day written at the bottom. At this stage, CCD was still perceived as a South Indian coffee joint similar to the Coffee House in Kolkata, a place where intellectuals meet and spend their time discussing issues. CCD saw a latent market in youngsters, who were increasingly looking for a place to spend time with friends and have fun. It then created an umbrella mother brand, Coffee Day and four subbrands to represent the various activities. The logo then incorporated red, white and green colours, a larger font and emphasis on the word Caf. According to the company, red signifies leadership and passion and the white swirl stands for purity of purpose and the feel of coffee. The new colour green endorsed the long heritage of CCD in growing coffee. Caf Coffee Day is known to experiment with different caf formats. They have been: Music cafs Books cafs Highway cafs Lounge cafs Garden cafs Cyber cafs The most recent addition has been lounge cafes. These cater to a more niche segment than the general consumer segment of CCD. The age group of 20-29 would be more able to afford a lounge setting than the group of 15-19. ADVERTISING, SALES PROMOTION AND SEGMENTATION

STRATEGY Caf Coffee Day does not look at mass media as a viable area of advertising or marketing spend. CCD is advertised through barter deals with other brands for ground events BELOW-THE-LINE ACTIVITIES: 2003- Levis launched a new range of Low Rise jeans through a campaign called 6 below. CCD displayed POPs of Levis in all its outlets during the campaign. 2004- The launch of Liril Orange soap by HLL was conducted in Caf Coffee Day. 2004- TVS Scooty tied up with CCD for events in the coffee bars and at malls on Valentines Day in February. 2004- CCD was the official ground partner for the Channel V Get Gorgeous Contest IN-FILM ADVERTISEMENTS: Some Telegu and Tamil films with prominent brand placement Hindi films- It started with Bas Yun Hi and then conscious advertisement decisions were made for Khakee, Main Hoon Na, Kyun Ho Gaya Na and Mujhse Shaadi Karoge. All these movies were targeted at young movie-goers, teenagers and people looking for light-hearted entertainment. These are much the same kind of people who are likely to visit Caf Coffee Day. Serials like Kahani Ghar Ghar Kii, but there are no important tie-ups with such entities. SALES PROMOTIONS: Merchandising- Every CCD stocks merchandise ranging from coffee mugs, Tshirts, caps, bags, coffee filters, mints, different flavours of coffee powders, tea and cream, wafers and biscottis. It also merchandises promotional materials for other brands it associates with. When some brands are conducting events for which passes are distributed or movie premiere tickets are given out, CCD is an important hub for these activities as most of the target market. CCDs Guide to Active Holidays- It is a travel guide focusing on adventure

sports and is available in the CCD outlets, for people seeking escapade from monotonous life. Caf Beat- An in-house magazine which gives the entire low-down on whats happening in CCD outlets across the world. It describes experiences of customers, celebrations in CCDs, and covers youth-centric topics like movies, music, travel, lifestyle, e-dating, books and careers. Around 38% of CCD goers read Caf Beat and some carry it back with them. CCD has now tied up with WorldSpace and Microsense to provide satellite connectivity in its outlets. SEGMENTATION STRATEGY: Caf Coffee Day has its main consumer base in the age group of 15-29 years. Its customers are mainly middle class and upper middle class youth who are upwardly mobile. From the market, CCD seeks to target not just the youth but anyone who is young at heart. PRODUCT ANALYSIS Caf Coffee Day has different caf formats across different cites. They can be categorized into Music Cafs, Book Cafs, Highway cafs, Lounge cafs, Garden cafs, and Cyber cafs. Every format has a different feel to it. Also, Caf Coffee Day changes or makes fresh additions to its menu from time to time. This includes having specialty coffees from different countries, exotic desserts and pina coladas. Since the target consumer is of an age where one constantly seeks change, this makes sure that the consumer does not get bored with a repetitive style and seeks new places to go to. Caf Coffee Day has changed its interiors twice since inception. First, during its rebranding in 2002, where it brought in big photographic wall mounts of coffee experiences, and yellow chairs and marble tables. In 2006, it again changed its dcor to cane chairs to give the outlets a more causal feel. Caf Coffee Day has hence constantly reinvented its look to keep up with the ever-changing wants of its consumers.

GENERIC COMPETITION DIRECT COMPETITORS: Barista- This is the closest competitor to Caf Coffee Day in the Indian market. They target the same class of upwardly mobile youth and young professionals. But Barista is often viewed as a place to unwind after a hard days work or an ideal setting for some business meetings. Caf Mocha- This aims at providing a level of experience to the consumer which is hard to imitate. Inspired by Morocco and Turkey, Mocha offers not just coffee but also sheeshas from Egypt and gourmet desserts. Mocha calls itself a coffee shop for the soul. Java Green: Javagreen was started in 2003 as a chain of In-Store Cafs within Reliance WebWorlds. After the formation of ADAG it has expanded into other locations outside Reliance and operates over 100 cafes operating within a host of retailers, food courts and corporate campuses. Among the big guys this seems to have the weakest patronage and lacks the spark(read clear positioning, promotion or good products) INDIRECT COMPETITORS: Eateries like McDonalds and Haldirams pose competition to CCD as they are likely attractions for a consumer to be drawn to. A consumer can well contemplate why he should spend around Rs. 45 on a coffee when he can get a burger and a coffee for the same price at McDonalds. Local tea joints and coffee shops like Caf Nescafe- They are smaller places but nevertheless target the same set of consumers. Hence, CCD has to consider the threat a shop like this could pose to it. GLOBAL COMPETITORS: Starbucks is planning to enter India shortly and would be stiff competition for even an established brand like CCD. Coffee bars in the market of the other country that Caf Coffee Day is entering is also be a factor CCD will have to plan for before entering a market. DISTRIBUTION STRATEGY Today CCD has the largest network of cafes in India, with over 607 Company Owned Company Operated cafes across 98 cities. But they do not follow a franchising strategy. The channel partner has no involvement in the daily

operational activities of the Caf in the retail space. Neither would he have to invest in operational capital equipment or branding or marketing and promotion of Caf Coffee Day. CCD opted not to follow forward integration and outsourced its distribution responsibility to other parties in 2003. As its reach spreads across India and it is now exploring smaller towns, CCD would find it more expensive to maintain on its own. The private players would procure raw materials like sugar and paper cups but coffee beans would still come from Bangalore. COMPETITIVE STRATEGIES OF CAF COFFEE DAY Caf Coffee Day which follows a backward integration of the value chain procures coffee beans from its base in Bangalore. This gives it a high sense of quality assurance and guaranteed supply across its outlets as the same raw material is used in all outlets. But Barista is a combination of imported coffee beans and beans from Tata coffee. This is a relative disadvantage because if there is a discrepancy in the quality or supply, Barista would have to consider alternatives and probably look for another supplier. Similarly, the food items available in Caf Coffee Day are obtained from local suppliers whereas Baristas food is catered by the Taj caterers. Caf Coffee Day would hence, have a lower-cost advantage. The brand strength of Caf Coffee Day in comparison to Qwickys and Caf Nescafe is far greater and its reach is on a countrywide scale. A consumer travelling 10 across cities would not find it too difficult to seek a Caf Coffee Day outlet instead of deciding on trying a Qwickys, which he is not accustomed to. Caf Coffee Day has an advantage of top-of-mind recall for coffee-shopgoers in India, especially because it set the caf ball rolling in the country. It is a place where a lot of young people can meet, chat, have fun and let their hair down, rather than sit and sip a cup of coffee in prim and proper serenity. This is one of the main factors for why it is chosen over places like Barista or Mocha. MARKET EXPANSION

Recently, Caf Coffee Day entered a tie-up with the Ginger hotels of the Taj. This caters to business executives and is on a Smart basics platform. The outlet would be open to all, and not just the hotel's guests. The aim is to increase footfalls in Ginger and increase the reach of Caf Coffee Day. This way, CCD can reach out to another set of consumers, apart from the young crowd it has mainly catered to.