The Hindu Business Line : COFFEE and more

COFFEE-drinking at your favourite outlet may not remain just that. In a bid to make sipping coffee a more "wholesome" experience, coffee retail companies such as Café Coffee Day and Barista are taking a step beyond the conventional. For starters, both the retail majors are actively focusing on expanding a new format this year - Bookshop Cafes.

No, this is not a coffee shop within a library or a store, it is the other way round. Café Coffee Day, after testing the Book Café format in seven smaller cities, is now all set to roll out the outlets across the country in a big way this year. The company recently launched two Book Cafes in Delhi and plans to set up 25 such outlets in the country this year and 100 Book Cafes by 2007.

"This allows customers to have an even more relaxed café experience by leisurely browsing through an interesting selection of books and periodicals while sipping their favourite coffee," says Sudipta Sen Gupta, Marketing Head, Café Coffee Day.

Interestingly, this is a step towards the company experimenting with different kinds of formats for the cafes. According to Gupta, the chain sees potential not only in Book Cafes but also in similar formats such as garden cafes, fashion cafes, sports cafes, music cafes and maybe even a singles café in the future! While Café Coffee Day is already experimenting with garden cafes, it will most probably test the fashion cafe format next, Gupta said. "The outlets would vary from location to location. We are looking to segment people according to the socio-psychographics," she explains.

Coffee retailing major Barista too is getting aggressive on the bookstore café format this year with Barista Corner Bookstores. The company, which already has about seven such stores in Delhi, is now planning to open about 40 such stores across the country this year. "It's a value addition for the consumer. The mix of the books at the outlets also varies according to the location. Thereby an outlet closer to the university area would have more reference books or text books," says Brotin Banerjee, Head of Marketing and Strategy, Barista Coffee Company.

Explaining the trend, Harish Bijoor, CEO, HarishBijoor Consults Inc. says, "The café market in India is maturing, and the category is trying to get into the second phase of activity. This is a trend that we have seen internationally in the café business. In the beginning, the café is a simple place, a functional place where good coffee is served in an atmosphere that is comfortable and acceptable. And then the café morphs. Stage Two is when it becomes a restaurant of sorts, a theme restaurant even. It offers more than coffee. It offers food, then accessories, and then it adds more. The simple cafe as we have seen it happen in India is the lowest common denominator in the cafe game. Higher-end offerings will morph this category and catapult it further. The consumer marketing and retailing game is all about change."

According to Bijoor, a time would come when the café will eventually become a community hub, with even cafes such as pop music lovers' cafes, an intellectuals-only café, and maybe even a communists' café will come up. A key aspect, however, is localisation. Nestle India, for instance, which has opened about 350 outlets in metros, mini-metros and major cities in the country is using a different café format according to the location in which the Café Nescafe outlet is to be located.

According to Carlo Donati, Chairman and Managing Director, Nestle India, the company follows a flexible model and the choice of module is adapted to cater to consumer needs in that location. A key focus area for the company would be the institutional segment. While not specifying targets, Donati says that a place such as Gurgaon which has a fairly high concentration of corporate offices, particularly BPO firms, has potential for at least half-a-dozen outlets, while Delhi alone can see a few dozen outlets come up. "It is a good place to sit down, have coffee and take a break from work," he says.

On the other hand, in areas such as shopping malls, the company has smaller take-away kiosks. Says Bijoor, "I believe this is a very effective and efficient strategy. In the cafe market today, you have segmentation emerging, which is clear. Both Nestle and Coffee Day (with its XPress counters) are active in the take-away space. I believe it is part of good strategy, particularly considering the BPO boom and the latent opportunities that exist in the business space. Every petrol bunk, every office, every bank and every school and college is a ripe location for such an outlet."

While Barista is not active in the take-away segment, it is following a localisation strategy at its outlets by adapting value-additions such as music. An example is the `Sound of Barista' or Barista radio concept which the company has launched. According to Banerjee, the dedicated radio will play customised music keeping the profile of the customers frequenting the outlets in mind. The music at the outlets would vary according to its location and even the time of the day. Café Coffee Day too has introduced services such as video/music jukeboxes, cyber corners and so on.

In an earlier interview to Business Line, Shashi Chimala, CEO, Chimayo Chains, which owns the Qwiky's brand of coffee pubs, had an interesting observation to make. The market has to evolve, he said, adding that "coffee pubs in the country are still selling ambience and not the product." Ask him to distinguish, and he says there's a difference between treating a coffee pub as a fashionable hang-out and making a statement as someone who appreciates gourmet coffee. To illustrate, he says that in the US, Starbucks has a major presence in institutional sales - employees at offices get Starbucks coffee free in their own mugs or in a plastic cup, but that doesn't prevent them from buying branded coffee from Starbucks outlets on their way to work.

Bijoor feels additional value-adds will not really make a difference. "The biggest issue for a cafe and its success or lack of it is the issue of location. A jukebox and a book counter will come and go. Essentially a cafe has to focus on its core offerings. It needs to focus on staying relevant to its audience. This is the biggest arena where cafe players in the market are making a mistake. They are a bit too static in what they offer. There is just too much of standardisation. The cafe is not a ration shop! It needs to be different and local. And it needs to stay relevant to the needs of the local populace as well," says Bijoor.

And with coffee retailers beginning to stretch their imagination to stay relevant to a core audience in an increasingly competitive segment, consumers can expect a lot more value addition to come along with that that cup of coffee in the future.

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